Africa: British American Tobacco - Investors Can't Afford to Ignore Allegations of Bribery and Corruption

analysis

British American Tobacco is a bellwether stock on the JSE, although it has lost some of its lustre in recent years. New allegations of bribery and corruption could tarnish it further.

Protracted battles with the Nigerian regulator wiped millions of rands in value from MTN as the share price fell from more than R200 to less than R70 between 2015 and 2018. Tussles with US regulators over bribery allegations in the Democratic Republic of Congo kept Glencore's share price suppressed until new management began to sweep the cobwebs out. And discount retailer Pepkor will not see its value unlocked until the uncertainty about Steinhoff is removed - and even then trust issues may linger.

Investors have learnt, often painfully, that environmental, social and governance issues matter. Sometimes more than operational issues.

So when two reports were released this week suggesting that tobacco multinational British American Tobacco (BAT) ran a mass surveillance operation and informant network in South Africa, bribed the late Robert Mugabe and made questionable payments totalling $600,000 in 10 other African countries, investors sat up and paid attention.

"Investors have to care," says Zwelakhe Mnguni, chief investment officer at...

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