World Bank External Affairs Department, Press Review

April 13, 2004

The World Bank has taken note of the decision of the Court of Appeals of Lesotho to uphold the conviction of Lahmeyer International GmbH on several counts of bribery connected to the Lesotho Highlands Water Project. Lahmeyer had received a Bank-financed contract on the Highlands Water Project, All Africa reports.

In early 2002, the World Bank’s Sanctions Committee determined that the information available to it at that time was not sufficient to conclude that Lahmeyer had engaged in corrupt practices as defined in the Bank’s Consultant Guidelines. Therefore, the Bank has not declared Lahmeyer ineligible to be awarded future Bank-financed contracts. The Sanctions Committee stated that it would re-examine its findings in light of any additional relevant information that might surface from any source, including the public proceedings conducted by the authorities in Lesotho.

With the ruling of the Court of Appeals of Lesotho, the Bank will now review the evidence presented during the criminal proceedings, including the Court of Appeals decision, to determine whether there is additional relevant information that was not previously considered by the Bank’s Sanctions Committee. If the Bank determines that there is additional relevant information, then the Bank may reopen debarment proceedings against Lahmeyer, which would then have an opportunity to respond to the charges against it.

The World Bank applauds the commitment demonstrated by the Government of Lesotho to fight corruption through the judicial system. The World Bank has cooperated with the Government throughout its investigation, and the World Bank continues to finance the development of the Lesotho Highlands Water Project.

Meanwhile, The Globe and Mail reports that 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, says the news report.