Garry Marr
Financial Post
September 18, 2002

Acres International, a Toronto-based engineering firm, was convicted yesterday of two counts of bribing a foreign official in connection with contracts tied to a US$8-billion water project in Lesotho, a tiny landlocked country within South Africa.

Acres vowed to appeal the decision yesterday to the Lesotho High Court. “Acres continues to strongly declare its innocence of the charges and will take vigorous action to protect its good name,” the company said in a release.

Sentencing on the convictions is to take place in October.

The charges are in connection with S2-million in bribes paid to the former head of Lesotho Highlands Development Authority. Acres International and 11 other international dam-building companies were linked. The project is designed to alleviate water shortages in Africa.

Patricia Adams, executive director of Probe International, hailed the decision and said it would have sweeping implications for Third World development.

“It’s a call to foreign firms operating in other countries, especially Third World countries, that you can’t break the law,” she said.

Acres was accused of paying USS260,000 to Masupha Sole, chief executive of the Highland Development Authority, to secure contracts.

Acres said it acted in good faith when it retained a Lesotho engineer as its independent local representative in Lesotho. It said the compensation paid to the representative from 1985-1999 was at the lower end of industry norms and government guidelines for comparable international projects.

“In doing so, Acres was following a practice recommended by the World Bank, other development banks, the government of Canada and international industry organizations, of appointing a local representative for assistance in complex, international projects,” Acres said.

Acres said it was unaware its representative was secretly paying part of his fee to the director of the water project and could not have anticipated he would have done so. The representative has since died.

The company noted that Lesotho court decision is “directly opposite” one made by a sanctions committee of the World Bank which dismissed charges against Acres in February after an investigation of more than two years.

“This decision sets a dangerous precedent that, if allowed to stand, will greatly increase the risk to companies who do business in developing countries,” Acres said. “This decision means Canadian and other developed-country Finns can be found guilty of crimes without any clear evidence showing that they had reason to know of or participated in the illegal actions of their independent representative.”

Probe International yesterday called for western governments to get tough with convicted bribers. “Multinational firms will get the message that corruption is costly and that will spell the end of corruption in Third World development projects,” Ms. Adams said.