Russian sues BAT for 'missing' £180m

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The Independent Online

British American Tobacco has been accused of siphoning off £180m in profits from a Russian cigarette factory over a three-year period.

The allegation, made by a minority shareholder in BAT's Moscow factory - one of the largest cigarette producers in Europe - is to be tested in a Russian court.

Branston Holding, the minority shareholder, wants BAT to pay back the disputed 9.35bn roubles (£184m) to the BAT-Yava factory in Moscow, one of three factories operated by BAT in Russia. It claims BAT deliberately sold cigarettes made at the factory cheaply to a distributor it wholly owned from 2003 to 2005 and then sold them on to retailers and other buyers at a 25 per cent mark-up.

BAT denies the allegations, claiming that there is no documentary evidence to back up BH's lawsuit. It says that the challenge is designed to spark lengthy court proceedings in order to damage its reputation.

A court in Stavropol, southern Russia, is due to consider BH's complaint later this month; BAT is hoping it will throw the case out. The suit names five non-Russian BAT managers including John Taylor, managing director of BAT Russia, and John Selby, BAT Russia's former finance director, who now works at BAT's London offices.

Last year, BAT sold 73 billion cigarettes in Russia, the world's fourth-largest cigarette market. BAT Russia is the market leader in Moscow where its premium brand "Kent" sells for 50 roubles (£1) a pack. The dispute appears to be connected to BAT's offer to buy BH out of its Moscow factory.

BAT already owns 97.78 per cent of the factory and has offered to buy the rest at a price of 16.13 roubles per share. BH insists the price offered is too low.