Germany: Berlin’s water privatisation under investigation by EU

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

Corruption risks to undermine adaptation to climate change

In the years ahead of us at least US $100 billion will be spend worldwide for climate change mitigation and adaptation. Transparency International (TI) warns us that efforts to combat climate change risk to be undermined by corruption and mismanagement. This year, TI’s annual Global Corruption Report, sheds its light on corruption risks in climate governance. The report gives a comprehensive overview of those areas where improved governance will be essential to render climate policies successful.

 One of the key areas at risk is adaptation to climate change in the most vulnerable countries. Twenty countries  are expected to be most affected by climate change, all of those countries rank low on TI’s Corruption Perception Index. As a lack of transparency and accountability is an endemic problem in those countries, new investments for adaptation programmes will pose enormous governance challenges.

 Special attention is drawn to the consequences for the water sector in a chapter contributed by the Water Integrity Network (WIN). Climate change adaptation programmes often concern flood control or measures to deal with water scarcity. As such, most of the adaptation money immediately flows into the water sector. For example inBangladesh, one of the most vulnerable countries, nine out of 15 National Adaptation Programmes of Action (NAPA) are directly related to water. The report states that “an important element of any adaptation effort should be the promotion of water integrity at all levels”.

Source: Global Corruption Report : Climate Change

Irish water utility criticized for weak procurement procedure

Most households in Northern Ireland have their water supplied by a government owned company called Northern Ireland Water (NI Water). Recently NI Water has been harshly criticized for a lack of transparency in procurement procedures. The Assembly’s Public Accounts Committee (PAC) published a report in March 2011, which listed all procurement failures over the last five years. Their report shows that the company did not adhere to widely recognized procurement rules to prevent corruption. As a result, many contracts were issued without competition or extended without approval. The chairperson of the PAC, Paul Maskey, said: “This case has undoubtedly undermined confidence in the integrity of the public sector, but it is important to remember that there are good and honourable people at all levels in public bodies.” The report concludes with a series of recommendations to address the weak procurement procedure of NI Water.

Source:  government-news

Development aid: focus on citizen security, justice and jobs says World Bank

Development aid should refocus on strengthening national institutions and improving governance in ways that promote citizen security, provide justice and create jobs, particularly in fragile states, the World Bank’s latest World Development Report (WDR) suggests.

Some 1.5 billion people live in countries affected by repeated cycles of political and criminal violence, and no low-income fragile or conflict-affected country has yet to achieve a single Millennium Development Goal.

While water and sanitation do not play a major role in the report, two of the input papers have links with the sector:

• Resource scarcity, climate change and the risk of violent conflict by Alex Evans – in which the resource scarcity element of the paper is primarily focused on resources required to meet basic needs such as food, land and water.
• Service delivery in fragile and conflict-affected states by Mark Baird – which includes a short case study on post-conflict water and sanitation programmes in East Timor

The WDR stresses that true institutional transformations require time.

It typically takes 15 to 30 years for weak or illegitimate national institutions to become resilient to violence and instability, according to new research commissioned for the report.

The report provides a set of tools that have helped countries make successful transitions and rebuild confidence between citizens and the state. These include transparency measures, budget allocations for disadvantaged groups and credible commitments to realistic timelines for longer-term reform.

A major omission in the report, according to Overseas Development Institute research fellow Jonathan Glennie, is the failure to mention the Paris agenda on aid effectiveness.

Fundamental to the legitimacy of institutions is where their money comes from. So the report is right to focus on the donor-recipient relationship, which muddies the supposed accountability links between citizen and government. It is good that this link (a particular beef of mine) is being recognised in such an important report.

But to engage in a long list of (very welcome) suggestions for how international agencies should reform without mentioning the major international initiative seeking to achieve such reform is strange. While calling for donors to work better together, the World Bank is in danger of looking like it prefers to go it alone, setting up a new group of “WDR principles”.

