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French Cement Company to Pay $780 Million Over Payoffs to ISIS French Cement Company to Pay $780 Million Over Payoffs to ISIS
(about 5 hours later)
The Justice Department has reached a $778 million criminal plea agreement with a French construction conglomerate that paid off the Islamic State to protect its Syria operations in 2013 and 2014, when the terrorist group murdered Americans during its reign of brutality in the region. In the fall of 2012, an executive at the French construction conglomerate Lafarge S.A. met in Gaziantep, a sprawling city in southern Turkey, with representatives of several militias from northern Syria to hash out an agreement.
The company, Lafarge S.A., a subsidiary of the Switzerland-based Holcim Group with extensive operations in the United States, entered a guilty plea Tuesday in federal court in Brooklyn to a count of conspiring to provide material support to a foreign terrorist organization. As Syria had descended into civil war, Lafarge was among the few multinational companies still operating there. But employees of its cement factory just south of the Turkish border had come under attack from factions that had seized power in the region.
The company also faces criminal charges in France, where it is the first corporation to be indicted on a charge of complicity with crimes against humanity. Four years ago, authorities in France charged Lafarge executives in connection with the company’s Syrian operations. After the Gaziantep meeting, Lafarge executives agreed to protect their operation by making monthly payments to terrorist groups including the Islamic State. The militants issued papers to the company’s drivers guaranteeing safe passage for its shipments and even offered to choke off competition.
U.S. authorities on Tuesday detailed the extraordinary measures that company officials took to keep operations going at a cement plant in northern Syria, just south of the Turkish border, during the civil war that ravaged the region. The yearslong arrangement — which came to resemble a revenue-sharing deal, even as violence encircled the plant — was at the center of a $778 million criminal plea agreement announced Tuesday by the U.S. Justice Department.
According to a statement of facts unsealed Tuesday, executives at Lafarge and its Syrian subsidiary worked with intermediaries based in Syria to pay “numerous armed factions,” including the Islamic State and the Nusra Front, that controlled the area around the cement plant. The payments included periodic “security payments” to the armed groups and the purchase of raw materials from Islamic State-controlled suppliers. Lafarge, a subsidiary of the Switzerland-based Holcim Group with extensive operations in the United States, entered a guilty plea Tuesday in federal court in Brooklyn to a count of conspiring to provide material support to a foreign terrorist organization.
The company eventually entered into what was effectively a revenue-sharing agreement with the Islamic State, structuring its payments to the group based on cement sales. The company also faces criminal charges in France, where it is the first corporation to be indicted on charges of complicity with crimes against humanity. Eight former company executives, including two former chief executives, were indicted by French authorities in 2018 on charges of financing terrorism and putting the lives of their workers in Syria at risk.
On Tuesday, U.S. authorities detailed the extraordinary measures that company officials took to keep Lafarge’s new $680 million cement plant going in 2013 and 2014, and their efforts to keep it secret.
“The defendants partnered with ISIS, one of the most brutal terrorist organizations the world has ever known, to enhance profits and increase market share, all while ISIS engaged in a notorious campaign of violence,” Deputy Attorney General Lisa Monaco said during a news conference in Brooklyn announcing the plea.
Evidence showed that Lafarge had extensive dealings with groups responsible for the deaths of thousands of people. From August 2013 through October 2014, Lafarge and its Syrian subsidiary paid the Nusra Front and the Islamic State about $5.92 million, consisting of monthly “donation” payments and fees to suppliers. Lafarge also paid about $1.1 million to third-party intermediaries.
Prosecutors also said the company concealed its payments, falsified records and backdated contracts to keep the arrangement from becoming public.
Lafarge’s chief executive, Magali Anderson, appeared in federal court Tuesday morning to enter the plea on the company’s behalf. The company — which at the time of the misconduct employed 63,000 people in about 60 countries through direct and indirect subsidiaries, according to court filings — said in a statement that the conduct that set off the case had ended. The company was acquired by Holcim in 2015.
“None of the conduct involved Lafarge operations or employees in the United States and none of the executives who were involved in the conduct are with Lafarge or any affiliated entities today,” Lafarge said in a statement Tuesday, adding that it had “accepted responsibility for the actions of the individual executives involved, whose behavior was in flagrant violation of Lafarge’s code of conduct.”
