Building Materials Manufacturer Pleads Guilty to Supporting Terrorist Organizations
Commentary by Ilan T. Graff
In the U.S. District Court for the Eastern District of New York, a France-based building materials manufacturer pleaded guilty to one count of conspiring to provide material support and resources to two U.S.-designated foreign terrorist organizations.
According to the Statement of Facts attached to the Plea Agreement, a Syria-based indirect subsidiary of the manufacturer conspired to provide financial support to numerous armed factions - including designated foreign terrorist organizations ISIS and the al-Nusrah Front - in a region of Syria that contained a cement manufacturing plant that the company owned. The company engaged in these agreements, with full support from the manufacturer, so that it could harvest raw materials in occupied territories and continue safely producing building materials in that region. The company used third-party intermediaries to negotiate the agreements and created false invoices to conceal the transactions.
In addition, the company had agreed to pay the terrorist organizations via a revenue-sharing agreement that gave a portion of the revenue earned from cement sales to ISIS in exchange for permission to conduct business in the occupied areas, and protection and safe passage for its employees. The company also entered into agreements to purchase raw materials from ISIS-controlled suppliers, which in turn paid ISIS an amount proportional to its sales to the company. Further, ISIS agreed to impose heavy fees on, and in some cases block the importation of, cement produced by the company's foreign competitors.
The DOJ reported receiving "significant cooperation and assistance" from French, Moroccan and Lebanese authorities. The DOJ said that this is the first corporate material support for terrorism prosecution.
As part of the plea agreement, the manufacturer agreed to pay a criminal monetary penalty of $90,780,000 and forfeiture of $687,000,000.
Commentary
Although the facts here are both novel and striking, the announcement is another data point suggesting heightened enforcement activity and penalties for corporate misconduct, as this is the latest in a series of guilty pleas that the DOJ has required as part of corporate resolutions.
The DOJ's ability to marshal inter agency and international support for the investigation and prosecution illustrates the type of institutional focus necessary to achieve similar results with respect to the FCPA and other corporate enforcement priorities.