In 2017, French authorities investigated and indicted several former executives of the world’s largest cement manufacturer, LafargeHolcim (Lafarge), for paying the Islamic State terrorist group to protect their factory in Syria and its workers. The indictment charged Bruno Lafont and Eric Olsen—two former CEOs—and the former senior executive of Syrian operations, Christian Herrault, with financing a terrorist organization and endangering the lives of others.
Lafarge was a major multinational cement company based in France, employing 81,000 workers at 2,300 sites in 80 countries around the world. The company had maintained operations in Syria since 2010, after investing more than $708 million to refurbish a factory in Jalabiyeh, a town near the Turkish border. This plant created hundreds of jobs for local residents, generated thousands of tons of cement every day, and supported other businesses nearby.
Just a year after Lafarge started operations in Jalabiyeh, civil war broke out between President Bashar al-Assad’s government and various rebel factions. Between 2011 and 2013, the area near the factory was occupied by a succession of armed military groups before the Islamic State (also known as ISIS) seized control. During this period, militants intercepted and detained Lafarge employees as they came and went from work, making it dangerous for employees and difficult for managers to run the plant efficiently.
In 2011, Lafarge management started paying the militants through intermediaries, essentially to leave the company alone and allow it to operate. The company’s subsidiary in Syria, Lafarge Cement Syria (LCS), paid about $15.2 million for this purpose between 2011 and 2014; a large part of this money went directly to ISIS. Herrault admitted that Lafarge was involved in a “racket,” but said that he regularly informed top managers of the company and that everything was under control.
In an official statement justifying management’s decision to pay off the militant groups, the company stated, “Very simply, chaos reigned, and it was the task of local management to ensure that the intermediaries did whatever was necessary to secure its supply chains and the free movement of its employees.” Lafarge said that they did not think they had any other options to keep the plant operational and minimize risks to their employees.
The company also took other steps to protect its workers and keep the militants at bay. After militant forces kidnapped nine Lafarge employees and transferred them to local militia camps, local managers spent more than $200,000 to secure their release. Lafarge also attempted to ease tensions by purchasing raw materials from ISIS-held areas to support the region’s economy. In 2013, a Lafarge memo emphasized the threat posed by terrorists. “It becomes more and more difficult to operate without being required to directly or indirectly page 114negotiate with these [ISIS] networks classified as terrorists’ networks by international organizations and the USA,” the memo concluded.
Despite the company’s efforts, workers continued to be at risk. French courts reviewed charges submitted by 11 Lafarge workers through Sherpa, a French law association whose primary mission was the protection of workers, that Lafarge placed them in a high-risk environment and put their lives in danger. “Lafarge acted as if it was above the law,” said Marie-Laure Guislain, the head of litigation at Sherpa. “But it played a role in an armed conflict, as well as in the violation of human rights, and must be held accountable.”
Olsen resigned as CEO amidst an internal investigation of the firm’s top management that found that the money funneled to the terrorist groups was used, in part, to permit factory workers to move to and from the facility. This inquiry also found that Olsen was not responsible for, or aware of, the activity. According to extensive testimony and eyewitness accounts of former and current employees as well as a review of internal company correspondence, the payments to the militant groups did not guarantee the safety of plant employees. More than twelve workers were kidnapped between 2012 and 2014. There were multiple accounts of employees being held at gunpoint on their way to and from work.
In 2014, ISIS forces declared a caliphate, asserting their control over a region, including parts of Syria. Within weeks, as the fighting for territory continued, air strikes were heard outside the Lafarge plant. When ISIS militants claimed responsibility for the truck bombing at a Turkish-owned cement plant nearby, Lafarge temporarily halted production and told its workers to stay home. Some workers, considered nonessential by management, were ferried by bus to operations in Manbji, a city in northern Syria. Yet, managers ordered about 30 workers to report to work to keep the Jalabiyeh plant operating.
Ultimately, in 2015, as a team of employees and managers gathered for work one morning outside the plant, the factory’s doctor warned that ISIS had just captured a nearby village. “You’ve got to get out of here,” he warned. “ISIS is coming!” When the workers discovered that evacuation buses promised by management were not there, they escaped in their own vehicles. ISIS captured the factory that evening. “What I want to know,” Mostafa Haji Mohamad, a medical worker at the Syrian factory, said of Lafarge in an interview, “is why did they leave us there to face our deaths? The factory was the only thing they cared about.”
Sources: “France Investigates Lafarge Executives for Terrorist Financing,” The New York Times, December 8, 2017, www.nytimes.com; “Former LafargeHolcim CEO Charged with Syria Terrorism Funding,” Bloomberg, December 8, 2017, www.bloomberg.com; “Top Lafarge Executives, Including Former CEO, Indicted on Terror Financing Charges,” France24, December 9, 2017, www.france24.com; and, “Lafarge Paid 13 Million Euros to Armed Groups to Keep Operating in Syria,” Reuters, December 12, 2017, www.reuters.com; and “‘ISIS Is Coming!’ How a French Company Pushed the Limits in War-Torn Syria,” The New York Times, March 10, 2018, www.nytimes.com.
In your analysis, the LaFarge case by applying four methods of ethical reasoning summarized in the text (and below):
1. Virtues: Ethical actions align with good character.
2. Utility/Utilitarian: Ethical actions produce the greatest amount of happiness and prevent the greatest amount of unhappiness, typically summarized (or implemented) as begin ethical if the net benefits exceed the net costs.
3. Rights: Ethical actions respect basic entitlements as human beings (e.g. according to Kant, if there is a Categorical Imperative , then it is a universal rule that applies in all situations, no exceptions)
4. Justice: Ethical actions are actions that treat all people fairly, typically summarized (or implemented) in that the benefits and costs are fairly distributed.
1. Question to answer: (answer per above professor instructions)
You’ve read what LaFarge has done and how the courts have ruled (to date), but is there anything that LaFarge could have done differently to protect its employees adequately without paying the terrorists? In other words, what might a far-sighted top executive team have decided to do differently before the first payment was ever made?
2. Question to answer: (answer per above professor instructions)
analyze whether or not it was ethical for LaFarge to pay the terrorist organization following rights or Kant’s reasoning. To what extent can the rights of all of the stakeholders be balanced in this case?
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