Syria’s 11-year civil war began as a revolt against President Bashar al-Assad. In the years since, it has displaced millions of refugees and left hundreds of thousands dead. The ravaged nation has become a battlefield for proxy wars involving Iran, Israel, the United States, Russia, Turkey and the Islamic State.
Amid the chaos, executives at Lafarge and its Syrian subsidiary worked with intermediaries in the country to pay “numerous armed factions,” including the Islamic State and the Nusra Front, that had taken over the area around the cement plant, according to a statement of facts unsealed Tuesday. The payments included periodic “security payments” and the purchase of raw materials from Islamic State-controlled suppliers.
Even after the payments began, jihadist groups continued to surround the plant, which is about two hours from the city of Raqqa, and threaten employees. That prompted the company to pay for safe passage through checkpoints — which involved a flat $150 fee for each cement truck.
“It is clear that we have an issue with ISIS and Al Nusra,” an executive wrote in an email in August 2013. The next month, a Lafarge security committee reported that operating would be increasingly difficult without dealing with organizations classified as terrorist groups: “The main challenge being to assess how far their demands and threats will reach, and consequently, the limits that we want to impose for the site to operate.”
The plant remained open, even after a Lafarge executive and an employee were summoned to an Islamic court in Raqqa to answer charges of cooperation with the Syrian government.
For months, company executives received regular updates from Syrian intermediaries and employees about the situation on the ground, including meetings with Islamic State officials, evolving security threats and challenges with procuring raw materials.
The company soon entered into what was effectively a revenue-sharing agreement with the Islamic State, structuring its payments to the group based on cement sales, rather than the flat fees for trucks.
In an email quoted by prosecutors, an unnamed senior executive with Lafarge compared the company’s agreement to sharing a “cake” with the Islamic State.In an email quoted by prosecutors, an unnamed senior executive with Lafarge compared the company’s agreement to sharing a “cake” with the Islamic State.
“To me, the ‘cake’ is anything that is a ‘profit,’” the executive wrote in a July 2014 email to other company staffers. “To me, the ‘cake’ is anything that is a ‘profit,’” the executive wrote in a July 2014 email to other staff members.
The Islamic State permitted access to raw materials sourced from its territory, allowed Lafarge employees, suppliers and distributors to pass safely through checkpoints manned by the Islamic State and the Nusra Front. As the Islamic State consolidated power in 2014, it proposed to the company that it choke off competition, including by stopping the passage of cheaper cement from Turkey over the border, court filings said.
The plea materials on Tuesday included images of a vehicle pass from April 2014, issued by an Islamic State official in Aleppo Province to “the brothers at the checkpoints of the Qarah Qawzak Bridge,” asking that they “kindly allow the employees of Lafarge Cement Company to pass through after completing the necessary work and after paying their dues to us.” “The decision to become business partners with ISIS was extraordinary,” Breon S. Peace, the U.S. attorney in Brooklyn, said Tuesday. “Leveraging ISIS to harm competitors defies belief — but it really happened.”
The payoffs continued even as the Islamic State captured, tortured and killed hostages. Executives coordinated the payment of cash advances to the group as part of their “deal” to keep the plant running in August 2014, about a month after the Islamic State beheaded American journalist James M. Foley, emails obtained by the government showed. Court papers presented Tuesday included images of a vehicle pass on Islamic State letterhead from April 2014, issued by an Islamic State official in Aleppo Province to “the brothers at the checkpoints of the Qarah Qawzak Bridge,” asking that they “kindly allow the employees of Lafarge Cement Company to pass through after completing the necessary work and after paying their dues to us.”
The abduction, torture and murders of Americans, including Mr. Foley — and a growing sense that their suffering and courage is being forgotten as time elapses — was a powerful motivating factor in pursuing the case, according to law enforcement officials. The payments continued even as the Islamic State captured, tortured and killed hostages. Executives coordinated the payment of cash advances to the group as part of their deal to keep the plant running in August 2014, about a month after the Islamic State beheaded the American journalist James M. Foley, emails obtained by the government showed.
The company’s plea comes two months after the department achieved one of its most important goals of bringing Islamic State operatives to justice in an American courtroom. In August, El Shafee Elsheikh, a key member of the group, was sentenced to life in prison in a Virginia federal court for his role in the deaths of four Americans in Syria. The abduction, torture and murders of Americans, including Mr. Foley — and a growing sense that their plights had been forgotten as time elapsed — was a powerful motivating factor in pursuing the case, according to law enforcement officials.
