International firms in SA bribery scandal

E. Ogoso Opolot
The East African
August 17, 1999

JOHANNESBURG- Several international construction companies that have handled major contracts in Uganda and Kenya have been named in a 12 million rand ($2.5 million) corruption scandal in South Africa and Lesotho.

The world’s leading anti-corruption NGO, Transparency International, has called for the censure of the companies.

The firms also face possible blacklisting by the World Bank, whose procurement guidelines now specify that firms engaged in corrupt or fraudulent practices in competing for or executing a bank-financed contract will be ineligible, either indefinitely or for a stated period of time, to be awarded a contract.

They include the Italian Impreglio and Canadian Acres International, which are currently civil works contractors and technical consultants at the World Bank-funded Jinja Owen Falls Dam second power project. Acres International have been technical consultants for the project since 1994.

The Owen Falls project, estimated to cost $316 million, of which civil works cost $64 million, was awarded to Impreglio after the original $84 million contract awarded in 1993 to the Chinese SIETCO company was terminated amid allegations of substandard work and claims that up to 30 per cent of the contract money was used to bribe Ugandan officials to award the contract.

Also named are the French Spie Batignolles and Sogreah companies, which were involved in the construction of Kenya’s Turkwell Gorge Dam. The South African Business Day newspaper said that because of bribes allegedly paid to senior government officials, the Turkwell project cost more than twice the estimates of the European Commission.

In a press release on Friday, Transparency International’s chairman, Mr. Peter Eigen, said: “This illustrates the heavy price in the long term for what was essentially a short term gain.”

Other companies named in the scandal in which officials of the World Bank-funded $150 million Lesotho Highlands Water Project (LHWP) allegedly received the 12 million rand bribes over a 10-year period are the German Hochtief and Zublin, the Swiss-Swedish ABB, Bouygeas, Dumez International, and the German Lahmeyer Consulting Engineers.

All the implicated companies are from countries that have signed the OECD Convention, which makes it a crime to bribe public officials abroad. Although the Lesotho government has charged the LHWP chief executive officer, Mr. Masupha Sole, with 14 counts of bribery and fraud involving a dozen international firms, it is yet unclear what penalty the companies face back home.

The Berlin-based Transparency International wants the convention honoured. Said Mr. Eigen: “As the implicated companies are from countries which have signed the convention, the case illustrates the urgency for countries to make genuine efforts to introduce fair and transparent trading by passing national legislation and depositing instruments with the OECD.”

The NGO stated that the multi-million case reveals a pattern of systematic bribery and urges the South African authorities, who are preparing to host this year’s International Anti-Corruption Conference in Durban from October 10 to 15, to seek the extradition of foreigners they believe were implicated to stand trial in South Africa.

Reports in Business Day quoted a US-based environmental activist group, International Rivers Network, as saying six of the companies implicated in the Lesotho case were linked to other dam building scandals in Brazil, Argentina, Paraguay and Guatemala.

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