Select Committee on International Development Minutes of Evidence

Attachment 1

Letter to Mr Vivian Brown, Chief Executive, Export Credits Guarantee Department, from Viscount Weir, Chairman, Balfour Beatty


  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.


  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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