Holcim’s Syria Woes Mount After Unit’s French Court Defeat
(Bloomberg) -- Swiss cement maker Holcim Ltd. risks criminal charges in France after its Lafarge SA unit lost a lawsuit about paying a terrorist group to keep a plant operating in war-torn Syria.
Judges at France’s top court ruled against Lafarge on Tuesday, paving the way for charges of complicity in crimes against humanity to be reinstated. The judgment topples a decision by a lower tribunal, which had dismissed the accusations.
The case emerged just months after the 2015 tie-up between Swiss and French cement rivals and has been a thorn in side of the combined company ever since. An internal probe found “significant errors of judgement” after money was paid to armed Syrian groups to safeguard the factory, triggering the departure of its first CEO. Islamic State fighters seized the plant in September 2014.
“This is a legacy issue for us that we are managing responsibly,” Lafarge said in a statement, adding that individuals under investigation are no longer at the firm. “We have taken immediate and firm steps to make sure that similar events do not happen again.”
The shares fell as much as 4.2% to the lowest level since Jan. 29.
The French ruling adds to Holcim’s Syria-related woes, which extend to the U.S. In its first-half earnings report published in July, the company said it has also received “informal requests for information” on Lafarge’s past conduct in Syria from the Department of Justice and discussions have recently started on a potential resolution.
Oddo BHF downgraded the stock on Tuesday, saying the Syrian issue is a “sword of Damocles that has become American” and could damage the company’s ESG rating.
On Tuesday, the top court confirmed a terrorism financing charge from 2018 but raised doubts as to whether the cement maker can be accused of putting the lives of Syrian staff in danger. The Cour de Cassation judges asked for the matter to be re-examined at a lower level, taking international law into account.
The top court also instructed a different panel of judges at the lower jurisdiction, the Paris court of appeals, to review the aiding and abetting charge. The top judges consider that a company can aid and abet crimes against humanity by being aware of their preparation or carrying out and providing some assistance to facilitate them.
“In this case, the knowing payment of several million dollars to an organization whose purpose is exclusively criminal is sufficient to characterize the complicity, regardless of whether the concerned party is acting in pursuit of a commercial activity,” the top judges said in a statement.
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