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Acres International, the Canadian engineering firm that conducted the controversial resettlement portion of the Canadian-financed Three Gorges dam feasibility study, has been convicted by the Lesotho High Court on two counts of bribery.

The company, based in Oakville, Ont., was found guilty yesterday of paying US$260,000 to an official in the Southern African kingdom to secure contracts on a multibillion-dollar dam scheme. Sentencing is expected on Oct. 7 or 8.

Acres said in a statement that it is shocked by the decision, and will immediately begin an appeal.

“Acres continues to strongly declare its innocence of the charges and will take vigorous action to protect its good name,” the company’s press release said. “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.”

Acres was found guilty of paying bribes through an agent to Masupha Sole, the former chief executive of the Lesotho Highlands Development Authority, to win contracts in a huge dam project designed to supply water to South Africa and generate electricity.

Acres’ defence was that it had “no knowledge or suspicion” that its agent, with whom it had a “representative agreement,” was passing on money to Mr. Sole. Chief Justice Lehohla described this as a strategy to cover up the bribe payments. Prosecutors in Lesotho accuse Acres, along with 11 other foreign companies, of paying more than US$1.1 million in bribes to Mr. Sole, who was convicted of bribe-taking earlier this year.

Patricia Adams of Probe International, which has monitored the activities of Acres and other engineering firms for more than 20 years, hailed the judgment in Lesotho as a landmark decision with sweeping implications for Third World development.

“Prime Minister Jean Chretien has been urging African nations to rid themselves of corruption, in order to become attractive to Western investment,” Ms. Adams said. “Lesotho has just done that.  Now it is up to Canada to show it wasn’t paying lip service to getting rid of corruption.

“If Western governments get tough with convicted bribers, multinational firms will get the message that corruption is costly, and that will spell the end of corruption on Third World development projects.

“If Western governments don’t get tough, corruption will continue to thrive. We in the West will be seen as hypocrites who preach clean government to the Third World while tolerating corruption among our own corporations,” Ms. Adams said.

In 1986, the Canadian International Development Agency provided C$14 million to a consortium of Canadian engineering firms and public utilities (Acres, SNC, Lavalin, BC Hydro and Hydro-Quebec) to conduct a feasibility study for the Three Gorges project, the world’s biggest dam now being built on the Yangtze River in China.

By 1988, the Canadian engineers had concluded that the Three Gorges project “should be carried out at an early date.” In 1992, pro-dam members of the Chinese leadership –armed with the Canadian feasibility study — silenced debate within China about the wisdom of building the dam, and pushed the project through.

The Canadian study extolled the Chinese government’s resettlement policy and concluded that adequate replacement land could be found for local people displaced by the dam.

But in 1993, Hydro-Quebec vice-president Pierre Senecal admitted that due to population increases and a lack of available land in the Three Gorges area “the [Canadian] study’s recommendation that resettlement is feasible is not valid any more.”

Reports of coercion being used to force reluctant migrants to move, and of widespread misuse of compensation funds by local officials, have dogged the Three Gorges resettlement operation. Officially, 1.2 million people are being uprooted for the dam, though critics believe the real figure is close to two million.