Lafarge case study.

Doing business in Syria : at which cost ?

Authors :

Mrs Virginie Lecourt, Ph.D, Université de Montréal

Mrs Elisabeth Gressieux, Ph.D, ESSCA School of Management

Jalabyia, September 19, 20141 : "Islamic State soldiers are at the gates of the factory!!! What do we
do? Where to flee? How do we escape?" screams Jamel one of the Syrian engineers at Lafarge's
Jalabyia plant who was present at the scene when the factory was taken over by the terrorist group
Daech. Fear, anxiety and a feeling of helplessness overwhelmed the few Syrian workers and engineers
who remained at the French cement company's facilities in northern Syria, 60 km from Aleppo, very
close to Raqqa, Manbij and Kobane, the stronghold of the Islamic State.

Then, nothing more, Jamel fell into a serious depression. In 2018, he seems to be getting better and
can again be interested in current events. The international press brings him back into this story.
Indeed, since 2017, several senior executives of the Lafarge group are before the courts for having
pacted with the Islamic State. Jamel knows all these personalities for having worked with them for
many years. He then tries to reread the story and tell the facts to his family. But, even several years
later, he is still very affected and many questions are spinning in his head. He still doesn't understand.

"Which decisions did our leaders take to make such an attack possible ? How did all of this happen?
How can we explain this disaster? "How could they leave us in such a situation? ... putting our lives in
danger .... 240 employees ... it is not nothing .... Syria is far away, another continent, another culture,
... and then what is a handful of workers worth to them?"

Of course, in 2010, we were far from imagining such a situation. The inauguration of the Lafarge plant
in Syria was grandiose. After three years of work, and some 680 million US dollars invested in
renovating the site, Lafarge was about to produce 23% of the cement in Syria and had the support of
political institutions in several countries2. It could be proud of itself. We were also very proud of our
company and very happy to work for this French flagship. A bright future was opening up for us.

However, in 2011, numerous riots broke out so that the situation quickly became critical. It is the
beginning of the civil war. On September 2, 2011, faced with this situation, the European Union
decreed an embargo on Syrian oil imports from November 15, 2011 (the EU imported 95% of Syrian
production; these imports represented 75% of Syrian export revenues).

The first departures of foreign multinationals such as Bel, Shell, Total, Air Liquide... started at that time
and they will go on over 2012.

1
https://www.middleeasteye.net/fr/opinion-fr/lafarge-en-syrie-pourquoi-ne-pas-nommer-les-groupes-armes-
avec-qui-le-cimentier-sest
2
http://www.lefigaro.fr/societes/2017/12/09/20005-20171209ARTFIG00115-financement-du-terrorisme-en-
syrie-la-chronologie-de-l-affaire-lafarge.php
However, Lafarge did not seem to be moving. Only a few months later, in July 2012, did we notice that
expatriates working in the cement plant were evacuated3. Why? What was going on? Were there any
risks?

We, the locals, stay but we stay without understanding. And it was not for lack of asking for
explanations, because our anxiety was beginning to be palpable within the factory. Moreover, a few
months later, several of our colleagues were kidnapped. In August 2012, the former director of human
resources, Nidal Wahbi is kidnapped; And, on October 6, it is the turn of a group of nine employees.
Then new kidnappings until 20144, but each time ending "well". Lafarge paid ransoms, but not directly
to the kidnappers. Money was paid to the families of the hostages who negotiate alone with the
kidnappers. Also, a cordon sanitaire was set up around the factory to protect us.

However, Lafarge was aware of the risks because, as Jacob Wærness, risk manager for Lafarge in Syria
from September 2011 to October 2013, explained, "The banking system had collapsed in the rebel
areas. It was very difficult to transfer money to Manbij. So you had to go to the regime-controlled area
to withdraw money. It is true that it was risky for the employees, but we could not collect money in
cash in the factory. It would have been known and it would have become a target. (...) Lafarge wanted
to keep the plant running, it was the best way to protect our site. (...) We also wanted to give a good
image of Lafarge. While others had left, we stayed, in solidarity with our customers and employees "5.

