African mould broken as Western firms are to be put in the dock on bribery charges
Chris McGreal
Multinational companies are about to go on trial in Lesotho where they are accused of paying huge bribes to a local official, a case virtually unprecedented in Africa.
European and Canadian engineering companies, four of them British, are alleged to have paid an official about $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.
The British companies Balfour Beatty, Sir Alexander Gibb and Co, 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.
The Lesotho attorney general, Fine Maema, said before the trial: “We have taken the big companies by the horns. We cannot say because of the bigness of these companies they should not be prosecuted.
“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.”
If convicted, the companies may be barred from bidding for contracts funded by the World Bank and the European Union, which are the main sources of income for some of them.
The case began this month 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 worth hundreds of millions of rands 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 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.
“The court will be asked to draw the inescapable conclusion that the payment of these monies to Accused 1 by the other accused were intended and constituted bribe money.”
Sole allegedly maintained at least three Swiss bank accounts. The currencies deposited sterling, French francs, German marks, United States 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 for the Lesotho dams.
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 contract worth $189-million. Two weeks before it won another contract 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 and Co 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 plead, but in public statements have strenuously denied paying bribes.
Although the evidence of a link between the payments and contracts is circumstantial and largely based on coinciding dates, 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 connected with the project.
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.