Karen MacGregor and John Saunders
Globe and Mail
October 29, 2002

MASERU and TORONTO — Lesotho’s chief justice had angry words yesterday for Acres International Ltd., one of the great names in Canadian engineering, as he imposed an unprecedented $3.4-million fine on the firm for bribing a local official in order to win work on an internationally funded water project.

Judge Mahapela Lehohla rebuked Acres, convicted last month on two bribery counts, for showing “not the slightest hint of remorse” during its trial and for subsequent comments that “bordered on contempt of court.”

An Acres spokesman had suggested that the Lesotho High Court was unqualified to hear such a complex case and that the decision will be reversed by the mountain kingdom’s Court of Appeal, which comprises experienced South African judges.

Acres, based in Oakville, Ont., has a staff of 1,000 and an otherwise spotless record. It now waits to learn whether the World Bank and other agencies will revive investigations that could result in it being barred from any work they finance.

In a statement yesterday, Acres said it “vociferously protests its innocence” and is as “disturbed and dismayed by the Lesotho trial judge’s sentence as it was by his earlier unjustified decision” in finding it guilty.

The company says it did not know its agent was sharing fees with the now sacked project chief, Masupha Ephraim Sole.

Mr. Sole was jailed for 18 years in June for accepting $1.1-million (U.S.) in graft from a dozen companies. The agent, Zalisiwonga Bam, died of a heart attack in 1999 before he could be questioned.

Acres did about $21-million worth of work on the Lesotho project.

Although other foreign companies still await trial on related charges in Lesotho, outsiders watching the case could think of no comparable example of a major Western firm convicted and punished for corruption on such a project.

At the Washington headquarters of the World Bank, chief spokeswoman Caroline Anstey said the bank wrapped up an investigation of Acres’ conduct in February without finding evidence of corruption, but may reopen it.

“We are currently looking at the trial transcript — it’s some 27,000 pages, I think — and the trial judgment in the case, and we have people who are going out to meet with the prosecutors,” she said.

“. . . We don’t have subpoena power, so at the time we said that should new evidence come out in the course of the criminal investigation, then we would want to consider whether we reopen our debarment case, and that’s exactly what we’re doing now.”

George Soteroff, a Toronto public relations specialist speaking for Acres, said the firm sees no reason to reopen the case. “The evidence that was before the World Bank debarment hearing was the same material evidence that the Lesotho prosecutor had, so there is no new material evidence that Acres is aware of.”

Mr. Soteroff suggested that Acres does not rely heavily on World Bank-financed work. He gave no precise figure, but said that about two-thirds of the firm’s business now is done in North America and not all of the rest involves development projects.

Joseph D’Cruz, a professor of strategic management at the University of Toronto, said Acres and its peers need all the contracts they can get because they face stiff new competition from the engineering firms of such countries as India and China.

“As a consequence of that, firms like Acres become increasingly reliant on the projects of institutions such as the World Bank,” he said. “Therefore, this ruling in Africa is of real concern to them, because if the World Bank does indeed go forward in blacklisting them, this will be a significant setback for them.”

Patricia Adams, executive director of Probe International, a Toronto-based environmental lobby group that has criticized the Lesotho project, predicted “a domino effect” among development bodies if the World Bank bars Acres.

The Canadian International Development Agency, Ottawa’s foreign aid arm, said it is reviewing the trial transcript, but will say nothing else while the case is being appealed.

A CIDA official, Dominique Hétu, said the agency contributed $160,000 (Canadian) to the project for a program in which Acres trained local engineers. Unlike the World Bank, CIDA maintains no blacklist of corrupt contractors because it has banned none, she said.

In Maseru, Judge Lehohla demanded that Acres pay the fine immediately, rejecting a request for delay while it files an application to stop payment pending appeals of the conviction and sentence. He said the fine reflected the seriousness of corruption, which research had shown has a devastating impact on development. In an impoverished nation of two million, it was reprehensible that money for the project had been squandered on a powerful official, he said.

But the main role of the sentence, he said, was as a deterrent “such that other consultants and contractors who want to become involved in Lesotho will think twice about paying bribes to senior officials.”

Leaba Thetsane, director of public prosecutions, said Lesotho will “continue relentlessly” to act against firms implicated in bribery in the $2.4-billion (U.S.) Lesotho Highlands Water Project, which yields electricity for Lesotho and water for neighbouring South Africa. “The Acres fine doesn’t cover the enormous bills we’ve run up investigating and prosecuting these cases, but it helps,” he said. “We’ve had real financial difficulties but we’re determined to fight corruption and have had government’s support all the way.”