Pressure Mounts on Executive Constantine to Take Action on Veolia

by Susan Koppelman

French multinational corporation Veolia is the largest privatizer of water in the world and the largest privatizer of transportation in North America, with appalling labor practices and a long list of human rights violations, including profiteering off of inflated water prices and Israeli apartheid. In King County, Veolia Transportation Services has been contracted to operate Metro Access paratransit service for folks with disabilities and the elderly since 2008.

Successful campaigns against Veolia on account of its human rights and labor violations have cost the company more than $20 billion in lost contracts – an amount comparable to its debt load, which caused Fitch and Moody’s to downgrade its credit ratings in recent years.

In order to distance its corporate logo from its corporate debt, Veolia has engaged in several restructuring and rebranding efforts throughout the years. Most recently, Veolia Environnement, now Veolia Group, entered into a joint venture with French financial institution Caisse des Dépôts to consolidate all of its transportation contracts within a new company that would be 50% owned by the French bank. A March 3, 2011 press release marks the completion of the restructuring in France and the creation of a new company Veolia Transdev, now simply called Transdev. [1]

In a July 15, 2014 letter to King County Department of Transportation in Washington State, Veolia Transportation wrote: “Veolia Transportation will be going through a name change and rebranding process… Starting in mid-August of 2014, our parent company’s name, Transdev, will become our name. There are no other changes—no changes in ownership, in management, or in any other aspect of our operations.”

But the name change of the subsidiary from Veolia Transportation Services Inc, a Maryland company, to Transdev Services Inc, undeniably represents a change in ownership.

Veolia Transportation Services changed its name from that of a subsidiary wholly owned by Veolia Environnement / Veolia Group to that of a new subsidiary wholly owned by Transdev, which is presently only 50% owned by Veolia Environnement / Veolia Group and 50% owned by a French financial institution. This is a change that King County and all entities contracting with Veolia Transportation Services need to know about.

If it is recognized that Transdev Services is a new entity, this suggests that when Veolia Transportation Services ceased to exist, all of its contracts should have been reopened to a public bidding process.

Initial investigation seems to suggest that Veolia’s claim that Transdev was its parent company is false as well.

Veolia Transportation Services, Inc, as stated in its contract with King County was a “wholly owned subsidiary of Veolia Environnement”. At no point between the initial contract signing with the county and the July 15, 2014 letter did Veolia Transportation ever issue the county documentation that its parent company had changed.

What does this mean for King County, WA?

In 2008 Veolia caused a huge upset to the King County labor community. Veolia replaced a long-time union-represented subcontractor, leading 140 union-represented employees to lose their jobs or take pay cuts. The Amalgamated Transit Union Local 587 had just negotiated new contracts the previous year to increase the wage cap from $19.90 to $23 over the course of 4 years. Under Veolia, these victories were rolled back, with Metro Access drivers’ wages capped at $18 since 2008.

According to a July 30, 2008 article in the Seattle Times, “Metro’s general manager, Kevin Desmond, estimated there would be a $1 million annual savings” from the switch to Veolia. But for the last four years, the County has paid at least $7 million more per year than the amount that was to represent $1 million in annual savings.

How could this happen? Local activists are still looking into why Metro agreed to a number of changes to the initial contract, including such a spike in costs. Other contract changes cut training hours in half and reduced vehicle maintenance to save $179,091. All of this was decided without reinstating previous pay scales.

Significantly, the contract change that added $212 million to the contract over seven years was signed after French Veolia subsidiary Veolia Transport had already ceased to exist. So, while Veolia claimed that it was getting out of the transportation sector entirely, it was nonetheless moving aggressively to renew and transfer transportation contracts held by its former subsidiaries abroad to Transdev. First it put off reporting on the merger in France for years; and then when it finally announced the merger years later to entities it was contracted with in the U.S., it falsely claimed, “same company, same leadership, same ownership – just a new name.”

It remains to be seen whether there is any legal recourse to punish Veolia for its fraudulent misrepresentation and overcharging of King County. Allegations of labor misconduct also need to be investigated.

This past March 1st, Seattle/King County residents were subject to fare increases for public transportation. Fare increases were double for Access users compared to bus fares for students, seniors or the general population. In light of Veolia’s price gauging across sectors globally, in many cases making access to water unaffordable for local populations, it is fair to ask the question whether Veolia may be behind the double fare increase for Access users in King County.

Too big to fail?

This is not the first time that Veolia has rebranded in order to escape its debt or its deteriorating reputation.

In 1996 over a third of the directors of the Executive board of Compagnie Générale des Eaux were under investigation for corruption and “misappropriation of public funds”, contributing to the 1998 name change to Vivendi. In 2002, in the shadow of CEO Jean-Marie Messier’s conviction for fraud, the company changed its name once again, this time to Veolia.

This also is not the first time that Veolia has been hostile to labor.

