Globe and Mail
July 2, 2002
DURBAN — The corruption trial of Canadian engineering firm Acres International Ltd. moved toward its conclusion in the tiny African kingdom of Lesotho last week with closing arguments by the defence and prosecution.
With judgment set tentatively for Aug. 5, the company’s fate hinges on whether the judge believes that money it paid its local agent was actually intended for the head of a water project on which it did about $21-million worth of work.
Acres, based on Oakville, Ont., will face a heavy fine and serious damage to its reputation if it is found guilty of bribing Masupha Sole, who was convicted on June 4 of taking bribes from Acres and 11 other companies and sentenced to 18 years in prison. That finding does not preclude an acquittal for Acres, which is being tried separately and maintains its innocence.
Anticorruption advocates say Mr. Sole’s conviction is less important than the fact that alleged bribe-paying multinationals, including Acres, are in the dock in Maseru, capital of the impoverished nation of two million.
Lesotho accuses Western contractors of paying Mr. Sole about $1.7-million when he was head of the Lesotho Highlands Water Project, one of Africa’s biggest engineering works, involving dams and tunnels to divert water to neighbouring South Africa and generate electricity in the process.
Acres was the first firm to go to trial, in February. It is accused of paying $674,000 over seven years into the Swiss bank account of its Lesotho agent, engineer Zalisiwonga Bam, and his wife, Margaret. The Bams allegedly passed 60 per cent on to Mr. Sole, in return for lucrative contracts and other favourable treatment for Acres.
Two other firms, Germany’s Lahmeyer International GmbH and France’s Spie Batignolles, have been charged with bribery and are awaiting trial, along with some of the alleged middlemen. Other trials of major contractors accused of bribery may follow. Lesotho’s attorney-general Fine Maema says he is “determined to prosecute” all of them.
In the Acres case, the defence and prosecution agree that the company made regular payments, most in the area of $23,000, to Mr. Bam’s Swiss bank between 1990 and 1997. But they disagree on whether the money was for legitimate work by an agent (as Acres maintains) or for bribes (as the prosecution says).
The accused companies have strongly denied bribing Mr. Sole, who could influence the awarding of contracts and their smooth operation.
The head of Acres’ legal team in Lesotho, South African lawyer Sytze Alkema, said the company’s position is that it employed Mr. Bam as a local agent, as companies do when operating in the developing world. Agents know the local language and customs, and help with everything from work permits to the movement of equipment into the country.
Mr. Bam, who was briefly Canada’s honorary consul in Lesotho, received about 3.6 per cent of the value of its Lesotho contracts, which is in line with the commission agents routinely earn, he said.
“Our argument is that Acres had no knowledge of what Mr. Bam did with the money it paid him, and had no knowledge of any connection between Mr. Bam and Mr. Sole. Acres was surprised to learn that there was an unholy and unlawful relationship between them. Acres didn’t even know that Mr. Bam was also representing other companies involved in Lesotho.”
Guido Penzhorn, another South African lawyer and head of Lesotho’s prosecution team for the corruption cases, questions the legitimacy of Acres’ representation agreement with Mr. Bam and the commission he received.
He is asking Judge Mahapaela Lehohla to follow Judge Brendan Cullinan, who heard the Sole case, in taking a suspicious view of money paid through Swiss accounts to an agent whose “normal course of business” would be to use local banks.
Acres counters that agents often operate in various currencies paid into overseas accounts, especially when they are in countries with weak currencies or political instability. “Mr. Bam wanting to be paid into a Swiss bank account raised no red flags,” Mr. Alkema said.
In legal argument on Thursday, Mr. Penzhorn also drew on Judge Cullinan’s findings that if a local agent such as Mr. Bam were bribing an official, it was presumably to get a contract or confidential information leading to an award of a contract.
If that were the case, the results produced by the agent “speak for themselves,” he said.
How could a company be unaware of its consultant’s activities, “particularly where they are extended over a period?” he asked. “If Judge Lehohla follows Judge Cullinan, Acres is gone.”
The prosecutor also argued that “the Swiss bank accounts set up by Mr. Bam were for no other purpose than to transfer money to Mr Sole. There were just two small transactions in the account that did not fit the pattern.” Payments to Mr. Sole through Mr. Bam coincided with work contracts and were mirrored by payments by several other successful bidders, he said.