Terminate Indianapolis's Contract with Veolia

Don't let Veolia into your town or city

  Return to Home

Introduction

Since the late 1990’s, the multinational corporation Vivendi (now known as Vivendi Universal) has gone through a number of fundamental shifts in operational focus. Moving away from the environmental services management business and towards communications and media, Vivendi Universal has almost completely retreated from its roots in the water services industry where it began operations in France 1853. The Vivendi legacy, however, synonymous with water privatization and corruption, lives on in a new corporation created in 2002 out of their water and wastewater services division. The new company, Veolia Environment, which was known as Vivendi Environment until 2003, carries all of Vivendi’s history and reputation into its new corporate entity.

Vivendi, the notorious water services privateer, originally called Compagnie Générale des Eaux, was formed in the 1850s in France as a private water services provider. After more than a hundred years of global expansion in the water and wastewater services business, they expanded its business in the 1980’s with the acquisition of a waste management services and transportation provider  and an energy services provider. In 1998, following the acquisition of several communications and media companies they changed its name to Vivendi. The same year Vivendi continued to extend its global environmental services activities with the acquisition of  the leading water and wastewater treatment services company in the US, United States Filter Corporation.

In 1999, Vivendi created Vivendi Environment to conduct all of its environmental management activities. At this point, because of its now huge scope, Vivendi began to fall into some serious financial difficulties. Investors began to believe that the company was overstretched, causing a major sell-off of shares and a drop in Vivendi’s share price. They had to write off almost $17 billion dollars in the first quarter of 2002 and took $4.85 billion charge on their 2nd quarter earnings statement, because the value of their assets had dropped after the stock tumbled.

In April 2003 Vivendi Environment changed its name to Veolia Environment (VE).4 At the same time VE became a limited liability company under French law with a Board of Directors, replacing a Management Board and Supervisory Board structure used under its former core shareholder VU. This move essentially split VE from its former majority shareholder.

Like its predecessors, Veolia Environment profits from pro-privatization policies. VE has allied itself with international institutions and capitalized on its extensive links with the French government to ensure that the use of public private partnerships is a widely promoted and accepted economic development initiative. VE makes money managing privatized water utilities and it is in their interest to influence governments and institutions to privatize public services.

VE has also been charged with corruption, bribery and anti-competitive business practices on a number of occasions.

Operations

Like other corporations in the services industry, Veolia Environment’s operations are managed by a large number of subsidiaries operating in a diverse range of activities from the construction and maintenance of huge water treatment facilities to street cleaning and garbage collection.

What does this corporation actually do?

Veolia Environment is a global provider of ‘environmental management services’, which is defined as water and wastewater management services, energy services (excluding the production, trading and sale of electricity) and transportation services. Veolia sells these services to a range of clients around the world, including, public authorities, industrial and commercial customers and individuals. In 2003, VE decided to withdraw from activities in the manufacturing and sale of industrial equipment to focus purely on environmental services.

Veolia Environment is divided into 5 main divisions: Water, Waste Management, Energy Services, Transportation and Fomento de Construcciones y Contratas (FCC). Each division is made up of various subsidiaries which undertake a variety of operations.

Water

VE’s water division, known as Veolia Water, is the company’s biggest revenue earner. Water services, is historically the company’s main division and has produced the most controversy. With more than 77,700 employees around the world, Veolia Water has a presence in close to 70 countries and operates more than 5,000 contracts. Since December 2003, Compagnie Générale des Eaux, a VE subsidiary, has been the main holding company for VE’s 5 Veolia Environment Annual Report 4 water division. USFilter, the US’ main water and wastewater services provider, and Veolia Water Systems, which designs and constructs the structures used to provide water services, are both VE subsidiaries. USFilter is now known as Veolia Water North America.

Waste Management

VE’s waste management operations are run primarily through their subsidiary Onyx. Onyx employs more that 72,100 people worldwide and operates in all segments of the waste management business, serving municipalities and industrial clients. Operating in thirty countries, Onyx’s activities include the following:

    · Waste management services and logistics for municipalities and industrial clients including maintenance of public spaces and urban cleansing (street cleaning, graffiti removal etc), cleaning and maintenance of industrial sites, liquid waste management, treatment of contaminated soil, sewage system cleansing, treatment or contaminated soil, and the collection and transfer of waste.

