[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

dam-l Bigger fish in the dock in Lesotho trial/LS



Two articles on the Lesotho corruption trial, now underway.


Bigger fish in the dock in Lesotho trial

Business Report Sunday Independent    11/6/00

The Lesotho Highlands Water Project (LHWP) R25-million corruption trial
restarts in Maseru next week. It promises to be a landmark case - a small
African country clamping down on corruption which had been supported by
large multinational construction companies.

International interest in the case has been building, since the trial is
being monitored by the European Union and the World Bank. Both helped fund
the R10-billion project to export water from the Lesotho mountains to South
Africa's economic and industrial heartland in Gauteng.

They are not very interested in accused number one - Masupha Ephraim Sole,
former chief executive of the LHWP, accused of receiving bribes. Of far more
concern and interest are the alleged bribers: Dumez International; Cegelec -
a partnership which includes CGEE-Alstrom and General Electric, Coyne et
Bellier, Sogreah and Spie Batignolles, of France; Lahmeyer International
GmbH and Asea Brown Boveri Schaltanlagen GmbH, of Germany; Asea Brown Boveri
Generation AG, Sweden; Acres International of Canada and Sir Alexander Gibb
and Partners of the UK.

If convicted, the accused face being barred from future World Bank and EU
projects.

This is believed to be the first time in Africa that such an array of
international operators have been called to account for the corruption and
backhanders that have long been suspected to be a feature of big-ticket
construction deals the world over.

As one senior counsel after another argued in the High Court in Maseru last
week that his client had been improperly indicted, it was impossible not to
think of the discomfort the international engineering firms and Sole felt
when exposed to the light of accountability.

Judge Brandon Cullinan, a former chief justice of Lesotho, called out of
retirement to deal with the biggest corruption case in the mountain
kingdom's history, postponed last week's hearing until Monday, to allow the
prosecution to prove that the people it had cited were authorised directors
or servants of the companies concerned.

If the charges in the indictment - compiled by two advocates of the Durban
bar, Guido Penzhorn and Hjalmar Woker - show that Sole's secret bank
accounts in South Africa and Switzerland had been filled with massive
payments from 13 of the consultants and contractors involved in the project
are proved, they would be seen as parasites feeding off Lesotho's
impoverished people in need of economic development.

Any hope of anonymity for the 19 defendants who were in court last week were
dashed when the judge gave permission for TV cameras in court.

Sole, 52, a Mosotho who trained as an engineer in Canada, featured as the
main recipient of the alleged 16 counts of bribery in all of the charges.

Sole returned from Canada to head the LHWP and with a salary package of some
R250 000. He became the highest paid individual in the tiny kingdom.

Sole also faces two charges of fraud and one of perjury arising from a 1995
disciplinary hearing which found him guilty of 22 of the 23 charges.

He said his only accounts were in Lesotho, but Penzhorn and Woker discovered
he had a Standard Bank account in Ladybrand and substantial transfers had
allegedly been made to it from accounts in Switzerland.

The indictment said Sole had accounts with the Union Bancaire Prive and the
Banque Multi Commerciale in Geneva and the Union Bank of Switzerland in
Geneva.

Sole said: "They must prove that I had these secret accounts in Switzerland
before they can prove that I took the money.

"Do you think those Swiss banks will come to Lesotho and give evidence
against their own clients?"

Also indicted are Jacobus Michiel du Plooy, a South African from Ficksburg
whose Swiss bank account was allegedly used as a conduit for bribes of at
least $375 000, paid to Sole by Highlands Water Venture, comprising Kier
International of the UK and Impregilo SpA of Italy.

http://www.iol.co.za/news/newsview.php3?click_id=81&set_id=1&art_id=ct200006
10163727567S5134608


---------
Highlands hearing may land multinationals in hot water
James Lamont, 12 June 2000
Today a landmark case gets under way in Maseru with the potential to
embarrass some the world`s largest construction companies.


Their relationship with Masupha Sole, the chief executive of Lesotho
Highlands Development Authority, their local partner in the Lesotho
Highlands Water Project, is under scrutiny.

Sole is under investigation for allegedly taking bribes from these firms and
squirrelling the money to foreign bank accounts.

The case has received little publicity. The companies - Dumex International;
Cegelec, a partnership including CGEE-Alstrom and General Electric; Coyne et
Bellier, and Sogreah and Spie-Batignolles of France; Lahmeyer International
and Asea Brown Boveri Schaltanlagen of Germany; Asea Brown Boveri Generation
of Sweden; Acres International of Canada and Alexander Gibb of the UK - are
understandably a little shy of this kind of inquisition and the damage it
might do to their reputations.

Some of them will wonder when they can finally extricate themselves from a
country difficult to operate in. The R10 billion project awakened old
controversies over southern African land removals when local highlanders
were resettled to make way for giant reservoirs and compensation payments
were held up.

Unrest broke out among local workers as the project wound down.
Non-governmental organisations (NGOs) made life difficult by questioning
whether big dam projects were environmentally and socially watertight.

To make matters worse, there were two attempted coups.

It would be nice to think that calling these companies to account shows the
gutsy determination of a small African country to challenge some of the
irregularities that often attend large engineering projects in the
developing world.

Very rarely have the mechanics of the relationship between government
officials and corporate interests come to light.

More rarely still have representatives of multinationals been requested to
sit in the dock of a courthouse in one of the world`s smallest and poorest
states.

The project`s bankers will be curious to see the outcome, as will be the
multitude of shareholders` associations and NGOs which have become
interested in the conduct of multinationals in the developing world.

Should it avoid getting bogged down in litigious ramblings, the case has the
potential to do for the construction industry what Nigeria did for Shell.

At best, it could have wider resonance as an example of corporate governance
standards enforced by African governments. At worst, Judge Brandon Cullinan,
the country`s retired chief justice, could find himself enmeshed in local
feuds and corporate obfuscation.

Large engineering projects are fertile ground for corruption. Unscrupulous
governments love multimillion-rand projects because they pose an enormous
opportunity to syphon off funds put up by the World Bank, European Union or
foreign governments.

Big dam projects have prestige and might, but they also hold the promise of
foreign capital and the opportunity of kickbacks.

The Turkwel Gorge Dam in Kenya was promoted by President Daniel arap Moi in
spite of widespread opposition. Zaire`s President Mobutu Sese Seko
commissioned two dam projects across the Congo river.

On the other hand, companies are not altogether averse to smoothing their
way with backhanders to get what they want.

The Lesotho Highlands Water Project had unpropitious beginnings. It was
cooked up by the old apartheid government in the early 1980s to supply
Gauteng`s industry with water.

The government`s inability to source international capital meant a complex
and interwoven financing structure was required to fund the project, in a
combination of South Africa`s good credit rating pasted onto Lesotho`s
balance sheet.

In spite of the abundant pitfalls of a multibillion-rand project being
administered in a weak national infrastructure, the water project had noble
development intentions.

Lesotho is a desperately poor agrarian economy that relies on its people
earning wages in South Africa and bringing them back home.

The export of water to Gauteng raises its gross domestic product
considerably, and with it the chances of development.

It`s hard to know who or what is the force behind this extraordinary
corruption trial in an unlikely environment to take on the international
construction industry.

Sole has claimed that he was the victim of political and financial
jealousy - not inconceivable in Lesotho, a place where rivalries run deep.

The focus so far has been squarely on Sole`s fallibility. Should it shift to
the fallibility of others, then one can believe the trial may have noble
intentions too.
http://www.busrep.co.za/static/20000612/week_ahead_32180.html

::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
      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
::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::