Lafarge pleads guilty to US charge of supporting Islamic State, to pay $778 million

French cement maker Lafarge pleaded guilty in US court on Tuesday to a charge that it made payments to groups designated as terrorists by the United States, including Islamic State, so the company could keep operating in Syria.

The admission in Brooklyn federal court marked the first time a company has pleaded guilty in the United States to charges of providing material support to a terrorist organization. Lafarge, which became part of Swiss-listed Holcim in 2015, agreed to pay $778 million in forfeiture and fines as part of the plea agreement.

US prosecutors said Lafarge and its Syrian subsidiary Lafarge Cement Syria paid Islamic State and al Nusra Front, through intermediaries, the equivalent of approximately $5.92 million between 2013 and 2014 to allow employees, customers and suppliers to pass through checkpoints after civil conflict broke out in Syria.

That allowed the company to earn $70 million in sales revenue from a plant it operated in northern Syria, prosecutors said.

"Lafarge made a deal with the devil," Breon Peace, the top federal prosecutor in Brooklyn, told reporters following the guilty plea. "This conduct by a Western corporation was appalling and has no precedent or justification."

Lafarge eventually evacuated the cement plant in September 2014, US prosecutors said. At that point, Islamic State took possession of the remaining cement and sold it for the equivalent of $3.21 million, prosecutors said.

Lafarge Chair Magali Anderson said in court on Tuesday that from August 2013 until November 2014 former executives of the company "knowingly and willfully agreed to participate in a conspiracy to make and authorize payments intended for the benefit of various armed groups in Syria."

In a statement, Holcim noted that none of the conduct involved Holcim, "which has never operated in Syria, or any Lafarge operations or employees in the United States, and it is in stark contrast with everything that Holcim stands for."

DUE DILIGENCE

Holcim said that former Lafarge executives involved in the conduct concealed it from Holcim, as well as from external auditors.

Without naming Holcim, US Deputy Attorney General Lisa Monaco told reporters that the company that acquired Lafarge did not perform due diligence of the Syria operations.

No Lafarge executives were charged in the United States. Monaco said that French authorities have arrested some of the executives involved but did not provide names. US court records refer to six unnamed Lafarge executives.

Anderson said in court that the individuals responsible had not been with the company since at least 2017.

Eric Olsen, the company's first chief executive following the merger, left the company in 2017 after the firm admitted to paying armed groups in Syria. Olsen said at the time that he was not involved in or aware of the payments.

Paris-based human rights group Sherpa, which filed a complaint against Lafarge in France that prompted a criminal investigation into whether the company was complicit in crimes against humanity, criticized the plea agreement on Tuesday.

The deal "impede(s) access to justice for victims and deprives them of a public trial," said Anna Kiefer, Sherpa's advocacy and litigation director.

Lafarge had denied charges that it was complicit in crimes against humanity. The French investigation, which concerns acts partially committed in France, is ongoing, a person close to France's anti-terrorism prosecution office, told Reuters on Tuesday.

The SIX Swiss Exchange suspended trading in Holcim shares before the news. Shares rose as much as 3.2% when trading resumed.