Related web site: World Bank – World Development Report 2011

Source: World Bank, 11 Apr 2011 ; Ivy Mungcal, Devlopment Newswire, Devex.com, 11 Apr 2011 ; Jonathan Glennie, Poverty Matters Blog, Guardian, 11 Apr 2011

Wikileaks: US political interests in water issues

Wikileaks logo

Leaked diplomatic cables from US embassies published to date by Wikileaks give an indication of US political interests in international water issues. These generally relate to transboundary water disputes and terrorism, corruption, political instability, and US business interests.

Transboundary water disputes and terrorism

When US Senator John Kerry spoke to Pakistan’s President Asif Ali Zardari on 16 February 2010, he suggested that “cooperation on counter terrorism with the Indians could lead to Indian compromises on key Pakistani issues such as Kashmir and water use” [1]. Pakistan claims that the Baglihar Dam in the Indian-administered part of the disputed state of Jammu and Kashmir is obstructing the flow of the Chenab river into their country [2].

A 2006 cable on the bioterror threat in India, quoted experts saying that biological warfare agents would be diluted in municipal water supplies, but could threaten smaller bodies of water such as apartment water tanks, urban water trucks and rural wells [3].

Berlin citizens vote for more transparency in public water deal

This is a follow-up to the entry about the Berlin Water Utility referendum posted on 2nd February 2011.

Berlin’s referendum on February 13^th has successfully passed a law demanding the disclosure of all contracts documenting the partial privatization of the Berlin Water Works. Despite the low budget of the initiators, the Berlin Water Table, and public silence around the elections, enough citizens were mobilized to vote. 25% of Berlin’s voters had to turn up to render the referendum valid. In total 665,000 Berliners went to the polling station, which was 27% of the total voters. 98% voted in favour of the proposed law.

Although the outcome of the referendum surprised all parties, and spread a clear sign for more transparency on public goods, it is unclear what the new law will bring about. The Berlin Senate denies the accusation of the Berlin Water Table and asserts that all documents have already been disclosed. The success of the referendum might motivate the Berlin Water Table to go to the city-state’s constitutional court and demand for the withdrawal of undisclosed contracts as is stated in the admitted law.

Referendum on the disclosure of the contracts of the partial privatisation of the Berlin Water Utility

A referendum on the disclosure of the contracts of the partial privatisation of the Berliner Wasserbetriebe (Berlin Water Utility) will be held on Feruary, 13^th 2011. The referendum touches issues of transparency related to Berlin’s water supply utility.

In 1999 the Berlin’s state government sold 49,9 % of the Berliner Wasserbetriebe to RWE and Vivendi (today Veolia). The initiative Berliner Wassertisch, launched in June 2007, has instigated a referendum to pass a law that requires the disclosure of all contracts and agreements related to the partial privatisation of the Berliner Wasserbetriebe. The proposed law would also apply to previously signed contracts and agreements. If they are not disclosed within a year after the law becomes effective, these previous contracts would be rendered invalid.

Berlin’s state government maintains that all contracts have been made public and that the demands of the Berlin-based initiative have therefore already been met. Moreover, Berlin’s House of Representatives states that all contracts have been disclosed and refers to http://www.berlin.de/sen/finanzen/ for access to that information. But the House of Representatives shares the Berliner Wassertisch concern as they, with hindsight, consider the partial privatisation a mistake. However, they also point out that the current draft version of law would be unconstitutional.

In the past, Berlin’s operational water supply utility, the Berliner Wasserbetriebe, kept a neutral position in the discussion about the disclosure of contracts. Veolia, one of BWB’s shareholders, has not given an official statement but, when consulted, referred instead to the statements of the Berlin’s state government and the Berlin House of Representatives. According to Veolia, all contracts related to the partial privatisation of BWB have been made available to the public according to the process of the amendment to Berlin’s freedom of information act and thus the proposed referendum would be deemed unnecessary.

Sydney Water found maintaining a corruption culture

Sydney Water, a provider of drinking water, wastewater and storm water services in Australia, has been accused of maintaining a culture of corruption and an enquiry has been opened.

