WATER IN COURT
In March 2001, Jean-Philippe Joseph was interviewed by France Culture, Radio France's upmarket talk station. The interview was about an article he had written concerning Vivendi, the big French utilities group which bought Universal Studios. The focus of the interview was the way in which, whilst loudly backing a free-market philosophy, Vivendi had in fact received considerable amounts of public - i.e. non-market - support. The libel claim relates to specific comments made in response to a question about how corporations are able to access the water services market. This is what Jean-Philippe Joseph said on air :
"Vivendi basically used a variety of strategic and legal instruments, including bribery. A number of elected officials have said - not just about Vivendi, about Lyonnaise des Eaux and others too - that bribery lies at the heart of those markets(1). So if bribery is used to enter markets, then the system is not a free-market system. Examples are supporting a football club, and other such types of financial support to help access a market. That's the first thing. The second thing is that resources are going to be siphoned out of the system as a matter of course (2). There are instances of overcharging on water-bills. In Avignon, water rates were three francs higher than they should have been(3). In other instances, companies are going to charge for infrastructure work twice over, when the work was not necessary(4); they may add considerable management costs and so on. They use water contracts and the whole business of managing water to amass a series of sums of money with which they can expand and invest outside the water business(5)."
This is not the first time that water companies and Lyonnaise in particular have used legal means as a way of silencing opposition. They have in the past sued:
- an investigative magistrate, Thierry Jean-Pierre, known as "le juge anticorruption", for publishing in his "Black Book of Corruption" a statement that 80% of bribery is organized by two major corporations each made up of hundreds of subsidiaries.
- Jean-Loup Englander, Mayor of the city of St-Michel-sur-Orge, for saying that "bribery is the key to these markets".
- a former Lyonnaise employee for a reference to "mafia-like methods".
Often, the water companies win these suits. The law on bribery and libel protects them.
This time, Lyonnaise affirms that Jean-Philippe Joseph's remarks "are an attempt on the company's honour and reputation". They were nothing unusual. They teach us nothing new. For ten years, newspapers articles, verdicts and official reports have repeatedly denounced bribery, overcharging, lack of competition and lack of transparency in the French water market dominated by Lyonnaise, Vivendi and Bouygues. Recently, the Office of Fair Trading ("Conseil de la Concurrence") stipulated that Generale des Eaux (a Vivendi subsidiary) and Lyonnaise must liquidiate their jointly-owned subsidiaires(6). And though the climate in France may have improved, these corporations' and their subsidiaries' practices are still subject to investigation and trial in the US, in Lesotho, in Peru, in Oman, in Kazakhstan...
So what is behind Lyonnaise' sensitivity?
Lyonnaise des Eaux France is a French subsidiary of ONDEO, the water division of Suez which is the world leader in its sector. It supplies 120 million people and 60,000 industrial clients with water.(7) Large cities and industries: Ondeo has a pretty name but it thrives on pollution.
Historically, the company is linked to the RPR (President Chirac's Gaullist party, dissolved in 2002). Former Lyonnaise Chairman and Managing Director, Jerome Monod, was secretary-general of that party. The company and its subsidiaries have stood at the heart of a number of "affaires" or scandals (the Carignon Affair, the Botton Affair, Maillard and Duclos, the Ile-de-France High School scandal...). The same connection recurs as a central feature in so-called "Françafrique", a web of political networks throughout French-speaking Africa (Morocco, Tunisia, Congo-Brazzaville, Libya, Senegal, Burkina Fasso)(8). And the political connection remains important to this day: Jerome Monod was President Chirac's Special Adviser during the 2002 presidential elections.
He has also been Special Adviser to World Bank Chairman, James Wolfensohn. At the end of the 1980s, when the French market was showing signs of saturation, he began to promote "The French School" in Water Management, a form of public-private partnership (the public sector takes responsibility, the private sector takes the profits). His efforts were successful because French-style privatisation has become the current orthodoxy among international institutions in the field of water management.
So now is not a good moment to remind Gerard Mestrallet, current Suez Chairman, of the world-famous black-marks on the company's record, including charges of bribery, high prices, profits made under the apartheid regime in South Africa and under the Suharto regime in Indonesia, anti-trade union discrimnation in Colombia). Wearing his new Ondeo colours, the new Chairman is launching "The Real Battle for Water"(9) whose battle-cry is "Water for All, Fast!" Never mind that Gerard Mestrallet is quoted as having once said that "water is an efficient product. It is a product that ought to be free and which it is our job to sell".(10) In these times of privatisation, under the auspices of the World Bank, the IMF and the WTO, Ondeo is on a shopping-spree dressed as little red riding-hood.
