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LafargeHolcim CEO set to step down over Syria controversy

LafargeHolcim is close to announcing that its chief executive will step down following an internal investigation into a plant the Swiss-French cement company operated in Syria until September 2014.

Eric Olsen’s expected departure would make him the highest-profile casualty of the controversy surrounding a Lafarge cement plant that the company continued operating as Syria descended into civil war. Human rights groups have alleged the company helped finance terrorism.

Terms of his departure, which had not yet been finalised, were still being discussed on Sunday, according to sources close to the company. LafargeHolcim had no comment.

LafargeHolcim said in November that it “completely rejects the concept of financing of designated terrorist groups”.

Mr Olsen was not directly responsible for the operations in Syria, but while the plant was running, he was a senior manager in charge of operations at Lafarge. The French group merged with Switzerland’s Holcim to form LafargeHolcim in a €41bn deal in 2015.

His expected exit, which was first reported by France’s Le Figaro, would be another blow for the cement company. Last year its chairman stepped down and the group is under pressure to deliver on an ambitious integration programme in weak global markets following the 2015 merger.

Under Mr Olsen’s leadership since July 2015, LafargeHolcim has implemented a substantial disposal programme and sought to bridge cultural differences between the former Lafarge and Holcim parts of the business.

A sudden departure by Mr Olsen is likely to mean his position will be filled temporarily until a longer-term successor is found.

LafargeHolcim admitted in March that “unacceptable” measures had been taken to keep its Jalabiya plant in Syria running as the civil war intensified in 2013 until it was evacuated in September 2014. Those responsible for the plant had made “significant errors of judgment”.

At the time of the statement, Mr Olsen told the Financial Times that LafargeHolcim would “take all the actions necessary” against any individuals who violated its coded of conduct and to strengthen its internal controls.

The company is expected to comment on the results of a final report into the affair this week, possibly as early as Monday.

LafargeHolcim’s initial probe into the Syria plant revealed that “the local company provided funds to third parties to work out arrangements with a number of . . . armed groups, including sanctioned parties, in order to maintain operations and ensure safe passage of employees and supplies to and from the plant. The investigation could not establish with certainty the ultimate recipients of funds beyond those third parties engaged.”

The internal investigation has been conducted with law firms Baker McKenzie in Washington and Darrois Villey in Paris.

Paris prosecutors have opened a preliminary inquiry into alleged dealings between Lafarge and sanctioned groups in Syria following a complaint by the French finance ministry.

Human rights groups in France have filed a lawsuit and have alleged that the company had “business relations” with militant group Isis and may have taken part in financing the group.

LafargeHolcim reported net sales of SFr26.9bn in 2016, a fall of 1.7 per cent on the previous year on a like-for-like basis. Operating earnings before interest, tax, depreciation and amortisation were up 22 per cent at SFr5.2bn.

Via FT