ISLAMABAD, Nov 11: Work on the Bhasha dam project is in jeopardy as the World Bank has blacklisted, for seven years on corruption and bribery charges, the German contractor currently conducting the feasibility study and detailed engineering design of the $7 billion project in the Northern Areas, it is learnt.
"The World Bank has declared Lahmeyer International GmbH (Lahmeyer), a German company, ineligible to be awarded (World) Bank-financed contracts for a period of seven years because of (its) corrupt activities," in a project in African state of Lesotho, an official statement of the WB said.
The decision was taken on November 3 and the name of the blacklisted company has been put on the website of the Pakistan Public Procurement Authority (PPRA) on top of the list. The company, accordingly, would remain ‘ineligible’ until November 3, 2013 to participate in the project financed by the World Bank.
A government official said that the Asian Development Bank and the Islamic Development Bank among other international lenders normally adopt the WB decisions on corruption related maters. As such the government of Pakistan will have to expel the German company from the project immediately to save the project. He said the contract for the feasibility study and detailed engineering design of the dam was awarded in mysterious circumstances and a competing consortium led by the National Engineering Services of Pakistan (Nespak) was sidelined without assigning any reason.
A PPRA official said although not required by the law, the PPRA adopts the WB decisions on corruption issues and that is why it has placed on its website a list of companies black-listed by the bank. Pakistan has been discussing the project with a number of lenders, including the World Bank, Asian Development Bank and Islamic Development Bank, for about a year for financing. These institutions had agreed to fund the project.
Advisor to the Ministry of Water and Power Riaz Ahmad Khan told Dawn that the black-listing of the company had not yet come to his knowledge. He said if the information was true, the government would have to examine as to in what circumstance the company had been black-listed and then take an appropriate course of action.Wapda’s Member Water, Chaudhry Mushtaq, said he would have to confirm first on Saturday if the information about the World Bank decision was correct. He said similar information was brought to his knowledge before award of the contract and Wapda had verified the company’s credentials.
The WB said the company was blacklisted on corruption and bribery charges in connection with the Lesotho Highlands Water Project (LHWP). The period of ineligibility may be reduced by four years if the bank determines that Lahmeyer has met specific compliance conditions and fully cooperated with the Bank in disclosing its past misconduct.
"The World Bank's Sanctions Committee found that Lahmeyer engaged in corrupt activities by bribing the Lesotho Highlands Development Authority's Chief Executive Masupha Sole, the government official responsible for awarding contract and implementation under the LHWP, in violation of the bank's procurement guidelines." In July 2004, the World Bank debarred Acres International, another firm convicted of paying bribes under the LHWP, for a period of three years. Two other European firms were also convicted in Lesotho in relation to the LHWP, although they were not involved in the WB-financed portions of the project.
"The Government of Lesotho has shown courage and leadership in successfully prosecuting its own officials and several large foreign companies for corruption," said World Bank President Paul Wolfowitz.
"Institutions like the World Bank and governments of rich countries should support the bold stance of poor countries like Lesotho which are working to make sure that precious public resources go to help the poor, for whom they are intended," the statement said.
The LHWP is a massive, multi-billion dollar water transfer and hydropower project implemented by governments of Lesotho and South Africa. The project is designed principally to transfer water from the Maluti Mountains in eastern and central Lesotho to the Gauteng Province of South Africa. In connection with the LHWP, Lahmeyer was found to have arranged bribery payments to Mr. Sole. Lahmeyer received two World Bank contracts pertaining to the water transfer component that related to detailed design work, construction supervision, project studies and technical assistance in connection with the Water Delivery Tunnel South and the Mohale Tunnel.
In making its recommendation to World Bank President Paul Wolfowitz, the committee took into account several factors, including Lahmeyer's lack of cooperation with respect to the World Bank's investigation as well as Lahmeyer's payment of a criminal fine in Lesotho and its cooperation with the Lesotho authorities.
Accordingly, the Bank has decided to allow for a possible four-year reduction in the debarment period if Lahmeyer puts in place a satisfactory corporate compliance and ethics program and cooperates fully with the bank in disclosing any past misconduct, including through a review of its Bank-financed contracts.
"This sanction reflects a serious response to corrupt practices," said Graeme Wheeler, Managing Director of the World Bank Group and Chairman of the Bank's Sanctions Committee. "At the same time, the sanction is structured to encourage Lahmeyer to demonstrate that its contracts and practices now meet the high standards that are essential to the Bank's work."
