Executives at French cement maker Lafarge did not intentionally set out to fund terrorists. Instead, it was a gradual descent, marked by a series of “local concessions.” Operating in a war zone, with employees at risk and a $680 million plant hanging in the balance, withdrawing felt like a failure. This led to a series of deals, ultimately resulting in payments to the Islamic State of Syria (ISIS).
The story of Lafarge’s Syrian plant, unfolding amidst the Syrian Civil War and detailed in a U.S. government investigation and ongoing criminal proceedings in France, serves as a stark illustration of the perilous consequences when ethical and compliance standards are sidelined for the sake of business survival. It highlights how easily the line between right and wrong can blur until the severe repercussions become undeniable.
In high-risk, volatile environments, the pressure to compromise can be immense. A robust, values-based compliance program is crucial for maintaining essential boundaries.
Reflecting on the case, Marcia Narine Weldon, general counsel of Eunomia Risk Advisory, Inc. and a professor at the University of Miami School of Law, emphasized that “business continuity can’t be an excuse for abandoning core legal and ethical principles.” Weldon further asserted, “When you’re dealing with potential terrorism financing, neutrality isn’t an option. You either stop it or you become complicit. Compliance officers have to be willing to be the adult in the room—especially when it makes you unpopular with the people signing your paycheck.”
Lafarge’s Road to Hell Paved with Local Concessions
The proof was damning in the case of Lafarge, according to investigations conducted by Swiss-based building materials company Holcim, which completed a merger of equals with Lafarge in 2015, and the Justice Department.
Following public allegations that managers of Lafargeʼs Syrian plant dealt with armed factions and sanctioned parties, Holcim conducted an internal probe into its “legacy Syrian operationsˮ in 2016. After a ten-months-long investigation involving outside counsel and forensic accountants, the building materials manufacturer publicly disclosed in 2017 that payments were made through intermediaries on behalf of Lafarge to “armed groupsˮ between 2013 and 2014. While Holcimʼs press release didnʼt explicitly say payments were made to sanctioned parties, it acknowledges U.S.-designated terrorist groups “expanded into the area,ˮ and that it was “in this chaotic environment that [the plant] … tried to keep its doors open.ˮ
The U.S. Department of Justice (DOJ) investigated Paris-based Lafarge not just because it had a U.S. subsidiary, but because the company had relied on U.S. infrastructure and financial systems for the misconduct. Lafarge executives used U.S.-based email services to avoid using their company email addresses, and some payments tied to terrorist groups were made in U.S. dollars through New York banks, the DOJ found. This usage gave the DOJ jurisdiction under anti-terrorism laws, and in 2022, Lafarge pleaded guilty to providing material support to terrorist organizations—the first case of its kind in the U.S.
The DOJ estimated Lafarge routed about $5.92 million in illicit payments to two of the world’s most notorious terrorist organizations: the al-Nusra Front (ANF) and the Islamic State of Syria (ISIS).
“Lafarge paid millions of dollars to both terrorist groups and benefited from their brutality to the tune of $70 million in revenue,” former Deputy Attorney General Lisa O. Monaco said as she announced the guilty plea in October 2022. As part of the plea agreement with the Justice Department, the French cement maker paid fines and forfeitures totaling $778 million.
In France, the company and eight individuals, including the former global chief executive officer (CEO), will face charges of financing terrorist enterprises and, for some, non-compliance with international financial sanctions, later this year. The provisional schedule for the trial is November through December. The investigating judges emphasized, “none of those under investigation is suspected of having had the slightest sympathy for the causes defended by these [terrorist] organizations or specifically wished to support their objectives,” according to Le Monde reporting.
All of the former Lafarge executives have denied the charges against them, per The New York Times.
Timeline of Events
Chapter 2: Background and Evolution of Scheme
Chapter 3: Danger of Their Own Making
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