UK firms paid a pounds 1.2M bribe to get dam contract

The Independent
June 14, 2000

BRITISH FIRMS are among a dozen of the best known international construction companies involved in a trial in the remote South African kingdom of Lesotho, where they have been accused of paying bribes to obtain contracts in a multi-billion-pound dam contract.

Balfour Beatty, based in Surrey, is part of a consortium charged with paying a pounds 1.2m bribe into a Swiss bank account controlled by a former chief executive of the Lesotho Highland Water Project.

Other companies charged include the UK’s Sir Alexander Gibb and Partners, the Swiss-Swedish group ABB, Italy’s Impregilo, Acres International of Canada and Sogreah, Dumez and Cegelec of France. Two other British companies are in consortiums involved in the trial that began last week.

Although the 17 defendants deny the charges, the case could not come at a more embarrassing time for the British Government. Of the 54 companies banned from working with the World Bank due to corruption or fraud, about 35 are British. None of those is involved in the Lesotho case.

The allegations centre on the Katse dam – the highest in Africa – finished two years ago and part financed by the World Bank. The Katse and the network of smaller dams and tunnels around it are part of scheme to reverse the river flow to send badly needed water to far-off Johannesburg.

According to a Channel 4 News investigation to be broadcast tonight, the Lesotho case features Masupha Sole, the former chief executive of the Lesotho Highland Development Authority, which is running one of the biggest dam projects in the world.

Mr Sole was first exposed for fiddling his expense accounts. After further investigations that led to disciplinary hearings in 1995, he was fired, and civil proceedings were launched. He denied having any foreign bank accounts but the South African prosecutor, Guido Penzhorn, discovered he had transferred large amounts of money to a Swiss bank account.

Mr Sole lost the civil trial, and has already been stripped of his passport and ordered to pay back about pounds 700,000 to his former employers.

The prosecution in the trial says he and several intermediaries were paid a huge amount in bribes between 1988 and 1995. Court documents obtained by Channel 4 News say: “The evidence will show that not only were payments involving millions of maluti made by the contractors through the intermediaries to Sole secretly, but they coincided with events leading up to the award of major contracts.”

Balfour Beatty has a 16 per cent stake in a venture called the Lesotho Highland Project Contractors, which is charged with paying pounds 585,000 to Mr Sole’s Swiss Bank Account in March 1991, one month after it signed a contract to build underground tunnels. In March 1994, according to Lesotho prosecutors, the consortium also concluded an agreement to build a dam two weeks after it had paid Mr Sole pounds 200,000. Balfour Beatty vigourously denies the charges.

Sir Alexander Gibb – now known as Gibb Limited – is charged with paying pounds 51,000 in bribes, but the company says it “vehemently denies the allegations. . . and is taking legal action to protect its good name”.

News 13

World Reporter All Material Subject to Copyright

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