ZURICH – LafargeHolcim Ltd. Chief Executive Eric Olsen abruptly resigned in the wake of a controversy over payments the cement giant made to armed groups in Syria amid the country's civil war.
Continue Reading Below
The Franco-Swiss company said Mr. Olsen, a U.S.-French dual national, will leave July 15. It said it had started a search for a successor. Chairman Beat Hess will serve as interim CEO after Mr. Olsen departs.
Lafarge said Monday in a separate release detailing the findings of an internal probe into the Syria payments that the role of Mr. Olsen as CEO had been a "point of attention" in the review. But it said its internal investigation cleared him of any wrongdoing regarding the payments, or knowledge of them. It declined to comment further, citing legal proceedings in France.
Mr. Olsen, in a statement, said his decision to resign "is driven by my conviction that it will contribute to addressing strong tensions that have recently arisen around the Syria case." He said he was "absolutely not involved" with, or aware of, the payments. "I believe my departure will contribute to bringing back serenity to a company that has been exposed for months on this case," he said.
Lafarge had previously disclosed that its local unit in 2013 and 2014 provided funds to third parties, who then hired armed groups, including groups on Western sanctions lists, to "maintain operations and ensure safe passage of employees and supplies to and from the plant."
The disclosures over the Syrian payments have been a big distraction for the company, as it pushes ahead with the complex integration of Switzerland's Holcim and France's Lafarge, two of the world's biggest cement makers that merged less than two years ago. The company's shares were 1% higher at 0730 GMT, in a generally upbeat market across Europe.
Continue Reading Below
Mr. Olsen has been chief executive since the cement merger in 2015. Before that, he served in a variety of executive roles at Lafarge and was executive vice president of operations from 2013.
In a statement Monday, the company provided some further detail about its internal probe into the payments. It said "a number of measures taken to continue safe operations at the Syrian plant were unacceptable, and significant errors of judgment were made that contravened the applicable code of conduct."
The company said it determined that "although these measures were instigated by local and regional management, selected members of group management were aware of circumstances indicating that violations of Lafarge's established standards of business conduct had taken place."
Last month, Lafarge said the Syria allegations weren't expected to have a material financial effect. It posted a net profit of 1.79 billion Swiss francs ($1.8 billion) in the year to Dec. 31, a turnaround from a pro forma net loss of CHF2.12 billion the previous year.
Some analysts said the departure could be further disruptive to LaFarge's integration efforts.
"In our view, it is extremely disappointing that Eric Olsen has to leave at a time when the company is gaining traction and delivering on targeted synergies," said analysts at Vontobel.
LafargeHolcim also came under criticism in France last month over comments Mr. Olsen made that signaled the company's willingness to supply cement for a border wall with Mexico that U.S. President Donald Trump has proposed building.
Write to Brian Blackstone at firstname.lastname@example.org
(END) Dow Jones Newswires
April 24, 2017 06:43 ET (10:43 GMT)