David Pallister Tuesday March 16, 2004 The Guardian
The World Bank has formally reopened a corruption inquiry into a leading Canadian engineering company which could lead to the first blacklisting of a major international firm.
The move follows the conviction of Acres International in the high court of Lesotho in southern Africa, an unprecedented example of a western firm being prosecuted for bribery by a developing country.
The Ontario company was the first of several to be found guilty of bribing Masupha Sole, the chief executive of the multibillion-dollar Lesotho Highlands Water Project, a massive series of dams providing water to South Africa and electricity to the tiny, landlocked country. The World Bank contributed $155m (£86m) to the cost.
Last August Acres International lost its appeal and it has taken six months for the bank's sanctions committee to study the judgments and issue a notice that the debarment case has been reopened. In his appeal judgment, Judge Jan Steyn said the company "will live in the shadow of the taint of corruption," and he predicted that "an embargo by the World Bank and other institutions such as donor agencies is no remote possibility".
An earlier investigation by the World Bank, before the series of trials began, exonerated Acres International of any wrongdoing; the company still insists it was unaware that money given to its Lesotho agent went into Mr Sole's Swiss bank accounts. He is now serving 15 years in prison. The second company to be convicted at the end of last year was Lahmeyer International of Germany. Its appeal against conviction and a $1m fine starts in the high court next week.
In the latest trial, which ended last month, Schneider Electric of France pleaded guilty to 16 counts of bribery and was fined nearly £1m after a plea bargain. It did not dispute that its corporate predecessor in Lesotho, Spie Batignolles, had also bribed Mr Sole. It was agreed by the court that Schneider's present managers were unaware of the bribes.
Spie, now part of Amec, was the lead firm in a consortium that included the UK's Balfour Beatty, which held a 16% stake. Although Balfour Beatty has not been charged, it has admitted that all the consortium members paid a contribution to the agent who bribed Mr Sole but claimed that it was Spie executives who took all the secret commission decisions.
The agent, Frenchman Max Cohen, who used a Panamanian company and Swiss bank accounts to transfer the money, is the only individual so far to be placed on the World Bank's debarred list.
Another British firm, consulting engineers Sir Alexander Gibb, now merged with American company Jacobs, has also been charged.
If Acres is debarred it will send a powerful signal to the world's big construction companies, which rely heavily on World Bank and other international financial support.