Kate Jaimet, Ottawa Citizen
Southam News Service
September 18, 2002

Ottawa: Canada’s former consular representative in the small African country of Lesotho was revealed this week to be at the centre of a bribery scandal that has seen a Canadian engineering firm convicted of greasing palms in order to win contracts on a massive hydroelectric dam project.

Zalisiwonga Bam, who served as Canada’s honorary consul to Lesotho from 1994 to 1999, was shown to be the middleman between the Toronto-based engineering firm Acres International and the Lesotho Highlands Water Authority, the public agency in charge of building a $3.7-billion hydroelectric and water-diversion project in the mountainous African kingdom.

Court documents show that Mr. Bam and his wife, Margaret, received $674,000 from Acres through Swiss bank accounts between 1991 and 1998, then funnelled 60 per cent of it to Musapha Sole, the chief executive officer of the Lesotho Highlands Water Authority. In exchange, the Canadian firm won $21-million worth of engineering and consulting work in the project.

Court documents also implicate Mr. and Mrs. Bam in similar bribery schemes involving the German company Lahmeyer International and the French company Dumez, whose cases have not yet been heard in court.

The documents indicate Mr. Bam was already well embroiled in the Acres bribery scheme at the time he was appointed honorary consul by Marc Brault, Canada’s high commissioner to South Africa, with approval of then-foreign affairs minister André Ouellet. Bam’s role was to provide consular assistance and protection to Canadians, take part in ceremonial functions, and assist in developing commercial and economic relations.

Bam died of a heart attack in 1999, but his wife, an accountant, has been charged in connection with the bribery investigation.

On Tuesday, the Lesotho High Court convicted Acres of paying $403,000 in bribes. Sentencing is to take place in October. Acres insists it is innocent and will appeal the ruling.

The World Bank is also investigating Acres for possible blacklisting following the conviction. But the Canadian International Development Agency, which gave Acres a $160,000 grant as part of the Lesotho project, said it is taking no steps to bar the Toronto company from receiving further public funding.

“At this point there is no action being taken,” said CIDA spokeswoman Dominique Hetu.

The investigation of the massive bribery case began in 1994, when the Lesotho Highlands Water Authority noticed irregularities in Mr. Sole’s accounts.

By 1999, the government of Lesotho had laid bribery-related charges against Mr. Sole, numerous alleged middlemen, and 19 companies including Acres. Last month, the court convicted Mr. Sole of 13 counts of receiving bribes totalling more than $1.1 million. He was sentenced to 18 years in prison. One of his convictions was for bribes received from Acres International.

The Lesotho case prompted the World Bank – which had contributed a $230-million grant to the hydroelectric project – to investigate Acres earlier this year. But without power to subpoena documents, the bank was unable to prove that allegations of bribery.

“In the case of Acres we didn’t find a paper trail,” said Caroline Anstey, chief spokesperson for the World Bank.

But the Lesotho High Court obtained access to Swiss banking records, which showed that Acres made a steady stream of payments into the accounts of Bam and his wife, and that Bam channelled 60 per cent of those payments into Sole’s account.

Acres International argued in court that it honestly hired Bam as its local representative, without knowing he would pay bribes to Sole.

But the prosecution argued in court that that excuse was not to be believed.

“It is improbable, even illogical, that Bam would have received all this money from Acres and then paid most of it over to Sole without Acres intending this or not knowing about it,” lead prosecutor Guido Penzhorn wrote in his court submission. “There can be no other explanation for Bam’s payments to Sole except that they were bribe payments.”

Now, the Swiss bank documents and the Lesotho conviction have caused the World Bank to re-open the case against Acres.

“We want to see the judgment. We want to take a look at the court transcript, and see if it warrants any action by the bank,” said Anstey. “It take two to corrupt: both the payer of the bribe and the person who’s bribed. We in the bank feel that the spotlight also has to fall on companies who are winning contracts through bribery.”

If the bank is convinced of the evidence against Acres, it can disbar the company from working on bank-funded projects, either for life or for a period of time, and impose conditions before the company is removed the black list.

Canada’s Export Development Corporation, a government-owned bank that gives loans to Canadian companies for overseas projects, said it will demand proof that Acres has reformed before approving any more loans for the engineering company. Acres has been a client of EDC “on and off for the past 30 years,” although the EDC was not involved in funding the Lesotho project, said EDC spokesman Rod Giles.

“We would have to have clear evidence from the company that they had changed since then. They would have to have in place systems and procedures to ensure that they could detect active corruption,” said Giles.

This is not the first time Canada’s foreign service has been embroiled in allegations of bribery and corruption. In the last 1990’s, police conducted 128 investigations into diplomatic staff at posts in Canada and abroad, resulting in six criminal convictions and scores of resignations and firings.