World Bank Debars Acres International Limited (Acres)

Wednesday, June 23, 2004

World Bank Finally Debars Company Convicted of Bribing in Lesotho

The World Bank at long last has debarred a company convicted of corruption on Africa’s largest dam project, nearly two years after a guilty sentence was handed down in a Lesotho court.

On July 23, the World Bank announced that it would debar from further Bank contracts the Canadian firm Acres International for 3 years. The company had been convicted of bribing the head of the Lesotho Highlands Water Project (LHWP) in September 2002. The World Bank, which had previously concluded there was not enough evidence to debar Acres, decided to re–open its investigation into the company in April.

Says Korinna Horta of the US–based group Environmental Defense:

"This long overdue action on Acres is very much welcome, and hopefully signals a more forceful World Bank approach to corruption on its projects. But the fact that a court case in Lesotho was decisive in the limited debarment of Acre appears to be a case of the tail wagging the dog. It remains to be seen if this will lead to more systemic changes in how the Bank approaches corruption."

Although World Bank President James Wolfensohn has said that fighting corruption is a top priority at the institution, the Bank has long avoided the tough step of debarring major multinationals that engaged in corruption on its projects. At least a dozen companies were found to have bribed the chief executive of the LHWP (now serving a 12–year jail sentence for taking bribes), and the Lesotho courts have managed to get convictions of four companies, but Acres is the first to be debarred by the Bank. The company carried out about $16 million worth of business on the dam project.

Says Antonio Tricarico of Italy’s Campaign to Reform the World Bank:

"The World Bank should finally draw the lesson from the Lesotho corruption story and debar without any hesitation all leading transnational companies found guilty in the courts of a sovereign state. The Bank should respect the decisions of courageous national authorities in the spirit of cooperating against international law against bribery and corruption."

Since its conviction in Lesotho, Acres has received three contracts from the World Bank, according to Susan Hawley, a research consultant working on issues of corruption for the UK group The Corner House. These Bank contracts, worth $400,000, are in Tanzania, the West Bank and Gaza, and Sri Lanka.

Says Lori Pottinger of International Rivers:

"We applaud the Lesotho government for pursuing this case against all odds, and for shining a bright light on the corruption–riddled large–dam industry. The Bank should follow its lead, and take stronger action to ensure corruption no longer taints its projects: for example, by adopting accountability mechanisms as detailed by the World Commission on Dams and Transparency International. The Bank should also re–examine its contracts with Acres since the conviction."

The Lesotho courts have fined each of the convicted companies according to their role in the corruption. Acres was fined US$2 million, but has reportedly paid only half of the fine. Guido Penzhorn, a South African lawyer serving as chief prosecutor in the trials, this week told The Globe and Mail (Canada), "Lesotho considers Acres delinquent on its fine and will seek to recover the outstanding R9 million through the Canadian courts. We have no alternative." Mr. Penzhorn testified on the Lesotho corruption case at a hearing called by the Senate Foreign Relations Committee on July 21, stating that the World Bank had early on offered to help pay for the trials in Lesotho, but "unfortunately none of this help has been forthcoming."

The LHWP left tens of thousands of poor farming families even poorer, and has sold the nation’s precious water to the highest bidder, leaving the nation vulnerable to drought. An ongoing drought has necessitated emergency food assistance to a large part of Lesotho’s population this year, according to the UN Food and Agriculture Programme.

Says Korinna Horta:

"The World Bank still needs to fully address the project’s failure to live up to its environmental and social commitments. With most of Lesotho’s river water being diverted , there are serious impacts on people and ecosystems downstream¹. There are clear signs that Lesotho and South Africa are failing to fulfill their treaty obligations with respect to the impoverished people of the Lesotho Highlands."


  1. Adherence to the LHWP treaty requirements with South Africa results in 96% reductions in river flow below Katse Dam, and 57% reductions where the Senqu (Orange) River flows out of Lesotho. Rivers affected by the 5–dam Lesotho Highlands Water Project (LHWP) could deteriorate to "something akin to waste–water drains" if Lesotho delivers as much water to South Africa as the original treaty requires, according to the project’s technical report on impacts to river health. For more information, please read:

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