Impregilo sued for R77m by lobbyist

Italian global construction company Impregilo is being sued in court by a businessman for e6 million (about R77m) for allegedly failing to honour its commitment to pay him a commission for helping the company to secure a multimillion-rand Eskom project contract. The matter is due to be heard in November in the South Gauteng High Court. Impregilo, which was fined R15m in 2006 for corruption in the Lesotho Highlands Water Project (LHWP), has denied the allegations. Legal opinion obtained by the South African businessman, Sipho Mahamba, says that in theory and depending on the relevant facts, a case of corruption could be made against Impregilo under the Prevention and Combating of Corrupt Activities Act.

If such a case succeeded and Impregilo was convicted of corruption, this would empower Eskom to cancel the awarding of the Ingula pumped storage scheme project to the Impregilo consortium in terms of the Public Finance Management Act. However, Mahamba has opted instead to sue Impregilo, a global leader in the building of dams and tunnels. Mahamba issued a summons claiming payment from Impregilo arising from an alleged contract concluded between the two parties, with Mahamba acting personally. In terms of this mandate, Mahamba was to supply Impregilo with lobbying and other services so as to position the Impregilo-led consortium – consisting of Impregilo, smaller Italian company CMC and empowerment construction company PV Mavundla – to be awarded a contract under a tender issued by Eskom for the construction of Ingula.

The consortium was declared a preferred bidder and was awarded the Ingula contract on March 31, 2009. Ingula is located about 23km north-east of Van Reenen, in the Little Drakensberg range. Its cost in 2008 was estimated at R18 billion and the project is due to be completed this year. Mahamba says he met two executives of Impregilo in Milan, Italy, where an oral agreement was concluded about his payment of e6m as commission if his lobbying of Eskom secured the contract for Impregilo. The Italian firm was pitted against Murray & Roberts, which had teamed up with a German contractor. Lesotho bravely prosecuted long-running corruption trials against leading international construction companies that were involved in the LHWP, a project to build five dams to provide water for Gauteng.

The project was financed by the World Bank, South Africa and donor countries. Jacobus Michael du Ploy, a South African consultant for Impregilo, pleaded guilty to paying $375 000 (about R3.7m at yesterday’s exchange rate) to Masupha Sole, the former chief executive of the LHWP, who was sentenced to 15 years’ imprisonment for accepting more than $2m in bribes from a dozen Western companies. The cash was paid on behalf of Impregilo. The company was the lead partner in the Highlands Water Venture consortium, which was given the contract to build two of the five dams in the largest civil engineering project in Africa.

Two other companies, German company Lahmeyer and Canadian company Acres International, were blacklisted for seven years each from projects financed by the World Bank after being found guilty and fined. Impregilo escaped the blacklisting because the two dams it was involved in were not financed by the World Bank.