By James Vassilopoulos
What the hell is going on! That sums up the feelings of many Sydneysiders as, for the second time within a month, they have been warned to boil their water, following the detection of the parasites giardia and cryptosporidium.
The Sydney Water Corporation had announced on August 3 that the city's tap water was safe to drink. An article in 91×ÔÅÄÂÛ̳ Weekly on August 12 commented that "no current method can guarantee complete removal" of the parasites and therefore the corporation was "misleading the public over the water supply's clean bill of health".
At the heart of the Sydney water crisis is the water treatment plant at Prospect, owned and operated by Australian Water Services, a consortium led by the biggest water transnational in the world, Suez Lyonnaise des Eaux (also known as Lyonnaise des Eaux). It won the contract for a 25-year period.
An interim report by the inquiry into the Sydney water crisis found that the Prospect plant was one of the most likely sources of the outbreak. Tests done at the plant on August 24 had found a reading of cryptosporidium of 863 per 80 litres, much higher than during the earlier crisis.
Suez Lyonnaise des Eaux is not the only water transnational involved in Australia. Générale des Eaux runs the water treatment plants at Illawarra and Woronora. United Water, a joint subsidiary of Générale and the UK company Thames Water, provides water for Adelaide.
Suez Lyonnaise des Eaux
Suez Lyonnaise got the contract to build and operate the water treatment plant at Prospect in November 1993. The plant was opened three years later. The corporation also won the contract to run a waste water treatment plant for 25 years from the municipality of Noosa, Queensland, in June 1996.
Suez Lyonnaise is the biggest of the five water transnationals. It has business interests in 120 countries and employs 175,000 workers. It is also involved in electricity production and generation, waste services, cable and TV broadcasting, operating airports and toll roads, construction and public works. It also has its own bank.
There is a dark side to Suez Lyonnaise which it does not mention in its glossy publicity. It has been convicted of corruption.
An executive of Suez Lyonnaise and Alain Carignon, the mayor of the French city of Grenoble, were tried in 1995 and convicted for corruption over a water contract with the city. Carignon was charged with accepting up to $6 million in presents, flights and a large flat in Paris.
Merlin, the subsidiary of Suez Lyonnaise involved, was also alleged to have paid out huge subsides to Dauphine News, a pro-Carignon newspaper that had run into financial difficulties. In return for the bribes, Merlin was awarded the municipal water contract in 1989.
Grenoble had demanded $120 million in damages from Carignon. The lawyer for the city told the court that there had been a three-fold increase in water prices in the six years since the privatisation.
Carignon and the executive of Merlin, Jean-Jacques Prompsey, received prison sentences.
In January 1997, the national audit office of France published an extremely critical report on the water industry. It found there were problems of extending contracts without subjecting them to tender and of contracts lasting 30 years or more.
There was a lack of transparency in that privatisation was rarely evaluated. Many contracts were ambiguous, and subcontracting went to companies in the same group without competition.
Suez Lyonnaise has put communities in South Africa offside. In Fort Beaufort in the Eastern Cape a reservoir is polluted by dead dogs and cats, bottles of industrial cleaner and sanitary pads. According to a source within the South African Municipal Workers Union, the communities are complaining bitterly to the council but nothing is being done to avert a potential crisis.
The owner of the dam is Water and Sanitation Services South Africa, a subsidiary of Suez Lyonnaise.
The Prospect water filtration plant was developed as a build/own/operate (BOO) contract. This form of privatisation has had severe problems in the United Kingdom, where it has been used to build and finance roads.
Transport 2000, a national transport campaign organisation, found that the cost of a road under a BOO scheme is on average three times as much as conventional public funding.
In France, the stadium where football's world cup final was played was built under a similar BOO contract. The contract was awarded to a consortium of three companies — Suez Lyonnaise, Générale and Bouygues.
The European Commission is investigating the contract because there was no competition. The commission has also objected to the consortium being allowed to modify the terms of the contract during the course of the bidding.
Générale des Eaux
Générale is the second largest water multinational, with $48 million in sales in 1997.
Between the years 1990 and 1995, the transnational was investigated in six separate corruption cases, yet it continue to win contracts. According to Le Monde on May 9, 1995, the chairperson of the Générale subsidiary CME was investigated for alleged misappropriation of assets, bribing witnesses and forgery.
In 1994, a French senator admitted accepting $430,000 from Campenon-Bernard, the subsidiary of Générale in the construction industry, for a contract.
Also in 1994, Générale got the water contract for the Hungarian city of Szeged. According to a report in PW Financing in June 1994, the deputy mayor admitted that the votes of the conservative councillors had been "bought" by giving 102 million forints of public works in their wards.
In the UK in 1992 an auditor investigated the award of a waste collection contract to Onyx, a Générale subsidiary. He concluded that the tender process contained "flaws [which] could have enabled corrupt practices to have taken place".
In France, the Aix-en-Provence prosecutor's office has begun an investigation of Onyx, following fires which ravaged 4000 hectares of forests north of Marseille. Onyx manages the municipal tip near Marseille; hot waste dumped into the tip could be the cause of the fires.
Générale's was successfully prosecuted in July 1994 for supplying poor quality water to the inhabitants of Tregeux, France.
It was prosecuted for supplying water unfit for consumption due to excessive nitrates and pesticides on 476 days between 1990 and 1993. Générale responded by denying responsibility for standards, claiming that "improvement in water quality comes from the provision of new installations, which is the responsibility of the commune".
When cryptosporidium was found in the north London water supply, United Water, in which Générale is the major partner, failed to let people know for weeks. It had no procedure for dealing with outbreaks.
Générale has also been prosecuted for anti-competitive practices. According to Le Monde on May 11, 1995, subsidiaries of the transnational were fined a total of $2 million by the French competition council. The fines were imposed for collusion by five companies bidding for waste collection contracts in Var.
Three of the companies were 100% owned by Générale, one was 50% owned and the last 34% owned. Générale could not lose. The companies did not reveal this in their bids, nor did they reveal that they shared information.
Privatisation is robbery
Générale was prosecuted in July 1994 for failing to provide quality drinking water. It was prosecuted in May 1995 for collusion. Yet it was awarded the contract to supply water for Adelaide after these events, in late 1995, and was also awarded two contracts to run water treatment plants in Sydney.
When a subsidiary of Suez Lyonnaise was prosecuted for bribing the mayor of Grenoble in October 1995, why wasn't its contract for the Prospect plant revoked? How could the corporation win the contract in Noosa, in June 1996?
The awful record of Générale and Suez Lyonnaise provides a compelling argument against privatisation, outsourcing and corporatisation.
Any form of privatisation is robbery by big business of the people. Only profitable firms are privatised. These public utilities, built up over years with the money of working people, are often sold at bargain prices. Taxpayers also lose the dividends the public utilities or public corporations provide.
BOO schemes are often far more expensive than a public works program, but they are a windfall for big business. Suez Lyonnaise, for example, doubled its profits from 1996 to 1997.
The Public Services Privatisation Research Unit in Britain found 52 cases of alleged corruption in the contracting process between 1990 and 1995. It concluded, "Corporate attempts at corruption are the norm ... whenever public sector work is contracted out".
Privatisation is also anti-democratic, removing any accountability of service providers to those they supposedly serve. The corporations end up accountable only to their shareholders.
Working people lose by their health being compromised, through higher prices and through job cuts when utilities are sold.