PARIS/ZURICH (Reuters) - Cement maker LafargeHolcim (LHN.S) on Thursday said its French predecessor company Lafarge SA has been put under formal investigation into allegations it funded armed militant groups in Syria to keep a plant open.
The confirmation came after a judicial source said the company, formed by a 2015 merger between France’s Lafarge and Switzerland’s Holcim, was being investigated in France for the payments and abetting crimes against humanity.
The affair relates to the Jalabiya cement plant in northern Syria which was operated by the company between 2011 and 2014.
LafargeHolcim said that the step by examining magistrates in Paris was expected, given that several former managers - including former Lafarge Chairman Bruno Lafont and LafargeHolcim CEO Eric Olsen - had been placed under judicial investigation.
The company acknowledged failures at the Syrian business, “which were the result of an unprecedented violation of internal regulations and compliance rules by a small group of individuals who have left the group. Lafarge SA will appeal against those charges which do not fairly represent the responsibilities of Lafarge SA.”
The scandal has already cost the job of Olsen, the former Lafarge executive who became the first CEO of the combined company. He has denied wrongdoing in the affair.
LafargeHolcim Chairman Beat Hess said: “We truly regret what has happened in the Syria subsidiary and after learning about it took immediate and firm actions.
“None of the individuals put under investigation is today with the company,” he said in a statement.
LafargeHolcim has handed its own report over to the French authorities, along with 260,000 documents related to the case.
Hess said the company had strengthened its compliance regulations to prevent similar cases in future.
A company spokesman said there was no indication how long the investigation would last, but the company expected no material financial impact from the proceedings.
Reporting by Emmanuel Jarry and Dominique Vidalon in Paris and John Revill in Zurich; editing by Michel Rose