    · Sorting and recycling of materials

    · Waste treatment (solid and liquid, hazardous and non-hazardous) through incineration, composting and storage

    · Final recovery of waste in the form of energy or organic materials

The subsidiary provides services to more than 280,000 industrial and commercial clients. Onyx is also one of the major global players in the treatment of hazardous waste.

Energy Services

VE’s energy services operations are run primarily through their subsidiary Dalkia. With more than 41,700 employees and a presence in more than 35 countries, Dalkia is one of Europe’s largest providers of energy related services to companies and municipalities. Dalkia provides services relating to heating and cooling networks, thermal and multi-technical systems, industrial utilities, installation and maintenance of production equipment.

Transportation

VE is also involved in the privatization of public transportation systems around the world. Connex  VE’s main transportation subsidiary, is the leading European private ground transporter of passengers in terms of revenue. Connex operates road and rail passenger transportation networks under contract with national, regional and local transit authorities. The public authorities with which Connex contracts generally own the infrastructure and typically establishes schedules, routes and fare structures for the networks that the company operates and manages. Connex has a presence in 20 countries and contracts with approximately 5,000 public authorities. In 2003, Connex operated more than 25,000 road and rail vehicles and employed more than 56,000 people worldwide.

In North America, Connex provides road transportation services in the Washington D.C. area, Los Angelesand Fairfax County, West Virginia. Through its regional transportation sector, Connex provides regional transportation services through the operation of road and rail networks. Connex is responsible for designing, planning, operating, maintaining and providing security on the vehicles and stations it uses in its regional networks, as well as for ticket sales and customer service. In this sector, Connex has won contracts in Boston and Massachusetts.

Key US Transactions from the Past Few Years

The following is a short list of contracts Veolia Environment  involved in the management and privatization of water, wastewater and transportation systems in North America.

For a complete list of every Veolia Water North America municipal contract in the United States and Canada please visit their website: http://www.veoliawaterna.com/project/projmap.asp

April 2005: Canada – Connex was awarded a contract to operate the express right-of-way bus network in the northern suburbs of Toronto. The 5-year renewable contract begins in September 2005 and will represent earnings of approximately 62 million euros.

November 2004: Los Angeles, California, US – The Southern California Regional Rail Authority awarded Connex North America a five-year contract for the operation of the rail network in suburban Los Angeles. The contract is worth 77 million euros.

October 2004: Florida, US – Onyx, VE’s waste management division, was awarded a ten-year contract extension to continue its operation, maintenance and management of the Miami-Dade County Resources Recovery Facility. Under the new terms, Onyx will run the facility until 2023.

July 2004: Michigan, US – Onyx North America was awarded a 20 year contract for solid waste collection, drop-off and transfer station management, and the land filling of solid household and commercial waste for the municipality in Pontiac, Michigan. The total contract value is estimated at $250 million.

June 2004: Denver, US – Connex, the transport division of VE, won a tender to operate the bus network in the Denver region. The five year contract is worth EUR55 million.

May 2003: Rialto, California – US Filter was granted $12 million agreement to operate a wastewater treatment plant for 5 years, including three 5-year renewals in Rialto California, a city of 95,000.

April 2003: Edwardsville, Missouri – A 15-year contract was signed with US Filter to maintain, and finance, design and construct enhancements to the water and sewer system. The contract is worth $35 million and includes the construction of a new water tower, water storage facility and regional sewage lift station.

February 2003: Algonac, Michigan – US Filter (Maryland) and Tetra Tech MPS are splitting the cost to further expand a water-filtration plant for the City of Algonac.

December 2002: California – US Filter presented a $1.8 billion proposal for a desalination project for the Salton Sea, a salty lake being threatened with increased salination and wildlife loss. The plan proposes to save 10% of the lake by building an inner circle of saltwater and outer circle of fresher water which would support wildlife and could augment California’s water supply.29 The authorities did not adopt the US Filter plan and have since proposed their own plan based on a similar framework.

