Displaying items by tag: Lafarge Syria
Lafarge Syria managers arrested in Paris
30 November 2017Syria: Three managers of LafargeHolcim were arrested in Paris on 29 November 2017 over allegations that Lafarge Syria, now part of the group, paid money to the Islamic State group in Syria in 2013 and 2014. They included Bruno Pescheux and Frédéric Jolibois. Pescheux was in charge of Lafarge Syria’s plant from 2008 until 2014. Jolibois took over in 2014 for a short while before the plant was abandoned. A third detainee was not named. Investigators are seeking to determine whether executives at Lafarge in Paris knew that payments were being made in Syria to insurgent groups.
LafargeHolcim has not commented on the arrests but has previously admitted ‘errors’ in its handling of events in Syria. It denies criminal wrongdoing and said that it had ‘put everything in place to ensure that this situation cannot be reproduced.’
A preliminary inquiry opened in France earlier in 2017 amid claims that Lafarge Syria had paid insurgent groups to keep roads clear around its plant in Jalabiya after the outbreak of war in Syria. In 2013, Islamic State representatives reportedly summoned two company managers in Syria to demand a cut of operations. They reportedly threatened to stop supplies to the plant and deliveries from it if they did not receive the money. The business is alleged to have paid Islamic State about Euro20,000/month, which represented 10% of the Euro5m that had reportedly been paid to a variety of armed groups.
France/Belgium: French police have searched the Paris offices of LafargeHolcim as part of an on-going investigation into the company’s conduct in Syria. At the same time the offices of Belgium’s Groupe Bruxelles Lambert (GBL) were also searched, according to the Agence France Presse (AFP). Both companies said they were cooperating with the investigations.
A source quoted by AFP said that the investigators are trying to find out if GBL had been aware of Lafarge Syria’s activities in Syria. GBL is a shareholder of LafargeHolcim that held a 9.4% stake at the end of 2016. The investigation as a whole is attempting to determine whether LafargeHolcim’s predecessor company Lafarge Syria paid terrorist groups in Syria and how much managers knew about the situation.
Lafarge Syria alleged to have paid armed groups up to US$100,000/month to keep cement plant running
09 October 2017France: Lafarge Cement Syria allegedly paid up to US$100,000/month to armed groups including US$20,000 to the Islamic State (IS) terrorist group. Former plant manager Bruno Pescheux told investigators that the money went via local businessman Firas Tlass, who was a former minority shareholder in the cement plant, according to the Agence France Presse. Witnesses in the French judicial inquiry have also described false accounting methods used to disguise oil purchases from IS, travel documents allowing Lafarge trucks to move in the region and a planned meeting between IS and a Lafarge Cement Syria security official. The inquiry continues.
Investigators question Lafarge Syria workers
21 September 2017France: French investigators have interviewed three former Lafarge Syria workers as part of an inquiry in to the company’s conduct in Syria. A computer worker, an engineer and packing line worker at one of the company’s cement plants travelled from Syria to be questioned, according to the Agence France Presse. The trio are the first witnesses to be called by the judicial inquiry that started in June 2017. It is investigating whether the subsidiary of Lafarge indirectly paid armed groups, including the ‘Islamic State’ group, to keep its plant during the Syrian Civil War.
France: The French judiciary has launched an inquiry into the Syrian conduct of LafargeHolcim. Three judges, one dealing with anti-terrorism matters and two financial judges, will handle the probe that opened on 9 June 2017, according to Agence France Presse. The prosecutors will examine the ‘financing of a terrorist enterprise’ and whether the actions of the building materials producer had endangered lives.
LafargeHolcim admitted in March 2017 that its staff at a cement plant in Syria in 2013 and 2014 had struck deals with armed groups, following an investigation by the French newspaper La Monde in mid-2016. It is also alleged that Lafarge, one of the companies that merged to become LafargeHolcim in 2015, purchased oil in Syria in violation of international sanctions. The group’s chief executive officer Eric Olsen then resigned after the completion of a review into the affair in April 2017 despite not being found personally culpable or even aware of the situation. However, the review found that selected members of group management had been aware of the situation at the time.
