John Saunders
Globe and Mail
April 13, 2004

A German engineering firm now stands alongside Canada’s Acres International Ltd. in facing possible blacklisting by the World Bank for corruption.

The Washington-based development agency said yesterday that its sanctions committee will re-examine evidence relating to Lahmeyer International GmbH, which is based in the Frankfurt suburb of Bad Vilbel, after the Lesotho Court of Appeals upheld the firm’s bribery conviction.

Both Lahmeyer and Acres worked on Africa’s biggest dam and water diversion project, the $12-billionHighlands Water Project, whose first phase opened last month. Financed partly by the bank, the project will generate electricity in Lesotho, an impoverished mountain enclave, and channel water to thirsty South African cities.

Acres, which did about $21-million worth of engineering work on the project, was found guilty on two bribery counts involving about $680,000 paid into the Swiss bank accounts of a local agent and his wife. Much of the money ended up in the hands of project chief Masupha Sole, who was jailed 18 years for accepting the equivalent of $1.5-million in bribes from various contractors and consultants, some of whom also have been convicted.

In an appeal last year, Acres won a reversal of its conviction on one count involving about $180,000 and saw its fine reduced to $2.8-million from $4.2-million.

The bank, deploying capital supplied by the world’s major governments, has helped to dot the planet with dams and other works, making itself it a major indirect employer of engineers. Under anti-corruption policies, it has barred many firms and individuals from working on its projects, although none as prominent as Lahmeyer or Acres.

The firm, based in Oakville, Ont., appears closer than Lahmeyer to learning its fate. Last month, the bank said its investigations unit had made undisclosed recommendations about Acres to the sanctions committee, which can impose penalties ranging from a reprimand to temporary or permanent blacklisting.

A third big company, France’s Schneider Electric SA, was convicted in Lesotho in February after admitting that its former contracting unit, Spie Batignolles, bribed the project chief. The bank has announced no steps against Schneider.