Corporations and Economic Sanctions

November 7th, 2019 by Phil Mattera

Large corporations like to claim rights, such as freedom of speech and even freedom of religion, originally intended to apply to individuals. Yet they don’t like it when they are accused of crimes customarily brought against human persons.

That is the situation facing the Swiss cement company LafargeHolcim, whose French operation just escaped prosecution for crimes against humanity but is still facing serious terrorism-related allegations.

The case stems from actions taken by Lafarge half a dozen years ago in Syria, where in an effort to continue doing business in the war-torn country it made substantial payments to jihadi groups such as ISIS.

In 2017 the Paris Public Prosecutor opened an investigation of the company for financing terrorism, and the following year Lafarge and several executives were indicted for complicity in crimes against humanity and other offenses. The most serious allegation was just dismissed by an appeals court, but two NGOs that brought the original complaint – Sherpa and the European Center for Constitutional and Human Rights – are seeking to have the charge reinstated. Whether or not that happens, Lafarge will still face charges of financing terrorism and violating a trade embargo.

In the United States there have been numerous cases accusing large corporations of violating economic sanctions imposed on countries such as Iran, North Korea and Cuba. We have more than 400 such entries in Violation Tracker with total penalties of more than $16 billion. These were mostly brought by the U.S. Justice Department or Treasury’s Office of Foreign Assets Control.

Our next Violation Tracker update will include another two dozen such cases brought by the Manhattan District Attorney and the New York State Department of Financial Services that will add billions more to the penalty total.

The largest of these cases involved the French bank BNP Paribas, which in 2015 was penalized more than $8 billion after being convicted of conspiring to violate the International Emergency Economic Powers Act and the Trading with the Enemy Act by processing billions of dollars of transactions through the U.S. financial system on behalf of Sudanese, Iranian and Cuban entities subject to U.S. economic sanctions.

BNP was sentenced to a five-year term of probation and ordered to forfeit $8.8 billion to the United States and pay a $140 million fine.  This was the first time a financial institution had been convicted and sentenced for violations of U.S. economic sanctions, and the total financial penalty was the largest ever imposed in a criminal case.

One difference between the U.S. cases and the French one involving Lafarge is that individual executives at large corporations are usually not targeted by American authorities. This allows the companies to buy their way out of the legal jeopardy, and no one ends up behind bars.

That’s also true, of course, for other kinds of business misconduct and is one of the key reasons the corporate crime wave never seems to end.

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