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First-Ever Prosecution of a Corporation Under the Anti-Terrorism Act: A Legal Milestone with National Security Implications

Introduction

In a groundbreaking legal development, the United States Department of Justice (DOJ) recently initiated its inaugural prosecution of a corporate entity for providing material support to terrorist organizations, as stipulated under Section 2339B of the Anti-Terrorism Act (ATA). The corporation in question, Lafarge S.A., a leading French cement manufacturer, along with its Syrian subsidiary, Lafarge Cement Syria S.A., admitted to a single count of conspiracy to furnish material support to specific foreign terrorist organizations, namely ISIS and the al-Nusrah Front. The company has consented to pay a staggering $777.78 million in fines and asset forfeitures.

The Intersection of Corporate Crime and National Security

As articulated by Deputy Attorney General Lisa Monaco, this case serves as a stark illustration of the convergence of corporate malfeasance and national security concerns. The prosecution underscores the extensive toolkit at the disposal of the U.S. government to tackle corporate criminality, including the extraterritorial reach of U.S. laws that can affect foreign corporations, even those already facing legal actions in their home countries.

The Backstory

Between August 2013 and October 2014, Lafarge remitted payments to armed terrorist factions for the continued operation of its cement facility in Syria. These payments were rationalized by company executives as akin to taxation. Notably, one such transaction was processed via a New York-based intermediary bank. The corporation also endeavored to obscure its activities through the manipulation of records and the utilization of personal email accounts hosted by U.S.-based service providers.

The Acquisition Angle

In July 2015, Lafarge was acquired by Swiss cement company Holcim Ltd. During the pre-acquisition due diligence phase, Lafarge's interactions with ISIS and the al-Nusrah Front were not divulged. Although Holcim did not perform post-acquisition due diligence on Lafarge's Syrian operations, it did initiate an investigation when the misconduct eventually surfaced.

Legal Consequences

On October 18, 2022, following the unsealing of the case in the U.S. District Court for the Eastern District of New York, Lafarge entered a guilty plea for conspiring to provide material support to ISIS and the al-Nusrah Front, in violation of Section 2339B of the ATA. The statute prescribes criminal penalties for any individual or entity that knowingly offers material support to a foreign terrorist organization. The term "material support" is broadly defined to include property, services, financial services, lodging, training, expert advice, and transportation.

Financial Repercussions

As part of the plea agreement, Lafarge will forfeit over $687 million, representing the value of assets accrued from the criminal enterprise, and will pay an additional criminal fine exceeding $90 million. The company has also committed to aiding ongoing investigations.

Observations and Implications

• - Setting a Legal Precedent: This case marks the first instance where a corporation has been prosecuted under the ATA's "material support" provision. It opens the door for similar future prosecutions. - Global Reach of U.S. Laws: The case exemplifies how U.S. anti-terrorism laws can be applied to foreign corporations and their overseas activities. In this instance, jurisdiction was established based on a single wire transfer and the use of U.S.-based email accounts.
• - Multi-Jurisdictional Enforcement: Lafarge has also been subjected to legal actions in France, further emphasizing the need for corporations to be vigilant about compliance across multiple jurisdictions.
• - Due Diligence in Mergers and Acquisitions: This case serves as a cautionary tale for companies contemplating acquisitions, highlighting the imperative for comprehensive due diligence and potential disclosure of pre-acquisition activities to authorities.

For further legal consultation on this matter or related issues, feel free to reach out to the authors or your regular contacts at Lucosky Brookman LLP.