Serenity when? LafargeHolcim and Syria
26 April 2017LafargeHolcim’s investigation into its conduct in Syria claimed its biggest scalp so far this week with the shock resignation of chief executive officer (CEO) Eric Olsen. His decision landed with the publication of the group’s investigation into the conduct of the legacy Lafarge operations in the country in 2013 and 2014. As per the initial findings of the investigation that were released in March 2017, it confirmed that selected personnel had engaged in dealings with terrorists in connection to one of its cement plants in the country during 2013 until the unit closed in September 2014. The board decided that Olsen had no connection or even awareness of the misconduct. However, he decided to quit anyway in order to restore ‘serenity’ to the company.
In its latest public statement on the investigation, LafargeHolcim outlines five weaknesses with its compliance led by improper payments related to Lafarge Syria’s security and supply chain. It then goes on to list a failure of line management, inadequate controls over expenses and a failure to detect improper payments and improperly recorded payments. It’s all presented as ‘chaos reigned’ or wayward staff in tough circumstances trying to do their muddled best for the company. Unfortunately for this narrative, selected members of group management were aware of the situation and appeared to have done nothing about it. This then begs the question: who knew what when?
Olsen may have been exonerated by the board on his departure but he was Lafarge’s Executive Vice-President of Operations for Lafarge in 2014. If he didn’t know what was going on in Syria during his watch then he wasn’t doing his job properly or it was being hidden from him. The head of Lafarge itself at the time, Bruno Lafont, might also have been a viable target for discipline but he decided to stand down from the board of LafargeHolcim in early April 2017. No doubt other former members of the Lafarge management team may bear more responsibility. LafargeHolcim’s implementation of its remedial measures may turn up more culprits, as may the on-going criminal complaints process continues in France.
French newspaper Le Monde, the newspaper that originally broke the story, is probably on the money with its assessment that Olsen’s departure is actually the continuation of the boardroom battle between the board and its shareholders that has raged since before Lafarge and Holcim formally merged. Bruno Lafont was originally lined up to become the CEO of the new company until Lafarge’s worsening financial position compared to Holcim’s prompted a backlash from Holcim shareholders. Le Monde describes how LafargeHolcim’s shareholders include four prominent billionaires: Switzerland’s Thomas Schmidheiny, Belgium’s Albert Frère, Canada’s Paul Desmarais and Egypt’s Nassef Sawiris. Schmidheiny, readers may remember, was one of the principal actors who sunk Lafont’s bid to be CEO back in early 2015.
Placed in this context, Olsen’s departure might seem forced, especially if he had no connection to the debacle in Syria. LafargeHolcim has faced a tough couple of years following its formation with consistently falling sales revenue. Asset divestments and cuts have been the cure as the group struggled to find its new size. Yet, the group saw its adjusted operating earning before interest, taxation, depreciation and amortisation (EBITDA) start to rise in 2016 suggesting that the remedial action was starting to work. LafargeHolcim’s management and shareholders will be acutely aware of its performance so far in 2017 ahead of the public release of its first quarter results in early May 2017. Under these circumstances it seems unlikely that serenity will be restored to the upper echelons of LafargeHolcim any time soon.
Switzerland: Eric Olsen, the chief executive officer (CEO) of LafargeHolcim, has resigned from the company following the completion of a review into a conduct of a cement plant in Syria. An independent internal investigation concluded that the a number of measures taken to continue safe operations at the plant were ‘unacceptable’ and ‘significant’ errors of judgement were made that contravened the applicable code of conduct. Although Olsen was not found personally culpable or even aware of the misconduct by the board of directors he has resigned to draw a line under the affair.
