Displaying items by tag: Department of Justice

Doing deals with terrorists has a price: US$778m. The US Department of Justice (DOJ) revealed this week that it had fined Lafarge for its conduct in Syria between 2013 and 2014. In addition Lafarge and its subsidiary Lafarge Cement Syria (LCS) have pleaded guilty to one count of conspiring to provide material support to designated foreign terrorist organisations in Syria. It is uncertain how exactly the fine will be paid but it is worth noting that successor company Holcim reported net sales of nearly US$27bn in 2021. The fine represents nearly 2% of this.

A reasonable amount of new detail can be found on the DOJ website. LCS was essentially dealing with the Islamic State of Iraq and al-Sham (ISIS) and the al-Nusrah Front (ANF) as they would a local government in relation to the running of the Jalabiyeh cement plant. As a reminder, both of these groups were defined as terrorist organisations by the US government at the time. The relationship apparently started as monthly payments to local armed groups, including ISIS and ANF, to allow movement through checkpoints. This later progressed to a de-facto tax based on cement sales. However, it became worse when LCS started asking ISIS to block or tax imports of cement from Turkey-based competitors into northern Syria as part of a revenue-sharing agreement. Effectively LCS was fixing the price of cement in a war zone by collaborating with terrorists. In the end LCS, the intermediaries and the terrorist groups made around US$80m whilst they were working together.

Holcim’s interpretation of the ruling was keen to point out that the conduct in Syria was recognised by the DOJ as not involving Holcim in any way. The DOJ did agree that Lafarge’s executives didn't disclose their activities in Syria to its successor company Holcim either before or after the merger in 2015. However, it pointed out that Holcim had not carried out due diligence of LCS’s operations in Syria. It added that, “Lafarge, LCS and the successor company also did not self-report the conduct or fully cooperate in the investigation.”

Despite this, other information that Holcim also highlighted was that the US authorities were now happy that effective compliance and risk management controls were in place to prevent anything similar happening again. Crucially, it said that the DOJ didn’t think that an independent compliance monitor was required. It pointed out that none of the conduct involved Lafarge’s operations or employees in the US and that none of the Lafarge executives were working for Holcim or any associated company. Finally, the group wanted to report that the DOJ found that none of the former Lafarge executives involved shared any of the “methods, goals or ideologies” of the terrorist groups operating in area at the time.

The immediate reaction from all of this is what happens to the ongoing legal case in France, also about Lafarge’s conduct in Syria? In mid-May 2022 the Court of Appeals confirmed a charge of complicity in crimes against humanity against Lafarge. The company then reportedly started the appeal process at the Supreme Court. Other charges, including financing terrorism, endangering life and violating an embargo, were lodged earlier in the legal process. The US is generally seen as being the leading prosecutor of international corporate crime but if the French legal system also issued a fine to Lafarge on the same scale things could become difficult for Holcim. The other complication for the French legal case is that the national intelligence services allegedly used Lafarge’s links with the Syrian terror groups to acquire information but they did not warn the company that it was committing a crime.

Holcim is a different company from what it was when LafargeHolcim formed in 2015. It is being run by a new chief executive officer who came in from another company well after the merger and is diversifying away from the trio of cement, concrete and aggregates with the addition of a fourth business area of light building materials. Alongside this the group has been selling off businesses in the developing world and focusing on Europe and North America. Yet it is still being defined by the criminal actions of a company it absorbed seven years ago and the behaviour of staff long gone. Those actions have been investigated and punishment delivered. More may be coming.

Syria/US: A US court has found Lafarge Cement Syria guilty of conspiring to provide material support to the terrorist organisations al-Nusrah Front (ANF) and ISIS in Northern Syria during 2013 and 2014. Lafarge Cement Syria and its parent company, France-based Lafarge, agreed in 2011 to pay the terrorists for Lafarge Cement Syria employees' 'protection' and the continuation of the Jalabiyeh cement plant's operations, as well as to gain an economic advantage over other Syrian competitors. During the duration of the agreement, Lafarge Cement Syria recorded US$70.3m in sales. Coalition forces fighting against ANF and ISIS damaged the plant in an airstrike 'to reduce the facility's military usefulness' on 16 October 2019.

