OLAF probes bribe claims over Lesotho dam project

Date: 30/01/03

By David Cronin

OLAF, the European Commission's anti-fraud office, is examining allegations that firms which benefited from EU funding may have resorted to bribery in Lesotho.

In late October the country's High Court imposed a fine of €2 million on Canadian engineering firm Acres International after it was convicted of paying bribes to win contracts related to a major water project.

The scheme has been part-financed by the Union; it has been allocated grants and loans from the European Investment Bank and European Development Fund (EDF) worth €122.5 million and €60 million respectively.

Charges have also been brought in Lesotho against German company Lahmeyer International over alleged corruption relating to the multi-billion euro dam scheme. A company spokesman admitted that one of its representatives, now deceased, had paid bribes without its knowledge.

According to a Commission official, OLAF has a "watching brief" on the dossier. The office has not yet opened a formal probe on the matter as it feels the Lesotho authorities are pursuing the allegations, the official added.

Earlier this month Poul Nielson, the development commissioner, said the EU executive hired independent auditors in 2000 to examine whether EDF cash given to the project had been used improperly. "The general conclusion from this audit was that it was not possible to demonstrate that there had been a direct misuse of EU funds," he told Italian MEP Antonio di Pietro.

Among the European firms participating in the scheme are Frances' Spie Batignolles, Italy's Impregnio and Britain's Sir Alexander Gibb & Partners.

The project - intended to offset drought in neighbouring South Africa - originated in an accord signed 17 years ago between Pretoria's apartheid government and the military junta then ruling Lesotho. It has been designed to divert water from Lesotho, into South Africa using tunnels through the Maluti mountains.

A businessman working on the project, Masupha Sole, was jailed for 18 years last May for accepting almost €3 million in bribes from companies.

OLAF, the European Commission's anti-fraud office, is examining allegations that firms which benefited from EU funding may have resorted to bribery in Lesotho.