Acres International, an Ontario-based company, was found guilty yesterday of paying US$260,000 to a local official in the southern African kingdom of Lesotho, through an agent, in an attempt to win contracts for an US$8-billion water diversion scheme.

Earlier this year, the recipient of the bribe, Masupha Sole, the former Chief Executive of Lesotho’s Highland Development Authority, was also convicted and sentenced to 18 years in prison for taking US$1.1 million in bribes from more than a dozen engineering and construction firms over a ten-year period.

Acres is the first company to be prosecuted and could face a large fine when sentencing occurs next month.

Patricia Adams, Executive Director of Probe International, which has monitored the activities of Acres and other aid-backed engineering companies for two decades, hailed Lesotho’s judgement as a landmark decision that should lead to tougher penalties for multinationals that resort to bribery.

“Lesotho has shown it takes corruption seriously. Now it’s up to western governments to get tough with convicted bribers,” says Adams, “If western governments don’t get tough, corruption will continue to thrive, and our governments will be seen as hypocrites who preach clean government to developing countries while tolerating corruption among our own corporations.”

Acres said in a press release that it is shocked by Lesotho’s decision, and will appeal.

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

“The trial 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.”

Acres’ said that it had “no knowledge or suspicion” that its agent, with whom it had a “representative agreement,” was passing on money to the project director, Mr. Sole. Chief Justice Lehohla described the arrangement as a strategy to cover up the bribe payments.

The Lesotho Highlands Water Project directly affected approximately 27,000 people in Lesotho, a tiny landlocked country of two million people. Still under construction, the hydro and water supply dams have displaced hundreds of subsistence farming households, and dispossessed many more of their land.

Also on trial for alleged bribery is another longtime hydro consultant in Asia, Germany’s Lahmeyer International.

The judgement could have serious repercussions for Acres’ work in Asia, much of which is paid for by western governments and development agencies, such as the Asian Development Bank and the World Bank.

The World Bank has a new policy of declaring a firm “ineligible,” either indefinitely or for a stated period of time, for Bank-financed contracts if the Bank determines that the firm has engaged in corrupt or fraudulent practices in competing for, or in executing, a Bank-financed contract. The World Bank financed Acres’ work on the Lesotho project.

The Canadian government, which has financed Acres’ work on hydro projects in Thailand and Laos, has refused to say what action it would take against a convicted company.

In the U.S., which has the western world’s toughest anti-corruption laws, a person or firm found in violation of the Foreign Corrupt Practices Act may be barred from doing business with the Federal government [see, http://www.usdoj.gov/criminal/fraud/fcpa/dojdocb.htm%5D.

In 1994, Acres advised the Mekong River Commission on hydro development on the Mekong and its major tributaries, including the Nam Theun 2 hydro project in Laos now under consideration by the World Bank.

In 2000, Acres received an award from the Canadian International Development Agency in the category “Improvement of Physical or Social Infrastructure” for its Asian Development Bank-funded review of dam-related resettlement policy and legal framework in Asia.

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For more information, CONTACT:
Patricia Adams, Executive Director, Probe International, Toronto, Canada
Tel.: 1 (416) 964-9223 (ext. 227)
E-mail: PatriciaAdams@nextcity.com