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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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