But Jamel is not convinced of the sincerity of his company .... He wonders afterwards what it means to
"show solidarity" ... He thinks that all they wanted was to keep the factory running so that they could
participate in the reconstruction of the country once the war was over and thus benefit from a lucrative
market that would allow them to amortize the 600 million euros they had invested there since 2007.
Jamel is surprised to read the defense of Christian Herrault, Deputy Head of Operations between 2013
and 2014 : "We went to see the French ambassador for Syria - in Paris - every six months, and no one
told us that we had to leave. On the contrary, the Quai d'Orsay strongly encouraged us to stay, it is still
the biggest French investment in Syria and it is the French flag. "6.

This reminds him of another time when Bruno Pescheux, Director of Lafarge Cement Syria (LCS), said
these clear words: "The idea was to preserve the integrity of the plant by keeping it running, even if it
was discontinued. We wanted to avoid the cannibalization of the plant, which would have happened
if it had been perceived as abandoned. "7 And he added: "No one within Lafarge asked us to stop (...)
In this racket situation, there are people who know. And they don't want to dig.8

And then this strange remark by a spokesman for the group9 : "We were fulfilling a very important role
in Syria, as an employer who provided a living for hundreds of families, but also by supplying 25% of
the cement needed for the country. We could not take the decision to close down lightly. We had to
keep the plant running, albeit 'at the cost of unusual practices'10 ».

« Unusual practices » ... a euphemism .... We had to pay for the passes for the employees and the
trucks at the checkpoints held by the different armed factions, some of which were qualified as

3
La Tribune de Genève, le 04-01-2018 : « Syrie : Lafarge n’en avait rien à faire de nous »
4
Le Monde, 14-11-2016 : Comment Lafarge a exposé ses employés au rapt en Syrie. Et Libération, le 16-01-
2018 : Menacés par Daech, ces salariés que Lafarge a abandonné en Syrie.
5
Comment Lafarge a exposé ses employés aux rapts en Syrie. 14-11-2016. Le Monde.
6
Le Monde, 20-09-2017 : Lafarge : l’engrenage syrien.
7
Le Monde, 20-09-2017 : Lafarge : l’engrenage syrien.
8
Le Monde, 22-09-2017 : Lafarge en Syrie : questions autour des responsables.
9
Le Monde, 14-11-2016 : Le jeu dangereux de Lafarge en Syrie.
10
Le Monde, 13-12-2017 : Financement du terrorisme : le double jeu de Lafarge.
terrorists by the UN, not to mention the supply of raw materials - sand, fuel oil, pozzolan, etc."11
remembered Jamel. The accountant had told him: "In accounting terms, the payments for the passes
are recorded via false invoices as 'representation expenses'.12 The 'transactions with armed groups'
would have been decided by the 'local management', not by headquarters13 ... " How do we know?"
asked Jamel.... "20,000 dollars a month from 2012 to 201414, that's a lot of money... Daech could
prosper"! It is the former minority shareholder Mr. Tlass who will be in charge of paying the armed
groups using the cash from the factory15. Indeed, "Mr. Tlass would talk to the rebel factions and pay a
fee so that our employees would not be bothered at the various crossing points. "16

This racketeering economy did not prevent several cases of kidnapping of Syrian employees, however,
thought Jamel sadly, even though Christian Herrault had remarked: "We managed the risks through
this racketeering economy, and there was no significant phenomenon until the end of 2013".17

But on June 29, 2014, the situation became more and more delicate as Daech set up a caliphate around
the area where the factory was located. But again, we stayed. Jamel cannot help but think: "At that
moment I told myself that the lives of the Syrians were less valuable than others. "18 The kidnappings
multiply, however, and each time they negotiate, as happened a few days ago: "After twenty days of
captivity, a transaction is organized in the middle of the night, on the banks of the Euphrates, for the
equivalent of 200,000 euros in cash. The hostages are released. "From then on, Lafarge agreed to let
the Alawite employees return home (...). "19 And then finally, "but several months later, they asked us
to return or resign. The risks were too great, so we finally agreed to leave, without any real dismissal
procedure ».20

Internationally, decisions are becoming more and more drastic. For example, on August 15, 2014, the
United Nations voted for an embargo on oil from Syria. Financial transactions with terrorist
organizations are also prohibited. If they continue, they will be considered as financial support to
terrorist organizations. Yet, within Lafarge, we do not see much change. It is certain that stopping the
activity would have generated a great financial loss. Moreover, the company took on debts to foreign
investors for the renovation of the site a few years ago and it must respect its commitments to the
lending institutions. If it fails to do so, it will have to repay its debts as stated in the company's 2010
annual report.

