[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]
dam-l LHWP corruption story by IPS/LS
| Copyright 1999, Inter Press Service
| FINANCE-LESOTHO: Funders Ponder Response to Corruption
|
| By Abid Aslam
| WASHINGTON, Oct 21 (IPS) - The World Bank and other official financiers
| meet next month to discuss ways out of a corruption scandal reaching from
| the remote highlands of Lesotho to their own headquarters.
|
| The Bank will lead a Nov. 17 meeting of official backers of the Lesotho
| Highlands Water Project, the former head of which faces trial in the
| southern African country on charges of accepting bribes from multinational
| companies.
|
| The Highlands project is an eight-billion-dollar effort to supply water
to
| South Africa and electricity to Lesotho. It involves construction of five
| dams on the Senqu River - also known as the Orange River - a power plant,
| and tunnels through Lesotho's mountains. The work is due for completion in
| 2017.
|
| ''The list of corrupt companies reads like a 'Who's Who' of the
| dam-building industry,'' says Patrick McCully of the non- governmental
| International Rivers Network.
|
| A dozen firms - including Canada's Acres International, Italy's
Impregilo,
| Germany's Lahmeyer Consulting Engineers, and Swiss- Swedish construction
| giant ABB - allegedly curried business by paying more than two million
| dollars in bribes to former project chief Masupha Sole between Feb. 1988
| and Dec. 1998.
|
| Members of the funders' group meeting next month include Western
| governments that have signed an Organisation for Economic Cooperation and
| Development convention requiring them to make it a crime for their
| nationals to bribe foreign officials.
|
| The World Bank helped to set up the scheme, lent it 150 million dollars
| and took responsibility for its ''sound financial management'', according
| to project documents.
|
| The agency is under pressure from project critics to suspend companies
| implicated in the scandal from doing business with the global lender until
| the case is resolved - and then to permanently blacklist firms proven to
| have paid bribes.
|
| ''If there's evidence of illegal activities under our rules, debarment
| would be the ultimate penalty,'' says Robert Calderisi, chief spokesman in
| the Bank's Africa department.
|
| This would only happen if companies tampered with the Bank's money - not
| funds provided by other project backers. Such a distinction is considered
| spurious by McCully and by observers including Jeremy Pope, executive
| director of Transparency International, an international watchdog group.
|
| It nevertheless could save the lender from having to take action that
| would shake the international dam-building industry and complicate other
| Bank-financed projects.
|
| A number of the firms also are involved in other Bank-supported dams -
| Impregilo alone is working on at least seven of these projects, according
| to McCully.
|
| Several of the firms previously have been implicated in investigations of
| Third World dams financed by the Bank and other official lenders. These
| include Turkwell Gorge in Kenya, Chixoy in Guatemala, Tucurui in Brazil,
| Itaipu on the Brazil-Paraguay border and Yacyreta, on the border between
| Argentina and Paraguay.
|
| The World Bank also is under fire for a 1994 letter to Lesotho
| authorities, in which it protested the suspension of Sole, the project
| chief, and another senior official under audit. The move would ''seriously
| jeopardise the progress of the project,'' the Bank said at the time.
|
| The letter threatened legal action if the officials were removed from
| their positions and is seen by project critics as evidence that the Bank
| sought to quash the Lesotho government's early efforts to clean house.
|
| Calderisi, the Bank spokesman, denies that charge.
|
| ''The intention was to obtain more information, not to stop a government
| action,'' he says, adding that the lending agency ''had to send a stiff
| letter'' because its earlier queries about the personnel changes had not
| been satisfactorily answered.
|
| ''They subsequently sent the information and we took no further action,''
| he said. ''With hindsight, the government was right.'' Sole was fired in
| 1995.
|
| For its part, the Bank has dispatched private lawyers to Lesotho to look
| into whether agency rules on bribery, procurement, and competitive bidding
| have been broken. No deadline has been set for the investigation and
| officials have yet to agree what punishment they will mete out to firms
| found guilty.
|
| The Highlands Water Project was set up by legal sleight of hand under a
| 1986 sanctions-busting treaty between apartheid South Africa and what was
| then a military government in Lesotho, which is surrounded on all sides by
| its larger neighbour.
|
| The World Bank, which brokered the arrangement, provided legitimacy and
| key financing for the scheme. With Lesotho as the Bank's borrower of
| record, European banks, government export credit agencies and engineering
| firms could take part without appearing to violate international sanctions
| against the apartheid regime.
|
| The Bank's loans were channeled through Lesotho but were made at interest
| rates consistent with South Africa's economic status, not that of its
| low-income neighbour.
|
| South Africa no longer needed to play such financial shell games after
| white minority rule ended in 1993 but by then the two countries were
| committed to the project.
|
| The deal allowed South Africa to pipe water to factories and poor
| townships in Gauteng province, the country's industrial heartland, without
| having to drain swimming pools in the region's wealthy suburbs.
|
| Lesotho's government looks to the scheme for some 40 million dollars per
| year in water royalties. The project also is ''helping poor communities in
| Lesotho through a social fund,'' according to a statement by Callisto
| Madavo and Jean-Louis Sarbib, the World Bank's vice presidents for Africa.
|
| ''Unfortunately, this is not our perception here on the ground,''
| community leaders Thabang Kholumo of the Highlands Church Solidarity and
| Action Centre and Motseoa Senyane of the Transformation Resource Centre
| counter in a statement of their own.
|
| ''The fund has been and continues to be a tool of opportunistic
| politicians,'' who have committed its resources to pointless pet projects
| although the social fund's decision-making committee has yet to meet,
| Kholumo and Senyane declare.
|
| ''We see the same stretch of road repaired, torn up the next week,
| repaired again the following week and then torn up once more at the end of
| the month,'' they complain.
|
| ''Punishing the corrupt multinationals involved in (it) and closely
| monitoring the implementation of the project's social fund would reassure
| us of the World Bank's concern,'' they add. (END/IPS/aa/mk/99)
|
::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
Lori Pottinger, Director, Southern Africa Program,
and Editor, World Rivers Review
International Rivers Network
1847 Berkeley Way, Berkeley, California 94703, USA
Tel. (510) 848 1155 Fax (510) 848 1008
http://www.irn.org
::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
Lori Pottinger, Director, Southern Africa Program,
and Editor, World Rivers Review
International Rivers Network
1847 Berkeley Way, Berkeley, California 94703, USA
Tel. (510) 848 1155 Fax (510) 848 1008
http://www.irn.org
::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::