*This post was originally published on EJIL: Talk! on 3 July 2023
On 18 October 2022, the U.S. Department of Justice agreed to a historic plea deal in the Lafarge proceedings, marking a significant development in the field of corporate accountability and terrorism. In the first-ever U.S. prosecution of its kind, the Lafarge corporation (at the time one of the two largest construction companies in the world) and its subsidiary, Lafarge Cement Syria (‘LCS’), were sentenced to $778 million in financial penalties for providing material support to terrorist organizations (‘the Lafarge Settlement’). This post reviews the fine and asset forfeiture components of the Lafarge Settlement and considers the broader significance of the Settlement for the victims of terrorism, while discussing proposals for Congress to establish a permanent U.S. Fund for Victims of Designated Terrorist Organizations (the ‘VDTO Fund’) that would distribute corporate financial penalties to victims.
The Settlement centres on Lafarge’s business dealings with two Designated Terrorist Organizations (‘DTOs’), the Islamic State in Iraq and the Levant (‘ISIL’) and the Al-Nusra Front (‘ANF’), during the period of August 2013 to October 2014. The defendants admitted paying the equivalent of approximately $5.92 million to ISIL and ANF to protect Lafarge’s business in Syria. Lafarge continued with this arrangement in Syria, even knowing that ISIL was ‘brutalizing innocent civilians’ at the same time, including Alawite, Christian, Kurd and Yazidi victims, notably Lafarge’s own employees. This begs the question, at whose expense did Lafarge and LCS unjustly enrich themselves? What are the implications of the $778 million Lafarge Settlement for victims of ISIL atrocities?
1. The Fine and Asset Forfeiture Components of the Settlement
On 18 October 2022, the District Judge sentenced Lafarge and LCS to terms of probation and to pay financial penalties of $778 million made up of $90.78 million in criminal fines and $687 million in asset forfeiture.
Fines levied pursuant to non-prosecution agreements are usually deposited into the Crime Victims Fund. Although victim support is among the Crime Victims Fund's primary objectives, it is unlikely to provide any reparations for ISIL victims, as victims would need to be covered by an eligible State’s victim compensation program. Alternatively, the Lafarge Settlement could prompt the U.S. Justice Department’s Director of the Office for Victims of Crimes to establish a special program to compensate victims of international terrorism, funded from the Crime Victims Fund’s antiterrorism reserve. The practical value of this legal possibility is limited. Only U.S. nationals falling within the definition of ‘victims’ could benefit from the emergency antiterrorism reserve. Non-U.S. victims affected by ISIL would not be eligible. Moreover, the reserve can at no point exceed $50 million, which would only amount to around half of the Lafarge fine component.
The asset forfeiture component of $687 million is based on ‘proceeds obtained directly or indirectly as a result of (the) offense’. Approximately $80 million of this amount is attributable to ‘gross gains to all participants in the conspiracy, including LCS, the intermediaries, ISIL and ANF’. In other words, roughly 10% of the total $778 million financial penalty is made up of the ‘ill-gotten’ gains of the agreement with the Designated Terrorist Organizations, a result of Lafarge’s decision to continue doing business in Syria despite the surrounding terrorist threat.
Asset forfeiture monies are generally sent to the Asset Forfeiture Fund (AFF). Victim compensation ranks among the primary goals of the Asset Forfeiture Program (‘AFP’). However, the Asset Forfeiture Program’s mechanisms only compensate victims for pecuniary losses directly caused by the offense underlying the forfeiture, excluding losses resulting from property damage, physical injuries or from a tort associated with the offense. This narrow requirement would likely exclude the vast majority of claims from potential victims in relation to Lafarge.
In sum, neither the Crime Victims Fund nor Asset Forfeiture Fund offers an obvious legal pathway for victims of ISIL to recover from the $778 million financial penalty.