The review examined allegations that company personnel had struck deals with armed groups and sanctioned parties during 2013 until the plant closed in September 2014. The findings also confirmed that selected members of group management were aware of the situation. Remedial measures announced in March 2017 will be taken including: the adoption of a more rigorous risk assessment process focusing on high risk third parties; introduction of a restricted party screening program and a new sanctions and export control program; as well as continuation of other efforts from an external benchmarking exercise. Eric Olsen and his executive management team will implement the remedial measures supported by the Ethics, Integrity & Risk Committee.
“Although I appreciate that those responsible for the Syrian operations appear to have acted in a manner they believed was in the best interests of the company and its employees, there can be no compromise when it comes to compliance rules and adherence to the standards set out in the company’s code of conduct, no matter what the operational challenges are. We are absolutely committed to ensuring that events like those that occurred in Syria must never happen again at LafargeHolcim,” said Beat Hess, chairman of the board of LafargeHolcim.
Olsen will leave LafargeHolcim on 15 July 2017. Hess will become interim CEO whilst a replacement is found. Roland Köhler, currently an executive committee member with responsibility for Europe, Australia/New Zealand and Trading, will be appointed chief operating officer.
LafargeHolcim admits to deals with armed groups in Syria
02 March 2017Syria: LafargeHolcim has accepted that its conduct at a cement plant in Syria in 2013 and 2014 was ‘unacceptable.’ An internal investigation by the group into Lafarge’s behaviour has reported that staff committed ‘significant errors in judgment.’ The probe, supervised of the Finance and Audit Committee of the Board, was started in response to media allegations in 2016 that legacy Lafarge operations had engaged in dealings with armed groups and with sanctioned parties during 2013 until the plant was ultimately evacuated in September 2014.
The investigation has found that the Lafarge subsidiary appears to have provided funds to third parties to work out arrangements with a number of armed groups, including sanctioned parties, in order to maintain operations and ensure safe passage of employees and supplies to and from the plant. The investigation could not establish with certainty the ultimate recipients of funds beyond those third parties engaged. However, LafargeHolcim says that it believes its staff acted in a manner they believed was in the best interests of the company and its employees.
Following the review, the board has approved the creation of a new Ethics, Integrity & Risk committee, supervised by a member of the Executive Committee. The group will also adopt a more rigorous risk assessment process focusing in particular on high risk third parties and joint venture partners, a restricted party screening program, a new sanctions and export control program and further efforts resulting from a benchmarking exercise it has undertaken.
Finally, LafargeHolcim does not believe that its culpability poses any financial impact to its business. It says that its operations in Syria operated at a loss during the time period in question and represented less than 1% of the group’s sales at the time.
Sherpa and European Centre for Constitutional and Human Rights take legal action against Lafarge over operations in Syria
16 November 2016France: Sherpa and the ECCHR (European Centre for Constitutional and Human Rights), as well as 11 complainants who are former Syrian employees of Lafarge, are taking legal action against Lafarge and its subsidiary Lafarge Cement Syria (LCS) for its actions in Syria. The non-government organisations have accused the cement producer of conducting business with the Islamic State of Iraq and Syria (ISIS), a terrorist group, via its Jalabiya cement plant.
“The Lafarge case highlights once again how multinationals doing business in conflict zones can directly fuel armed conflicts and contribute to grave human rights violations committed therein. Companies like Lafarge must be held accountable,” said Miriam Saage-Maaß, Vice Legal Director at ECCHR.
Sherpa and the ECCHR have accused LCS of entering into arrangements with ISIS in order to maintain production, by paying for passes issued by the jihadist organisation and buying raw materials necessary for cement production such as oil and pozzolana in areas under ISIS’s control. They have also accused Lafarge of reckless endangerment given that the plant continued to operate in the conflict zone. LCS repatriated its expatriate staff in 2012 but it kept its Syrian employees working at the site. Subsequently, when the plant was attacked, Sherpa and the ECCHR say that the local employees were forced to escape on their own.