When Cameroon privatised its water, Lyonnaise's offer was the only one to appear. Out of 103 water-management centres, the corporation was only interested in 6: the most profitable ones, accounting for 95% of turnover. Too bad about the others. Too bad about Cameroonian fears of a price hike(11). A far cry from "Water for All!" There are other examples. In 1999, the Mayor of Buenos Aires said, "Water prices, which Aguas Argentinas (an Ondeo subsidiary) had said would go down 27% have increased by 20%."(12)
In France, several reports have already shown that where water is privately managed, prices are on average 16% higher.13 And the outlook is rosy. Since the Doha Ministerial Conference, the WTO has announced a policy of encouraging development. The chase for markets in developing countries is on. Supported by governments and disguised as vegetarians, the ogres are sitting down to eat.
"Social Engineering in low-income neighbourhoods"...
A recent internal document shows how Ondeo deals with poor people... It details "the art of working with NGOs", how to set up "patrols for payment recovery", so "people can pay their bills as close to home as possible". Also, "Good relations with residents' associations will help define how often patrols should come by and where they should intervene (for instance markets, public libraries, community centres and so on). Another feature of water for all.
BLACKING UP IN BLUE AND GREEN
Jerome Monod's strategy worked. The World Bank and the IMF are promoting a "French School" of water management, a concession system which has enabled three French corporations, Lyonnaise, Vivendi and Bouygues to become world leaders. The State keeps ownership of water resources and local authorities are responsible for supplies. A contract is established under which a private corporation guarantees distribution and/or waste management and charges for it. Much to the delight of the WTO, which is keen to promote privatisation and keen to detect the slightest "obstacle" to trade.
Now, it is the UN's turn to surrender to commerce. The World Summit on Sustainable Development opened at the end of August in Johannesburg (a city where Ondeo manages water distribution). Then in 2003, the 3rd World Water Forum will be held in Kyoto. Ten years after the Earth Summit in Rio, ecology is to come under the aegis of the economy and sustainable development has replaced the environment. Water is no longer a need but a commodity: it can be priced and sold. The corporations responsible for introducing this strategy, truly the pimps of the development business, can appear in a new green guise.
As a member of the World Business Council on Sustainable Development (WBCSD) alongside other ecological groups such as BP Amoco, Procter and Gamble, Monsanto and General Motors, Suez is leading the campaign for water privatisation. So the launch of Ondeo's "True Battle for Water" is timely, a PR campaign designed to develop new markets under the protection of a generous slogan "Water for All, Fast!" The logic is easy to understand. It goes as follows: "Pollution is caused by urban waste, there are many poor people, poor people are responsible for polluting water. As a result of polluted water, they fall ill and die. They need help. The water they sully needs to be made clean. This is tricky, but luckily corporations have the technology to do it. At a price. So the thing to do is to privatise. And if the poor have no money, governments and international institutions will pay, because they are partners." Which opens the way to social engineering...
Naturally, since these corporations declare that they are interested in poverty and in the environment, anybody who opposes them works against the interests of the poor and against the interests of the environment. Suez has donned a suit of green. It will wear blue too, by participating in the Global Compact, a non-binding pact promoted by Kofi Annan which offers companies like Nike and Shell use of the UN logo in exchange for a few pious remarks.
Suez is also a World Bank "Business Partner for Development".
Suez (and consequently Ondeo) is engaged in a battle for its image. It needs to conceal its influence over political organizations, its control of cities and its government of a vital resource. It is hardly surprising that it should choose as a matter of policy to sue anyone scratching at its varnish.
Lobbying as a form of corruption
As a member of the Transatlantic Business Dialog (TABD) and the European Round Table, Suez can influence European Commission decisions regarding directives and commercial treaties, such as those involving the WTO. Suez' managing-director is Yves Thibault de Silguy, a former European Commissioner. Through specialized groups such as the Global Water Partnership, the World Committee on Water for the 21st Century or the World Council on Water, it also influences decisions on water at a world level. Some legal and political science theorists consider this kind of influence on public decision-making, excercised through lobbying or through hiring former public officials as a form of corruption. (14)
"I am convinced that, more even than a financial crisis or local political crisis, the main threat to our group would be a public relations' crisis."
