APPENDIX 21
Supplementary memorandum by Transparency
International (UK)
EXPORT CREDITS
GUARANTEE DEPARTMENT
Further to my e-mail of 7 May and in response
to the request made by Ms Mallaber at the Committee session on
20 April, I now enclose a copy of the e-mail message of 4 December
2003 from ECGD that copied to me a summary of the opinion of Counsel
on which the ECGD relied in order to claim that it was not empowered
to operate a debarment sanction.
I had been hoping to be able to let you have
a full response to the request of Mr Hoyle for information regarding
the approach to due diligence adopted by other export credit agencies
in regard to agents' commissions. I regret that this has not proved
possible. TI's international secretariat did not have recent specific
information and TI(UK) does not have the resources, nor indeed
would it be particularly appropriate, itself to undertake a direct
survey. I have been in touch with ECGD which has kindly briefed
me on the basis of an OECD survey valid as of March this year,
but not yet finalised and not therefore generally available. The
OECD Working Party on Export Credits and Credit Guarantees surveyed
measures taken by the official export credit agencies (ECAs) of
28 member countries to combat corruption by reference to a number
of questions which include some directed to the practice in respect
of agents' commissions.
The vast majority of ECAs indicated that agents'
commissions are eligible for official support. Some exclude agents'
commissions and others apply a numerical cap such as 5%. Most
apply a case-by-case approach and judge commissions against what
they consider to be industry norms.
About two-thirds of ECAs require details of
agents' commissions at some stage during the life of the supported
credit. More than half of these require them at the time of the
application, which is currently the ECGD's practice. Some ECAs
indicated that details of commissions are sought in the event
that some impropriety is suspected.
Whilst writing, I am enclosing a copy of a summary
(received from the prosecuting counsel) of a Lesotho Court of
Appeal judgment in the case of Lahmeyer International GmbH which
had been charged with bribery in the case of the Lesotho Highlands
Development project. The case is unusual in that the host country
itself prosecuted a number of international contractors. Its interest
for present purposes lies in the finding of the Court of Appeal
that the substance and reality of an agency commission is more
important than the appearance derived from related agreements
which may be mere shams.
I trust the Committee will find this supplemental
information helpful.
ECGD AND ECA ANTI-CORRUPTION
BEST PRACTICE
Thanks for your comments—I have forwarded
them to our OECD team and am trying to arrange for a round table,
although this has proved very difficult so far and written comments
may prove to be the best way forward. Apologies for the delay
in my response—I had to take some time off at short notice.
With regard to your questions over the blacklist,
I asked counsel to revisit the position we have stated previously
in the light of your comments and they stand by the following:
"ECGD is subject to general principles
of administrative law. Pursuant to one of such principles, the
secretary of state may not fetter his future discretion; he must,
in each case, evaluate all relevant facts before making decisions.
If blacklisting means automating a refusal to grant cover to a
company that has been convicted for corruption or debarred from
the services of another institution, blacklisting would be contrary
to the duties of the Secretary of State and could be successfully
challenged by way of judicial review.
"While ECGD cannot blacklist companies,
a company's conviction for corruption or its inclusion in the
world Bank's blacklist would be a prima facie reason for
refusing it cover."
I will be in touch shortly with regard to the
best practices document.
C of A (CRI) 6 OF 2002
IN THE COURT OF APPEAL OF LESOTHO
In the Matter between:
LAHMEYER INTERNATIONAL GmbH APPELLANT
and
THE CROWN RESPONDENT
Executive Summary
The Full Court—being:
J H Steyn, President
F H Grosskopf, Judge of Appeal
J W Smallberger, Judge of Appeal
1. The appellant, Lahmeyer International
GmbH ("Lahmeyer"), appeared in summary proceedings in
the High Court before Mofolo J and two assessors on twelve counts
of bribery allegedly committed over the period 21 December 1989
to 10 April 1997. At the conclusion of a protracted trial Lahmeyer
was convicted on seven counts (being counts 2, 6, 7 and 9 to 12)
and acquitted on the remaining five counts. It was sentenced to
fines on each of the seven counts amounting to £10,650,000
in all. The present appeal is directed against Lahmeyer's convictions
on all seven counts. There is no appeal by Lahmeyer against sentence.
The Crown has noted a cross-appeal in respect of four of the counts
on which Lahmeyer was acquitted. It also seeks to appeal against
what it claims to be the leniency of the sentence imposed.