December 2002: Sarasota County, Florida – US Filter gains a $3.9 million contract to run two wastewater treatment plants.

November 2002 – US Filter concluded the sale of its waterworks distribution business for $620 million - part of its divestiture strategy of non-core assets.

November 2002: Delta, Ohio – The Village of Delta awarded US Filter a $1.5 million contract to build a water treatment plant.

October 2002: Tampa Bay, Florida – “One of the nation’s largest design-build-operate (DBO) projects for water services” started operation filtering 66 million gallons per day. The 15-year $144 million contract is a public-private partnership between Tampa Bay Water, the public utility that will own the plant, and US Filter, who will operate it.

July 2002: Alabama US – US Filter was awarded a 10 year $7 million contract to operate, maintain and manage the drinking water treatment system in five Alabama communities (Prattville, Holtville, Tri-community, Wetumpka, and Milbrooke)

March 2002: Indianapolis, US – Vivendi was given a contract to manage the city’s waterworks system under a 20-year public-private partnership valued at approximately $1.5 billion. This is the largest ever contract awarded in the United States to a private corporation for operation of water services.

November 2001: Louisiana, US – US Filter was awarded a contract to design and supply a wastewater treatment plant for Calcasieu refining in Lake Charles, LA

February 2001: Oregon, US – The town of Wilsonville awarded U.S. Filter a contract to operate the city’s new water treatment plant. It is a five year contract plus a five year renewal option worth $5.5 million.

November 2000: New York, US – The Onondaga County Department of Drainage and Sanitation awarded US Filter a $11.9 million contract to upgrade Syracuse’s wastewater treatment.

October 2000: Washington, US – National Council for Public Private Partnerships awarded US Filter with the Performance and Safety Excellence award for 2000, for its work on wastewater treatment in Vancouver, Washington.

October 2000: Canada – Goderich, Ontario selected US Filter to operate the town’s water and wastewater systems public private partnership. The contract is for 5 years with a five year option. May 2000: Kentucky – Floyd River, Kentucky awarded U.S. Filter a 20 year contract to expand 11 and operate rural water service. The project includes the finance, design, and construction of 21 miles of new water lines, 3 pumps and 3 tanks. US Filter will also handle the system operations and maintenance for the next 20 years.

Economic Profile

Although VE has a long history of operations in France through its water division, it is a relatively young company (2003). Recently it has dealt with its separation from its financially troubled former majority shareholder, Vivendi Universal. The combination of a competitive environmental services industry and a high debt load, had placed VE in a fairly unstable economic position. In 2003 rating agency Moody’s changed its outlook for VE from ‘negative’ to ‘stable’. During the same fiscal year, the corporation was able to marginally reduce its net debt through the sale of certain assets among other actions. Debt reduction will remain a major focus point..

Lawsuits

2001-2003 – In February 2001, Compagnie Générale de Eaux was notified by the French Competition Council (Conseil de la concurrence) of a complaint alleging that several joint ventures it had formed with other water multinationals were affecting the level of competition in the market. In 2002, the Council found that the joint ventures constituted a ‘collective dominant position’ in the French water services market, and requested that the French Ministry of Economy, Finance and Industry take necessary measures to terminate the anticompetitive practices of the companies. None of the companies involved in the joint ventures were fined or punished.

1997-2003 – In December 2003, Onyx Méditerranée, a subsidiary of VE’s waste management division Onyx, was ordered by the criminal court of Aix-en-Provence to pay a EUR100,000 fine for the destruction of 3,500 hectares of scrubland by fire. The fire started in a landfill site operated by Onyx Méditerranée. A number of civil suits are still pending.

March 2001 – Vivendi and AOL Time Warner struck a deal in Europe as Vivendi gave up its shares in AOL France for shares in AOL Europe. The two companies will also enter into other distribution and marketing activities. Questions have been raised about the anti-competitive nature of two huge direct rivals holding shares in each other’s companies and in working together on business activities.

