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Tuesday, 7 August, 2001, 13:48 GMT 14:48 UK
Putting corruption on trial in Lesotho
Katse Dam
Dams exploit Lesotho's one natural resource: water
The High Court of the tiny southern African state of Lesotho has postponed a high-profile corporate corruption trial until December.

The postponement came after pressure from lawyers for a number of Western construction companies, members of a consortium accused of paying $2m or more in bribes over a dam-building project, and a request for more time from the state prospecutor.

The companies concerned have much to lose. If the consortium is convicted of bribery in the Lesotho Highlands Water Project (LHWP), all concerned could, conceivably, be barred from taking part in any World Bank-funded project.


"Maybe this is a test case... but for once we are saying it takes two to tango

Lesotho attorney-general Lebohang Fine-Maema

The consortium is led by French company Spie Batignolles, but it also includes the UK's Balfour Beatty as well as three other European construction firms.

Seven other companies, three of them British including Stirling International and Kier International, are also alleged to have paid bribes as part of the LHWP.

Fault on both sides

For the first time, the companies, and not just the person receiving the money, are in the dock.

"Maybe this is a test case," Lesotho's attorney-general, Lebohang Fine-Maema, told the BBC. "But for once we are saying it takes two to tango."

The government aims to see the case through, he said, despite the bigger financial muscle of the defendants. "It doesn't matter how much it's going to take," he said.

Meanwhile the criminal case against the alleged middleman, former head of the Lesotho highlands development agency Musopa Sole, continues on 14 August.

Mr Sole denies the charges. He has already lost a civil suit on the matter and is appealing.

World Bank

The accused consortium is involved in building a group of huge dams in Lesotho, a scheme agreed in the 1980s between Lesotho and the then-apartheid government of South Africa, which needed reliable sources of both water and electricity.

World Bank president James Wolfensohn
Wolfensohn's World Bank: accused of being soft on bribery

The World Bank arranged much of the finance, and is currently holding an internal investigation into the project.

The World Bank representative in Southern Africa, Fayez Omar, told the BBC's Rageh Omaar that the Bank "will definitely take very strong action if companies are found to be guilty of misconduct of World Bank funded parts of the project".

Over the past two years, 54 companies had been blacklisted from bidding on Bank-funded operations, he said.

But a recent UK parliamentary committee report noted comments from Bank president James Wolfensohn that the Bank will only disbar a company if corrupt activity can be proved within a specifically Bank-funded part of the project.

Countries where OECD convention is already law
Argentina
Bulgaria
France
Germany
Italy
Japan
Poland
US and 21 others

Given the wide range of other funding groups involved, the report says, "That position is based on the narrowest legal interpretation of the Bank's guidelines and a singularly selective view of the Bank's involvement in the project."

The report quotes an internal 1991 Bank document to support its contention that the Bank will go as far as possible to avoid blacklisted any but the most minor construction contractors.

Other countries yet to make OECD convention law
Brazil
Chile
Ireland
Turkey

"The Government of Lesotho explicitly requested that the Bank be the lead agency in raising the massive amounts of funds required," the confidential report says. "That the proposed project has reached its current stage is clear evidence of the Bank having successfully fulfilled this role to date."

UK weakness

Meanwhile, few are surprised that UK companies should, however tangentially, be implicated.

The UK has yet to include the well-regarded Anti-Corruption Convention drawn up by the Organisation for Economic Co-operation and Development (OECD) into domestic law.

It plans to do so within the next 12 months. But the UK's record in fighting corruption, and its companies' reputation in avoiding it, is far from spotless, according to international anti-corruption lobby group Transparency International.

Giving evidence to the UK parliament's international development committee, TI member Laurence Cockcroft said: "The UK is currently gravely at fault, to an extent which can be described as a national disgrace."

The OECD's peer review of the UK's work against corruption was described by one lawyer as "lamentable and humiliating".

Staff at the Department for International Development trying to fight corruption say they are stymied by officials from the Ministry of Defence and the Department of Trde and Industry, whose brief is to persuade foreign governments to "buy British".

The DTI's Export Credit Guarantee Department, which backs projects such as the LHWP, said it has never refused cover because of allegations or proof of corruption.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Rageh Omaar
"It's the most massive infrastructure scheme in Africa"
See also:

10 Dec 99 | From Our Own Correspondent
Lesotho's white gold
04 Apr 01 | UK Politics
Bribery laws 'shameful', say MPs
15 May 99 | Africa
Foreign troops leave Lesotho
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