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DAM-L Companies Vying for New Orleans Water (fwd)



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Subject: Companies Vying for New Orleans? Water 
Date: Mon, 22 Oct 2001 07:45:43 -0500
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Right to Water (right-to-water@iatp.org)    Posted: 10/22/2001  By  mritchie@iatp.org	
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http://www.citizen.org/pressroom/release.cfm?ID=683

Sept. 7, 2001

Companies Vying for New Orleans’ Water and Sewer Systems Linked to Criminal
Behavior, Corruption, Poor Service

Records Collectively Include Bribery, Environmental Violations, Substandard
Maintenance, Broken Promises and Questionable Ties to Government Officials

WASHINGTON, D.C. - The top three corporations competing to take over the
city of New Orleans’ water and sewer systems have tarnished records that,
combined, include connections to criminal wrongdoing, suspect relationships
with government officials, infliction of environmental damage, failures to
maintain equipment, and the delivery of substandard customer service, a
Public Citizen report reveals.

The report, The Big Greedy, details the unseemly histories of three
multinational corporations likely to submit bids to operate the water and
sewage systems for nearly half a million people in New Orleans, in what
would be the largest public works privatization in U.S. history. The
winning company, expected to be chosen next spring, will run the system for
up to 20 years and take in an estimated $1 billion in revenues. All three
corporations are either subsidiaries of or maintain intimate business
relationships with foreign-based conglomerates that are aggressively
acquiring water and other utility services throughout the world.

"Giving a precious public resource to private interests is distasteful to
begin with, but handing over New Orleans’ entire water system to one of
these companies would set a new standard for governmental negligence," said
Wenonah Hauter, director of Public Citizen’s Critical Mass Energy and
Environment Program. "City officials need to seriously reevaluate their
actions ¾ particularly because multinational corporations hold the
interests of their overseas shareholders above the interests of local
communities."

Public Citizen does not believe that New Orleans residents would benefit
from privatization of their water and wastewater systems. Evidence
indicates that private operation or ownership of such systems fosters
corruption and often results in rate hikes, poor customer service and a
loss of local control and accountability.

Following an emerging trend among local governments, the New Orleans
Sewerage & Water Board (S&WB) decided last year to hire a private company
to operate the city’s water and sewage systems. A team of financial
analysts concluded that a corporation could do a better job than the city
of minimizing rate increases that will result from $1.3 billion worth of
necessary repairs to the systems. The S&WB will continue to set water and
sewer rates, but the system otherwise will be privatized.

Though no formal bids have been submitted to run the systems - which
include 1,610 miles of water pipes, 1,450 miles of sewer pipes, 105 pumping
stations and two treatment plants - representatives from three
corporations, including U.S. Filter, which already operates the city’s
sewer system, have toured the facilities. The track records of all three
corporations have been sullied by various misdeeds:

· OMI Inc. of Greenwood, Colo. - Last year, the City Council of Biddeford,
Maine, withheld payment from OMI until the company fixed a chronic odor
problem at the city’s sewage treatment plant. This year, the county
executive of Bergen County, N.J., was accused of trying to privatize the
county’s wastewater system to pay back his campaign contributors, which
included OMI, its parent company and its law firm. OMI is planning to
submit its bid with Thames Water, a British water giant recently acquired
by German energy giant RWE.

· United Water Resources of Harrington Park, N. J. - In 1996, a top
executive of United Water’s parent company, Suez Lyonnaise des Eaux of
France, was sent to prison, along with government officials in Grenoble,
for bribery in connection with a contract award. Last year, United Water
executives from several states donated more than $10,000 to the brother of
Atlanta Mayor Bill Campbell, who was running for state auditor of North
Carolina. It was just two years earlier that United Water won a $21 million
contract in Atlanta, where local officials and residents have since
complained about broken fire hydrants, slow service and brown water with
flecks of debris.

· U.S. Filter of Warrendale, Penn. - In 1997, executives of U.S. Filter’s
parent company, Vivendi Environnement of France, were convicted of bribing
the mayor of St-Denis to obtain a water concession. Last year, U.S. Filter
shareholders took Vivendi to court over allegedly illegal payments made to
U.S Filter executives to win support for Vivendi’s takeover of the company..
Last month, an electrical fire at one of the sewage treatment plants that
U.S. Filter operates in New Orleans caused raw sewage to be dumped into the
Mississippi River for two hours. According to a City Council member, the
company was aware of the problems that led to the fire but didn’t address
them.

"If these shenanigans don’t make elected officials in New Orleans run as
fast as they can in the opposite direction, they aren’t thinking straight,"
Hauter said. "The water supply of New Orleans should not be entrusted to
these companies."

The conduct of these corporations aside, the privatization process itself
has been questioned by local civic organizations and leaders. Among the
criticisms, the S&WB gave local residents just 10 days to file comments on
the bidding documents when they were released in February. In response to a
public outcry, the board eventually extended the comment period to four
months.

Additionally, the New Orleans Bureau of Governmental Research (BGR) said
the bidding documents were flawed because certain protocols were missing,
bidders were not required to disclose campaign contributions or reveal
potential conflicts of interest, and certain provisions encouraged
patronage. Some of the disputed provisions made their way into the final
draft of the bidding documents. The BGR also expressed concern that the
city’s financial advisors did not conduct apples-to-apples comparisons
between the New Orleans situation and privatization cases elsewhere. And,
the BGR found that analysts provided no specific evidence that the city
would really save money through privatization.

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