Takeaways From First Anti-Terrorism Act Prosecution Of A Co.

• Jurisdiction: United States,Federal
• Law Firm: Arnold & Porter
• Subject Matter: Corporate/Commercial Law, Government, Public Sector, Corporate and Company Law, Terrorism, Homeland Security & Defence
• Author: Ms Amy Jeffress, Daniel Bernstein and Volodymyr Ponomarov
• Published date: 02 February 2023

On Oct. 18, 2022, the U.S. Department of Justice announced¹ its firstever prosecution of a corporation for material support to terrorism under Title 18 of the U.S. Code, Section 2339B of the Anti-Terrorism Act.

Lafarge SA, a French cement company, and its Syrian subsidiary, Lafarge Cement Syria SA, pled guilty to one count of conspiracy to provide material support to one or more foreign terrorist organizations ' namely, ISIS and the al-Nusrah front, or ANF ' in connection with business operations in Syria. Lafarge agreed to pay a hefty $778 million in fines and forfeitures.

As Deputy Attorney General Lisa Monaco explained, the Lafarge case is "a vivid reminder of how corporate crime can intersect with national security."²

Indeed, the case shows the array of tools available to the U.S. to combat corporate crime, including the long arm of U.S. jurisdiction, which extends to foreign companies operating overseas, even when those companies are subject to enforcement actions in their home countries. The case also highlights the importance of due diligence in corporate acquisitions.

Background

From August 2013 to October 2014, Lafarge paid armed terrorist groups what company executives likened to taxes, but were in fact bribes.³ Specifically, the plea agreement notes, in exchange for the payments:

ISIS permitted access to raw materials sourced from territory under its control so that the Jalabiyeh Cement Plant could continue to produce cement, and further allowed [Lafarge] employees, suppliers and customer-distributors to safely pass through ISIS and ANF checkpoints on the roads leading to the Jalabiyeh Cement Plant. ISIS also agreed to impose costs on, and in some cases block the importation of, competing cement from Turkey.⁴

While most of the relevant conduct took place overseas, one of the payments was made through a New York intermediary bank. Lafarge also attempted to conceal the scheme through falsified records and the use of personal email addresses serviced by U.S.-based providers.

In July 2015, Lafarge was acquired by one of its competitors, Swiss cement maker Holcim Ltd. During preacquisition due diligence, Lafarge executives apparently did not disclose its dealings with ISIS and ANF.

Although Holcim "did not conduct post-acquisition due diligence of the Defendants' operations in Syria," it did investigate the conduct when it later came to light.⁵ Notably, Lafarge did not voluntarily disclose the conduct to government authorities, nor did it fully...