Ethics and Values,
Lyonnaise des Eaux internal document, p35
Legal Proceedings as a Deterrent
Criticism of water management practices are rare in the French press. This is hardly surprising. What could one expect from a supposedly anti-establishment channel like Canal+, which is a Vivendi subsidiary, or from a channel such as M6, of which Suez is a major shareholder, or from a channel such as TF1, which is a Bouygues subsidiary?
The written press is partly owned by these groups too and notably by Vivendi Universal Publishing. It also relies on vital advertising revenues and the water companies are high on the list of major advertisers. A corporate name change means tens of millions of dollars in communication. Media formats not reliant on advertising revenue are few and far between which means that those immune to threats from the water companies are few and far between also. So when a public radio station offers space for criticism, expensive libel proceedings constitute a convenient means of exercising pressure and encouraging self-censorship. They also constitute a form of intimidation against the interviewee, who is responsible for what he says and may consequently be sued. In order to defend himself, he must focus on superficial aspects of the water-management problem (bribery, water prices and lack of competition) and thus not concentrate on the main issues.
More fundamentally, protest against water bills is difficult too because unlike petrol pumps, water meters in the home do not show the price of a bath, a leak or flushing the toilet. The bill itself is scarcely explicit and clear. Nothing encourages revolt. The fact is that people's silence can be interpreted by their mayors as a form of consent, enabling them to renew in all conscience concessions which will provide a regular income for water companies for dozens of years to come.
Sometimes, however, price rises or decreases in the quality of water are too flagrant. Sometimes, too, the companies are over-greedy and demand, as they did at Cochabamba in Bolivia, that collecting rain-water should be made illegal. In those instances, people get angry. Their anger forces municipal authorities to annul private concessions in order to reclaim control of water distribution. This leads to further legal proceedings, as at Cachabamba, at Nkonkobe in South Africa, at Tucuman in Argentina or at Chatellerault in France.
Such local or national trials are mere skirmishes. Continental Free-Trade Agreements enable companies to sue governments if their profits are under threat. WTO and World Bank panels already constitute available jurisdictions. They know this in Canada, where a battle against privatisation is being waged in the knowledge that the WTO GATS agreement would make privatisation irreversible.
In France, strangely, despite the fact that 80% of the population uses privately-managed water systems and where public control of this vital resource has largely been abandoned, the battle is not over. There is a regular streams of local laïcités(15) against Lyonnaise, Générale des Eaux and SAUR (Bouygues) subsidiaries. Sometimes, they succeed and the companies withdraw. But the fact remains that the technical and legal battle is fundamentally one-sided.
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1Que Choisir magazine, n° 352, Sept 1998, p15
2 See, French National Court of Auditors ("Cour des Comptes") Report, "Managing Local Authority Water and Waste Systems", January 1997.
3 Que Choisir, op cit, audit.
4 Final remarks on SIVOM management of water and waste in Fréjus-Saint-Raphael during 1987-1998, Provence-Côte d'Azur Regional Court of Auditors: "To conclude, in view of the above, it could be argued that doubling the capacity of centre was unnecessary."
5 Extract, Parliamentrary Information Report n°3081, by Yves Tavernier, "Funding Water Management", 22nd May 2001: "More generally, two of the largest French industrial groups have their origins in water-management. Their profits from selling water have enabled them to diversify and to set out to conquer the world. Which leads the consumer to speculate on the relationship between levels of water-rates and the service provided."
6 Decision n° 02 D-44, dated July 11th 2002, regarding competition in drinking-water and waste management.
7 source: http://www.ondeo.fr
8 see F.X. Vershave, "Noir Silence", ed. Les Arènes, 2000.
9"The Real Battle for Water" is the french title of Suez brochure 'bridging the divide' and the headline given an open letter by Gerard Mestrallet published in "Le Monde" newspaper, Oct 26th 2001, which formed the basis of a PR campaign by the corporation.
10 Beverly Schuch, Charles Hodson and Charles Monlineaux, Transcription 99062700V56 from CNN Business Unusual, June 27 1999.
11 See, notably, L'Action, a Cameroonian magazine, issue n°178: "Can Water Be Privatised?"
12 Quoted by Municipal Services Project in "Lessons from Argentina, The Buenos Aires Concession", April 2001, p19.
13 Enquiry into Water Prices, 1995-2000, Department of Fair Trade, Consumer Affairs and Fraud, November 2001.
14 See, for instance, Pierre Lascoumes, "Corruptions", Presses de Sciences Po, 1999, p37
15 See "Jurisprudence" on http://www.seaus.org