Business Report (South Africa)
July 26, 2004
Washington: The World Bank had blacklisted Canadian engineering firm Acres International for three years for “corrupt activities” related to the bank-sponsored Lesotho Highlands Water Project, it said at the weekend.
Acres, bought in June by Canadian design firm Hatch, will be barred from receiving any new bank-financed contracts for the next three years.
Acres is the largest company to be sanctioned for corruption by the World Bank, which is under pressure by shareholders like the US to root out misuse of money spent on development projects in poor countries.
Acres has been prosecuted in Lesotho for bribing Masupha Sole, the former chief executive of the Lesotho Highlands Development Authority, who was convicted in 2002. The company still, however, owes a large portion of its $2.8 million (R17 million) fine.
The bank’s move does not affect its contracts with Acres in Palestine, Ghana, Ethiopia and Tanzania worth $2.3 million.
“The World Bank’s sanctions committee found that Acres engaged in corrupt activities for the purpose of influencing the decisions of [Sole],” the World Bank said in a statement.
Acres said it was disappointed at the bank’s decision and its management had entirely changed since the bribery incident.
The events in Lesotho occurred 10 to 15 years ago and Acres had responded to these allegations over a five-year period, the company said in reaction.
“We have already moved on by implementing corporate compliance measures that include strict guidelines about how Acres engages and supervises contractors, employees and representatives.”
Guido Penzhorn, a South African lawyer involved in the Lesotho prosecutions, told the US senate in testimony last Wednesday it was important for the World Bank to act firmly against project contractors and consultants involved in Third World corruption to discourage abuses.
He said World Bank action would also encourage countries like Lesotho in their fight against corruption.
US legislators have turned up pressure to ensure that multilateral development institutions prevent, detect and punish officials for corruption.