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From the October 2001 issue of World Press Review

Taking Multinationals to Task


Chris McGreal, The Guardian Weekly (liberal), London, England, July 4, 2001.

Multinational companies are about to go on trial in Lesotho [the trial date is set for December], a case virtually unprecedented in Africa. European and Canadian engineering companies are alleged to have paid an official about US$4.2 million for contracts for one of the continent’s biggest engineering projects, the $1.4-billion construction of huge dams to supply water and electricity to South Africa, which entirely surrounds the mountainous kingdom. Four British companies—Balfour Beatty, Sir Alexander Gibb & Partners, Stirling International Civil Engineering, and Kier International—are charged either individually or as members of consortiums.

Corruption trials are rare in sub-Saharan Africa, where oil companies routinely greased the palms of Nigeria’s military dictators, and diamond dealers ensured that former President Mobutu Sese Seko of Zaire got his cut. Officials in Kenya or Ghana might occasionally be hauled before the courts to give the illusion that the government was fighting corruption, but trial for those believed to have paid the bribes was unheard of.

Lesotho’s attorney general, Fine Maema, said: “We have taken the big companies by the horns....People are quick to point the finger at Africa, but if someone is taking the money then someone is paying it, and they must be held accountable too. You can see from this case that it is not only Africa that is corrupt.” If convicted, the companies will almost certainly be barred from bidding for contracts funded by the World Bank and the European Union (EU).

The case began this month [in July] with the trial of Masupha Sole, who has pleaded not guilty to 16 counts of bribery and fraud. Sole was appointed chief executive of the Lesotho Highlands Development Authority in 1986 when the dam project began. His primary responsibility was to award contracts to foreign construction companies.

According to the indictment, the accused companies paid him about $4.2 million over 10 years. It says: “The evidence will show that not only were payments involving millions of maluti [Lesotho currency] made by the contractors through the intermediaries to Accused 1 [Sole] secretly, but also that they coincided with events leading up to the award of major contracts.” Sole allegedly maintained at least three Swiss bank accounts. The currencies deposited—sterling, French francs, deutsche marks, U.S. and Canadian dollars—reflect the extent of the alleged conspiracy.

The prosecution says the companies were connected by a web of corruption and collusion and that graft became a standard practice in awarding contracts. The biggest bribes were allegedly paid by the Lesotho Highlands Project Consortium, in which Balfour Beatty was a partner. The consortium is accused of depositing more than $1.4 million in Sole’s accounts over three years. The first payment, in 1991, was made weeks after it won a $189-million contract. Two weeks before it won another contract—for $57.4 million—another big deposit was made.

Two other British firms—Kier International and Stirling International—are members of another consortium, Highlands Water Venture, alleged to have paid Sole $350,000. Sir Alexander Gibb & Partners is accused of paying $72,069. Canadian, French, German, Italian, Swiss, and South African companies are also charged. The companies are accused of using middlemen to move the money through front companies registered in Panama. The companies and their alleged intermediaries will be tried once Sole’s case has been heard. They have not yet been asked to plea, but in public statements have strenuously denied paying bribes. Although the evidence of a link between the payments and contracts is circumstantial, the prosecution argues that it was illegal for Sole to hold the Swiss accounts and a breach of contract by the companies to make payments to Lesotho officials.

The prosecution has the backing of the EU and the World Bank, but both have played equivocal roles in the case. When the allegations first came to light, the World Bank, which lent about $140 million for the project, suggested that no action should be taken for fear of undermining the scheme. The case is likely to increase the pressure on European countries to enforce international conventions aimed at holding companies that pay bribes responsible in their own countries. “This is a test case of the will of these countries to take their own companies to court,” said Stiaan van der Merwe, Southern Africa representative of the anti-corruption body Transparency International.


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