LaFarge SA is guilty of supporting foreign terrorist organizations

French cement maker Lafarge has pleaded guilty to supporting the Islamic State and other terror groups in the US.

Prosecutors said it marked the first time a company had pleaded guilty in the US to aid terrorists.

LaFarge SA has been hit with a $90,780,000 fine, was ordered to forfeit $687,000,000, and will be under probation for three years after pleading guilty to one count of conspiracy to provide material support to foreign terrorist organizations (ISIS and the al-Nusrah Front, or ANF)

Breon Peace, US Attorney for the Eastern District of New York - where the case was brought - said

•  The conduct "by a Western corporation was appalling and had no precedent or justification".
•  "The defendants paid millions of dollars [to Islamic State], a terrorist group that otherwise operated on a shoestring budget,
•  Millions of dollars that [Islamic State] could use to recruit members, wage war against governments, and conduct brutal terrorist attacks worldwide, including     against US citizens."  

Lafarge also faces charges of complicity in crimes against humanity in France over its activities in Syria, but the company denies the claims.

Some background

1. The firm opened its plant in Jalabiya near the Turkish border in 2010 following a $680m investment.
2. US prosecutors said that Lafarge's Syrian subsidiary had paid Islamic State and another terror group, al Nusra Front, the equivalent of $5.92m to protect staff at the plant as the country's civil war intensified. Executives likened the arrangements to pay "taxes", they said.
3. Lafarge eventually evacuated the plant in September 2014, when Islamic State took control of the town and the factory. But before its departure, the deals helped the company do $70.3m in sales, prosecutors said.
4. Lafarge had previously admitted bribes were paid after an internal investigation.
5. But US Deputy Attorney General Lisa Monaco said on Tuesday that the company's actions

• "Reflect corporate crime that has reached a new low and a very dark place."
• "Business with terrorists cannot be business as usual,"  

6. In a statement, Lafarge's new owner Holcim said none of the conduct involved Holcim, "which has never operated in Syria".
7. It added that former Lafarge executives involved in the bribery had concealed it from Holcim and external auditors.
8. Eric Olsen, who was CEO between 2015 and 2017, stepped down from his role following an investigation into Lafarge's activities in Syria.
9. At the time, Mr Olsen said he had not been involved in any wrongdoing and was standing down to bring "serenity" to the company.
10. The US State Department of Justice said that

• Senior executives at Lafarge were involved in the arrangements, and aware they risked running afoul of authorities.
• The dealings with armed groups took place before Lafarge merged with Holcim
• Executives had attempted to require Islamic State not to include the name "Lafarge" on documents memorializing and implementing their agreements, and many involved in the scheme also used personal email addresses, rather than their corporate email addresses, to carry out the conspiracy; the Department  
• Lafarge executives also backdated the termination agreement to 18 August 2014, a date shortly after the United Nations Security Council had issued a resolution calling on member states to prohibit doing business with Islamic State, to falsely suggest that negotiations with Islamic State had not occurred after the UN resolution,  

11. The dealings by Lafarge were eventually made by public in 2016 on a website run by a Syrian opposition group.

Some interesting points about this case [see US indictment]

1. First is the long reach of US criminal law.
   • The illegal payments to ISIS and ANF (described in the Plea Agreement as "effectively a revenue-sharing agreement") were between non-US nationals and entities in Syria.
   • None of them, and none of the payments, had any direct connection to the United States (see paragraph 112).
   • The only direct US connection appears to be that the executives running the scheme used private emails to communicate, which were from a US email provider. So the extra-jurisdictional reach of this Title 18 criminal offense came into play.

2. Also, the payments occurred in 2013-2014.
   • Lafarge completed its $680 million cement plant in northern Syria in 2010, the Syrian civil war kicked into high gear in 2011, and by 2013 LaFarge couldn't operate without paying monthly protection to ISIS and ANS ($816,000 a month), using ISIS suppliers ($3.5 million), and sharing revenue ($1.6 million).
   • Through the protection rackets and revenue sharing, LaFarge was able to keep operating and earn about $80 million  

Its rival, Holcium Group, bought Lafarge in 2015.

• In the pre-acquisition due diligence, LaFarge's Syrian operations didn't come up: too small, accounting for <1% of LaFarge's sales. And when asked by Holcium, LaFarge didn't mention any problems
• Also, check out the lengthy section on what a corporate compliance & ethics program is expected to include.
• This program and LaFarge's other remediation work saved it from having a monitor up its corporate wazoo for the next three years, and that saves them tens of millions of dollars.

Finally, at the end of the probation term,

• Senior executives will have to certify that everything and everybody are clean as a whistle 
• Assistant AG Kenneth Polite mentioned that the DOJ would require a "Chief Compliance Officer Certification" to get out of pleas, DPAs, and NPAs in a speech on September 16, 2022.  

Source

https://www.bbc.co.uk/news/business-63305371

To read a full judgment please click here