Veolia defends record as critics line up

AN Indianapolis lawyer suing Veolia for improperly billing water customers says Winnipeg should be very careful in doing any deals with the company.

"They get you to sign on the dotted line and once they are in and running the show, then they start complaining about unforeseen costs," said Peter Kovacs. "Then, they get you back to the bargaining table and extract a very substantial premium."

Kovacs filed a class-action lawsuit two years ago on behalf of 250,000 customers of Indianapolis's water utility. It alleges Veolia habitually overcharged customers by overestimating their water usage.

Veolia has managed that city's beleaguered drinking-water system since 2002. The utility is about $1 billion in debt, some of it incurred before Veolia's time, and is facing huge repair and maintenance costs along with steep rate hikes. A 35 per cent rate increase was proposed last fall after several years of rate freezes. Last summer, Veolia's deal with the city raised the ire of state regulators who criticized the city's lax oversight and the system of management fees Veolia is paid.

Some of that bad news cropped up at Winnipeg city hall Wednesday when city council approved a deal to hire Veolia to design and build $661 million in upgrades to two sewage-treatment plants and help manage them for 30 years. The city says the partnership will save 10 to 20 per cent on a $1.2-billion tab to upgrade and operate the plants.

Opponents of the plan -- some councillors, think-tanks, the city workers' union -- said the details of the deal are too secret and the city hasn't considered Veolia's questionable corporate reputation.

But Mark Sanderson, Veolia Canada's vice-president of major projects, said much of what he heard about his company was one-sided and misleading.

He said Winnipeg will retain ownership and control of the sewage plants and all Veolia will be providing is its specialized engineering and scientific expertise in building complex projects and seeing them through for decades.

He pointed to the successful work Veolia has done in Walkerton, Ont., where tainted water killed seven people 10 years ago. Since then, Veolia has been hired to manage both the sewer and water systems and Sanderson said it's been a positive partnership.

City officials in Moncton, N.B., say they've had a good relationship with the company for more than a decade.

Veolia dates back to 1853 when its French forerunner was created and later hired to supply Paris with water.

Today, the French multinational employs more than 300,000 people worldwide and earned $782 million (Cdn) in profits from $47 billion in revenue last year. It designs, builds and manages water, sewage and transit systems in dozens of cities -- everything from Houston's new LRT lines to the drinking-water system in Dover, England.

But Veolia has been dogged by controversy. Critics often point to many cases in the last two decades where Veolia staff allegedly bribed city officials or were involved in questionable financial transactions, especially in France.

It's also been criticized for having a poor environmental compliance record and it's been mired in several lawsuits involving the cities it serves.

In Australia, Veolia was part of a team that won a contract to run Adelaide's waterworks in the 1990s. According to the Sydney Morning Herald, not long after, Adelaide experienced a powerful sewage smell that became known as the "big pong."

A government report found the problem stemmed from equipment failures and inadequate monitoring.

In New Orleans -- another example Winnipeg city councillor's heard about -- officials blamed a subsidiary of Veolia for illegally discharging sewage into the Mississippi River on dozens of occasions.

Veolia officials said the spill in New Orleans was the result of an electrical fire and the city is currently in "perfect environmental compliance."

"We are consistently exceedingly good at environmental compliance, 99.6 per cent or 99.8 per cent," said Scott Edwards, executive vice-president of communications.

maryagnes.welch@freepress.mb.ca

Republished from the Winnipeg Free Press print edition May 21, 2010 A4