Attachment 1
Letter to Mr Vivian Brown, Chief Executive,
Export Credits Guarantee Department, from Viscount Weir, Chairman,
Balfour Beatty
LESOTHO
I know that you wanted some information from
Balfour Beatty regarding our involvement in the two Lesotho projects
which have recently been the subject of articles in the press.
The short answer is that BB was a members of
both of the consortia which were led by the French company Spie
Batignolles who were responsible for all commercial matter with
the customer.
Attached is a resume of the position which I
hope is helpful and self explanatory.
LESOTHO
The following is the position as far as Balfour
Beatty is aware in respect of matters relating to projects in
Lesotho whch have recently been the subject of media interest
and articles in the press.
Balfour Beatty Limited was one of five companies
which comprised two consortia. These were Lesotho Highlands Project
Contractors ("LHPC") and Muela Hydro Power Project Contractors
("MHPC"). These consortia were created in 1990 and 1992
to tender for and carry out the construction works for the Lesotho
Highlands Development Authority ("LHDA") at respectively
the Lesotho Highlands Water Project ("LHWP") and Muela
Hydro Power Project ("MHPP").
The other four companies on the LHPC and MHPC
consortia were Spie Batignolles SA, Campenon Bernard GE, Ed Zublin
AG and LTA Limited. However, LTA Limited did not join the MHPC
consortium until a later stage in the MHPP after the construction
had been awarded. Spie Batignolles was the leader of both consortia.
Prior to the creation of the consortia, Spie
Batignolles had a relationship with a company operating in Lesotho
called Universal Development Corporation ("UDC"). UDC
was regarded as having a broad knowledge of Lesotho and it was
decided by LHPC and MHPC that this relationship should be continued
by appointing UDC as agents for each consortium.
During the course of recent years investigations
have been made by the Lesotho Government concerning the role and
alleged corruption of the then Chief Executive of LHDA, Mr Masupha
Sole. As a result of these investigations the role of UDC has
recently been brought into question by the authorities in Lesotho,
the allegation being that UDC made payments to Mr Sole. The investigation
into Mr Sole has also culminated in summonses alleging wrongful
and/or unlawful payments being issued recently by the authorities
in Lesotho against numerous construction companies and consultants
operating in Lesotho at the time including the LHPC consortium.
The proceedings are being vigourously defended by LHPC.
Spie Batignolles as leader of the LHPC/MHPC
consortia has co-operated with the authorities in Lesotho at all
stages of recent investigations concerning UDC and Spie Batignolles
has strongly rejected any allegation of wrongdoing on the part
of LHPC/MHPC. In view of LHPC/MHPC the rigorous procedures followed
during the tender process and subsequently throughout the performance
of the construction works on the projects which involved international
experts, panels, committees and consultants of high repute should
have guarded against any irregularity in the whole process.
26 January 2000
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