Guido Penzhorn SC, presenting before the U.S. Senate Foreign Relations Committee

July 21, 2004

The only “real punishment” companies convicted of corruption find meaningful are sanctions from international donor and lending agencies, said Mr Penzhorn, who likens a company’s loss of livelihood to an individual’s loss of liberty. Taking away a corporation’s means of livelihood is the only real punishment that matches the taking away of a natural person’s liberty, he said. Mr Penzhorn defined “real punishment” as sanctions by international donor agencies. With few exceptions, he alleged the international community had resisted efforts to cooperate with the Lesotho trials despite initial promises of assistance.

“These attempts to undermine the prosecutions in my view illustrate the very insidious nature of the crime of bribery,” he said. “When prosecuting bribery, and this is what these cases have taught us, one is met with an almost impenetrable wall of silence.” One exception he noted had been Swiss authorities who were “prompt” and efficient in their response to a request for bank records.

“There is a lingering impression in Lesotho, as well as in South Africa, that the interest of first world countries in the present prosecutions lies not so much in the successful outcome of these prosecutions but rather in protecting the interests of its companies that are involved,” Mr Penzhorn told the Senate.

The prosecuting authorities of Lesotho also met other obstacles. When the bribery scandal became public, several overseas companies connected to the project changed their corporate structure. Mr Penzhorn said that, despite what companies may say, “we believe that this may well have been done in order to evade prosecution.” Even after it’s conviction, Acres International (the first company to be tried by Lesotho) has not paid its fine.

“Something must be done to ensure that companies cannot simply walk away,” said Mr Penzhorn.

The European Union, a co-funder of the scandal-plagued Lesotho Highlands Water Project, did dispatch a team to investigate the involvement of European companies in Lesotho’s allegations of foreign corruption but found nothing untoward. Later, Lesotho would convict one of those companies, Lahmeyer International of Germany, while another, Spie Batignolles, pleaded guilty.

Mr Penzhorn said the EU left Lesotho with the impression that they were not so much concerned with “helping us than with white-washing EU spending.” He said he welcomed the World Bank’s recent moves to act firmly against companies involved in corruption and hoped the EU would now follow suit.