Also, if we do a quick calculation, it is sure that the decision to leave is not so simple: "the racket of
Daech, it was the equivalent of 500 tons... Lafarge had three silos of 20,000 tons. So, are we going to
fold everything for 500 tons? "21

11
Phrase adaptée de Le Monde, 07-01-2018 : les mécanismes financiers de l’affaire Lafarge.
12
Le Monde, 22-09-2017 : Lafarge en Syrie : questions autour des responsables.
13
Le Monde, 13-12-2017 : Financement du terrorisme: le double jeu de Lafarge.
14
La tribune de Genève, le 04-01-2018 : « Syrie : Lafarge n’en a rien à faire de nous. »
15
Le Monde, 22-09-2017 : Lafarge en Syrie : questions autour des responsables.
16
Les échos, 05-12-2017 : Lafarge dans le bourbier syrien.
17
La tribune de Genève, le 04-01-2018 : « Syrie : Lafarge n’en a rien à faire de nous. »
18
https://www.lesinrocks.com/2018/01/17/actualite/actualite/financement-de-daesh-par-le-cimentier-
lafarge-dancien-salaries-syriens-racontent/
19
Libération, 16-01-2018 : Menacés par Daech, ces salariés que Lafarge a abandonnés en Syrie.
20
Ibid
21
Ibid
So what was the best decision: to stop or to continue?

We often talked among ourselves about the political situation and wondered how our company could
continue its activity. We did not hear about the decisions made by our top management, who are
admittedly far from the situation... Were they aware of the risk? How did they evaluate it? Why were
we not told anything? Daech seemed far from France, which is the decision-making center of Lafarge.
Indeed, the activities of this terrorist group were mainly in Syria and in the region. At that time, there
had not yet been the Charlie-Hebdo attacks or those of November 13, 2015 in Paris. "It was a Syrian
affair" Christian Herrault 22.

Moreover, the CEO of Lafarge from 2006 to 2015, during his defense, maintained that he was not
aware of this. He said that he did not do the work of his colleagues and did not necessarily read the
minutes. He shifted the responsibility to Mr. Jolibois, then director of the factory23. He even went so
far as to say that he did not know what Daech - the acronym for the Islamic State - meant. He relied
on what his colleagues told him, without being systematically informed. According to him, the system
allowed him to be informed but that this information did not reach him24.

On September 10, 2014, nine days before the attack, the plant manager went to the French embassy
in Jordan. And the embassy's report concludes, "F. Jolibois did not seem particularly concerned about
the consequences for the security of the factory and its personnel of the presence of the Islamic State
a few kilometers from Ain-El-Arab (Kobane). "25

That same day, Lafarge's executive committee met and decided to stay put.

September 19, 2014, Daech attacked and stormed the factory.

A few days later, CEO Bruno Lafont had very proudly emphasized, "Despite the complexity of the
situation and the extreme emergency we were faced with, we managed to get our employees out of
the plant safely. Things probably did not go as we had planned; nevertheless, we achieved the main
goal. Lafarge Cement Syria is not dead. I am convinced that we will win the last battle. »26

22
Ibid
23
Le Monde, 04-01-2018 : Syrie : les documents qui incriminent les dirigeants de Lafarge
24
Le Monde, 09-12-2017 : Lafarge en Syrie : la chute de l’ex-PDG Bruno Lafont
25
Libération, le 16-01-2018 : Menacés par Daech, ces salariés que Lafarge a abandonné en Syrie.
26
Ibid