1999-2001 – Several criminal probes into Vivendi’s shareholder conduct during former CEO Messier’s control are being undertaken by both French and US authorities including the French Commission des Operations de Bourse (COB) and U.S. Securities and Exchange Commission, as well at the US Department of Justice.The COB said that Vivendi Environment misled investors over its US losses in 1999-2000 relating to its purchase of US Filter to avoid plunging itself into the red and pay taxes.In January a class action lawsuit was filed in the United States on behalf of shareholders who claim that Messier misrepresented its financial position, thus inflating Vivendi’s share price, and used the inflated shares to aggressively bid for public companies at excessive prices.They also allege that the revenues for US Filter were improperly booked, inflating earnings.

April 2000 – A subsidiary of Veolia Water, SADE, along with 40 other corporations came under investigation by the French Competition Council. The investigation stems from alleged anticompetitive practices in respect to public bids for 44 public sector construction contracts in the Ile-de-France department, which includes Paris and its suburbs. In 2002, the Council reduced the number of contracts under review to 32, four of which involve SADE. The case is still pending.

Public Relations

As documented above VE has a poor social and environmental track record. To counter this VE uses its affiliations with organizations like the United Nations (Global Compact) and the World Water Council (see political profile below) to project an image of a caring, responsible and green corporation. Through these affiliations and with the help of numerous advertising and public relations agencies around the world, VE has had some success in promoting water privatization while hiding their questionable social and environmental track record. 

Political Connections

A number of VE’s directors and high level executives have held powerful positions in the French and US governments. These links give VE important access to policy makers in Europe and North America.

Olivier Barbaroux – Barbaroux is a VE’s Executive Vice President of Energy Services. In 1979 he held the position of head of the International Investments Bureau at the French Ministry of Industry. In 1981 he was appointed to the Port Authority of Marseilles-Fos first as Director of New Construction and Ship Repair and then in 1983 as Director of Marseilles Terminals and Facilities.

Daniel Bouton – Bouton sits on VE’s board of directors and is the Chair and CEO of Société Générale. Bouton has occupied a number of positions in the French Government including the Ministry of Economy, Finance and Industry where he was Budget Director, between 1988 and 1991.

Denis Gasquet – Gasquet is VE’s Executive Vice President of Waste Management. From 1979 to 1989, Gasquet held a number of positions in the French Government’s Office National des Forets.

Arthur Laffer – Laffer sits on VE’s board of directors and is the Chair and Chief Executive officer of Laffer Associates and Laffer Investments. Laffer has held a number of positions in the United States Government including: Economic Director of the Federal Office of Management and Budget (1970); special advisor to the Secretary of the Treasury and to the Secretary of Defense (1972-1977); and a member of the Presidential Council of Economic Advisors (1981-1989). Laffer is also a founding member of the Policy Consultative Committee of the United States Congress.

Francis Mayer – Mayer sits on VE’s board of directors and is the Chair and CEO of Caisse des Dépots et Consignations. Mayer joined the French Finance Ministry in 1986, where in 1994 he became the Deputy Director.

Baudouin Prot – Prot sits on VE’s board of directors and is the CEO of BNP Paribas. From 1974 to 1983 Prot held the positions of Deputy Prefect of the Franche Comté region of France, the French General Inspector of Finance, and the Deputy Director of Energy and Raw Materials of the Ministry of Industry.

Stéphane Richard – Richard is VE’s Executive Vice President of Transportation. In 1991 Richard held the position of technical advisor at the Ministry of Industry and Exterior Commerce.

Louis Schweitzer – Schweitzer sits on VE’s board of directors and is the Chair and CEO of Renault. From 1981 to 1986, Schweitzer served as Chief of Staff of Laurent Fabius, who was Deputy Minister of Budget, Minister of Industry and Research and Prime Minister of France.

