Home / Business / France Investigates Lafarge Executives for Terrorist Financing
Cement mixer trucks sit parked on the quay side at a Lafarge SA depot in Paris, France, on Thursday, Feb. 16, 2012. Lafarge SA jumped as much as 4.5 percent, the most in about a month, after the company posted better-than-expected operating profit and unveiled a 400 million-euro cost-cutting plan for this year. Photographer: Fabrice Dimier/Bloomberg

France Investigates Lafarge Executives for Terrorist Financing

The former chief executive of LafargeHolcim, the world’s largest cement maker, and five other top officials are being formally investigated as part of a government inquiry into whether the company helped finance the Islamic State militant group and other armed factions while operating a factory in Syria.

The expanding investigation underscores the difficulty of doing business in war-torn regions, a challenge faced by companies around the world, especially those in the energy and industrial sectors.

Lafarge, a sprawling French multinational with operations in 80 countries, has said that its employees were motivated to keep the Syrian plant running by a “can-do” approach. But critics have accused the company of trying to maintain profitability and a presence there, despite the growing danger to its employees.

Investigators questioned Eric Olsen, the former chief executive, on Thursday, a day after he was taken into police custody. They are trying to determine whether he and other company managers placed the lives of workers at the cement factory, in northern Syria, in danger during a civil war.

Mr. Olsen resigned as chief executive in April after an internal inquiry found that managers of Lafarge’s Syrian plant had paid armed groups to allow employees to move to and from the factory so that it could continue operating. Lafarge concluded at the time that Mr. Olsen was not responsible for, or aware of, the activity.

Since then, French judges have been examining the extent to which top Lafarge executives knew about the payments, and whether the company may have bought oil linked to the Islamic State, also known as ISIS, in violation of United Nation sanctions and a 2011 European Union embargo. The group seized the plant in September 2014, forcing the Lafarge employees who were there at the time to abandon it.

Police raided the Lafarge headquarters in Paris and an office in Brussels last month, seizing computers and seeking other information related to the case.

Lafarge began producing cement for the Syrian market in 2010 after investing more than 600 million euros, or $708 million at current exchange rates, to refurbish a factory in Jalabiyeh, a town near the Turkish border. The plant had created hundreds of jobs for local residents, generated thousands of tons of cement every day and supported other businesses nearby. 

But the security situation in Syria began to deteriorate in 2011 as a civil war broke out after protests against Bashar al-Assad’s government. Multinational companies began to pull out of Syria one by one, except for Lafarge.

In the two years that followed, the area near the factory was occupied by a succession of armed groups, including the Al Qaeda affiliate in Syria, the Al Nusra Front. In April 2013, ISIS infiltrated Syria and began advancing across the territory. 

At various times, all of these groups interfered with Lafarge employees as they traveled to and from the plant. They also hindered access to supplies needed to keep the plant running, according to a statement by the company in April. 

In 2012, Lafarge’s local managers started using intermediaries to pay the armed groups to ease the passage of employees and suppliers, the company’s internal inquiry found. Lafarge has said it saw little choice if it wanted to keep its operations running, and sought to avoid direct contact with the groups to minimize potential risks that could arise with the Syrian government or other militants. 

“Very simply, chaos reigned and it was the task of local management to ensure that the intermediaries did whatever was necessary to secure its supply chain and the free movement of its employees,” the company said in its statement. 

As part of their investigation, French judges are also examining charges brought by a French organization, Sherpa, on behalf of 11 employees. They claim the company endangered their lives by placing them in a high-risk situation as the Islamic State advanced. 

Two other former executives from Lafarge’s Paris headquarters were placed under investigation this week: Bruno Lafont, the company’s chief executive from 2007 to 2015, and Christian Herrault, the former director general, who was responsible for Lafarge’s operations in Syria and other countries. 

Last week, three former managers of Lafarge’s Syrian operations were placed under formal investigation over questions about funds paid to factions that controlled the area where the cement plant was located. Those being investigated include Frédéric Jolibois, the plant’s director from 2014 to 2016; Bruno Pescheux, who oversaw the plant from 2009 to 2014; and Jean-Claude Veillard, Lafarge’s former security director based in Paris.

The case is expected to take months, if not years, to conclude.

Source: New York Times

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