August 25, 2003

LESOTHO: Courts send strong messages on corruption re Highland Water Project

The Lesotho Court of Appeal made strong statements about corruption in developing countries when it recently confirmed the conviction of Canadian engineering contracting firm Acres International on a charge of bribery. Acres was found guilty of having bribed the CEO of the Lesotho Highlands Development Authority, Masupho Sole, to secure a lucrative contract for the construction of the Katse Dam. Sole, now in prison, received bribes totalling R12m from a number of international companies.

In passing judgment, the three judges, led by judge president and former South African judge Jan Steyn, said the Lesotho prosecuting authorities had in launching the prosecution against developers and the officials "demonstrated courage, determination and competence. It has been an arduous task... However they set an example of good governance, and have delivered a blow on behalf of all countries who face major challenges in strengthening their infrastructure through project activity. Corruption is of growing international and regional concern corruption has a particularly devastating impact on development and good governance in developing countries in Africa, because it undermines economic growth, discourages foreign investment and reduces the optimal utilisation of limited resources available for infrastructure, public services and antipoverty programmes."

The judges wanted the sentence to send a strong message to developers. "The question of conviction alone is a far-reaching punishment because Acres will be unlikely to secure contracts funded by the World Bank."

In addition, the South African Broadcasting Corporations (SABC) reported last week in August that about 15 international companies, believed to have been involved in bribery in the Lesotho Highlands Water Project, will be prosecuted soon. This comes after a German firm, Lahmeyer, was fined R10.5 million (1.46 million U.S. dollars) in the Lesotho High Court for bribery, aimed at securing lucrative contracts, this week. Lahmeyer says it will appeal against both the conviction and the fine. The former chief executive of the dam and hydro-electric power building programme, Masupha Sole, has been sentenced to 15 years in jail for receiving bribes amounting to over one million U.S. dollars.

The Lesotho government says its new policy on zero-tolerance on corruption will restore investor confidence in the kingdom. It warned that if international companies and top government officials involved in corruption are not prosecuted, others would follow suit. Fine Maema, Lesotho's Attorney General, said: ”Investor confidence clearly would be diminished if there's corruption and people thrive on bribery. We're saying that once the international companies and the international community as a whole realise that there's zero tolerance on corruption, then it clearly means that there'd be more investors coming to Lesotho”. (Business Day, Johannesburg / ips)

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