Gary Norris
The Record (Canadian Press)
September 18, 2002

TORONTO (CP) – Canadian engineering firm Acres International warned indignantly of a threat to international business and Third World development Tuesday after being convicted of bribing an official in the southern African country of Lesotho. Acres said it was “shocked” by the verdict and will immediately appeal.

“Acres is proud of its efforts to assist in developing countries around the world and it is also proud of its 78-year unblemished record for ethical business practice and its high reputation for integrity and honesty in international development,” the employee-owned firm, based in Oakville, west of Toronto, said in a statement.

The case arose after Acres hired a Lesotho engineer, Zalisiwonga Bam, as its local representative as it sought and won contracts for the Lesotho Highlands Water Project, a massive development to generate electricity and move water from the mountains of Lesotho to South Africa.

Bam, whose pay was deposited by Acres in a Swiss bank account, secretly relayed part of his fees to the director of the water project, Masupha Ephraim Sole.

The High Court of Lesotho ruled Tuesday that the representative agreement between Acres and Bam was a smokescreen for bribery.

The court is scheduled to pass sentence in the second week of October on the company, which has no personnel at risk of imprisonment in Lesotho, said Acres spokesman George Soteroff.

Bam worked for Acres from 1985 until he died of a heart attack at age 51 in 1999, the year charges were laid.

Sole, 54, did not testify at the Acres trial, and previously remained silent at his own trial at which he was found guilty of bribery and fraud. He is appealing an 18-year sentence for accepting the equivalent of more than $1.6 million Cdn from intermediaries for a dozen international companies, including $320,000 from Bam.

“Acres had no knowledge or suspicion of these payments, could not have anticipated them, had no motive for them, and received no benefit,” the 1,000-employee Canadian firm insisted Tuesday.

“This decision sets a dangerous precedent that, if allowed to stand, will greatly increase the risk to companies . . . who do business in developing countries.”

The firm, which was paid $21.6 million Cdn during 12 years of work on the Lesotho water project – also said the court “surprisingly ignored Acres’ entirely legitimate reasons for retaining a local representative in a particularly unstable country at that time, as well as the fact that Acres’ agreement with the representative expressly prohibits illegal activities such as the payment of bribes.”

The verdict, it said, “means that Canadian and other developed-country firms 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.”

Acres spokesman Soteroff said the representation agreement, “which the court apparently does not recognize or understand,” is of a type widely used by engineering companies and other firms internationally – and was in fact required by the World Bank, which funded the Lesotho project and found no irregularities in Acres’ activities.

“No judge in Lesotho has ever heard a trial of this sort or of this magnitude,” Soteroff said, comparing the expertise of the tiny country’s High Court to that of a magistrate’s court elsewhere.

“If they can invalidate those international contracts that are part of world business structures, just think of the increased risks any company would face going in to work in those countries and invest in them.”