Multilateral Development Banks

WB blacklists Bhasha dam surveyors

Khaleeq Kiani,
November 12, 2006
The World Bank blacklisting of Lahmeyer International has
the future of a dam scheme the company is working on in Pakistan;
although widely reported by the media, Pakistan authorities say they
need to verify the company’s debarment first before taking action.

Work on the Bhasha dam project in Pakistan is in jeopardy now that the
World Bank has blacklisted the German engineering firm, Lahmeyer
International, after finding the company guilty of paying bribes in the
multi-billion dollar Lesotho Highlands Water Project (LHWP).

Blacklisted for seven years on corruption and bribery charges, the
German contractor is currently conducting the feasibility study and
detailed engineering design of the $7 billion Bhasha project in the
Northern Areas of Pakistan.

A government official said that the Asian Development Bank and the
Islamic Development Bank, among other international lenders, normally
adopt the WB decisions on corruption related matters. As such the
government of Pakistan will have to expel the German company from the
project immediately to save the project.

The contract for the Bhasha dam’s feasibility study and detailed
engineering design of the dam was awarded in mysterious circumstances
and a competing consortium led by the National Engineering Services of
Pakistan (Nespak) was sidelined without any reason given, said the
government official.

A Pakistan Public Procurement Authority (PPRA) official said that the
PPRA adopts World Bank decisions on corruption issues, although it is
not required to by law, and has placed Lahmeyer International on its
list of companies blacklisted by the Bank.

Advisor to the Ministry of Water and Power, Riaz Ahmad Khan, told Dawn
(Pakistan’s largest English language newspaper), that the blacklisting
of Lahmeyer had not yet come to his knowledge. He said if the
information was true, the government would have to examine the
blacklisting further and adopt an appropriate course of action.

Chaudhry Mushtaq of Pakistan’s Water And Power Development Authority
(Wapda), said he would have to confirm first if the information about
the World Bank decision was correct and said similar information had
been brought to his knowledge before the award of the Bhasha contract
but Wapda had verified the company’s credentials.

Meanwhile, the World Bank has decided to allow for a possible four-year
reduction in Lahmeyer’s debarment period if Lahmeyer puts in place a
satisfactory corporate compliance and ethics program and cooperates
fully with the bank in disclosing any past misconduct, including a
thorough review of its Bank-financed contracts.

“This sanction reflects a serious response to corrupt practices,” said
Graeme Wheeler, Managing Director of the World Bank Group and Chairman
of the Bank’s Sanctions Committee.

“At the same time, the sanction is structured to encourage Lahmeyer to
demonstrate that its contracts and practices now meet the high
standards that are essential to the Bank’s work.”

But, as reported by Odious Debts Online
after the World Bank’s announcement it would debar Lahmeyer, reducing
the company’s debarment period “sends the wrong signal to other
corporate bribers.”

Originally indicted in 1999 and convicted and affirmed in 2004, the
Lahmeyer decision was too long in coming, said Patricia Adams of the
Canadian-based foreign aid watchdog, Probe International.

“In those seven years since the original indictment, Lahmeyer was able
to carry on business as usual. Rather, the Bank should have taken swift
action and suspended the company’s right to do business with the Bank
when they were originally indicted – as is allowed for under the
U.S. Foreign Corrupt Practices Act – pending a decision by the Lesotho

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