Veolia Water Faces Scrutiny after Award of Consulting Contract

Crowd at the Estimate and Apportionment meeting on January 16 at St. Louis City Hall.Photo: Kat Logan Smith

Crowd at the Estimate and Apportionment meeting on January 16 at St. Louis City Hall.
Photo: Kat Logan Smith

ST. LOUIS. – In early November, the St. Louis Water Division awarded a consulting contract to the French company Veolia Water. The contract was to be voted on December 19 at the Estimate and Apportionment committee meeting, but was put off due to concerns raised by various citizens and organizations. The strong backlash was against what some see as Veolia’s checkered history in both social and environmental issues.

St. Louis Water Division chose Veolia out of four companies considered because the costs of maintaining old infrastructure have continued to rise while the population of the city continues to shrink. The consultation aims to devise strategies to avoid raising rates and worker layoffs.

Veolia Water, a French company based in Paris, is the largest private water services and treatment provider in the world, spanning 69 countries and with $16 billion in revenue in 2011. Veolia Water operates 8,500 water and wastewater facilities throughout the world. The company also provides a consulting service called Peer Performance Solutions such as the one they are offering to the City of St. Louis.

The approval of the St. Louis contract was pushed back until the E&A committee meeting January 16, but was removed from the agenda once again because more time was needed to address citizen concerns. This did not stop a large group of protesters from gathering outside the meeting anyway.

The protesters were part of a social media campaign dubbed “Dump Veolia.” The group is composed of people with environmental concerns as well as a Palestinian solidarity group that was protesting against Veolia’s services to contested homes on the Gaza strip.

Veolia Water is a sub-entity of the larger company, Veolia Environnement, which also comprises Veolia Energy (Dalkia), Veolia Environmental Services, and Veolia Transdev. Veolia operated under its former name Compagnie Générale des Eaux, until it was renamed Vivendi in 1998 and then Veolia Environnement in 2003. The original company was created in 1853 in Lyon, under the reign of Napoleon III.

The contract currently up for discussion contains an agreement for the first of a three-phase process. Phase I will cost St. Louis $250,000 for a four-month consulting contract, in which Veolia Water will produce an analysis of ways in which the Water Division can save money. Phases II and III will take place “by mutual agreement only.” These second two phases will involve Veolia assisting in implementing the recommended measures and then monitoring the effectiveness of these measures.

The city was looking to “increase the Water Division’s efficiency and revenues and possibly postpone or lessen future water rate increases,” according to the request they put out over the summer for a consulting company. One of the stipulations of the agreement was that the Water Division will “continue to own and operate the utility.”

The reasons for concern over this contract among citizens are numerous and include fears of layoffs, privatization, and environmental harm. As an employee explained, “the Veolia contract has renewed fears inside the department of layoffs and a private takeover of the utility,” according to The Riverfront Times, the Saint Louis newspaper that has been closely following the story.

The charter of the City of St. Louis does not allow the entity to be operated by anyone other than the city itself, officials have assured.

Matt Demo, Communications Director for Veolia North America, spoke with La Jeune Politique and refuted claims that a private takeover was even a legal possibility. “The city retains ownership of all assets and employees stay public. Not sure why this would even come up, since this is clearly reflected in the proposal as well as the city charter,” Demo said.

Martin Casas, a small business owner in the Tower Grove East neighborhood of St. Louis who is involved in local politics, said that he is “not concerned at all” about the prospect of Veolia privatizing the water division. “I’m more concerned about people losing their jobs,” he said, “as in every corporate arrangement, there is some restructuring that happens.”

Demo assures that layoffs will not happen, however. “Our proposal would save 15% of costs annually- without layoffs,” he said.

Another area of concern among citizens is over Veolia’s environmental record, regarding both Veolia Water and the other divisions within the company. Kat Logan Smith, Executive Director of Missouri Coalition for the Environment, wrote a letter on January 16 addressed to Comptroller Darlene Green, Mayor Francis Slay, and President of the Board of Aldermen Lewis Reed, addressing the organization’s opposition to granting Veolia this contract.

Logan Smith cites several specific examples of the company’s “shortcomings,” including the necessity for settlements in various American cities for overcharging, misleading investors, and disputes about contract performance, including their contract with Indianapolis that was terminated early.

She asserts that “Veolia will assuredly cost us ($250,000 is on the table now) and it may cost us even more, as it has in other cities, where Veolia violations racked up fines and damages for which the cities were liable.”

In response to a question about Veolia’s environmental track record, specifically over accusations of dumping waste in the Mississippi River in New Orleans in 2006, Demo maintained, “our environmental record in New Orleans is excellent.”

Casas added that it was important to raise these questions over Veolia’s conduct because “we have to make sure that the high quality of water we are known for in St. Louis doesn’t go away.”

Dump Veolia Protest SignPhoto: Kat Logan Smith

Dump Veolia Protest Sign
Photo: Kat Logan Smith

In a letter she wrote to President of the Board of Aldermen Lewis Reed on January 16, Comptroller Darlene Green summarized the city’s views on the matter. “The allegations made against Veolia are serious enough that they deserve to be heard in a public forum. Veolia deserves to be heard in a public forum as well.” She urged President Reed to hold public hearings on the issue.

The contract is on the agenda of the next E&A meeting that will take place on February 20.

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