Holding Transnational Corporations Accountable for International Crimes in Syria: Update on the Developments in the Lafarge Case (Part I)

[Claire Tixeire is a Senior Legal Advisor at the European Center for Constitutional and Human Rights in Berlin (ECCHR). Cannelle Lavite is a Legal Advisor and a Bertha Justice Fellow in Business and Human Rights at the ECCHR. Marie-Laure Guislain is Head of Litigation, Globalization and Human Rights program at Sherpa (France).]

Last November, the Paris Court of Appeals dropped the most incriminating of the four charges leveled in indictments by investigative judges against the multinational corporation Lafarge, namely the charge of complicity in crimes against humanity committed in Syria between 2012 and 2014. While this decision is currently the subject of an appeal before France’s Supreme Court, the Appeals Court upheld the three other charges against the corporation for deliberately endangering the lives of its Syrian workers, financing a terrorist enterprise, and violating an embargo.

A parent company is currently being criminally charged for illegal activities that took place abroad through its subsidiary and under the executive leadership of the company’s Parisian headquarters. Lafarge’s indictment is the first of its kind in France and represents an unprecedented step forward in the struggle for corporate accountability. In this article, the authors, representing the original plaintiff organizations in this case, seek to shed light on the main issues at stake in the pending legal proceedings.

Today, the name Lafarge no longer resonates only with cement, but also with corporate crimes. For the last four years, the giant French multinational company (now LafargeHolcim) and its former directors have been at the heart of a legal saga before France’s highest courts for their million euros’ worth of dealings with armed groups in Syria, including the Islamic State (hereafter “IS”), and for having put the lives of their Syrian employees at risk.

Revelations about Lafarge’s illegal activities in Syria first surfaced in 2016 through the investigative work of Syrian newspaper Zaman Al Wasl and French journalist Dorothée Myriam Kellou. They were the first to claim that, between 2012 and 2014, with the violence of war raging at the doorstep of Lafarge’s massive cement factory in Jalabiya, northeastern Syria, the company paid various armed groups, including listed terrorist entities, in order to maintain the plant’s productivity. This financing enabled Lafarge to access raw materials, and to secure the ability of trucks and employees to commute in and out of the plant. The factory continued to operate in a violent, explosive context, even as the local staff suffered repeated kidnappings. The company, after having repatriated all of its non-Syrian staff in 2012, is said to have exerted undue pressure on its local employees to come to work at all costs. When IS violently overtook the factory in September 2014, employees came to realize that there was no evacuation plan in place for them; they were left to fend for themselves.

Lafarge later acknowledged that its Syrian subsidiary, Lafarge Cement Syria, “provided funds to third parties to work out arrangements with a number of armed groups.” The judicial inquiry has since identified that these “arrangements” amounted to at least 13 million euros in payments. In the aftermath of the initial revelations, the Paris-based organization Sherpa gathered and worked through testimonies of a dozen former employees, analyzed hundreds of documents, many of which had been previously leaked, and compiled a criminal complaint. The complaint was filed in Paris in November 2016 by Sherpa and the Berlin-based European Center for Constitutional and Human Rights (ECCHR), on behalf of eleven Syrian former Lafarge employees.

In 2017 and 2018, three investigative judges, acting jointly, issued formal charges against the company and eight of its former executives, including the group’s former CEOs. The most notable charge leveled against the parent company was that of complicity in the crimes against humanity committed by IS and “other terrorist groups” in Syria and Iraq between 2013 and 2014 – the first such charge worldwide against a corporate entity.

The fact that charges were not just filed against former directors, but also against the company itself, sends an unequivocal signal to corporations. It suggests that the alleged criminal actions are not considered to be isolated incidents caused by a few bad apples on the ground. Instead, it shows an understanding by the French justice system that structural underpinnings and decisions within the corporation may have created incentives toward criminal action. In this case, Lafarge’s financial powers are alleged to have been mobilized to pay criminal entities in order to strategically serve the group’s profit margins, namely by keeping production active in Syria.

Court confirms that Lafarge could not have ignored the terrorist nature of IS

Under French criminal law, the threshold for the crime of financing terrorism is met as long as the recipient of the funds allocates them to the possible commission of a terrorist activity. The mental elementof the offense is general intent (dolus generalis), limited to the knowledge by Lafarge that the funds would be allocated – fully or partially – to the commission of terrorist acts.

The Appeals Court affirmed that, at the time, Lafarge could not have ignored the terrorist nature of IS. In making this point, it referred to the 2014 UN Security Council Resolution listing IS (“ISIL” in the text) as a terrorist group. It also confirmed that at the time of Lafarge’s payments to IS, the group was actively carrying out terrorist activities in Syria. Lafarge’s claims that the payments were meant to ensure the safety of its employees and the maintenance of the plant’s activities therefore bear no relevance in establishing the illegality of the payments and, hence, the company’s criminal liability.

Moreover, as documented in various studies, such as in a 2016 report of the Center for the Analysis of Terrorism, IS’s financial structure primarily relies on the control and exploitation of oil as its main source of income, in addition to extortion through hostage-taking and taxes. It has also been established that the great majority of the funds gathered by IS have been spent for military purposes. This adds weight to the likelihood that Lafarge’s payments to the group were allocated by IS to the commission of a terrorist activity. 

Importantly, the French Criminal Code does not provide for a minimum amount to qualify as financing terrorism. Indeed, French courts found a mother guilty of financing a terrorist enterprise and sentenced her to two years in prison for having sent a few thousand euros abroad to her son, who later used it to buy a plane ticket to Syria to fight with IS. In the Lafarge case, the initial figures identified by the judicial inquiry amount to at least 500,000 euros transferred to IS, out of the 13 million euros paid to various armed groups.

Piercing the corporate veil: Attributing payments to the parent company

In deciding to uphold the charge against Lafarge related to the financing of terrorism, the Appeals Court overcame a recurring legal obstacle in holding multinational corporations accountable. Indeed, the principle of separate legal entity – also referred to as the corporate veil – often makes it difficult to attach liability to a parent company for violations committed through its subsidiaries.  

The funds paid to IS did originate from Lafarge’s subsidiary’s accounts. But the judges took note of the fact that the subsidiary, Lafarge Cement Syria, was, in fact, financially sustained through loans from the parent company. They also pointed to the significant operational and financial control Lafarge exercised over its subsidiary and advanced that, through the decision of its directors, the company authorized and even may have instructed Lafarge Cement Syria to carry out the alleged financial transactions.   The financing of a terrorist enterprise plays a further, pivotal role in this case, as it comprises one of the alleged acts of complicity for which Lafarge is accused of contributing to crimes against humanity.