By Luc Cohen and Karen Freifeld
NEW YORK (Reuters) -French cement maker Lafarge pleaded guilty in U.S. 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.
U.S. 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, U.S. 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.”
Holcim said that former Lafarge executives involved in the conduct concealed it from Holcim, as well as from external auditors.
Without naming Holcim, U.S. 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. U.S. court records refer to six unnamed Lafarge executives.
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.
Anderson said in court that the individuals responsible had not been with the company since at least 2017.
The SIX Swiss Exchange suspended trading in Holcim shares before the news. Shares rose as much as 3.2% when trading resumed.
Lafarge is also facing charges of complicity in crimes against humanity in Paris. The cement maker previously admitted after an internal investigation that its Syrian subsidiary paid armed groups to help protect staff at the plant. But it had denied charges that it was complicit in crimes against humanity.
(Reporting by Luc Cohen in New York and Karen Freifeld; Additional reporting by John Revill in Zurich and Tassilo Hummel in ParisEditing by Noeleen Walder and Lisa Shumaker)