Financial Times Business (UK)
October 1, 2002

When a company is discovered bribing a government, it is usually only the civil servants involved that are punished. In an unprecedented case, the Canadian engineering company Acres International has suffered the humiliation of being the first multinational to be fined for bribing its way into a World Bank-funded dam project in the small mountain kingdom of Lesotho in southern Africa.

Chief justice Mahapela Lehohla convicted and fined the company $2.2m for bribing the former chief executive of the Lesotho Highlands Development Authority, Masupha Ephraim Sole. Mr Sole is believed to have accepted $1.1m-worth of bribes from Acres and other multinationals in the consortium. Other companies facing trial include the French company Spies Batignolles, Britain’s Balfour Beatty and Germany’s Lahmeyer. The companies have all denied the charges.

Acres is, so far, the only one to be convicted and continues to deny all the charges. The company insists a middleman, without its knowledge, paid the bribes. “Without Acres’ knowledge, the representative was secretly paying part of his fee to the project director of the water project. Acres has no knowledge or suspicion of these payments, could not have anticipated them, had no motive for them and received no benefit. The payments were entirely between the now-deceased representative and the project director,” an Acres company statement said. The middleman in question died of a heart attack in 1999.

Justice Lehohla said that he wanted to set an example and “send a clear message that companies wanting contracts should not even think of taking a risk in trying to bribe officials”. He added that a small, impoverished nation like Lesotho can be deeply affected by corruption on this scale.

Jeremy Pope, executive director of anti-corruption NGO, Transparency International, said: “This is a case of seismic significance that will shake the OECD exporters into the third millennium and push them to get their act in order.” He adds that the World Bank’s role raises cause for concern as it had conducted its own investigation and cleared the accused company before the case went to court in Lesotho.

Caroline Anstey, chief spokeswoman for the World Bank, said after the ruling that it would be examining the trial transcripts to see if it should re-open the case.

Acres is to launch an appeal and argues that it has an extremely good ethical track record. A press release also states that the company is worried that this case sets a dangerous precedent for companies operating in developing countries. “This decision 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,” said an Acres statement.

As Tim Sharpe, director of communications for Balfour Beatty in London, said: “We (Balfour Beatty) are not accused of anything, we have looked back at the details and see no wrong-doing.” He did add that he could not predict what the Lesotho courts will decide to do against the whole consortium after the Acres ruling.