The CEO of Swiss-French cement maker LafargeHolcim on April 24 announced his resignation following release of an internal review that found Lafarge employees made payments to rebel groups in Syria from 2013 to 2014.
Eric Olsen took the helm of the newly merged conglomerate in July 2015 as part of the complex deal that brought together Swiss-based Holcim and French-based Lafarge. LafargeHolcim is the world’s largest supplier by volume of cement, concrete and aggregate.
The company has spent the last two years working out the details of combining the global operations of the two cement giants, including the sale of various subsidiaries in the European Union to comply with antitrust regulations. LafargeHolcim also has been expanding its Latin American presence, with plans to open over 800 retail storefronts under its Disensa franchise over the next several years.
The company on April 24 released an internal report detailing its investigation into alleged payments to armed groups near its cement plant in Jalabiya, Syria, from 2013 to 2014. According to LafargeHolcim, the $640 million Lafarge Cement Syria plant took three years to build and began production in 2010. As the political situation began to deteriorate in Syria in 2011, Lafarge began transporting non-Syrian employees out of the country and operated the plant intermittently as the situation allowed. According to the report, it was at this time that Lafarge employees made payments to local armed groups, allegedly to reduce the threat to the plant and its workers.
LafargeHolcim says the payments were made to intermediaries, and it was difficult to document which armed groups were ultimately receiving the payments.
The U.S. and EU had designated several of the armed groups active in the area at the time as terrorist organizations. Elements of the Islamic State seized the plant in 2014.
The report states that Lafarge’s Olsen and his management team were not aware of the payments to armed groups. Olsen maintains he was not connected to the payments in Syria. “My decision is driven by my conviction that it will contribute to addressing strong tensions that have recently arisen around the Syria case,” he said in a press statement.
LafargeHolcim maintains that it was employees in Syria who decided to make the payments. “Although I appreciate that those responsible for the Syrian operations appear to have acted in a manner they believed was in the best interests of the company and its employees, there can be no compromise when it comes to compliance rules and adherence to the standards set out in the company’s code of conduct, no matter what the operational challenges are,” said Beat Hess, LafargeHolcim’s board chairman, in a press statement.
When Olsen leaves in early July, Hess will assume the title of interim CEO while the company conducts its search for a new chief executive. Executive committee member Roland Köhler, who currently is responsible for Europe, Australia and New Zealand, and trading, will take over as chief operating officer.
Eike Christian Meuter, a spokesman for LarfargeHolcim, says the firm has launched a search for a successor and will be looking both inside and outside the company for candidates. “It’s important to note that our strategic priorities are not going to change. We have our targets set for 2018, and that’s not going to change.”