As compliance failures compounded, so did the consequences: a $778 million penalty, criminal charges, and irreversible reputational damage—all for a plant that made up less than 1% of Lafarge’s business. This is more than a cautionary tale; it’s a blueprint for what not to do in high-risk regions and a call to action for compliance leaders to speak up, push back, and walk away when lines are crossed.

Danger of Their Own Making

Looking back on the case and reading through the DOJ evidence, the companyʼs decision-making shows that the rationale for continuing the misconduct kept expanding. Perceived “economic necessityˮ was the initial catalyst. Keeping the plant in business was regarded as critical for Lafarge at large, making security payments integral to business continuity.

On the ground in Syria, where things were hairier, those payments ensured the protection of Lafargeʼs employees and assets and safeguarded the plant from looting and destruction. Or so the reasoning went, according to Holcimʼs investigation findings.

Yet, that rationale was based on a false premise: that the company had no other choice than to put employees in harmʼs way. In reality, the company could have pulled out of the region. The danger was of their own making. 

“In many countries, today’s rebel becomes tomorrow’s president. … But the moment ISIS and al-Nusra Front gained territorial control, that should have triggered immediate operational shutdown,” said Marcia Narine Weldon, general counsel, Eunomia Risk Advisory, Inc. and professor, University of Miami School of Law. 

The Lafarge case represents a complete failure of contingency planning, Professor Weldon said. 

“Lafarge built a $680 million plant in 2010 knowing Syria was politically unstable,ˮ Weldon pointed out. “In many countries, today’s rebel becomes tomorrow’s president. So I understand companies trying to assess the landscape. But the moment ISIS and al-Nusra Front gained territorial control, that should have triggered immediate operational shutdown.ˮ

Companies overwhelmingly reach for the “point of duressˮ argument when they fall into a pattern of misconduct, said Michael Olver, Chief Executive Officer of global risk consultancy PSA. They subscribe to the belief that bad things will happen if they donʼt make XYZ concessions.

But that argument doesnʼt hold water. “When you wind it back and realize somebody made a strategic decision to put those guys there, that was not a ‘point of duressʼ decision. … It’s almost like a series of poor decisions have been made at this point. Paying the money is the last in a series of things,ˮ Olver said.

Weldon enumerated three legitimate alternatives to making payments to armed factions: immediate evacuation protocols, seeking United Nations (U.N.) or international protection mechanisms, or mothballing the facility.

“These options are disruptive and expensive, but this is not a circumstance where a typical cost benefit analysis would have been appropriate,ˮ the law professor said.

Even if Lafargeʼs rationale of economic necessity were infallible, it morphed into economic opportunity, the sequence of events and the DOJʼs evidence spell out. At the same time Lafarge was negotiating its revenue-sharing agreement with ISIS, the U.N. Security Council was calling on all U.N. members to prohibit financial and trade relations with ISIS and other terrorist groups.

Regardless of the changing motives, the belief that the arrangement was a temporary measure, expected to end naturally as the political situation in Syria evolved, remained ever present, according to an internal email obtained by the government:

“Even though Iʼm not completely comfortable in the relationship with Lafarge, I pressure myself to continue and I say tomorrow will be better for all of us, and we have to withstand two or three more years of unsettling circumstance. As long as we are selling and are able to overcome the obstacles, we should continue,ˮ a middleman wrote to three aforementioned Lafarge executives in March 2014.

All in, Lafargeʼs decision to make periodic payments to armed factions, including U.S.-designated terrorist organizations, lasted from 2011 to September 18, 2014, when Lafarge evacuated the Syrian plant, the DOJ found. ISIS militants seized the plant the next day.

Lafargeʼs operations in Syria represented less than one percent of Lafargeʼs sales at the time the Syrian Plant was evacuated, according to the DOJ. Holcim did not inquire specifically about LCSʼs operations in Syria when the company met with Lafarge representatives prior to the merger. Had Lafarge disclosed the facts concerning LCSʼs agreements with ISIS and ANF in Syria, the Holcim directors who led the deal with Lafarge would not have proceeded with the estimated $60 billion deal, according to the DOJʼs statement of facts.

A critical series of missteps

The Lafarge case shows that operating in high-risk jurisdictions requires continuous risk assessments and real-time transaction monitoring, specifically for high-risk vendors and payment routes, both Olver and Weldon said.

Even if Lafarge and LCS executives had properly assessed the risks, those risks should have been aligned with the legal and ethical standards set by top leadership. There should never have been any justification for making illegal payments to terrorist groups, even under the pretext of maintaining business operations.

“When it comes to conflict zones, ethical decision making is the only sustainable business strategy,“ Weldon said. “Certain compliance issues—like terrorism financing—must be treated as binary. There’s no middle ground for negotiation.ˮ Anti-terrorism laws have strict liability with no exceptions.

There also needs to be a very strong legal framework that is communicated well to employees on the front line or beyond the wire—the ones that go out and do community relations and engage with local government, said Olver. You canʼt just let them wing it.

“Those people need training. They need processes. They need really hard rules,ˮ the CEO said. “And then you need to monitor their expenditures, their cash, how they go about it and how they receive for it—because that’s where your largest ABAC [antibribery and corruption] risk is,ˮ he explained. 

The case also demonstrates that companies cannot outsource risk to third-parties. Lafarge attempted to obscure its payments through the use of intermediaries, false invoices, and so-called “local concessions.ˮ But ultimately these tactics failed to shield the company from liability and, instead, demonstrated intentional efforts to conceal misconduct.

“Internal audit should have immediately flagged those euphemistic ‘consulting feesʼ and ‘donationsʼ —classic money laundering red flags that any experienced compliance professional recognizes,ˮ remarked the law professor.

But whether or not Lafargeʼs internal audit did flag these transactions, it became clear through Holcimʼs and the DOJʼs investigation that leaders at the highest level of the organization were aware of the misconduct anyway—and permitted it.

Which is why the Lafarge case offers both cautionary lessons and practical guidance to compliance, Weldon advised. She expounded on four lessons.

Firstly, compliance officers must maintain detailed records of their recommendations and management responses. This is crucial for their own professional reputation protection.

Secondly, they must establish non-negotiable principles. There is no gray area when it comes to dealing with designated terrorist organizations.

Thirdly, frame decisions in business terms by urging executives to consider the full range of business consequences, including legal risk, reputational harm, criminal liability, and long-term operational sustainability. “Look at how compliance failures in other cases from the Epstein banking relationships to various FCPA violations, ultimately cost far more than prevention would have,ˮ Weldon said.

Case in point: In Lafargeʼs quest to avoid a write-down of its $680 million investment in Syria, the cement maker wound up with a $778 million penalty from the Justice Department, along with criminal liability in the French legal system, global reputational damage, criminal and civil lawsuits against former executives—the list goes on. And the fact the Syrian plant accounted for less than one percent of Lafargeʼs total sales at the time of the merger with Holcim highlights, with striking irony, the disproportionate impact of non-compliance.

Finally, compliance professionals’ careers depend on their willingness to be organizational activists, Weldon said. In extreme situations like Lafarge faced, that activism might mean recommending operational shutdown rather than compromise—or being willing to walk away if the company won’t walk away from what is unambiguously wrong.

Timeline of Events

Chapter 2: Background and Evolution of Scheme

 Chapter 1: Lafarge’s Terrorist Funding and Compliance Fallout in Syria