Dam shady business

Sam Sole, Mail & Guardian (Johannesburg)

March 26, 2006

Michiel du Plooy must be a nervous man. The Free State businessman is expected to be a key witness in the next corruption case to be launched by the Lesotho prosecuting authority in connection with bribes paid by international construction firms to secure contracts in the $8-billion Lesotho Highlands Water Project.

Three companies have already been convicted in Lesotho of paying bribes – via agents – to the former CEO of the Lesotho Highlands Development Authority, Masupha Sole, who was convicted of bribery in 2001 and sentenced to 15 years in prison.

This week German consulting firm Lahmeyer argued its case before the Lesotho Appeal Court against its conviction and fine of about R10-million. Canadian firm Acres International last year lost an appeal against its conviction and fine of about R15-million.

At the end of last year the French engineering firm, Spie Batignolles, pleaded guilty and paid a fine of about R10-million.

Lesotho attorney general Fine Maema told the Mail & Guardian that next in line for prosecution is Italy’s Impregilo, the lead partner in a consortium known as Highlands Water Venture (HWV) that included two South African firms: Concor, with 25%, and Group 5, with 10%.

HWV secured the contract to build the massive Katse dam. Initial charges against HWV were withdrawn after the Lesotho High Court ruled that a partnership could not be charged in the place of its individual members.

Du Plooy was the middleman who concluded a “representative agreement” with Impregilo and HWV that saw him receive $1-million, of which he, in turn, paid half to Sole.

Although a sworn statement from Du Plooy suggests none of the other partners were aware of his deal with Impregilo, the judge in the case against Sole was less sure.

Judge Andrew Cullinan noted: “As to whether any other partner of HWV was so aware, I cannot say. In view of the relevant contents of the joint venture agreement, the actions of Impregilo must be taken to be those of HWV.”

Group 5 told the M&G this week that they had “no direct or indirect knowledge of bribes being paid by any parties associated with the Lesotho Highlands Water Project”. CEO Mike Lomas said the company had been unaware of Du Plooy until charges were brought against HWV. Concor, which had the biggest single share in the consortium, failed to respond.

A feature of the case against Sole was his stony refusal to testify – even in exchange for a possible early release. But when Du Plooy lost some preliminary legal skirmishes, he cracked.

Durban senior counsel Guido Penzhorn, contracted by the Lesotho authorities to lead the prosecution, described the importance of Du Plooy’s decision to break ranks in a recent address to the Institute for Security Studies. “It was only when all the preliminary issues had been decided in favour of the prosecution and Du Plooy literally had his back against the wall – and [was] facing a long term of imprisonment – that he came forward, tendering a plea of guilty and offering to cooperate. In the process, he pierced the facade that is the representative agreement.

“Clearly, once you involve yourself in the murky world of bribery, it is not open to you to simply opt out whenever you like. Du Plooy told us that he quite literally feared for his life.”

And no wonder – extremely large sums are at stake. The practice of the court so far has been to fine the companies the amount of profit they earned on the contract, plus what they paid in bribes. But the potential damage from lost business is much higher.

Last week the World Bank announced that it would reopen investigations to debar the company from bidding for future contracts financed by the Bank.

Impregilo, Italy’s biggest construction group, has claimed, as Acres did, that it paid no money to Sole and that it had no knowledge of money paid to Sole by its agent, in this case Du Plooy.

An affidavit by Du Plooy, made in conjunction with his guilty plea, suggests otherwise. Du Plooy describes how, in meetings with senior Impregilo executive Romano Allione, he had originally raised the idea of securing work for Impregilo in exchange for a bribe.

“It was also then, in these circumstances, that he informed me that, should Impregilo be successful in obtaining a contract/contracts on the water project, he would be prepared to conclude an agency agreement with me for Impregilo in Lesotho. By this it was perfectly understood by both Allione and myself that such an agency agreement would be nothing more that a disguised bribe agreement.”

Categories: Africa, Lesotho, Odious Debts

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