15 Nov Multinational Lafarge Facing Unprecedented Charges for International Crimes: Insights Into the French Court Decisions
[Sandra Cossart is the Executive Director of the French NGO Sherpa which fights new forms of impunity linked to globalization. Anna Kiefer is Advocacy and Litigation Officer at Sherpa. Cannelle Lavite is Co-Director of the Business and Human Rights program at the European Centre for Constitutional and Human Rights (ECCHR). Claire Tixeire is a Senior Legal Advisor at the ECCHR.]
“Knowingly paying several million dollars to an organization whose purpose is exclusively criminal suffices to constitute complicity, regardless of whether the party concerned was acting to pursue a commercial activity.”Press release from the French Supreme Court, 7 September 2021.
In the French Lafarge case, two recent decisions taken at the highest levels of the judicial system have sent a clear message to multinational corporations: they can face charges for the gravest human rights violations, even if they were committed abroad via a subsidiary.
On 18 October 2022, in a separate US proceeding, Lafarge SA and LCS pleaded guilty before a federal court to conspiring to provide material support to foreign terrorist organizations and agreed to pay 778 million US dollars in fines and forfeiture– it is the first time in the United States that a company is prosecuted on this charge. In court, Lafarge chair said the former company executives “knowingly and willfully agreed to participate in a conspiracy to make and authorize payments intended for the benefit of various armed groups in Syria.”
While unprecedented, the plea agreement fails to address the more central question of corporate complicity in international crimes and reparations for those affected.
In this blog piece, the authors, representatives of the civil society organizations that filed the French complaint, describe the stakes: never before has a multinational, as a legal person, been formally charged in front of a domestic or international jurisdiction for complicity in crimes against humanity. While top former French directors of Lafarge had already been charged with endangering employees and financing terrorism, by indicting the company itself, French courts appear to be signaling their acknowledgment that the structural underpinnings and decision-making processes within corporations can incentivize criminal action.
The French Procedure Against Lafarge
In the wake of a criminal complaint filed in France in 2016 by Sherpa, the European Center for Constitutional and Human Rights (ECCHR) and a dozen former Syrian Lafarge employees, which addressed Lafarge’s activities in Syria via its subsidiary, Lafarge Cement Syria (LCS), the parent company (Lafarge SA) was indicted in June 2018 for complicity in crimes against humanity, endangering the lives of others, financing terrorism, and violating an embargo.
The judicial inquiry revealed that, to maintain operations in its newly renovated cement factory in Syria, Lafarge transferred at least 15 million US dollars to armed groups and intermediaries, including the Islamic State. Lafarge did so even as the Islamic State was accelerating its perpetration of atrocities in the region, and despite repeated kidnappings and disappearances of Lafarge’s local employees. The legal consequences of Lafarge’s decision to remain in Syria are taking shape within this procedure, which, though still at the judicial inquiry stage, is already creating an important precedent in the field of corporate accountability.
In a groundbreaking decision, French courts have upheld in May 2022 the charges of complicity in crimes against humanity and endangering the lives of its employees faced by the cement multinational Lafarge (today Holcim). The company has appealed the decision and a new decision of the Supreme Court is awaited.
The authors look at the reasoning behind the decisions of the Supreme Court on 7 September 2021 and of the Investigative Chamber of the Paris Appeals Court on 18 May 2022.
Historical Clarification of the Criteria for Corporate Actors to be Found Complicit in Crimes Against Humanity
The Lafarge proceedings offered an opportunity to discuss what often constitutes a major challenge in corporate accountability cases: namely, the mental element (the mens rea) required for a company to be found complicit in international crimes. Does a company need to share the intent of the main perpetrators? Can acting in pursuit of a commercial activity neutralize the attribution of intent required for complicity? In these proceedings, all judges confirmed that there is serious or corroborating evidence that the Islamic State and other affiliated groups in Syria perpetrated crimes against humanity at the time of the money transfers by Lafarge, including in the region where the factory is located. Nonetheless, in 2019, the Appeals Court cancelled the complicity charges, finding that Lafarge’s “arrangements” with the Islamic State were intended to keep the plant running and did not manifest the intention to associate itself with the crimes perpetrated.
However, on 7 September 2021, the Supreme Court brushed aside this argument, unequivocally asserting that “it is irrelevant that the accomplice acts with a view to pursuing a commercial activity, a circumstance that is part of the motive and not the intentional element.” Under French criminal law, motives bear no relevance in establishing (or negating) intent, thus entailing that a company cannot hide behind its business aims to escape liability.
The Court further ruled that, to characterize complicity “[i]t is sufficient that he or she has knowledge that the principal perpetrators are committing or about to commit such a crime against humanity and that by his or her aid or assistance he or she facilitates its preparation or commission” (para. 67). Remarkably, after noting that crimes against humanity are “the most serious of crimes,” the judges stated that “[a] different interpretation (…), which would require that the accomplice to a crime against humanity participate in the design or execution of a concerted plan, would result in many acts of aiding and abetting going unpunished, whereas it is the multiplication of such acts that makes the crime against humanity possible” (para. 70).
Regarding the material element (the actus reus), under French criminal law, acts of complicity are those that “facilitate or assist” the commission of the main crime. The accomplice does not need to have participated in its commission, nor do the acts of complicity need to have been indispensable to the commission of the main crime. The Supreme Court found that knowingly paying several million dollars to an organization whose purpose is exclusively criminal suffices to constitute complicity (para. 81).
