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dam-l LHWP corruption in Observer/LS
Sorry for cross postings!
Britain's biggest
builders
face dam bribery
charges
Antony Barnett
Public Affairs Editor
Sunday December 5, 1999
Some of Britain's
most prestigious construction companies
are involved in a
£1 million bribery scandal that is set to
rock the
international building industry.
Several
multinationals will appear in an African court next
week accused by
governments of funnelling large amounts of
money into secret
Swiss bank accounts of a senior official in
order to gain
lucrative contracts.
The scandal
revolves around the controversial £5 billion
Katse Dam project
in the former British colony of Lesotho
in southern Africa.
The scheme, dreamt
up by the apartheid government of
South Africa in the
mid-1980s, was one of the largest
construction
projects in the world and competition for
contracts was
fierce. The World Bank is now backing a
prosecution by the
Lesotho government, following a
four-year
investigation which found that Masupha Sole, the
dam project's chief
executive, took more than £1.2m in
bribes over 10 years.
Experts in
international finance believe it will be a landmark
case, because those
firms convicted face being barred from
future
international construction projects financed by the
World Bank.
Two of Britain's
largest construction firms, Balfour Beatty
and Amec, have
stakes in one of the main international
consortiums charged
with paying tens of thousands of
pounds in bribes.
In 1996 Amec bought nearly half of a
French company
which allegedly paid more than £75,000 to
Sole.
Two further British
firms, Kier International and Stirling
International, had
major stakes in another international
consortium that is
accused of paying more than £500,000 in
bribes.
Sir Alexander Gibb
& Partners - one of Britain's most
distinguished civil
engineer ing firms - is individually named
as having paid
large bribes to Sole.
The Lesotho dam has
been at the centre of controversy ever
since the project
was first drawn up. Lesotho is a nominally
independent country
completely surrounded by South Africa.
It is extremely
poor but rich in water resources and the
concept was to
bring water from Lesotho, via a complex
web of dams and
tunnels, to the drought-prone industrial
heartlands of
Johannesburg.
Environmentalists
and human rights groups have criticised
the dam for
devastating the vulnerable communities who live
in the Lesotho
highlands region where the dam is located.
Thousands have lost
farm and grazing lands and no longer
have access to
fresh water sources. The reservoir water
collected by the
dam is owned by South Africa and cannot be
used by the
citizens of Lesotho, despite predictions of a
water shortage in
the next decade.
The role of the
World Bank in the funding of the Katse Dam
is also being
questioned. While it is now helping the
prosecution of
firms charged with bribery, The Observer has
seen leaked
correspondence between the World Bank and the
Lesotho government
from 1994 suggesting the institution
knew of the
corruption allegations against Sole but tried to
prevent action
being taken.
The letter said:
'We believe that in the light of the
potentially
detrimental consequences for the project, unless
there are
overwhelming reasons to the contrary, it would
have been better
not to make any changes to staff.'
Equally damning is
a second leaked internal document from
the World Bank,
obtained by The Observer , dated July 1991
and stamped 'for
official use only'.
This gives details
of the establishment of a secret bank
account in London
where national governments, embarrassed
by supporting the
apartheid government in South Africa,
could channel funds
to support the Katse Dam project.
At the time, there
were international sanctions in place
against South
Africa, so the ultimate beneficiary of the funds
would be hidden.
The British, French, German and US
governments gave
financial support for the dam.
The World Bank -
which lent over $150m for the dam
project - now seems
serious about ending corruption. James
Wolfensohn, its
president, recently denounced the 'cancer of
corruption', and
the bank has adopted clauses that would
declare a company
'ineligible for future bank contracts if it
has engaged in
corrupt practices'.
But Patrick
McCully, campaigns director of the International
Rivers Network,
said: 'The World Bank is not a knight
coming to the
rescue of Lesotho, it is a leading actor in a
major corruption
scandal. While the case is under way, the
companies involved
should be suspended from competing for
contracts on World
Bank projects.'
The Observer
contacted all the British companies linked to
the scandal. They
all denied they had given money to Sole or
any other officials.
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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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