We earlier reported on the vote of Berlin’s citizens demanding the disclosure of contracts related to the partial privatization of the city’s water supply utility. A referendum on this issue was held last February. So what happened after the referendum and the publication of so-far undisclosed documents?
At present, the case is under investigation by the European Commission. They were urged to look into the matter by Transparency International Germany and Berlin’s Consumer Centre. Mid June a letter of complaint, signed by both organisations, was send to the Commission. Ahead of this, several jurists studied the newly disclosed contracts and agreements. Their investigation exposed two misconducts which are possibly in conflict with the European law on subsidies and public procurement.
As the letter explains, a so-far undisclosed clausal of the original contract states that the private shareholders have to be compensated for any profits lost due to unforeseen amendments of the contract. Compensation should be granted either by reducing the Berlin Senate’s share of the profit or, if necessary, through public funds. In line with this clausal, the private shareholders received at least 100 million euro compensation from the Berlin Senate. The EU Commission currently verifies whether this opposes the European law, which forbids subsidies to private companies.
The second suspected misconduct concerns the procurement of the partial privatization. Based on the disclosed documents, it can be assumed that there has not been an open tender to award the contract. The EU Commission currently examines whether the followed procedure has been in conflict with the European law on public procurement, which demands that “each potential actor has equal access to take over thus-far public services”.
When it turns out that the raised complaints are indeed in disagreement with the European law, this can have far-reaching consequences. The EU could oblige the Berlin Senate to enforce recovery of surplus profits made due to the aforementioned clausal. Moreover, the current contracts would have to be modified and might even need to be reversed.
Source: TI Germany