In the first case of its kind, a large French industrial company and its now defunct Syrian subsidiary, both long accused of human rights violations during the Syrian conflict, pleaded guilty on Tuesday to conspiring to provide material support to Islamic State and the al-Nusrah Front.
Lafarge S.A., one of France's largest companies, and Lafarge Cement Syria, allegedly paid the two U.S.-designated foreign terrorist groups nearly $6 million in exchange for permission to operate a cement plant in Syria from 2013 to 2014, according to court documents.
The payments consisted of monthly "donations" to the two groups, purchases of raw materials from Islamic State-controlled suppliers, and "taxes" based on the amount of cement that the company sold, according to prosecutors.
The scheme enabled the Syrian company to rake in more than $70 million in revenue during a roughly one-year period at the height of the Syrian conflict, prosecutors charge in court documents.
A federal judge in New York sentenced the defendants to probation. They were ordered to pay financial penalties totaling $777.78 million.
The Justice Department said the case marks the first prosecution of a company for providing material support to a foreign terrorist organization.
The charge of providing material support to a foreign terrorist organization is typically brought against individuals.
The case also illustrates how "corporate crime can interact with national security," noted Deputy Attorney General Lisa Monaco.
"The defendants partnered with ISIS, one of the most brutal terrorist organizations the world has ever known, to enhance profits and increase market share — all while ISIS engaged in a notorious campaign of violence during the Syrian civil war," Monaco said at a press conference in New York. ISIS is one of several acronyms used to describe the Islamic State group.
In addition to ensuring its cement factory operated without interference, Lafarge also demanded that Islamic State "impose costs" on competitors selling cheap Turkish cement in northern Syria, according to prosecutors.
In exchange for making payments to Islamic State, Lafarge executives made clear that "they expected ISIS to take action against its competitors, either by stopping the sale of competing imported Turkish cement in the areas under ISIS's control, or by imposing taxes on competing cement that would allow LCS to raise the prices at which it sold cement," the Justice Department said in a statement.
"In the midst of a civil war, Lafarge made the unthinkable choice to put money into the hands of ISIS, one of the world's most barbaric terrorist organizations, so that it could continue selling cement," Breon Peace, the U.S. attorney for the Eastern District of New York, said at the press conference.
In a statement, Lafarge said the conduct alleged by the Justice Department "occurred during a period of intense violence and coercive pressure from terrorist groups, as LCS tried to manage the grave security challenges in the area surrounding its cement plant during the Syrian civil war."
"Lafarge SA and [Lafarge Cement Syria] have accepted responsibility for the actions of the individual executives involved, whose behavior was in flagrant violation of Lafarge's Code of Conduct," the company said.
Lafarge operated the cement plant, located in the Jalabiya region of northern Syria and built at a cost of $680 million, from 2010 to 2014.
The company abandoned the plant in September 2014, leaving Islamic State in possession of about $3.2 million worth of cement, according to the Justice Department.
Lafarge was acquired by Swiss-based Holcim in a deal that closed in 2015. But the Justice Department said Lafarge did not disclose the payments to Islamic State and al-Nusrah to the Swiss firm.
The payments nonetheless came to light when a group of 11 former Syrian employees of Lafarge, along with two European human rights groups, filed a criminal complaint against the company in 2016.
Lafarge denied any wrongdoing, but last year the French Supreme Court ruled that the company could also be indicted for complicity in crimes against humanity committed by Islamic State.
