Caught for corruption in the Lesotho Highlands Water Project
A high-profile case of corruption in the water sector was uncovered in the construction of the Lesotho Highlands Water Project. Massive corruption was discovered in the project in 1999, when more than 12 multinational firms and consortiums were found to have bribed the Chief Executive (CE) of the project. After the CE himself was found guilty, three major construction firms were put on trial. Three were found guilty and charged, and one has been debarred at the World Bank. This was a prestigious project and the largest international water transfer at the time. Its purpose is to store and distribute water from the Lesotho Mountains to the Gauteng industrial heartland of South Africa.
High volumes of water were involved: 750 million cubic meters per year. And high volumes of money: the expected income on payments for water by South Africa was sufficient to cover Lesotho’s foreign debt at the time. Unfortunately, some major construction contracts were awarded fraudulently. The CE was prosecuted after he had appealed against his dismissal over an initial investigation based on the suspected misuse of cars and expenses. Investigators then discovered that foreign companies had paid bribes (totalling over US$ 1 million over nine years) through their agents into international accounts. The companies involved strongly resisted prosecution through name changes and takeovers to try and escape liability. Lesotho, however, mounted a successful prosecution despite its high cost and the limited support they received from financiers and the international community. In the end, the CE received 15 years in jail for bribery and major international companies and their agents were also convicted.
Read more in Grand designs: Corruption risks in major water infrastructure projects