ZURICH: French-Swiss cement maker LafargeHolcim said yesterday its chief executive Eric Olsen is stepping down following an internal investigation into the company’s activities in Syria. His resignation will be effective on July 15, LafargeHolcim said in a statement, adding that its board had agreed to his departure even though an internal probe had determined he was not responsible for any wrongdoings. Olsen’s departure follows an inquiry into the indirect financing by Lafarge of armed groups in civil war-ravaged Syria to keep one of its cement plants operational.
“My decision is driven by my conviction that it will contribute to addressing strong tensions that have recently arisen around the Syria case,” said Olsen. “While I was absolutely not involved in, nor even aware of, any wrongdoing I believe my departure will contribute to bringing back serenity to a company that has been exposed for months on this case,” he added.
Last month, LafargeHolcim admitted that it had resorted to “unacceptable practices” to continue operations at one of its now-closed factories in Syria, and yesterday it said an internal probe had confirmed that finding. The admission came after sources close to the case told AFP in January that the French government had filed a legal complaint against Lafarge for buying oil in Syria to power the Jalabiya factory, in violation of sanctions.
French cement maker Lafarge bought the factory in 2007 and invested some $680 million to get it working by 2010, representing the biggest foreign investment in the country outside the petroleum sector. The plant, located in northern Syria some 150 kilometres (95 miles) northeast of Aleppo, was finally evacuated in 2014, and closed down before Lafarge merged with its Swiss competitor Holcim in 2015. Lafarge is suspected of sourcing oil locally to operate the factory in defiance of a 2012 EU ban on purchases of Syrian oil as part of a sanctions package targeting the regime of Syrian President Bashar al-Assad.
According to an investigative piece published in French daily Le Monde last June, Lafarge entered into deals with armed groups in Syria, including the Islamic State group, to protect its business interests there. Yesterday, LafargeHolcim published findings from an independent, internal investigation into the plant, commissioned by its board. “A number of measures taken to continue safe operations at the Syrian plant were unacceptable, and significant errors of judgement were made that contravened the applicable code of conduct,” it said.
“The findings also confirm that, although these measures were instigated by local and regional management, selected members of group management were aware of circumstances indicating that violations of Lafarge’s established standards of business conduct had taken place,” it added. It stressed though that its internal investigation had “concluded that Eric Olsen was not responsible for, nor thought to be aware of, any wrongdoings that have been identified as part of its review.”
The company, which said it would begin searching for Olsen’s successor “immediately”, said it had taken “remedial measures”, including the creation of an “Ethics, Integrity and Risk Committe” to strengthen and enhance compliance with its ethics rules. Chairman of LafargeHolcim’s board Beat Hess, who is set to temporarily take over the chief executive seat after Olsen’s departure, stressed Monday that “we are absolutely committed to ensuring that events like those that occurred in Syria must never happen again at LafargeHolcim.”
Vontobel analyst Bernd Pomrehn meanwhile described Olsen’s departure in a research note as “extremely disappointing” at a time when the recently merged company was “gaining traction and delivering on targeted synergies.” But, he said, his departure “highlights that especially companies being active in politically challenging regions such as Syria have to follow strict code of standard practices.” “LafargeHolcim’s decision to create an Ethics, Integrity and Risks committee following the Syria issue came probably too late,” he said. – AFP