---

On the 23rd July 2004 the World Bank announced that it had blacklisted Canadian engineering groups Acres International for a period of three years for corruption in a Bank-financed dam project in Lesotho. This is the first time a major multinational company has been debarred from tendering from World Bank projects.

This followed its conviction of on 17th September 2002, by the Lesotho High Court of paying bribes to win contracts on a multi-billion dollar dam project. Acres was charged with paying nearly $266,000 to Mr. Masupha Sole, the former chief executive of the Lesotho Highlands Water Project.

Acres' defence was that they were not responsible for the payments to Mr Sole as these were made via an intermediary through a "representation agreement." Chief Justice Lehohla described this arrangement as a deliberate strategy to cover up the bribe payments.

The World Bank's policy on corruption states that it will debar any firm guilty of corruption on a Bank-financed contract. Initially the World Bank claimed there was "insufficient evidence" to blacklist Acres but was forced to look again at the issue.

Earlier in May 2002, the former Chief Executive of the Lesotho Highlands Water Authority was found guilty by the Lesotho High Court on 13 counts of bribery.

Sole was convicted on 11 counts of bribery and two of fraud for accepting about £3m in bribes over more than a decade from an array of European, Canadian and South African firms in return for contracts worth hundreds of millions of pounds.

The judge, Brendon Cullinan, said he was satisfied that Sole, who was responsible for awarding government contracts to build the dams, accepted payments from foreign contractors through intermediaries in return for "furthering their private interests".

When Sole's trial began last June, the prosecution said that as the chief executive of the Lesotho Highlands Development Authority he was at the centre of a web of corruption. Bribery became a standard business practice as he handed out contracts to build dams to supply water and electricity to neighbouring South Africa.

The prosecution said that Sole maintained at least three Swiss bank accounts into which bribes were paid in sterling, French francs, German marks and dollars. Payments by particular consortiums coincided with the awarding of contracts to those companies. According to the charges on which Sole was convicted, the biggest payments were made by the Lesotho Highlands Project Consortium, which was headed by the French company Spie Batignolles and included Balfour Beatty as a partner. The prosecution said that it deposited more than £1m in Sole's accounts over three years.

Sole was also convicted of accepting about £250,000 from another consortium, Highlands Water Venture, which has two British partners - Kier International and Stirling International.

Another conviction related to the payment of £51,478 by the British firm Sir Alexander Gibb.

The prosecutor, Guido Penzhorn, said that the judgment mounted to a damning verdict not only against Sole but the companies involved. "For Mr Sole to have accepted bribes, someone had to pay them. The court found that Highlands Water and all these other companies paid the bribes," he said.

The Lesotho government has been widely praised for pursuing the case. The trial is being closely followed by observers around the world. It has implications far and beyond the borders of Lesotho as its outcome will test the political will of OECD governments - now bound by the OECD Convention - and international organisations such as the World Bank who so far have failed to demonstrate that they truly aim to hold companies that bribe to account.

Observers have expressed concerns that the other companies may escape judgment as the Lesotho Attorney General may run out of funding to finance its case.