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dam-l Swiss article on corruption & ABB/LS
This article appeared in the Aug 8 edition of Zurich's SonntagsZeitung. The author is Joerg Dietziker, author of the book: "Water as a weapon - Turk dams and Swiss helpers"; about the Southeastanatolia Project (GAP) and the planned destruction of
Hasankeyf (1998).
ABB and eleven other companies are accused of bribery in connection with
Africa's largest dam project
Lesotho - "The international dam industry should be held responsible for
their corrupt business practices," thunders Patrick McCully, campaigns
director for International Rivers Network (IRN). The California-based NGO
is one of most knowledgeable organizations about dam projects. What fills
Patrick McCully with rage is the fact, that in connection with the largest
infrastructure project in Africa, a dozen well-known technology companies
ignored guidelines by the OECD and the World Bank, among them the
Swedish-Swiss company ABB.
In a decision on May 20, the Swiss Federal Court (Superior Court) in
Lausanne rejected a complaint [by Sole, the defendant] against a legal aid request by the Kingdom of
Lesotho [NOTE: this means Sole tried to stop the Les. gov from asking for "mutual aid" on the case; Sole lost and the Swiss court decided to support the claim]. With the legal aid provided the investigating state attorney came
to the conclusion that ABB bribed the former director of the Lesotho
Highlands Development Authority (LHDA) by paying him at least $40,000. ABB
Headquarters in Oerlikon refused to comment, stating that the case was an
ongoing investigation.
Various experts are of the opinion, that this is only the famous tip of the
iceberg. In the Sole case the total bribes paid amounts to more than 2
million dollars. The list of all the companies that supposedly illegally
paid Sole between 1988 and 1998 for the giant project in Southern Africa
reads like the Who is Who of the international dam building business.
The Federal Court ruling against Mustapha Sole (who was the head signatory
of the complaint) states, that several companies involved with the Lesotho
Project paid bribery monies to him. Because Mustapha Sole did not reveal
any information about the source of these funds, it was apparent that there
was a felonious connection between the payments and the influential
position Sole assumed in the LDHA. That this accusation doesn't appear out
of thin air, is apparent from the research of the regional attorney's
office in Zurich, which proves that payments from a total of twelve of the
contractors of LDHA (some of them directly, some via accounts of third
persons) were made to Sole's accounts in Zurich and Geneva. This is stated
by the federal court in its ruling.
According to law professor Mark Pieth of the University of Basel, Geneva
and Zurich are favored cities for such transactions.
Pieth has been the president of the OECD commission's working group on
bribery in international business. In this position, he has been
instrumental with his work on the convention to combat bribery of foreign
officials. In December of 1996 an agreement was signed in Paris, and on
15.2. 1999 the convention was put into effect.
Countries who sign the convention have a mandate to make bribery a federal
felony and to punish corrupt companies. Sanctions can lead up to the
exclusion of offenders from participating in public projects.
Switzerland - Slow in Execution
Unfortunately, Switzerland has not ratified the convention, says ambassador
Marino Baldi from the Federal Office for Foreign Economics (Bawi). While
Switzerland was one of the leading forces during the creation of the
convention, it has been very slow in executing it. However, the Swiss
parliament will discuss the convention in its upcoming fall session. If
Switzerland has not integrated these norms by spring of the year 2000 into
its criminal law, the OECD will be forced to put pressure on the government.
Industry takes the bull by the horns
In the case of ABB the change in criminal law comes too late, because it is
not retroactive. Should the bribery accusations in the case against Sole
and ABB prove true, ABB will get off scot-free in Switzerland- with the
exception of the loss of a good reputation, which should not be
underestimated.
In Germany and Sweden, though, the situation is different. ABB Generation
Sweden and ABB Calor Emag Schaltanlagen AG (Germany) both have supplied the
project with electromagnetic components. Sweden ratified its
anti-corruption laws on June 8, 1999 and Germany already on November 10, 1998.
A lot depends on the outcome of the criminal case in Maseru, which has now
been postponed until August 31st. Examples from the past and alarming data
from the present show that it is essential for the anti-corruption
convention to be integrated into national laws: The World Bank estimates
that annually bribery payments from industrial countries to officials in
economically underdeveloped countries exceed 80 billion dollars. According
to criminal law professor Pieth bribery monies worldwide add up to more
than 200 billion dollars.
ABB had previously hit the headlines during the constructions to the dams
in Tucurui and Itaipu in Brazil. In 1991 investigative report Itaipu was
named as probably the largest fraud in the history of capitalism.
With the mounting criticism, the dam industry is trying to do something
against the damage to their image. In May of 1998 several renowned
technology companies, international institutions and several
non-governmental organizations, including the Declaration of Berne and WWF,
founded the World Commission on Dams (WCD). ABB, saying that they conduct
internal seminars about company ethics in international business, has
apparently financed the commission and ABB head Goran Lindahl has been
appointed one of the commissioners. The objective of the commissioners is
the monitoring of the benefits and financing of dams worldwide, a venture
that after the Lesotho incidents is in serious danger, says Juliette Majot,
director of International Rivers Network.
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Lori Pottinger, Director, Southern Africa Program,
and Editor, World Rivers Review
International Rivers Network
1847 Berkeley Way, Berkeley, California 94703, USA
Tel. (510) 848 1155 Fax (510) 848 1008
http://www.irn.org
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