Lesotho project firms ‘linked to scandals’

David Greybe
Business Day
August 5, 1999

CAPE TOWN – Six of the dozen international companies implicated in the multimillion-rand Lesotho Highlands Water Project bribery case have been linked to other dam-building scandals.

The firm’s named in the Lesotho court case “read like a who’s who of the dam-building industry,” according to the US-based environmental activist group, International Rivers Network.

“The companies implicated in the (Lesotho) scandal are no strangers to the allegations of corruption,” the group said yesterday from its head office in Berkeley, California.

Six of them were involved in multi-billion dollar dam-building projects in Kenya, Brazil, Argentina, Paraguay and Guatemala, which were tainted by allegations of huge kickbacks paid to top officials and other forms of bribery and corruption. The companies are: ABB (Swedish-Swiss), Spie Batignoles, Sogreath, Dumez International (French), Impregilio (Italian) and Lahmeyer Consulting Engineers (German).

Corruption scandals such as the Lesotho one “have played an important role in the ongoing problem of cost overruns on large dams”, the International Rivers Network said.

It said the World Bank had estimated that more than 70% of the dams it had built since 1960 had cost overruns of more than 30%. For example, in the case of the Yacyreta Dam in Argentina and Paraguay, which involved Impregilio, Dumez and Lahmeyer, the costs ballooned from a projected $2,7 bn to a final $11,5 bn. Argentinian President Carlos Menem was quoted by the US-based agency as having called the dam a “monument of corruption”.

Spie Batignoles and Sogreah were involved in Kenya’s Turkwell Gorge Dam, which , because of bribes allegedly paid to Kenya’s president and energy minister, cost more than twice what the European Commission said it should have, the US-based agency said.

It quoted from a March 1986 article in the Financial Times which said Kenyan officials involved were “fully aware” of the disadvantages of the deal “but they nevertheless accepted because of high personal advantages.”

ABB and Dumez worked on the Itaipu Dam in Brazil and Paraguay and ABB also worked on the Tucurui Dam in Brazil. Costs in both projects ballooned, and amid allegations of major corruption.

Lahmeyer and Impregilio had contracts on Guatemala’s Chixoy Hydroelectric Project, where an estimated $350m to $500m was “lost to corruption”, the agency said.

Claes Norrlof, charge d’affaires at the Swedish embassy in Pretoria, commenting on the Lesotho bribery case, said yesterday: “We welcome the fact that these allegations are being tried in court.” However, the Italian, French and German embassies were not prepared to comment.

Masupha Sole, a former boss of the Lesotho Highland Water Project, was charged last week with taking R12 in bribes from a dozen international firms over a 10-year period to end -1998. The case will resume of August 31st.

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