Affiliations with big business associations and other international agencies

Big business associations are indispensable tools for corporations like VE for public relations purposes and for their search for new markets. The following associations predominantly function as lobby groups for big business to convince national governments that the global water industry is the best choice for managing water and sanitation services. Maude Barlow and Tony Clarke note that organizations such as these appear “to be neutral…but a closer look reveals that these agencies promote the privatization and export of water resources and services through close links with global water corporations and financial institutions.

Some of the Problem contracts and controversies

2004: Lee, Massachusetts – After 4 years of lobbying by Veolia Water North America, town representatives of Lee, Massachusetts voted 41-10 against granting the corporation a 20 year contract to run the municipality’s public water and wastewater systems. Community organizers waged a successful campaign against the privatization of the essential services, raising doubts about the company’s promise that current employees would keep their jobs.83 Resistance to privatization in a small community like Lee is a good example of how large multinationals are vulnerable to well organized and persistent action.

1996-2004: Angleton, Texas – The City of Angelton terminated its contract with Veolia Water North America, saying that the company did not provide the promised level of service. The company had been running the city’s wastewater treatment plant and maintaining the city’s streets since 1996. Since the contract was terminated, the city and Veolia Water North America have been embroiled in a number of lawsuits.

2002 – 2004: Indianapolis, Indiana – Indianapolis authorities are realizing the mistake they made when they bought a 130-year old water utility from NiSource in 2002 and handed it over to US Filter instead of keeping it a public utility. Since US Filter was awarded the contract, lawsuits have been filed and customer complaints have gone up by 250% for the water utility, which serves over 1 million.

Within one month of requesting management proposals, US Filter was granted a contract. Opponents criticized the excessive secrecy and “fast-tracking” surrounding the agreement. At its first opportunity, the company, limited by the contract from firing employees in the first two years, began to cut corners by slashing employee benefits. A report by Public Citizen, member of the Indianapolis Citizen’s Water Coalition, states that “non-union employees lost their valuable "defined benefit" pension; health care coverage was reduced, vacation time, personal days, sick days and holidays were all reduced.85 The employees claim that over $9000 in annual benefits have been lost or $4.3 million per year. Employees are angry and fearful as talk of the first layoffs in 130 years circulate. CEO Jim Keene told employees, ‘Being fair does not mean having a job for life’.” The employees have brought a federal lawsuit against the City charging breach of contract.

A second lawsuit against the City was filed in April 2003 by three local taxpayers challenging the legality of the contract. They claim that the City ignored the law by establishing the Department of Waterworks to oversee the water utility without the permission of the Department of Public Utility an Indiana State law ensures that any new utilities in the county must fall under the supervision of the local public utility office. They also claim that the Citizens Gas & Coke Utility would have been in a better position to manage it as a public water utility. Since taking control, net income of the utility has dropped 19% and revenue has dropped 25%. The founding member of the Indianapolis Board of Waterworks, who wrote a letter to the media condemning the 2002 purchase, quit after the Board passed a resolution limiting its members from speaking with the media regarding the utility. The lawsuit is still in the courts

In the summer of 2002, almost 16,000 customers were over-billed by successive computer glitches by the US Filter-owned billing company. Recently, US Filter’s decision to cut back on fire hydrant testing was made public when frozen fire hydrants prevented the control of a fire, which engulfed several buildings. The Indianapolis Star noted that the company was taking steps to repair the damage it had caused – “Apparently unaccustomed to working with community groups, USFilter convened a citizen’s advisory group, as is required by its agreement with the city, but had no members with experience in water utility or environmental matters”.

2003: Poughkeepsie, NY – Repeated failures of US Filter to remedy the foul odors coming from the water treatment plant they operate have prompted City officials to look elsewhere for potential bidders when the contract expires in 2005. The plant has had to be shut down several times over the last year during special events. US Filter has said it plans to bid for the contract again.

1998-2004: Rockland, Massachusetts – In February 2004, the town of Rockland Massachusetts terminated its 10 year $1.2 million contract with US Filter to run the town’s sewage treatment plant on the advice of the state Office of the Inspector General. The Inspector General determined in 1998 that the contract was tailored to US Filter to the exclusion of other bidders. Rockland Town Administrator Bradley Plante sent a letter to Veolia Water North America President Michael Stark stating that there was “clear evidence that indicates collusion between former superintendent Gregory Thomson and US Filter Regional District Manager Sause which resulted in a violation of the competitive bidding process”.