2. Establishing a Special Fund for Victims of Designated Terrorist Organizations
The lack of a well-established legal pathway to victim reparation in the Crime Victims Fund, and the several obstacles identified in relation to the Asseet Forfeiture Fund, does not preclude alternative solutions. Firstly, funds from the Crime Victims Fund and Asset Forfeiture Fund could be used in an unprecedented manner to make awards to victims. Failing that, another possibility would be for Congress to establish a special “Fund for Victims of Designated Terrorist Organizations” (proposed here as the ‘VDTO Fund’).
A novel VDTO Fund could distribute financial penalties obtained from counter-terrorism efforts to victims. The VDTO Fund would provide a standing mechanism to equitably allocate funds obtained from large and solvent transnational corporations penalised for supporting a DTO, as was the case in the Lafarge Settlement. The VDTO Fund would fill a lacunae - the current lack of any such U.S. to deal with penalties arising from corporate involvement in DTOs.
A precedent for the proposed VDTO Fund can be found in the United States Victims of State Sponsored Terrorism (VSST) Fund. The VSST Fund was established in the context of violations of economic sanctions, rather than conspiring to provide material support to terrorism. It provides compensation for claimants ‘injured in acts of international state-sponsored terrorism’. The VSST Fund is not a possible route to compensate ISIL victims since ISIL is not supported by any of the 4 currently designated states (Iran, Cuba, Syria and North Korea).
As envisaged for the proposed VDTO Fund, the VSST Fund is a standing mechanism that resulted from an individual U.S. criminal settlement with a corporation (which happened to be, like Lafarge, a major French transnational corporation that had become involved in supporting atrocities). In 2015, after a U.S. District Court sentenced the French bank BNP Paribas following a guilty plea for violating Sudan, Iran and Cuba sanctions, the Justice Department announced it was ‘exploring ways to use the forfeited funds to compensate individuals who may have been harmed by the sanctioned regimes of Sudan, Iran and Cuba’. Congress subsequently established the VSST Fund, and used $1.025 billion of the $3.8 billion BNP Paribas asset forfeiture originally allocated to the Treasury Forfeiture Fund as its starting balance. The Lafarge Settlement could prompt a similar initiative.
The VSST Fund furthermore demonstrates the significant legislative discretion in the context of victim compensation. Its funds have been used to compensate hostages held in the U.S. Embassy in Tehran in 1979 (despite occurring several decades prior to the BNP Paribas events), and family members of victims of the September 11 attacks. The fact that the Teheran victims were compensated from BNP Paribas funds based on sanction violations some 30 years after the hostage-taking demonstrates significant flexibility.
3. Eligibility of Victim Claimants
In order to define its criteria for claimant eligibility, the proposed VDTO Fund could draw inspiration from the VSST Fund, under which the eligibility criteria are defined by reference to the United States Foreign Sovereign Immunities Act (FSIA). Compensation is awarded to individuals under the VSST fund who obtained a claim against a designated state sponsor of terrorism that was not immune from this claim under the terrorism exception of FSIA. In addition, compensation is only awarded to the extent the civil claim is still outstanding and unpaid.
For the proposed VDTO Fund, an equivalent instrument could be identified, perhaps in the Antiterrorism Act (ATA), which enables civil actions for the commission and aiding and abetting of international terrorism. The ATA provides for extraterritorial civil jurisdiction and would therefore cover overseas acts, such as ISIL and ANF terrorist atrocities committed outside the U.S. It could therefore be the basis for drafting a clear definition of eligibility of claimants for the VDTO Fund.
It is notable that the ATA and the terrorism exception of the FSIA share one significant limitation: Only U.S. nationals can bring claims under the ATA, the FSIA terrorism exception additionally includes U.S. armed forces and government employees. However, the inclusion of Tehran hostages and family members of 9/11-victims demonstrates that the VSST Fund was specifically drafted with a broader definition of eligibility to encompass non-US nationals. A VDTO Fund defining eligibility by reference to an instrument such as the ATA could achieve more for international victims’ justice if it also included provision for non-U.S. nationals who suffer greatly from international acts of terrorism.
