CANADIAN COMPANY FOUND GUILTY OF BRIBERY IN
UK-SUPPORTED DAM PROJECT
MAJOR QUESTIONS FOR WORLD BANK & UK EXPORT
CREDITS GUARANTEE DEPARTMENT
In a landmark
decision, the High Court in Lesotho has convicted Acres International,
a Canadian engineering consulting firm, of paying bribes to
win contracts on the multi-billion dollar Lesotho Highlands Water
Project
(LHWP).[1] Sentencing will take place on October 7th and 8th.
Acres was
found to have paid $266,000 in bribes to Masupha Sole, the former
chief executive of the LHWP. Earlier this year, Sole wassentenced
to 18 years in prison for receiving bribes from Acres and a number
of other multinationals, including the consortium of which Balfour
Beatty, the UK construction giant, was a part. Spie Batignoles,
the lead company in the consortium, is due to appear in court
on bribery charges next year.
Balfour Beatty
received financial support from the UK Export CreditsGuarantee
Department.[2] The UK also supported the project through the European
Union [3] and the World Bank.
Acres' defense
was that it was not responsible for the payments made to Mr Sole,
since these were made by an intermediary, Mr. Bam, with whom the
company had a "representation agreement"; [4] In his verdict,
Judge Lehohla, dismissed this defence, stating that the representation
agreement was a "sham". Mr Bam could not be called a "local" agent
since, at the time, he was employed in Botswana, thousands of
miles from Lesotho. The Judge also ruled that there was no evidence
that Bam had provided any service to Acres. The inescapable inference
was that the representation agreement was a conduit for bribes
- and that Acres knew this to be the case.
Germany's
Lahmeyer International is currently also on trial. Other companies
facing prosecution include Italy's Impregilo and France's Dumez
International. However, there are fears that Lesotho, one of Africa's
poorest countries, will not have the financial resources to complete
the prosecutions.
"The judgment
is a landmark", says Nicholas Hildyard of the CornerHouse, a UK
human rights and development group. "The UK talks about cleaning
up corruption but has never prosecuted a company for bribing officials
abroad, despite numerous allegations. But Lesotho, despite its
poverty, has acted where others have only talked. The international
community must provide the resources for Lesotho to finish what
it has begun."
Campaigners
internationally are now demanding that the World Bank make
good on its
promise to crack down on corrupt corporations by debarring Acres
from future contracts.[5] "The Bank must act swiftly to implement
its anti-corruption procedures," says Alex Wilks of the Bretton
Woods Project, an NGO which monitors the Bank. "The Bank had financial
oversight for the project. It must explain why it failed to prevent
corruption from taking place ."
UK campaigners
are also demanding that the Export Credits Guarantee Department
release the results of any investigations it has made into the
allegations surrounding the consortium of which Balfour Beatty
was a part.
"The ECGD's
ethical and financial credibility rests on the public being assured
that it takes corruption seriously. Release of the investigation
documents is a minimum," says Mark Thomas of the Ilisu Dam Campaign.
Acres has
implied that it did not receive a fair trial. But David Lawson,
a lawyer
who observed the judgment being delivered, states: "Whilst Acres
may object to Judge Lehohla's conclusions, it would be entirely
offensive to suggest that the due process of law in Lesotho has
in any way been compromised."
For further
information, contact:
Nicholas
Hildyard: 01258 473795
Email nick@fifehead.demon.co.uk
To contact
the lead prosecutor:
Mr. Guido
Penzhorn, Tel: +27 31 301 1741
Editor's
Notes:
[1] The project
involved a series of large dams. It directly affected approximately
27,000 people and displaced hundreds of subsistence farming households,
many of which have never been properly compensated.
[2] The ECGD's
support for the project amounted to £66 million and went in loan
guarantees to five UK companies. The companies were: Balfour Beatty,
Kier International, Stirling International, Kvaerner Boving and
ABB Generation's UK subsidiary.
[3] The EU
supported the project through the European Investment Bank (122.5m
Euros) and the European Development Fund (59.8m Euros).
[4] Such
agreements, according to Acres, are common practice for companies
competing for business internationally. The agreement generally
employs a "local" person to safeguard and promote the interests
of the company concerned in negotiations. In some cases, the agreement
stipulates that money will only be paid if the company secures
a contract.
[5] The World
Bank has a policy in place of declaring a firm "ineligible" for
World Bank contracts, either indefinitely or for a stated period
of time, if the Bank determines that the firm has engaged in corrupt
or fraudulent practices.
