In the tiny mountain kingdom of Lesotho an historic trial took place that may have far-reaching implications for the global odious debts movement.

On May 20, 2002, the former head of the Lesotho Highlands Water Project, Masupha Sole, was convicted of 13 counts of fraud and taking bribes from international consultants and contractors eager to win contracts on this US$8-billion dam scheme. On June 4, Mr. Sole was sentenced to 18 years in jail, 12 of those years for taking US$265,531 in bribes from the local representative of Acres International, a prominent Canadian engineering firm.

Acres International wasn't alone. Nearly a dozen other firms were also named – a veritable "who's who" of the dam building industry.

A report by the investigative American law firm, Arnold and Porter, into Acres' bribery allegations, concluded there is "reasonably sufficient" evidence to indicate that Acres engaged in a corrupt practice by paying monies to Mr. Sole, through Mr. Z.M. Bam, to influence Mr. Sole in connection with work performed by Acres for the Lesotho Highlands Water Project. The World Bank Sanctions Committee later announced there was "insufficient evidence" to debar Acres from future World Bank contracts, but warned Acres this was an interim decision it would revisit, after examining the evidence produced during the Lesotho criminal proceedings.

Now available online, read the decision by the Honorable Mr. Acting Justice B.P. Cullinan of the High Court of Lesotho and the sentence handed down in Rex vs. Masupha Ephraim Sole.

Also available here is the indictment against Acres International of Canada, the first of the firms to be tried, the Crown's arguments against Acres, and in response, Acres' Written Argument, as presented by Acres during the closing arguments heard June 22-25, 2002. A guilty verdict in the case against Acres International was delivered by Chief Justice Mahapaela Lehohla on September 17, 2002.

Stay posted for results of the ensuing trials of the other accused firms.

This guilty verdict will test the World Bank's resolve to implement its policy of barring corrupt companies from bidding on World Bank projects. Anti-corruption activists and environmentalists from around the world have demanded that the World Bank take immediate action against companies implicated in the scandal ( link to letter to World Bank President James Wolfensohn).

All the companies connected to the project are from countries that have ratified the OECD Convention on Corruption and Bribery. According to a report by Antonio Tricarico (Campagna per la riforma della Banca mondiale), the trial will test the political will of these governments to take action against their own companies. The trial is also important because it may open the door for the government of Lesotho to challenge the legitimacy of loans tainted by corruption.

For more on how the Lesotho trials are forcing Western governments to reconsider their relationships with firms convicted of bribery, see " The Canadian connection," by Probe International's Patricia Adams. For Acre's response, see " The Canadian challenge," by O.T. Sigvaldason, chairman of Acres International.

Trial Timeline

• August 15, 2003 - Lesotho High Court confirms the conviction of Acres International Limited on Count 1 and setting aside the conviction on Count 2.
• June 17, 2003 - Lesotho High Court Judge Gabriel Mofolo found Lahmeyer (Germany) guilty on seven counts for paying R5.9m in bribes to Masupha Sole
• June 3, 2003 - Jacobus Michiel du Plooy pleaded guilty in the Lesotho High Court to bribery
• April 2, 3, and 14, 2003 - An appeal against Mr. Sole's convictions is dismissed by the Appeal Court of Lesotho. The appeal succeeds to the extent that Mr. Sole's sentence of 18 years in jail is reduced to 15 years.
• October 28, 2002 - Acres sentenced, fined R22.5m (US$2.25m, £1.43m) in the Lesotho High Court
• September 17, 2002 - Lesotho High Court finds Acres International guilty on two counts of bribing a local official.
• September 13, 2002 - Decision expected on Acres International trial.
• August 2002 - Trial against Lahmeyer International GmbH (Germany) begins.
• June 2002 - The trial of Acres International, the first of 12 Western contractors accused of paying Mr. Sole off, hears final arguments. Judge Mahapaela Lehohla retires to consider his decision.
• June 4, 2002 - Mr. Sole sentenced to 18 years in jail.
• May 2002 - Masupha Ephraim Sole, former chief executive officer of the Lesotho Highlands Development Authority found guilty of 11 counts of bribery and two counts of fraud.

Click here to read the full 57 page PDF document.

• J.H. Steyn, JP
• M.M. Ramodibedi, JA
• C. Plewman, JA

• G.H. Penzhorn SC
• H.T.T. Woker

With acknowledgement to Odious Debts Online.