4. U.S. and non-U.S. Victims connected to the Lafarge Settlement
The Syrian civil war illustrates the range of different victims who suffer from DTO-perpetrated atrocities, and who could be considered eligible claimants under a new VDTO fund. First and foremost, the proposed VDTO Fund could distribute compensation to U.S. victims of ISIL, such as the families of U.S. soldiers, U.S. aid workers or U.S. journalists who were killed by ISIL. In addition to military service personnel, a wide range of U.S. persons suffered at the hands of ISIL, such as human rights activist Kayla Mueller who was held in sexual slavery near Raqqa not far from Lafarge’s plant, and U.S. journalist James Foley who was brutally executed by ISIL, also near the plant.
Additionally, U.N. fact-finding has identified extensive atrocities against Yazidi, Christians, Alaouites and Kurds that amount to crimes against humanity. Some non-U.S. victims would have particularly strong claims that their harm was not only linked to ISIL but specifically to Lafarge’s role in cooperating with ISIL. Lafarge employees at the Jalabiyeh cement plant were threatened, arrested, kidnapped or disappeared by ISIL due to their identities, as argued in ongoing proceedings in French Courts where the Lafarge corporation and several of its executives are due to stand trial in 2023 on charges of complicity in crimes against humanity, financing of terrorist activities and endangering the lives of others.
Amongst the many non-U.S. victims of ISIL, the Yazidi community has been perhaps the most widely recognised ethnic group. On 3 August 2014, at the same time as their cooperation with Lafarge was materializing, ISIL militants carried out massacres of Yazidis, forcing thousands to flee to Mount Sinjar in Iraq, a day’s drive from Jalabiyeh. The U.N. recognized the attacks as a possible genocide, while rights groups say more than 5,000 Yazidis were killed and 400,000 displaced, and thousands of Yazidi women and children sold into sexual slavery. The plight of Yazidi survivors was recently recognised by the Higher Regional Court of Koblenz in convicting a former ISIS member, and abuser of an enslaved Yazidi woman, to 9 years imprisonment for aiding and abetting international crimes, continuing a series of such trials in German courts.
The idea of using a novel VDTO Fund to compensate Yazidi communities would be consistent with proposals for potential U.S. assistance analysed by Abid Shamdeen, a member of the Yazidi community from Sinjar, while providing direct monetary compensation to Yazidi victims. U.S.-based Yazidi NGOs and individuals could be beneficiaries of the fund, or could help to identify other potential beneficiaries, such as prominent ISIL survivor Nobel Prize Winner Nadia Murad who was captured by ISIL militants in Sinjar in August 2014 and held in sexual slavery for three months.
5. Flexible use of the Lafarge Settlement as a step towards corporate accountability?
In practice, the parameters of any mechanism for distributing the Lafarge Settlement would be attenuated by the U.S. political environment – strongly prioritizing victims who have a nexus to the U.S. Nonetheless, allocating even a small portion of the fund to foreign victims would be highly symbolic. For the non-U.S. victims of ISIL, particularly those Lafarge employees who have a direct nexus to the corporation’s activities with ISIL, the Lafarge Settlement presents an important opportunity to demonstrate U.S. commitment to international accountability.
Even a modest amount, such as 10% of the $778 million settlement (corresponding to the $80 million ‘ill-gotten’ gross gains part of the asset forfeiture component), could go a long way to answering victims’ calls for justice. A novel VDTO Fund would provide the legal framework to channel money to victims who suffered at the hands of ISIL -while it received Lafarge’s financial support- and would provide a standing mechanism for future victims of DTOs. Whether through Congressional action to establish such a fund, or flexible use of existing legislative routes, a victim-centred use of the Lafarge monies would see the U.S. taking an important symbolic and pragmatic step towards ensuring accountability for terrorism and atrocity crimes around the globe.
*Author's Note: With thanks to Maxime Neuhaus for research assistance in preparing this piece.