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Corporations and the financing of terrorism

Tom Fox | April 24, 2017

What is the responsibility of a company to assure itself that monies it pays out do not go to fund international terrorism? After all, one of the direct reasons for the dramatic growth of FCPA enforcement from 2004 to 2014 was the events leading up to 9/11. The FCPA was viewed as a tool in the fight against terrorism, as corruption has a linear relationship to terrorism. This question, however, has taken on a different and perhaps greater urgency after the revelations of continuing operations of a cement facility in Syria by the chemical giant LafargeHolcim until September 2014.

LafargeHolcim has admitted it took “unacceptable” measures to keep the facility safe and operating as the Syrian civil war convulsed. The company has obliquely said that executives running the facility “made significant errors in judgment” which included payments to “armed groups, including sanctioned parties” to keep the plant safe, up, and running. These actions violated the company’s Code of Conduct and unidentified internal controls.

It is not uncommon for companies with operations in countries or geographic areas at risk for violence, physical or property damage to hire additional or supplemental military or police protection. If those payments go to parties on U.S. or EU sanctions lists, however, this seemingly legal conduct may move into another level of concern. The LafargeHolcim matter points to more integrated approach international organizations must take in various types of compliance, including anti-corruption compliance, anti-money laundering compliance, and export control compliance. This convergence of various types of compliance requires not only compliance visibility but also compliance oversight across a wide spectrum of corporate risks.

The fallout for LafargeHolcim continues as the company’s CEO has resigned over these allegations. Human rights groups have brought civil actions in France, alleging the company had business relations with groups either directly supporting terrorism or indirectly supporting such groups. Finally, French prosecutors have opened a preliminary inquiry into the company’s activities around the cement plant in Syria.