[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]
dam-l LHWP corruption article/LS
http://www.suntimes.co.za/2000/04/30/insight/in06.htm
Sunday Times (SA) - Insight - 30 April 2000
GREED AND STUPIDITY
CARMEL RICKARD looks at how a man has fallen after cooking everything,
from the books to groceries bought on his official expense account
MASUPHA Sole must be kicking himself. If he hadn't let greed get the
better of him and fiddled his expense account claims for piffling sums
of money, he would still be the chief executive of the massive Lesotho
Highlands Water Project and the highest paid civil servant in the
mountain kingdom.
No one would ever have known about a Swiss bank account in his name,
containing millions of rands allegedly paid to him as bribes.
Instead, he has been ignominiously dismissed and is about to appear in
the Lesotho High Court as Accused No 1 in the world's first bribery
and corruption trial involving international construction and
consulting consortiums.
The prosecution will try to prove that a number of huge international
companies secretly paid at least R25-million to several intermediaries
between 1988 and 1994.
They allegedly took a cut, and then paid the balance to Sole,
depositing the money in a secret Swiss account. The list of the
accused in the case reads like a "who's who" of international
construction and consulting consortiums - including two of the world's
biggest.
They hail from Canada, the UK, Italy, Germany, France, Sweden and
Panama, and they have all been involved in various aspects of the
multibillion-rand Highlands Water Project in Lesotho, probably the
biggest construction scheme in the world at the moment.
Despite rumours of bribery surrounding major construction projects
over the years, this is the first time criminal charges are being
pursued. The stakes are huge for all the contractors and consultants
who make their living out of international development projects.
They know that The World Bank and the European Union, which are
helping to finance the Lesotho project, are closely monitoring the
case. If convicted, the contractors and consultants will be barred
from future lucrative contracts from these two major funders.
Unsurprisingly, all of the companies have mounted a vigorous defence
against the charges.
When the trial begins in Maseru on Tuesday, Sole may be thinking back
to October 1986, when he was seconded by the Lesotho government from
his job in the Department of Water, Energy and Mineral Affairs to be
the first chief executive of the Lesotho Highlands Development
Authority.
The project had begun in the '70s with a deal between South Africa and
Lesotho to build massive dams in the mountains of Lesotho. The water
would be transferred to South Africa, generating both revenue and
electricity for Lesotho.
Sole, a promising young engineer from Lesotho with his Canadian
university qualification and experience as a director in the
department, seemed just the man for the job of chief executive.
Soon he was overseeing the tender process and the building of the
Katse Dam, the first phase of the project.
But disquiet began to surface with claims that all was not well with
the accounts.
When the civilian government came to power in Lesotho in 1994, the new
minister of natural resources decided to check these complaints,
asking Ernst & Young to do an audit.
Preliminary findings suggested that Sole had some explaining to do and
the government set up a disciplinary inquiry into his financial
activities.
Sole protested that since he was the chief of the project, he could
not be investigated, but the High Court affirmed that the minister was
entitled to go ahead.
Sole then made a mistake which led to much more serious revelations.
He insisted that it was his right to be represented by a full legal
team at the inquiry.
That opened the way for the minister to claim the same right, and two
South African advocates, Guido Penzhorn SC and Hjalmar Woker, both of
the Durban Bar, were briefed to act for the government in the inquiry.
The two were given full government backing in their investigations,
and it is only due to their detective work that massive foreign
payments, allegedly to Sole, were discovered almost by accident.
The hearing, which began in May 1995, found Sole guilty of 22 of the
23 disciplinary charges against him, ranging from fraud to relatively
minor misdemeanours like buying groceries on his official expense
account.
He also used official vehicles and staff for domestic purposes.
One employee testified that he was used almost exclusively by the Sole
family as a driver and domestic assistant: he took the children to
school, cleaned the swimming pool, bought groceries and delivered
enough cement to Sole's in-laws to build a house.
The records describe all these activities as "chief executive mission"
with the fuel and other costs paid for by the project.
And when the driver worked over weekends or after hours, Sole claimed
overtime and subsistence.
Sole gave himself two raises a year and a 13th cheque, even though
this was not part of his package.
He was also found to have rented a number of houses, ostensibly for
use by project personnel.
In fact, they were never used by the staff: some stood empty and
others were sub-let at a loss.
One was uninhabitable for much of the period he paid rent.
So why did he hire these houses when they weren't needed? The
disciplinary committee concluded that it was to ingratiate himself
with the landlords - all of them influential figures in Lesotho
society.
In its report, the committee said Sole had become a "saboteur of the
very policies, rules and regulations" which he had been employed to
uphold.
Instead of making a clean breast of what he had done, he had tried to
scuttle the proceedings.
At the same time, he had approached the minister of natural resources,
the Prime Minister, members of the inquiry and others, trying to get
their support for the hearing to be scrapped.
The committee recommended that Sole be sacked, that steps be taken to
reclaim the money he had cost the project, and that certain
information obtained in the inquiry be given to the director of public
prosecutions to consider criminal charges.
Bizarre though some of these charges may be, there was still no hint
of any large-scale financial irregularity or the involvement of any of
the contractors.
However, the inquiry was followed by a civil claim in the High Court
to get back the money Sole had squandered.
He was ordered to repay R7.7-million, and an appeal against this
judgment is still pending.
As part of the investigation for this civil case, Penzhorn and Woker
asked that Sole disclose his banking details.
He gave them information relating to accounts held in Lesotho and
swore under oath that he had no accounts abroad.
However, investigators found a Standard Bank account in his name in
Ladybrand, South Africa, and learnt that large amounts were being
transferred into it from a Swiss account.
After a series of legal actions in Switzerland to have the records
released, Penzhorn and Woker discovered a complex web of payments made
by the contracting and consulting consortiums via middlemen to what
turned out to be a Swiss bank account in Sole's name.
The prosecution will ask the court to draw the inescapable inference
that these huge sums must have been for illegal purposes: they were
paid secretly by the consortiums to Sole's foreign account through
intermediaries at a time when he was considering tenders and
variations to contracts in which the consortiums were involved or had
expressed interest.
Sole had not disclosed these payments.
Indeed, he had denied the existence of any outside accounts.
The trial will involve a number of prominent South African lawyers,
some defending the accused, others appearing for the prosecution.
It's expected to be a lengthy case involving a range of difficult
issues such as the Lesotho court's jurisdiction to try international
consortiums.
The case is crucial for all involved.
Sole, who faces 16 counts of bribery, two of fraud and one of perjury,
will be trying to stave off a lengthy jail term.
His co-accused want to protect their reputations and their livelihood
in international construction work.
The World Bank also has a reputation to protect.
At an international anti-corruption conference in Durban last year,
its president, Austrian James Wolfensohn, committed his organisation
to stamping out bribery and corruption allegedly rife in international
projects of this kind.
Lesotho's Attorney-General, Fine Maema, who headed his country's
delegation to the Durban conference, said Lesotho wanted to show the
world that, though tiny, it was big on clean governance.
For both Wolfensohn and Maema, the Maseru trial represents their first
opportunity to turn talk into action.
::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
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
::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::