Karen MacGregor
Globe and Mail
October 28, 2002

MASERU, LESOTHO: Maseru, the sleepy capital of an African mountain kingdom, seems an unlikely theatre for an unfolding bribery scandal involving Western multinationals — among them Canada’s Acres International Ltd. — that has rocked the global construction industry.

The Oakville, Ont.,-based engineering firm, convicted last month of bribing the former head of one of Africa’s biggest water projects in return for contracts worth $21-million, is in Lesotho High Court today for sentencing.

It faces a fine of up to $4-million, Lesotho’s estimate of the ill-gotten profits Acres received as a result of payoffs to Masuphe Sole, the now-sacked chief executive officer of the Lesotho Highlands Development Authority. He was jailed for 18 years in June for accepting $1.1-million (U.S.) in graft from a dozen Western companies.

“We argue that if the fine is anything less than Acres’ profits, the company will benefit from corruption,” a member of the prosecution team said.

The 78-year-old firm, which strongly denies corruption charges and plans to appeal the case next year, stands to lose not only the money but an otherwise clean reputation. If it loses the appeal, it could be blacklisted from future projects backed by the World Bank and other development agencies.

Companies in the international construction industry have long been suspected of bribing poor-country officials to win contracts, and indeed many bribe-takers have been jailed. This is one of the few times in Africa that companies alleged to have given bribes are also being charged.

The Lesotho project, worth $2.4-billion (U.S), nearly half the country’s gross domestic product of $5.3-billion last year, offered rich pickings for engineering contractors and consultants through the 1990s.

Convicting Acres on two counts of bribery last month, Judge Mahapela Lehohla said he was persuaded by strong circumstantial evidence that Acres bribed Mr. Sole in return for a contrat that the CEO was in a position to award and keep “sweet.”

He found that Acres paid $493,169 (Canadian) between 1991 and 1998 into the Swiss account of its Lesotho representative, the late Zalisiwonga Bam, who transferred about 60 per cent of the money into accounts belonging to Mr. Sole; and that in 1991 the firm paid $188,255 into a Swiss account of Margaret Bam, who also transferred most of it to Mr. Sole.

Acres says that it paid Mr. Bam, who was briefly Canada’s honorary consul in Lesotho, to represent it on the ground and provide contacts and intelligence, and that his role and his fees were in line with accepted practice.

The firm says it was unaware that he was passing along part of the money to Mr. Sole. “Acres had no knowledge or suspicion of these payments, could not have anticipated them, had no motive for them, and received no benefit.”

In a 300-page judgment, the Lesotho court swept such claims aside. Judge Lehohla called Acres’ representative agreement with Mr. Bam a “mere sham” and rejected the firm’s profession of ignorance, declaring that Mr. Bam’s bank accounts were used as a conduit for bribes “with Acres’ full knowledge” to ensure that its interests “were secured to the detriment of other competitors who were under false belief that Acres had won Contract 65 by fair means over them.”

The judge said accepting that Acres bribed Mr. Sole through Mr. Bam cleared up questions in his mind, such as:

• Why did Acres use Mr. Bam as its Lesotho agent although he was working in Botswana part of the time?
• Why did it not tell project staff he was its agent?
• Why did it pay him large sums for “political intelligence”?
• Why did it pay him in Switzerland?

Acres “put all its eggs in one basket” by basing its defence on its agreement with Mr. Bam, he said. “The incontrovertible facts before this court are a negation of the validity of the representative agreement, thus leaving the credibility of Acres in tatters.”

Acres is the first of three Western engineering firms in the dock for their roles in the project, a series of dams and tunnels that pump water to neighbouring South Africa and produce electricity for Lesotho.

The Crown has completed its case against Germany’s Lahmeyer International GmbH and is waiting for the court’s ruling on the company’s application for dismissal.

The trial of France’s Spie Batignolles, which was due in court early next year, has been delayed to await the outcome of appeals by Acres and Mr. Sole.

Acres hopes for acquittal on appeal. George Soteroff, a Toronto public relations specialist speaking for the company, says he believes that the Lesotho High Court was not qualified to hear a case of such complexity and that the country’s Court of Appeal, which comprises experienced South African judges, “will validate our belief in our innocence.”