The court ordered Lafarge Cement Syria to pay criminal fines and forfeiture totaling US$778m.

US: Italy-based Buzzi Unicem subsidiary Lone Star Industries has concluded a settlement with the US Department of Justice, the Environmental Protection Agency and the state of Indiana over Clean Air Act violations at its integrated Greencastle plant in Indiana, dating from 2010 to the present day. The Indy Star newspaper has reported that under the terms of the settlement the producer must pay a fine of US$700,000. The authorities ordered the company to upgrade the plant in line with state and federal pollution regulations. The violations involved emissions of particulate matter that exceeded state and federal limits.

US: Mexico’s Cemex says that the US Department of Justice (DOJ) is investigating whether the cement producer violated the US Foreign Corrupt Practices Act (FCPA) in relation to a new cement plant being built by Cemex Colombia at Maceo in Antioquia. Previously, the cement producer received a subpoena from the US Securities and Exchange Commission in late 2016 as part of a probe also checking whether the FCPA had been breached.

Cemex says it is cooperating with both requests. However, it also said that it does not know how long either investigation will last or what impact the results of either investigation might have upon the company in terms of eventual sanctions.

In late September 2016 Cemex fired several senior staff members in relation to the Maceo project and its subsidiary’s chief executive resigned. This followed an internal audit and investigation into payments worth around US$20.5m made to a non-governmental third party in connection with the acquisition of the land, mining rights, and benefits of the tax free zone for the project.

US: The Environmental Protection Agency (EPA) and the Department of Justice (DOJ) have agreed a settlement with Cemex, under which the company will invest approximately US$10m to cut air pollution at five of its cement plants to resolve alleged violations of the Clean Air Act. Under the consent decree lodged in the District Court for the Eastern District of Tennessee, Cemex will also pay a US$1.69m civil penalty, conduct energy audits at the five plants, and spend US$150,000 on energy efficiency projects to mitigate the effects of past excess emissions of nitrogen oxides (NOx) from its facilities.

“This settlement requires Cemex to use state-of-the-art technology to reduce harmful air pollution, improving public health in vulnerable communities across the South and Southeast,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “EPA is committed to tackling clean air violations at the largest sources, cutting the pollutants that cause respiratory illnesses like asthma.”

The five Cemex cement plants affected by the deal are located in Demopolis in Alabama, Louisville in Kentucky, Knoxville in Tennessee and New Braunfels and Odessa in Texas. The Knox County, Tennessee and Louisville, Kentucky air pollution control authorities participated in this settlement. Cemex is required to install pollution control technology that will reduce emissions of NO_x and establish strict limits for sulphur dioxide (SO₂) emissions. The cement producer will install and continuously operate a selective non-catalytic reduction system for controlling NO_x at the five plants and meet emission limits that are consistent with the current best available control technology for NO_x. EPA estimates this will result in NO_x emissions reductions of over 4000t/yr. Each facility will also be subject to strict SO₂ emission limits.

This settlement is part of EPA’s National Enforcement Initiative to control harmful emissions from large sources of pollution, which includes cement plants, under the Clean Air Act’s Prevention of Significant Deterioration requirements. The total combined SO₂ and NO_x emission reductions secured from cement plant settlements under this initiative will exceed 75,000t/yr once all the required pollution controls have been installed and implemented.

The settlement is subject to a 30-day public comment period and final court approval.

US: Lafarge North America has agreed with the US Environmental Protection Agency (EPA), the US Department of Justice and New York State to provide US$1.5m towards projects to reduce air pollution in the community surrounding its Ravena cement plant. The agreement also grants Lafarge additional time, until 1 July 2016, to reduce air pollution from the cement plant.

"This agreement will reduce the pollution limits required by the settlement at this facility by providing a significant amount of funding for projects that will improve local air quality," said EPA Regional Administrator Judith A Enck.

A March 2010 settlement between the federal government and Lafarge North America over violations of the Clean Air Act required that the cement producer either install controls on two kilns at its Ravena plant or replace those kilns with a lower emitting kiln by 1 January 2015. In return for the deadline extension, Lafarge has committed to interim air pollution limits at the existing kilns intended to result in the same or higher reductions as would have been required by the original agreement in addition to funding local air pollution reduction measures.