Crooked company snubs Lesotho

Wiseman Khuzwayo
Business Report
March 21, 2004

Johannesburg: Acres International has snubbed the impoverished kingdom of Lesotho by not paying a R13 million fine after being convicted of corruption and bribery.

Instead, the Canadian engineering and construction company wants to pay the penalty in instalments, according to Lesotho attorney-general Fine Maema, who said he had flatly refused the request.

Parent company Acres Group had a gross revenue of R1 billion in 2002, the year Acres was convicted. On Friday, Acres seemed unaware that its offer had been rejected.

From Acres’ headquarters in Oakley, Ontario, spokesperson Indira Conroy said: “In spite of its deep disappointment that the Lesotho appeal court overturned only one of two counts subject to appeal, Acres has made a public commitment to pay the fine . . . in its entirety.

“Acres is determined to maintain its position as a respected and law-abiding corporate citizen, both inside and outside Canada, and intends to respect this commitment.

“Acres believes that a mutually acceptable agreement on the schedule of payments for the fine is near.”

Lesotho has won international acclaim for its prosecution of corrupt practices by multinationals.

Acres is one of three multinational contracting firms successfully prosecuted in the Lesotho courts on bribery and corruption charges related to the Lesotho Highlands Water Project, which was financed by the World Bank and European funding agencies.

Andrew Macoun, the World Bank representative in Maseru, said Acres would have to appear before the bank’s sanctions committee.

If found guilty by this committee, it might be temporarily suspended or even disbarred forever from participating in the bank’s contracts.

Guido Penzhorn, a Durban-based advocate who prosecuted the cases, said investigations against other multinationals were continuing with a view to prosecution.

Maema said the trials had already cost Lesotho R28 million.

Addressing a conference of the Institute of Safety and Security Studies last week, Maema said the World Bank had praised Lesotho’s actions at a 1999 meeting.

“More importantly, promises of assistance in these prosecutions were made from various quarters. This was after the representatives from Lesotho had pointed out . . . that the prosecutions would constitute a considerable drain on Lesotho’s financial resources. Unfortunately, none of this help has been forthcoming.”

Macoun denied financial pledges had been made at the meeting.

It was reported last week that South Africa’s minister of water affairs, Ronnie Kasrils, was in talks with Lesotho to work out how to provide funds to help the kingdom bring more corrupt contractors to book.

In 2002, Acres was found guilty by the Lesotho high court of paying bribes to Masupha Sole, the former head of the Lesotho Highlands Development Authority, which oversaw the project. Acres was fined R22 million. On appeal, this was reduced to R15 million, less the R2 million the company had paid as security.

The court found that between January and April 1991 an Acres consultant had paid Sole C$188 000 (R415 000 at the time, R950 000 at today’s rates) through his numbered Swiss bank account. Sole received another C$493,000 between June 1991 and January 1998.

Sole was sentenced to 15 years in prison for accepting the bribe. This was reduced to 12 years on appeal.

Michael du Ploy, who acted on behalf of Italy’s Impregilo, which led the consortium that built the Katse dam in phase one of the project, pleaded guilty to receiving $750 000 in bribes, half of which he paid to Sole. Penzhorn said Impregilo would be prosecuted next.

Schneider Electric, the French electrical company that merged with Spie Batignolles in 1995, pleaded guilty to giving R16 million to Sole as a bribe and was fined R10 million.

Lahmeyer International, Germany’s biggest engineering firm, was convicted of paying $550 000 in bribes to Sole and was fined R10.5 million. Its appeal starts tomorrow.

Categories: Africa, Lesotho, Odious Debts

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