For years, Justice Department officials have been quietly pursuing a case against Lafarge under a federal criminal law that prohibits people or businesses from harboring or collaborating with people they know to be terrorists. The case was brought in New York because one of the payments was routed through an entity in the city. The company’s plea comes two months after the Justice Department achieved one of its most important goals, bringing Islamic State operatives to justice in an American courtroom. In August, El Shafee Elsheikh, a key member of the group, was sentenced to life in prison in a Virginia federal court for his role in the deaths of four Americans in Syria.
Evidence in the case showed that Lafarge had extensive dealings with groups responsible for deaths of thousands of people. For years, Justice Department officials have been quietly pursuing a case against Lafarge under a federal law that prohibits people or businesses from harboring or collaborating with people they know to be terrorists. The case was brought in New York because one of the payments was routed through an entity in the city.
From August 2013 through October 2014, Lafarge and its Syrian subsidiary paid the Nusra Front and the Islamic State about $5.92 million, consisting of monthly “donation” payments and payments to suppliers. Lafarge also paid about $1.1 million to third-party intermediaries. The Justice Department, in its plea filings Tuesday, accused Holcim’s leadership of failing to conduct appropriate “post-acquisition due diligence” to investigate Lafarge’s actions in Syria after it purchased the company, which has $12 billion in revenue, in 2015.
Prosecutors also said the company concealed its payments, falsified records and backdated contracts to keep the scheme from becoming public. Lafarge’s actions were in part reconstructed by The New York Times in 2018 from sealed French court filings, which documented how the company’s efforts to stay open in Syria left one of the world’s biggest construction-materials firms vulnerable to criminal and legal jeopardy in the United States and France.
“The defendants partnered with ISIS, one of the most brutal terrorist organizations the world has ever known, to enhance profits and increase market share, all while ISIS engaged in a notorious campaign of violence,” said Deputy Attorney General Lisa Monaco during a news conference in Brooklyn announcing the plea. The Islamic State finally took over the plant by force in September 2014. Even up until the final days, Lafarge executives tried to secure the site, with one executive suggesting they “ask the Kurds” to protect it.
The chief executive of Lafarge, Magali Anderson, appeared in federal court Tuesday morning to enter the plea on the company’s behalf. On Sept. 18 of that year, the plant’s remaining employees fled in cars and a delivery van, the Times reported. The next day, advancing Islamic State militants seized it.
The company said in a statement that the conduct that set off the case had ended. They sold the remaining cement for about $3.2 million.
“None of the conduct involved Lafarge operations or employees in the United States and none of the executives who were involved in the conduct are with Lafarge or any affiliated entities today,” the company said, adding that it had “accepted responsibility for the actions of the individual executives involved, whose behavior was in flagrant violation of Lafarge’s code of conduct.”
Justice Department officials downplayed that justification, accusing Holcim’s leadership of failing to conduct appropriate “post-acquisition due diligence” to investigate Lafarge’s actions in Syria after it purchased the company, which has $12 billion in revenue, in 2015.
While other multinational companies pulled out of Syria after the start of civil war in 2011, Lafarge made a calculated decision to stay, pushing the limits of international law to keep going. The company’s actions, reconstructed by The New York Times in 2018 from sealed French court filings, documented the efforts of executives to take a series of actions — trade-offs and payments — that left one of the world’s biggest construction materials firms vulnerable to criminal and legal jeopardy in the United States and France.
To move supplies and employees through dangerous areas, and to secure raw materials, Lafarge funneled money to intermediaries who negotiated with the Islamic State, as well as Al Qaeda’s affiliate in Syria and other armed factions, according to the documents, which include testimony to investigators by former Lafarge officials, testimony and witness accounts of former employees, company correspondence and a confidential internal review of Lafarge’s Syria operations by the global law firm Baker McKenzie.
When Lafarge evacuated the plant in September 2014, the Islamic State took possession of the cement that had been produced there and sold it for about $3.21 million, authorities said Tuesday.
The only other settlement comparable to the Lafarge deal was the 2007 agreement between the Justice Department and Chiquita Brands International Inc., which admitted to paying off a violent, right-wing terrorist organization known as the United Self-Defense Forces of Colombia to keep its operations running.