In 2012 in Arizona the National Labor Relations Board (NLRB) found Veolia guilty of “refusing to meet with the Union for purposes of negotiating a successor collective-bargaining agreement, engaging in regressive bargaining, and bargaining with no intent of reaching an agreement,” among many other practices that are illegal under the National Labor Relations Act. The same year the NLRB intervened to quash Veolia’s illegal anti-union tactics in Las Vegas and Connecticut.

On March 5, 2015 a Boston jury took only ten minutes to dismiss Veolia’s frame-up charges against a local union leader; but the four union leaders Veolia fired in Boston are yet to be reinstated. (Boston Mayor Marty Walsh’s Vendor contract with Veolia gives the City full and sole authority to settle all grievances – demand Mayor Walsh reinstate the fired USW leaders 8751 by contacting him at mayor@Boston.gov or 617-635-4500).

Veolia’s repeated lying and embezzlement from the public clearly demonstrate that the company’s allegiance is to its shareholders and not the communities it serves. Of course, this is one of the main problems with the privatization of public services.

At a time when the US Congress is trying to fast track the Trans-Pacific Partnership (TPP), it is crucial that the public understand how large corporations like Veolia are already getting away with highway robbery. Agreements like the TPP will only tip the scales further in favor of massively powerful corporations.

A 1996 case concerning “Argentine affiliate company Aquas del Aconquija, controlled in substance by [Veolia predecessor] Vivendi despite its separate legal personality,” offers us a cautionary tale of privatization and free trade agreements that supersede national sovereignty. When consumer groups in the poor province of Tucuman, Argentina took legal action to halt the increase in water tariffs and a regulatory body ordered the company “to pay fines amounting to several million for water quality failures and contractual non-compliance,” Vivendi took the province to arbitration using the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID). In 2010, concluding the longest running case before the ICSID, the court ultimately sided with Vivendi, despite its contractual noncompliance, determining that the company had a right to make a profit and awarding the company US$105 million in damages, an amount nearly equal to ten percent of the public debt of Tucuman province.

It is anticipated that the TPP will further entrench the right to profit for corporations like Veolia that exist solely to make profit. In order to protect our public services, it is essential that we stop corporations like Veolia when we learn about them, that we create mechanisms to hold powerful corporations and their CEOs accountable, and that we work to remunicipalize public services that have been subcontracted.

If Seattle/King County residents are successful in creating accountability mechanisms and challenging Veolia’s lies, this could set a precedent for Transdev contracts throughout the U.S.

At the very least, it’s a cautionary tale as to why we need to resist the privatization of our public services and the TPP.

Opposing Veolia

In King County, the Transit Riders Union and Stop Veolia Seattle, in coalition with labor, anti-privatization, disability justice and Palestine solidarity groups, issued a letter to Councilmembers last year demanding that the County end the contract with Veolia. Reasons include Veolia’s poor service, low wages, erosion of labor protections, a 50% reduction in training hours and cut backs on vehicle maintenance, while adding $7 million in annual costs. The global context of Veolia’s profiteering from inflated water prices and Israeli apartheid is of additional concern.

Now activists are also insisting that King County hold Veolia to account for its fraudulent misrepresentation of its restructuring to the county.

In September 2014, the MLK County Labor Council – the local affiliate of the National AFL-CIO representing over 150 labor organizations and 75,000 workers – voted unanimously to pass a resolution to end the contract with Veolia, preclude Veolia from bidding on future contracts and to bring Metro Access in-house.

On March 18, Chair Larry Phillips of the King County Council sent a letter to King County Executive Dow Constantine signed by the five Democratic members of the nine-person council, urging the Executive to investigate “serious concerns for many aspects of ACCESS service, including rider experience, labor protections and wages, and potential cost overruns to our government.”

If you are concerned by Veolia’s profiteering off of our tax dollars while gutting this essential service for community members with disabilities and the elderly, let your Councilmember and Executive Constantine know.

The contract is up for renewal in 2018, but Veolia and Transdev have some answering to do now

 Susan Koppelman is a Seattle based mother and activist with Stop Veolia Seattle.

To contact the Council and the Executive:

King County Councilmembers may be reached at 206-477-1000 or council@kingcounty.gov

King County Executive Constantine may be reached at 206-263-9600 or kcexec@kingcounty.gov

 

[1] Veolia Environment and Caisse des Dépôts “announce the creation of Veolia Transdev today, the result of the combination of their respective subsidiaries, Veolia Transport and Transdev.” The press release is clear that Veolia Transdev is a new company that is the result of a merger, and that “Veolia Transdev is owned jointly by Veolia Environnement and the Caisse des Dépôts.” Veolia Transdev has since changed its name to Transdev to reflect Veolia’s planned departure from the field of transportation entirely. The Transdev that is jointly owned by Veolia Group today represents an entirely new entity than the Transdev that was wholly owned by Caisse des Dépôts, which preceded it.

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