2. The essence of the charges against Lahmeyer
was that it, with intent to bribe, had from time to time paid
varying sums of money into Swiss bank accounts held by one Z M
Bam ("Bam") and his wife ("Mrs Bam") who thereafter,
acting as intermediaries, had transferred the amounts in question,
or part thereof, to Mr Sole ("Sole"), who at all material
times was the Chief Executive Officer of the Lesotho Highlands
Development Authority ("the LHDA") and a civil servant
in the employ of the Lesotho Government (and as such a public
official). The Crown alleged that the payments in question were
made in respect of action or inaction by Sole in his aforesaid
capacity and were intended to influence him in such capacity.
That Sole was a public official is not in issue in the appeal.
3. The LHWP is one of the biggest and most
ambitious projects in the world and entailed inter alia the
construction of the Katse Dam in a remote and inaccessible part
of the Highlands of Lesotho. The ambit and objects of the project
are set out in the judgment. One of its principal purposes was
the delivery of waters to South Africa.
4. It is not necessary to set out the details
as to how Lahmeyer came to be involved in the project and how
they developed a relationship with Bam referred to above. However,
it is common cause that Lahmeyer paid Bam vast sums of money,
some of which was on-paid to Sole. The amounts paid to Bam were
substantial amounts in cash ie £1,495,590 and by way of bank
transfers into Bam's Swiss Bank accounts some £804,213. In
all rounded off the sum of £23,000,000. In terms of the charges
before us payments from Bam to Sole were made from the bank transfers
into Swiss bank accounts held by Sole.
5. The crux of the present appeal is whether
the payments to Bam, particularly those on paid to Sole, were
bribes or were legitimate remuneration for agency work done by
Bam under valid representative agreements. It was common cause
that the question to be answered was: were these agreements genuine
or were they shams, calculated to disguise the true nature of
the relationship—ie bribery?
6. We have analysed the evidence extensively
in the judgment (see par 15 at p 15 to par 44 at p 39). We proceed
to pose the ultimate question at par 45—p 39 of the judgment,
where we say:
"| in the light of all the evidence adduced
at the trial, was Lahmeyer's guilt established beyond reasonable
doubt?"
We go on to say that: "This translates
into whether the only reasonable inference to be drawn consistent
with all the facts, is that Lahmeyer bribed Sole."
7. We then concluded as follows:
"[46] It is common cause that the evidence
with regard to counts 6, 7 and 9 to 12 establishes a flow of money
from Lahmeyer to Bam and in turn from Bam to Sole. It was conceded
on behalf of Lahmeyer that bribery could have been the cause of
the payments to Sole, but it was contended that this had not been
proved beyond all reasonable doubt. We are satisfied on a conspectus
of all the evidence, and having duly stepped back a pace to "consider
the mosaic as a whole" that, applying accepted principles
of inferential reasoning, the only reasonable inference to be
drawn in the present matter is that Lahmeyer paid Bam money for
the purpose of bribing Sole, that the money that was passed on
to Sole by Bam in respect of the counts in question was in furtherance
of that purpose and that the RAs were not genuine in that they
were primarily entered into as devices to disguise the true relationship
between Lahmeyer and Bam and to facilitate unlawful payments to
Sole. In the result Lahmeyer's appeal against conviction on counts
6, 7 and 9 to 12 falls to be dismissed."
8. We then deal with count 2 and concluded
as follows at par 57 p 44:
"[51] In our view the Crown has failed
to prove any link between Lahmeyer's payment of FF135,760 to Bam
and Bam's payment of FRF 458,600 to Sole. The probabilities in
fact show that the payment to Sole derived from Acres and not
from Lahmeyer. In the circumstances the Crown has failed to proved
its case on count 2 and Lahmeyer's appeal against conviction on
count 2 accordingly succeeds."
8. THE CROSS
APPEAL BY
THE CROWN
Counsel for Lahmeyer contended that the Crown
did not have the right to appeal in accordance with the provisions
of sec 7(2) of the Court of Appeal Act (Act 10 of 1978) which
limits the right of the Crown to appeal only "upon a point
of law." This provision was however amended by Act 8 of 1985.
As a consequence the Crown now has the same rights of appeal as
an accused, ie it can appeal on any matter "of fact or law".
9. The Crown cross-appealed on counts 3,
4, 5, and 8 on which the High Court acquitted Lahmeyer. We hold
that the Crown's appeal succeeds on counts 3 and 5 and is dismissed
in respect of counts 4 and 8.
10. SENTENCE
We deal with the various considerations that
should be borne in mind by a Court of Appeal in general, and by
this Court on the facts of this case in particular.
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