Lahmeyer International, which was conducting feasibility studies and detailed engineering design of the US$7B project, is now ineligible to be awarded World Bank financed contracts for a period of seven years – as a result of its activities of bribery and corruption relating to Lesotho Highlands Water project (LWHP) in the African state.

In a statement on the World Bank’s website, it is reported that the World Bank’s Sanctions Committee found that Lahmeyer engaged in corrupt activities by bribing the Lesotho Highlands Development Authority’s Chief Executive, Mr. Masupha Sole, the government official responsible for contract award 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 Bank-financed portions of the project.

In making its recommendation for debarment 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 programme 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.’

News of the company’s ineligibility in World Bank funded projects has, according to local media, led the Pakistani government to cancel the German company’s contract immediately in order to save the 4500MW Bhasha project, which is expected to be complete by 2018.

The Pakistan public procurement authority (PPRA) lists Lahmeyer on its website as having an ineligibility period of 3 November 2006 to 3 November 2013, under its consultant guideline 1.25(a)(i).