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THE fifth estate: Dead in the Water
France> Printer Version
Broadcast
March 31, 2004
FRANCE: REVOLT IN THE
BIRTHPLACE OF WATER PRIVATIZATION
Privatized water has been well established in France since the days of
Napoleon. By the time then U.K. Prime Minister Margaret Thatcher and U.S.
President Ronald Reagan began calling for more privatization, three large
companies already supplied water to more than half of the French population.
The business of water started with the realization that there was money
to be made delivering it to places where people needed it the most - homes
and factories.
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Suez and Veolia Environnement (formerly Vivendi Environnement) are France's largest water companies.
Suez’ roots in the water business go back to 1822. It now has more than 125 million customers around the world.
Veolia provides water and wastewater services to more
than 110 million people around nearly 100 countries. During the nineties,
their revenue from water more than doubled to $12 billion a year.
Veolia director, Antoine Frérot: We
have 150 years experience. We are working for between 6 and 7,000 cities
in the world and we get a lot of experience. We could propose a lot of
best practices in water or waste management to every city in the world.
(read an interview with Antoine Frerot online)
Both companies are global empires with resources that can overwhelm most
of the municipalities they do business with.
THE MICHEL INTIMIDATION
Jacques Michel is a former regional director of Lyonnaise des Eaux (Suez).
He retired in 1990 at the age of 60. Building on his experience negotiating
water contracts at Suez, in 1990 he started his own consultant firm called
Assistance et Contrôle des Service Public (ACSP). Its business was
to advise cities on their private water and sewage treatment contracts
with a view to getting them a better deal. His intention was to show that
cities were being overcharged.
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Most of the waterworks in this area were/are controlled by a company called SA Compagnie des Eaux et de l’ozone, an affiliate of Compagnie Generalé des Eaux (CGE), later called Vivendi and now Veolia. The regional director was a man named Régis Calmels.
DIRTY DEALINGS IN FRANCE
In July 1994, arsonists attempted to burn down Michel’s home in
Béziers, France. While he and his wife were away, the arsonists
poured gasoline under the side door of his home. The fire roared up an
interior stairwell and, were it not for an alert neighbor who called the
fire department, the entire house would have been destroyed.
Jacques Michel: My family
was very afraid because we had young grandchildren at the time.
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Calmels decided in the spring of 1994 that Michel’s activities were becoming prejudicial to his company or, as one witness later said, were “getting in the way”. A fellow water executive, Louis Cunnac referred him to Bernard Cayron, who was the manager of a Paris-based company called la Société Export Trading Services. This company specialized in selling “special equipment” (weapons) to the French ministries of defence, the interior and justice and also offered security services. Cayron, a military veteran, had previously done some contract work for Cunnac and Vivendi that involved surveillance and screening for bugs.
In July 1994, Calmels met with Cunnac and Cayron at the Hôtel St. James in central Paris where they discussed, as court judgments later concluded, a plan to intimidate Michel into closing down his company.
CAUGHT IN THE TRAIN STATION
Their plans began to unravel on Sept. 1, 1994. On that day, the French
police anti-gang squad received information from a source that two men
planned to commit a robbery that afternoon. Police set up surveillance
and followed the men to the Gare de Lyon where they arrested Hervé
Jaubert, who had retired in 1993 as a French army captain, and Stéphane
Pommier, also an army veteran.
The two men were carrying two bags containing wigs, gloves, handcuffs, a roll of tape, a sawed-off shotgun, a 9mm pistol, shotgun shells, brass knuckles, sunglasses, a truncheon or blackjack, smoke and tear gas grenades. They also carried 19,000 francs in bills of 500 francs and two train tickets to Béziers.
A search of Jaubert’s flat turned up a loaded Smith and Wesson 357 revolver plus 50 cartridges, a Mossbert 12-gage shotgun, a Remington pump action shotgun with shells and 2 two-way radios.
Under interrogation, Jaubert eventually told police that
he was on is way to Béziers to intimidate Jacques Michel on behalf
of a client whose name he claimed not to know. He said that he had been
contracted in July 1994 by his former employer Cayron to conduct surveillance
and intimidate Michel. His payment would be 40,000 francs cash. He claimed
he hired Pommier to help him because he is a big intimidating guy. Pommier
confirmed Jaubert’s story.
When Michel was told about the intimidation plot, he said he did not know
why anybody would want to threaten him. Police asked him what he did for
a living. He told them about his work as an adviser to cities in the Var
on their water contracts. He said that he had discovered “overbilling”
by the water company.
Police arrested Cayron who originally denied any knowledge of Michel. But eventually he admitted that Cunnac had asked him to investigate Michel. He claimed that on his own initiative he hired Jaubert to investigate Michel as a business favor to CGE. He said the two thugs had carried out surveillance on Michel’s home in July or August and that he had written a report about this, which he mailed to Cunnac. He claimed that that marked the end of the affair and he paid Jaubert out of his own pocket. Whatever Jaubert and Pommier were up to on Sept. 1, 1994, was at their own initiative.
CALMELS IMPLICATED IN THE PLOT
Phone records showed telephone calls between Cayron and Calmels.
Calmels admitted that he had met Michel during contract renegotiations with the city of Sainte Maxime in the Var. He even visited Michel’s home to give him documents. Initially, he claimed he never heard of Cayron or his company and never intended to investigate Michel, never mind intimidate him.
