Cement maker Lafarge agrees $780mn US penalty over payments to Isis

French building materials manufacturer Lafarge has agreed to pay almost $780mn in fines and forfeitures to the US government, after pleading guilty to conspiring to provide material support to Isis and the Al-Nusrah Front in war-torn Syria.

The company was charged by federal prosecutors with making payments to both terrorist organisations as they controlled the area surrounding its cement plant in Jalabiyeh, Syria in 2013-2014. The US Department of Justice said the payments helped Lafarge’s local subsidiary make roughly $70mn in additional revenue.

Nearly $6mn in payments, some disguised as “donations”, were sent to Isis and Al-Nusrah for the purchase of raw materials and to ensure protection of staff, ensuring operations would continue, the DoJ added.

The case follows years of parallel legal challenges and investigations in France. A French court in May upheld charges of complicity in crimes against humanity against Lafarge, after the group’s bid to have them dismissed.

The company has carried out its own internal investigation, and concluded that its Syrian unit paid armed groups to help protect employees at a factory there, but rejected that it was complicit in crimes against humanity.

On Tuesday, US prosecutors displayed an Isis vehicle pass from April 2014, which asked fighters operating checkpoints near the plant to “kindly allow the employees of Lafarge Cement Company to pass through after completing the necessary work and after paying their dues to us”.

“Lafarge made a deal with the devil,” said Breon Peace, the US attorney for the eastern district of New York, adding that the company “paid millions of dollars to Isis, a terrorist group that otherwise operated on a shoestring budget”.

Lisa Monaco, deputy US attorney-general, told the Financial Times that companies “now more than ever” are operating in high-risk environments, pointing to sanctions against Russia as an example.

Monaco said the DoJ will scrutinise deals, mergers and acquisitions as well as due diligence undertaken by companies in such circumstances. “The reach of the justice department is long”, she added — in Lafarge’s case, the DoJ established jurisdiction because at least one wire transfer went through New York’s eastern district.

Lafarge, since 2015 a division of Swiss-based Holcim, said in a statement that it accepted responsibility for the wrongdoing, had worked with the DoJ to “resolve the matter” and “deeply regret[s] that this conduct occurred”.

The US case was different to the French one, a Holcim spokesman for the group in France added, saying that the company would “continue to defend itself against any judicial action it considers unjustified”.

The Lafarge investigation is a test case in France, where no company has ever been tried on charges of complicity in crimes against humanity.

“What we want is for the French case to not only result in a recognition of the crimes committed . . . but also that the victims can get justice if the group is found guilty of crimes against humanity,” said Cannelle Lavite, co-director of the human rights programme with the European Centre for Constitutional and Human Rights, one of the French plaintiffs.

Victims include former Lafarge employees in Syria who were exposed to danger at the plant and were also directly affected by terrorist acts, Lavite said.

US authorities said the company crafted schemes with Isis as a “revenue-sharing agreement” based on the quantity of cement it could sell.

A senior Lafarge executive in 2014 told colleagues: “We have to maintain the principle that we are ready to share the ‘cake’, if there is a ‘cake’. To me the ‘cake’ is anything that is a ‘profit’, after the amortisation and before financial expenses.”

A company executive also asked an intermediary to make invoices that would shield the payments’ true nature to “avoid problems with the Syrian authorities and with our Auditors”.

When faced with a delay, the executive said the company was “in a very uncomfortable situation vis-à-vis our auditors” and provided detailed instructions on how to prepare the documents. “Please do not mention any name on this invoice,” the executive added.

Under the scheme, Lafarge expected Isis to hamper competitors by blocking the sale of imported Turkish cement in areas controlled by the terrorist organisation or by levying taxes on competing cement supplies, allowing the company to increase its own prices, according to the DoJ.

The move against Lafarge comes as the DoJ takes a tougher enforcement stance against corporate malfeasance, implementing new policies to crack down on wrongdoing.

Monaco said in a statement: “This case sends the clear message to all companies, but especially those operating in high-risk environments, to invest in robust compliance programmes, pay vigilant attention to national security compliance risks, and conduct careful due diligence in mergers and acquisitions”.