LafargeHolcim has admitted to “serious errors in judgment”, after an internal independent investigation uncovered dealings between personnel at its plant in Syria and certain armed groups and sanctioned parties.
“It appears from the investigation that the local company provided funds to third parties to work out arrangements with a number of these armed groups, including sanctioned parties, in order to maintain operations and ensure safe passage of employees and supplies to and from the plant,” the company said in a press release.
The investigation did not establish the ultimate recipients of the funds, the company added.
Given the challenging political and security situation at the time of the payments in Syria, “those responsible for the Syria operation appear to have acted in a manner they believed was in the best interests of the company and its employees,” the company continued. “However, the investigation revealed significant errors in judgment that are inconsistent with the applicable code of conduct.”
Following the internal review, the Board of Directors has approved the creation of a new Ethics, Integrity and Risk Committee, which will be supervised by a member of the Executive Committee. The company also said it would adopt a “more rigorous risk screening programme focusing in particular on high-risk third partiers and joint-venture partners, a restricted party screening programme [and] a new sanctions and export control programme.”
The company’s executive management had been instructed to “vigorously implement” the changes by the Board, the company said, adding that “there can be no compromise with compliance nor with adherence the standards reflected in the company’s code of conduct no matter the operational challenges.”
The company added that there was no indication that the allegations were likely to have an adverse financial impact that is material to the group, although criminal complaints had been reported to have been filed in France. “Such proceedings are conducted under a rule of secrecy and neither Lafarge SA nor any of its affiliates have been made party to any of them,” the company said.
The admission overshadowed the announcement of generally positive results for the company in 2016, with earnings up despite a fall in revenues and sales volumes across its geographical profile.
Read the article online at: https://www.worldcement.com/africa-middle-east/02032017/lafargeholcim-admits-syria-payments/