By Martin Plaut
BBC Africa analyst
Building the dam involved billions of dollars in construction contracts
British police will not investigate a construction company accused of corruption in Lesotho, they have said.
British firm Mott Macdonald were implicated in an audit of a dam project in the southern African kingdom.
But the Serious Fraud Office (SFO) has said it will not be looking into the accusations, two years after they received them.
The decision makes the UK look like a "soft touch" on corruption, according to a British member of parliament.
The Foreign Office received detailed allegations against Mott MacDonald in December 2006 over its part in a multi-million dollar dam building programme, and referred the matter to the SFO.
"We have decided that we will not proceed with a formal investigation into Mott MacDonald, as there is no realistic prospect of a conviction," the SFO said.
The decision was revealed in a letter to British member of parliament Norman Lamb.
"I am deeply frustrated that there will be no further action, given the seriousness of the allegations," Mr Lamb said.
"It leaves the impression that the UK is a soft touch over corruption, and I will seek a fuller explanation for the SFO's decision."
Mott MacDonald was accused of bribing two senior Lesotho officials linked to a project to supply South Africa with hydro-electricity 15 years ago.
One of the payments included $147,000 (£74,908) allegedly paid by Mott MacDonald, as part of a consortium led by a German company, Lahmeyer.
Lahmeyer was found guilty of corruption and barred from undertaking any projects for the World Bank for the next seven years, unless it co-operated fully with the Bank in disclosing its misconduct.
It is in this context that Lahmeyer provided the detailed documentation, linking Mott MacDonald to the corrupt payment.
A forensic audit was carried out by the auditors PricewaterhouseCoopers, which provided details of the money allegedly paid by Mott MacDonald to two of the Lesotho government's representatives on the scheme.
A statement from the company said that several detailed investigations into the project had not made any suggestion of impropriety by its staff.
"We take our corporate social and professional responsibilities very seriously and have a rigid anti-bribery policy," it said.
"As this project took place over 15 years ago, it is difficult for us to comment on it."
The Lesotho Highlands project is the world's largest water transfer scheme, involving the construction of five massive dams, hundreds of miles of tarmac roads, bridges and electricity transfer stations.
Contracts worth billions of dollars were at stake.
The Lesotho chief executive of the scheme was found guilty, and sentenced to 15 years in jail for corruption.
The tiny kingdom has been one of the few African states not only willing to prosecute its own officials, but also the Western companies who paid the bribes.