For Veolia, Flint is just the tip of the iceberg

French multinational Veolia, the largest private water corporation in the world, is going through a rough patch as the world is wising up to its nefarious ways. Involved in numerous scandals across the globe, Veolia first entered the global spotlight in early 2016, when it was implicated as a culprit in the Flint water crisis.

The company was hired a year prior by the city to help improve drinking water quality following complaints regarding taste, odor and discoloration after Flint switched from using Detroit’s water supply to using water from the Flint river as a cost-cutting measure in April 2014. It was later revealed that the river water corroded the city’s lead pipes, causing an increase in lead levels in the water so as to qualify it as “toxic waste" according to EPA classifications.

Despite the obvious negative fallout resulting from the switch, Veolia published a report in March 2015 and even made a public presentation claiming the city’s water was safe to drink in accordance with Environmental Protection Agency (EPA) regulations. The report only mentioned corrosion control measures to rectify discoloration without once referring to elevated lead levels, despite the fact that the EPA had already identified lead contamination as a serious hazard by then.

In June this year, a lawsuit was issued against Veolia, along with a formal complaint by Michigan’s attorney general Bill Schuette. The complaint stated that due to its negligence, Veolia “totally failed to identify the problem, made no effort to understand the root cause, and recommended measures that made the situation far worse.” In fact, the lawsuit argues the report’s claims were fraudulent, that Veolia knew the findings were false and allowed the situation to worsen. Veolia was quick in refuting the allegations levied against it in a press statement, calling the lawsuit “outrageous” and the allegations “false, inaccurate, and unwarranted.”

With Flint, we are opening a new chapter of corporate malfeasance. If the traditional boogeymen of yore were the likes of Big Pharma, Big Oil or Big Agro, Veolia shows the devil-may-care attitude of a corporation tasked with the most basic on needs: water supply. And make no mistake, Veolia’s crooked ways do not stop in Flint.

While the outcome of the Flint lawsuit is yet to be determined, Veolia’s record of scandals in my home country of Lithuania offers another revealing glimpse into the company and its subsidiaries’ modus operandi. In 2002, Veolia, through its subsidiary Dalkia, won a 15-year lease agreement transferring the heating infrastructure of Vilnius and nine other cities to the French company. When in March 2015 Remigijus Šimašius replaced Arturas Zuokas as mayor of Vilnius, the new administration called foul on the details of the lease agreement and launched an investigation into the past and present activities of Veolia/Dalkia. What they found – Lithuania’s arguably biggest corruption scandal - was harrowing.

That contract was exposed as being the result of corruption and palm-greasing, and was enforced through intimidation and violence in what amounted to nothing short of a parallel state. Then-mayor of Vilnius, Arturas Zuokas, who was supposed to oversee the company’s dealings, was actually on the take from a local Dalkia subsidiary called the Rubicon Group. In what became known as the “black accounting” case, Rubicon was accused of regularly bribing politicians, including Zuokas whose name was listed in illegal accounting books as “Abonentas” (the Subscriber), with sums in the six digit numbers. Although the parliamentary commission involved in the investigation provided an official report asserting that Artūras Zuokas and “Abonentas”were one and the same person, the main investigative body dismissed the report’s findings on the basis that the proofs cited could not be considered “direct evidence.” Thus, after six years of investigation, the case was dropped due to a lack of evidence.

Next, Veolia/Dalkia was found to have manipulated the prices of Lithuania’s biofuel market to artificially increase the price of heating, pad its bottom line and cause direct harm to all Lithuanian consumers. As a consequence, the company was slappedwith a €19 million fine. A Vilnius councilman who called out Zuokas’ cozy relationship with the company was threatened by one of Dalkia’s main people in Lithuania to keep mum or else he would wind up floating in the river “ belly up”.

And when Vilnius decided not to extend the contract (due to expire in 2017), Veolia retaliated by accusing the Lithuanian government of arbitrarily changing the laws and their interpretation. Claiming foul play, the company immediately filed an international arbitration court case, demanding 100 million EUR in compensation for damages.

Whatever may come off Veolia’s demand, it is abundantly clear that the company has spun a web of deceit in its international involvements. Ranging from a blatant failure to fulfill its professional duties in the Flint water crisis to resorting to mob-like practices in the case of Lithuania’s heating grid, the company has proven its unreliability as a service provider and unscrupulousness in the face of opposition.

And then, for all its hard work, Veolia was crowned in July 2016 “Responsible Business of the Year” by Business in the Community, a British charity that promotes responsible business. Commenting on the award, CEO of Business in the Community Stephen Howard said “This year we have seen some profound examples of what business can achieve when it puts responsibility at the heart of its operations. I congratulate Veolia for the practical action it has taken to build a fairer world and more sustainable future.”

Tomas Liutkus

Tomas is an EU affairs consultant based out of Brussels, specialised in evaluation and performance audits

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