June 18, 2003

LESOTHO: Judge convicts German firm of bribery on water project

The Lesotho High Court on June 17 convicted Lahmeyer International, a German engineering consulting firm, of paying approximately US$550,000 in bribes to the former chief executive of the multi-billion dollar Lesotho Highlands Water Project in exchange for favourable contract decisions, according to South African press reports. Lesotho Justice Gabriel Mofolo found Lahmeyer guilty of 7 of the 13 counts for which they were charged.

This is the second company to be convicted in the lengthy trial, which began in 1999. The Canadian engineering company, Acres International, was found guilty last year, but has appealed the decision. The water project's former chief executive, Masupha Sole, was also convicted of corruption, and is now serving a 15 year prison sentence.

"Like the Acres' verdict before it, the judgment against Lahmeyer throws into doubt the legitimacy of these companies' involvement in other large dam projects throughout the world," said Ryan Hoover of International Rivers Network. "We expect the World Bank to bar Lahmeyer and all other companies found guilty of corruption on the Lesotho Highlands Water Project from participating in other World Bank-funded projects. The World Bank's kid-glove treatment of companies convicted of bribery in Lesotho thus far is an insult to the Lesotho government's courageous efforts to hold both bribe-takers and bribe-payers to account," said Hoover.

Lahmeyer International has worked on several controversial World Bank-funded dam projects. They were responsible for engineering and construction supervision on the Yacyreta Dam on the Argentina-Paraguay border (also marred by massive corruption) and the Chixoy Dam in Guatemala (known for the massacre of Mayan Indians who refused to be moved for the dam). They are currently involved in the Nam Theun 2 Dam in Laos, which is set to receive World Bank funding. The World Bank has stated that corruption is the "single greatest obstacle to economic and social development." Unfortunately, this assertion has yet to be demonstrated in real action with respect to the Lesotho case. Acres International continues to work on World Bank-funded projects in spite of its bribery conviction.

The other companies facing prosecution and potential disbarment from World Bank contracts include France's Spie Batignolles and Dumez International, and Italy's Impregilo.

The Lesotho Highlands Water Project directly affected approximately 27,000 people in Lesotho. It displaced hundreds of subsistence farming households, and dispossessed many more of their land. Austrian companies participated in thr giant project as well, but due to protests of the then Austrian Anti Apartheid-Movement (nowadays SADOCC) only in a limited way. (International Rivers Network, Berkeley, California)

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