Then he changed his story. He admitted he had called Cunnac to ask him if he knew anybody who could investigate Michel. Cunnac gave him Cayron’s number. He said however, that he was never able to contact him. He admitted he “toyed” with the idea of investigating Michel’s lifestyle. But he claimed he never followed through.
Cunnac said he had been contacted by Calmels about finding somebody to investigate Michel. He had told him that Cunnac was worried about the role Michel was playing in audits that were being performed in the Var region on water contracts and that Michel was “getting in the way”. Cunnac stated that there was a plan to intimidate Michel hatched by Calmels, Cayron and Jaubert. He said the plan was first discussed at a meeting at the Hotel St. James Albany in Paris in July, 1994. He said he, Calmels and Cayron took part in the meeting and agreed to pay Cayron 100,000 francs cash. He denied receiving a report from Cayron and noted that if there was a report it would have been sent to Calmels because he ordered the operation.
Cunnac later changed his story after meeting with the deputy director general of CGE – the number two man in the company. Cunnac claimed Calmels was not at the hotel meeting. But the judgment goes on to say that this change has no credibility because Cunnac and Cayron had frequently discussed the “Projet Michel” together and there would be no point in meeting at the hotel unless Calmels was present.
CHARGES LAID AGAINST WATER EXECUTIVE
Police charged Cayron and Calmels in 1994 with consorting with criminals
intent on committing crimes, to wit, the intimidation and extortion of
Michel.
Vivendi (Veolia) quickly shipped Calmels off to the Philippines. He is now working in Indonesia for Vivendi (Veolia).
Both men were convicted at trial, fined and sentenced to two years in jail.
The convictions were appealed. Both men lost and the appeals court imposed harsher sentences of three years in jail and increased the fines.
They appealed two more times and their convictions were
upheld.
But Calmels was not present at the final appeal. So he was given a new
hearing. This time he was declared not guilty owing to the fact that Cunnac
had changed his story about the Hotel St. James Albany meeting. This,
the court ruled, created enough doubt to reverse his conviction.
He is still working for Vivendi (Veolia) in Indonesia.
The conviction of Cayron was upheld.
Jaubert and Pommier were both found guilty and sentenced to two years in prison.
Police have never discovered who tried to burn down Michel’s home.
Michel continues to advise cities on their water contracts
and his business is thriving.
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VIVENDI'S LAWSUIT AGAINST MICHEL
In 1996, Vivendi’s affiliate SA Compagnie des Eaux et de
L’Ozone sued Michel for 2 million francs claiming he libeled the
company in an audit report on water contracts at Port Vendre in the district
of Côte Vermeille. Michel wrote in his report that the “city
should not allow a mafia-like exercise of power by companies no matter
how great their political or financial powers.” The Vivendi company
took offence to the reference to the mafia.
Michel won the case in a judgment delivered in March 1999. The judges noted that his statement reflected current public opinion in France about the water companies and also reflected Michel’s own experience having been the victim of a crime perpetrated by a director of the water company that was suing him.
In cities around France, the revolt against powerful water companies is growing. The protest is rooted in several proven cases of corruption and illegally elevated water rates.
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GRENOBLE: OVERCHARGING CUSTOMERS
The city of Grenoble ran one of the country’s best public water
utilities for a hundred years. That was until 1989 when the French water
company Suez made Grenoble’s mayor, Alain Carignon, an offer he
couldn’t refuse. In exchange for contracting out the city’s
water network, Suez helped finance Carignon’s mayoral election campaign.
For his part in the deal, Carignon went to jail.
In 1999, a court concluded that Suez had fraudulently overcharged its customers in Grenoble for years to recover the cost of the takeover. Raymond Avrillier led a citizens’ protest against the private water deal.
Raymond Avrillier: What happened at the time of the privatization in 1989 is what happens in all the French-style privatizations when public utilities are out-sourced, in French cities and foreign ones. There’s a huge increase in prices.
Grenoble took back its water utility in 1999. Their water fees dropped dramatically and are now among the lowest in France.
TOULOUSE: HIDDEN TAXES
In Toulouse, artist Anne Bouzinac is using Jacques Michel’s advice
to fight for the return of that city’s water utility to public ownership.
She is president of the local “Eau Secours” a network of anti-water
privatization groups around the country.
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Anne Bouzinac: Our goal here in Toulouse is the return to a public service. Because you have to realize the official figures show that the cost of a publicly owned service is, on average, twenty per cent lower than a contracted out service
CASTRE: QUESTIONABLE ACCOUNTING
In Castre, a small city east of Toulouse, there is another citizens’
protest movement over water rates. Their complaint is a common one - questionable
accounting that results in what they consider price gouging. Castre’s
water was privatized in 1991 through a 30-year concession to Suez Lyonnaise
des Eaux.
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After a tribunal concluded that Castre’s water rates were illegally high, Castre mayor Pascal Bugis and his council voted to cancel its contract with Suez in June 2003. The transfer back to the city is set to happen in spring 2004. There is still a debate over whether Suez should repay the users for the money it overcharged them.
This citizen and protest organizer explains. “We’ve seen the company’s methods and we don’t want it to stay here and continue to do what it’s doing, while it more or less hides its practices. We would prefer a return to a public service.”
the fifth estate: DEAD
IN THE WATER
Broadcast on the
fifth estate Wednesday, March 31 2004
on CBC-TV at 8PM
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