The termination of the contract came on the heels of an audit of the town’s sewer department, which found widespread misuse of town money at the plant. The audit detailed about $77,000 in fraudulent invoices charged to the town between 1998 and 2002.  To make matters worse, when the contract ended, Veolia Water North America allegedly helped themselves to a large amount of equipment without paying the city. Town officials say the company should pay $1.6 million for what they allegedly took.

In September 2004, Gregory Thompson pleaded guilty to charges of embezzlement and was ordered to pay back the $336,000 he admitted stealing from the town. Thompson said that he and Michael Sause, a district manager for US Filter, submitted phony invoices to the company and intercepted reimbursement checks. According to Thompson, the two also stole funds US Filter had reimbursed to the town from wage, equipment, maintenance, and electricity accounts. Sause is accused of working with Thompson to steal over $160,000. US Filter/Veolia Water North America has denied any wrongdoing and actually sued the town for terminating its contract. The town is countersuing in US district court.

1999-2004: New Orleans – In August 2004, five years and $5.7 million later, the Sewerage & Water Board of New Orleans ended its flirtation with privatization.  Throughout the 5 year process of consultations and studies, US Filter remained one of the top potential bidders for a $1.5 billion contract to run New Orleans’ water and sewer systems. The initial bidding process by Suez’ United Water and US Filter, now Veolia Water North America, was voted down in October 2002 after heated public opposition. The drive to privatize was revived in January 2003, but only one bid from US Filter was put forward raising fears that the city would not get a competitive price for the contract.

There were also persistent rumours that US Filter may have had an ‘inside track’ for the contract. There was speculation that US Filter was confident that they would be awarded the contract so they ‘stuck around’ for the revived privatization drive in 2003. This confidence is believed to come from the company’s efforts to hire consultants close to Mayor Ray Nagin and Eddie Sapir, the City Councilman who serves on the water board and spearheaded the privatization drive.  In the end it was Mayor Nagin who killed the privatization drive.

1998 – 2002: Puerto Rico – government subsidies for Vivendi’s shoddy work Vivendi’s management of Puerto Rico’s water authority, PRASA, through its subsidiary Compania de Aguas, was strongly criticized by a Puerto Rican government report in August 1999 for failing to adequately maintain and repair the state’s aqueducts and sewers. According to Interpress news agency, “The Puerto Rico Office of the Comptroller [Contralor] issued an extremely critical report on the PRASA-Compania de Aguas contract. The document lists numerous faults, including deficiencies in the maintenance, repair, administration and operation of aqueducts and sewers, and required financial reports that were either late or not submitted at all.” The Interpress account of the comptroller’s report went on to say, “Citizens asking for help get no answers, and some customers say that they do not receive water, but always receive their bills on time, charging them for water they never get. A local weekly newspaper published reports of PRASA work crews who did not know where to look for the aqueducts and valves that they were supposed to work on.” What’s more, the 1999 comptroller’s report showed that under private administration, PRASA’s operational deficit has kept increasing and has now reached US $241 million. As a result, the Government Development Bank (Banco Gubernamental de Fomento) has had to step in several times to provide emergency funding.

In May 2001, the Puerto Rico Office of the Comptroller issued another report about PRASA’s performance, identifying 3,181 deficiencies in the administration, operation, and maintenance of the water infrastructure. Among these, the Comptroller reports that PRASA’s operating losses had increased from US $241 million in August 1999 to US $695 million in May 2001, and that the agency had not collected US $165 million in bills. The report also noted that the U.S. Environmental Protection Agency had fined PRASA a total of US $6.2 million since it had been privatized through Vivendi’s Compania de Aguas (i.e., during the period between 1995 and 2000). According to Comptroller Manuel Diaz-Saldaña, the privatization “has been a bad business deal for the people of Puerto Rico.” “We cannot keep administrating the Authority (i.e., PRASA) the way it has been done until now,” he said.

