Veolia’s Other Offenses
Different names, same games…
Originally named Compagnie Generale des Eaux in 1853, the French multi-national Vivendi Universal had over a third of the directors of its main board under investigation for corruption in 1996. Vivendi Universal sold off a majority stake in its water subsidiary, Vivendi Environment and renamed it Veolia in 2002 after a decade-long merger spree. The company sought to jettison its debt load with their credit rating reduced to ‘junk’ status and the forced resignation of former CEO, Jean-Marie Messier. He was convicted and fined a million dollars for fraud by the U.S. Securities Exchange Commission, and denied a $25 million severance package in addition to fines and a conviction in France. Veolia has hundreds of subsidiaries in dozens of countries; various names for Veolia exist under the same umbrella: US Filter, Apa Nova, United Water, PVK, General-Des-Eaux, Onyx Environmental, Dalkia, Veolia Water North America, Connex, etc… See a 2005 report by Public Citizen titled Veolia Environment: A Corporate Profile
and a 2011 report by Food and Water Watch titled Veolia Environnement: A Profile of the World’s Largest Water Service Corporation
for more information on Veolia’s history as a corporation.
Profits over people…
Veolia is the largest water privatization business in the world, and has come under attack by water rights activists for many of its contracts that reveal consistent prioritization of private profit at the expense of the environment and public interest. See the 2011 report
by Food & Water Watch for more information. While public facilities are accountable to the public, often creating increased transparency and efficiency, private facilities are not. If a company chooses to abuse its privilege by hiking up price rates or cutting costs in ways that are detrimental to the public, it is much more difficult to fight. Worldwide, consumers report that Veolia consistently charges high rates, provides poor service, and fails to make promised improvements.
As highlighted in a report
prepared by Novato Friends of Locally Operated Wastewater as part of their campaign against this company, Veolia has additionally shown a lack of care for public welfare by:
- Cost-cutting and lack of proper oversight
- High staffing turnover and failure to attract experienced staff
- “Regional Response” plans slow down emergency responses
- Liability assignment provisions skirt full responsibility
- Contract fee schedules encourage maintenance deferrals & substandard equipment use while discouraging water conservation efforts
Veolia contracts gone bad…
Veolia settled out of court when sued under the Clean Water Act for dumping more than 10 million gallons of wastewater and untreated sewage over a 5 year period into the San Francisco Bay after creating an inadequate improvement project.
Veolia and Richmond settled out of court when sued for dumping more than 17 million gallons of sewage into tributaries after initiating a capital improvement project. Voters approved a $20 million bond to pay for sewer repairs, which Richmond used to privatize its sewers over three years and then sign a 20-year, $70 million contract with Veolia.
Taxpayers had to shell out $500,000 annually to compensate for related property damage. In 2008, the plant had 22 spills of more than 2 million gallons of sewage.
Mayor convicted on 16 counts including taking kickbacks, bribes and extortion, along with 8 other defendants over a PSG (Vivendi) contract proposal.
In a short-sighted attempt to balance its municipal budget, the city leased its sewers in exchange for a $10 million upfront payment, at $22 million overall expense.
Failures to upgrade and repair, have resulted in years of sewage spills; environmental violations; state fines; horrendously foul odors; sewage overflow outlets which annually send over a billion gallons of contaminated wastewater into area waterways; and contract disputes over a 55% rate hike.
In 2009, after cancelling its wastewater contract with Veolia, the city had to make thousands of dollars in repairs to the treatment plant because of the company’s neglect and poor maintenance.
Veolia has been sued for breaking state contract law, and for overcharging 250,000 residents. Non-union employees have had pension, health care and benefits cut $50 million over the 20-year contract. With the second worst drinking water in the country, a grand jury has subpoenaed four Veolia employees for allegations of falsifying water reports amid accusations by city and county officials that Veolia was skimping on staffing, water testing, maintenance and chemicals.
In 2011, the city sought to end a 20-year contract with Veolia because it believed the city could save money with a public operation.
New Orleans, LA
Consideration of a bid containing uncertainties, inadequacies, and omissions cost the city $5 million. Failure to take action on a known equipment problem resulted in an electrical fire. Raw sewage backed up into the East Bank Sewage Treatment Plant and was diverted into the Mississippi River for two hours. An executive was convicted of bribery in seeking wastewater contract extension and fined $3 million.
Lee rejected a bid that seemed to be a scheme to turn the city’s wastewater treatment facilities into a regional waste plant/Veolia profit stream.
The city was forced to end a weak contract that left it liable for expenses due to sewer overflows and flooding as a result of poor design or workmanship of system upgrades and an expired letter of credit. The city lost $22 million.
A forensic audit led to a contract termination amid embezzlement charges involving a sewer department official and a local company executive, charged with embezzling more than US$300,000.
West Carrollton, OH
An explosion at Veolia Environmental Service’s plant injured two workers, damaged over a dozen homes within a mile radius from the blast, caused $50 million in damage to the plant itself.
The Department of Environmental Protection (DEP) fined Veolia ES Solid Waste of Pennsylvania Inc. $160,278 for violations related to vehicle licensing and failing to abide by the terms of its permit and more than $11,200 for residual and municipal waste violations amid complaints a Veolia truck driver draining an estimated 100 gallons of dilute coolant and rust preventative into a storm drain leading to the Driftwood Branch of Sinnemahoning Creek.
Cameron and Centre Counties, PN
Veolia was also fined
by the Pennsylvania Department of Environmental Protection for municipal and residual waste violations in Cameron and Centre Counties.
Years of serious sewage spills, violations and fines followed kept the city’s plant out of Clean Water Act compliance including seven informal enforcement actions and five formal actions and the plant’s manager had to attend a remedial training program, sponsored by the state.
Failure to maintain adequate staffing levels, submit capital project reports, and charging expenses properly led to a contract termination a lawsuit for breached contract.
A federal investigation into the financial transactions of high-profile consultants hired to lobby city officials in unsuccessful bids. After a legal battle with Veolia’s competitor, the city expects to save 17%, or $2 million in public operation.
Fighting back against Veolia…
Even throughout Veolia’s home base of France, communities have begun taking back their water systems from Veolia mismanagement. In its home city of Paris in 2009, after a 25-year contract, the city decided not to renew its contract with Veolia in order to stabilize water rates and save money–which it has. In Belgium, Germany, Romania, and around the world, municipalities are taking back their water systems from Veolia and restoring public control to improve operations.
Locally, campaigns have sprung up against the company as well; for instance, in Novato the Committee for No on F organized in 2010 to veto Veolia’s privatization of their wastewater treatment plant. They were ultimately unsuccessful by a very narrow margin, yet are noteworthy for the impressive coalition that joined around this issue – including the Sierra Club, Green Party, Marin United Taxpayers Association and California Healthy Communities Network. See here for their report, titled: Veolia and the Environment: A Bad Fit for Novato
The end of an era…
Veolia’s offences are beginning to be reflected in their profit margin, which has plummeted since 2008, especially in the area of water. As this article
explains, Veolia is expecting a downturn, and has lost more than half its market value this year. Veolia has already experienced economic slowdown for several years, due to contract losses in Paris, Italy, and the Gulf of Mexico, as well as the implementation of a cost-cutting program. The current CEO has pledged to sell $1.8 billion of its assets in 2011 and to stop operations in at least 37 countries. Another article
adds that Veolia has disclosed accounting fraud in the U.S. from 2007-2010 amounting to $120 million, which took place in their Marine Services unit in the Gulf of Mexico. As of August 2011, Veolia shares had dropped 28% since the issuing of their profit warning.