Garry Marr
Financial Post
October 28, 2002

Toronto-based engineering firm Acres International has been fined US$2.25-million for bribing a foreign official in connection with contracts tied to a US$8-billion water project in Lesotho, a tiny landlocked country within South Africa.

“The court wants to send a clear message that companies wanting contracts should not even think of taking a risk in trying to bribe officials,” said Judge Mahapela Lehohla before imposing the fine.

“In my view heavy sentences are needed when bribery and corruption has been detected.”

Acres, which had already planned to appeal the decision released last month, said yesterday it will appeal the sentence.

“Acres vociferously protests its innocence and is committed to strongly defending its good reputation,” the company said in a statement. It added that in its 78-year history it had an unblemished record of ethical business.

The charges are in connection with $2-million in bribes paid to the former head of Lesotho Highlands Development Authority. Acres International and 11 other international dam-building companies were linked to the bribery scandal — most of which have court cases pending.

The project is designed to alleviate water shortages in Africa.

Acres was accused of paying US$260,000 to Masupha Sole, chief executive of the Highland Development Authority, to secure contracts.

Mr. Sole was sentenced to 18 years in jail in June. Acres said it acted in good faith when it retained a Lesotho engineer as its independent local representative in Lesotho.

It said the compensation paid to the representative from 1985-1999 was at the lower end of industry norms and government guidelines for comparable international projects.

Acres has said it was unaware its representative was secretly paying part of his fee to the director of the water project and could not have anticipated he would have done so. The representative has since died.

“The same charges were dismissed by the World Bank after a comprehensive, multi-year investigation with access to all of the evidence available to the Lesotho prosecution, including all bank records,” Acres noted.

Patricia Adams, executive director of Probe International, said the message to companies is that bribery doesn’t pay. Acres has argued payment of the fine should be suspended until the appeal court hears the case, something Judge Mahapela Lehohla has reserved judgment on.

The judge said comments from senior officials at Acres — that the trial highlighted the risk Canadian companies ran when doing business in a country like Lesotho — were nothing short of “contempt.”

“There is a total absence of remorse. All that Acres appears to regret was that it was caught,” he said. But an advocate for Acres countered in court that “the prosecution in this trial has become a persecution.”

With wire services, gmarr@nationalpost.com