World Bank legal dept faces corporate claim

The World Bank is facing its first-ever corporate claim over allegations that its legal department failed to carry out its functions properly.

The Bank is accused of assisting in the expropriation of diamond mining rights by the government of Lesotho and the Republic of South Africa.

Several Lesotho companies, led by Swissbourgh Diamond Mines (Pty), have made 12 allegations against the Bank relating to mining rights which were revoked in order to implement the Lesotho Highlands Water Project.

The companies are represented by the oldest firm of solicitors in South Africa, Rooth & Wessels, and English barrister Philippe Sands of 3 Verulam Buildings.

The principal allegations are that the claimants have been deprived of their property rights and their entitlement to prompt and adequate compensation.

This, it is alleged, would not have happened if the Bank's legal department had properly complied with its own internal policies and procedures.

The World Bank Inspection Panel, set up in 1993 to deal with charges against the institution, is being levied to conduct a full investigation into the Bank's conduct.

The panel will reach a decision within two weeks.

The diamond mining companies are also considering a claim in the national courts.

Any action of this kind threatens the Bank's long-held claim to absolute immunity.