Environment

2003: Toronto – US Filter has a contract with the City of Toronto to market and turn the city’s sewage sludge into pellets (euphemistically known as “biosolids”), including spreading it on farmland in Southern Ontario. A multi-million dollar lawsuit has been filed against US Filter after chemical-laden sludge spread on a farm caught fire and burned for five days. The couple claims that US Filter told them it was completely natural. USFilter/Veolia Water North America has denied any wrongdoing. The “natural” sludge is given “free” to farmers, who are led to believe they will save money on fertilizer.

2003: New Orleans – US Filter, which runs two wastewater treatment plants in the city, has racked up $107,000 in fines for discharging sewage directly into the Mississippi River 64 times since 2001.  Almost all of the discharges violated a 1998 US EPA consent decree over lake pollution. As a result of this issue and other reports of poor performance, the city’s water board withheld $2.6 million in payments in exchange for the company’s commitment to repair and maintain the two plants. US Filter claimed the move is in violation of the contract. In June 2003, the water board said that withholding the money was their only recourse to penalize the company for poor performance. By October 2003, the board agreed to pay the company the $2.6 million in exchange for USFilter agreeing to repair and maintain the two plants according to contract specifications.

2002-2003: Plymouth, Massachusetts – A water treatment plant built by US Filter has not been in compliance with its permit since it began operation in early 2002. US Filter was awarded the $40 million build and operate contract for its experience in running water utilities, however, town authorities have been unhappy with the contract since, even threatening to cancel it in May 2003.

The State issued a notice of non-compliance in January 2003 with 22 issues, including inaccurate and inconsistent testing, inadequate staffing, and reported rates of nitrogen and phosphorus levels two or three times higher than permitted. The state’s report also noted the breaking down of pumps, which in one incident had left the plant without pumping capability for more than 16 hours. Apparently the company had been aware of the issues but had failed to report it to the City authorities, who were shocked when they were handed the state’s notice. The City stands to pay heavy daily fines unless the violations are remedied. While US Filter has recently claimed they have been in compliance with the permit for four weeks, the state refuses to lift the moratorium on accepting additional sewage flow until compliance is noted for at least six months, leaving the Town unable to accommodate the rapid local development.

Corruption

1994-2003: Bridgeport, Connecticut – Former Bridgeport Mayor Joseph P. Ganim was sentenced to nine years in prison for corruption on several counts, which included a relationship between his office and Professional Services Group (PSG), which was purchased by US Filter. A major part of the testimony heard was regarding two multi-million dollar sewage contracts awarded to PSG – first a five-year contract, then an extended 20-year contract – in return for $500,000 in kickbacks from the company through consulting fees and benefits.

1997-2003: New Orleans – Again in New Orleans, USFilter has had to deal with controversy over contracts. This time a corruption scandal involving the bribery of a former New Orleans Sewerage & Water Board member in order to rig the renewal of a contract to run the city’s two wastewater treatment plants. Katherine Maraldo, the former Board member was convicted of accepting bribes during the mid-1990s from Professional Services Group (PSG) president Michael Stump. Stump, who was president of the company at the time, was buying Maraldo’s support for a five-year extension of the company’s contract to run two wastewater plants. At the time Maraldo was the chair of the committee that oversaw the contract. Stump was convicted in June 2003. The contracts are now held by Veolia Water North America, formerly USFilter. Both Maraldo and Stump were given jail terms. At the time of the crime, PSG was a unit of Vivendi’s indirect US subsidiary, Aqua Alliance.

1996-2001: Houston, Texas – In May 2001, PSG, a subsidiary of Aqua Alliance, reached a plea agreement with the US Department of Justice in which Aqua Alliance pleaded guilty to a charge of bribery and was fined $3 million. The plea was in connection with allegations that members of the Houston City Council received illegal contributions from PSG consultants.109 At that time, there was a battle over the proposed privatization of Houston’s wastewater facilities, and PSG's lobbying team was drenching city officials with cash inducements.

  Return to Home