The case was remanded to the Appeals Court, which reiterated the legal findings of the Supreme Court: it found that Lafarge could not reasonably have ignored that the actions of the Islamic State and other groups, which also occurred in the region where the factory is located, could constitute crimes against humanity. The Court also concluded that there was serious or corroborating evidence that Lafarge knowingly chose to maintain its activities in the region by financing these groups. The Court thus upheld the charge of complicity in crimes against humanity against the parent company.
By finding that an accomplice does not need to share the principal perpetrator’s intention to carry out crimes – nor approve of its larger plan or ideology – but that it is sufficient that they know their behaviour will facilitate these crimes, these rulings help dismantle some of the obstacles to assigning criminal liability to corporations for international crimes.
Parent Company Charged with Financing Terrorism Through its Subsidiary
The Supreme Court’s decision to uphold the charge against Lafarge for financing a terrorist enterprise is another stepping stone towards establishing the corporate accountability of parent companies for crimes committed abroad via a subsidiary.
Firstly, regarding the material element, the Appeals Court found that serious, corroborating evidence had been provided regarding Lafarge’s business dealings with various armed groups in the region , through the payments of over 15 million US dollars to intermediaries, notably for the purchase of raw materials and the payment of “taxes” to allow the movement of employees and goods. In the US procedure, it was estimated that close to 6 million US dollars were directed towards the Al-Nusra Front and the Islamic State.
To uphold the charge against the parent company even though the money used in the transactions came from its subsidiaries, the Appeals Court based its reasoning on the knowledge and approval of Lafarge directors of these “arrangements” and on the transfers of funds from the parent company to its subsidiaries. This reasoning was confirmed by the Supreme Court.
Secondly, regarding the mental element, the lower Court found that Lafarge could not have ignored the terrorist nature of the Islamic State. Lafarge argued that the mere knowledge of, or agreement to, the contentious transactions by its executives was insufficient to charge the company. However, the Supreme Court responded that the decisive element is the financier’s knowledge of the recipient’s terrorist nature – from which it follows that the funds were intended to be used for a terrorist purpose – rather than its intention to see the funds used for this purpose (para. 43).
Attributing Criminal Liability to a Parent Company for Labor Rights Violations Committed Abroad and Endangering the Lives of its Subsidiary’s Workers
Lafarge had been charged with endangering the lives of others – its Syrian employees — an offense encompassing the act of exposing others to the risk of death or injury through the deliberate infringement of a safety obligation required by law. The parent company argued that it did not have a contractual relationship with the Syrian workers who were employed by its subsidiary, and thus could not be held accountable, as it is a distinct legal entity.
In a remarkably pragmatic legal analysis, this argument was rejected by the Supreme Court. Beyond the fact that Lafarge owned almost 99% of its Syrian subsidiary, its de facto authority over the Syrian employees was crucial. The judges emphasized the operational control over its subsidiary and the “permanent interference by the parent company in the economic and social management [of its subsidiary], leading to the total loss of autonomy of action by the latter” (para. 53).
However, the Supreme Court did not uphold the charge against Lafarge but, instead, remanded the case to the Appeals Court to determine the law applicable to the employment relationship between Lafarge and the Syrian workers according to the European Union’s conflict of laws rules (Rome I). Indeed, a prerequisite for the offense of endangering the lives of others is the existence of a specific obligation of prudence or safety sanctioned by law.
According to article 8 of the Rome I regulation on the law applicable to contractual obligations, in the absence of a choice of law by the parties, the law of the country where the work is carried out applies – in this case, Syria. However, by exception, if the contract is more closely connected with a different country, the law of that country applies.
In May 2022, the Appeals Court found that French law was applicable as there was a closer connection between the workers and the French parent company. The Court notably relied on the permanent interference of Lafarge in the management of its subsidiary, as had been highlighted by the Supreme Court. The Court thus found that there was serious or corroborating evidence that Lafarge endangered the lives of its Syrian workers and upheld the charge.
The choice of applicable law can often constitute an obstacle to access to justice for employees of multinational companies working in foreign subsidiaries. This decision highlights the significance in today’s globalized economy of having conflict of laws rules that enable access to justice for victims of corporate crimes.
Setbacks on the Admissibility of Civil Society Organizations in Criminal Proceedings
In its September 2021 decision, the Supreme Court regrettably sided with a narrow interpretation of the rules of admissibility for civil society organizations in criminal cases. Indeed, it stated that a non-profit organization cannot be admissible as a civil party based on the collective interests it aims to protect, but can only trigger or join proceedings for a limited list of offenses and under strict conditions set forth in the criminal procedure code.
In particular, the Court gave a narrow interpretation of the law stating that any organization proposing in its statutes to combat crimes against humanity or war crimes may exercise the rights granted to the civil party: the Court found – rather surprisingly – that Sherpa’s statutory mission to fight against human rights violations perpetrated by economic actors, did not encompass crimes against humanity, and that it thus could not be admitted as a civil party.
This decision enshrines a growing legislative and judicial trend towards the restriction of civil society’s participation in French criminal proceedings, despite their key role in accompanying victims seeking to access justice and in overcoming obstacles to corporate accountability.