The New South Wales Independent Commission Against Corruption (ICAC) has opened an enquiry against Sydney Water following that employees would expect or request bribes before giving out certificates. In some cases up to $150 were required from constructors before being allowed a pass. An employe also admitted to acception up to 30 bribes in his 45 years at the compay.

Moreover, as the enquiry is underway, the ICAC has been confronted with the refusal by Sydney Water to hand over certain documents thought to be determining in confirming some of the corruption cases. Some records from before 2001 have even been deleted but Sydney Water representatives involved in the case deny that this links to the corruption allegations.

Sources

ABC News Australia, Jamelle Wells, 6th September 2010, http://www.abc.net.au/news/stories/2010/09/06/3003375.htm

Yahoo! 7 News, Sarah Malik, September 17th, 2010, http://au.news.yahoo.com/a/-/latest/7966834/sydney-water-ignored-corruption-claims/

The Sydney Standard, Malcolm Brown, September 30th, 2010, http://www.smh.com.au/nsw/icac-scolds-sydney-water-over-deleted-corruption-files-20100929-15xiu.html

Strategic evaluation of the Water Integrity Network: call for expression of interest

The Water Integrity Network (WIN) was launched in 2006 and its secretariat is hosted at Transparency International in Berlin. WIN is a multi stakeholder network that aims to fight corruption and promote integrity in the water sector to help reduce poverty in the world.

The strategic evaluation aims to reach conclusions concerning the adequateness of WIN’s strategy and work in an evolving policy environment. A key outcome is expected to be that clear conclusions are drawn concerning the intervention logic of the network and that concrete recommendations are formulated and supported by various stakeholders to improve this intervention logic or strategy for impact in relation to work already done and ongoing, as well as the mobilization of the capacities, partnerships and financial resources for scaling up.

The evaluation is expected to take place between 1 October and 15 December 2010. The final report should be available no later than 31 January 2011.

The team of consultants for the evaluation should represent comprehensive knowledge and experience in water sector issues, governance and anti corruption issues, financial management, and be in a position to deal with cultural perspectives in different parts of the world. The team should include the capacity to communicate in several of the UN languages including at least English, Spanish and French.

The total combined number of local and international consultant days is estimated at 75.

Deadline for receipt of expressions of interest: 10 August 2010

For submission details and the terms of reference go the WIN web site

Urban catastrophes: the Wat/San dimension

A lack of clean water and sanitation in burgeoning slums could trigger a complex set of humanitarian crises says a new [forthcoming] paper, Urban Catastrophes: The Wat/San Dimension [1], by the Humanitarian Futures Programme (HFP) of King’s College London, which keeps an eye on possible crises that could emerge in the not too distant future.

Using plausible but fictitious scenarios set in the slums of Dhaka, capital of Bangladesh, and the city of Sao Paulo, Brazil, the paper shows how water scarcity brought on by climate change and large numbers of people in urban areas could lead to water stress, especially in slums, where shortages can stoke conflicts and an outbreak of a new and virulent influenza.

Simultaneously, the new biennial report by UN-HABITAT, the State of the World Cities 2010/2011: Bridging the Urban Divide, notes that around 3.49 billion people – more than half the world’s population – now live in urban areas, of which 827.6 million are slum-dwellers. The global slum population will probably grow by six million each year, pushing the total number to 889 million in another 10 years.

Urbanization can also provoke water-quality problems, leading to outbreaks of waterborne diseases like cholera. An outbreak that began in the slums of Luanda, the Angolan capital, killed over 2,800 people in 2006, when only 66 percent of Angola’s urban population has access to safe drinking water, according to the UN.

Water shortages in slums could open the door to corruption, conflict and an increased risk of disease, setting off a range of complex humanitarian crises. Many of these factors are already evident and operating in slums across the world, the authors of the HFP report note.

Corruption

“As with any valuable good, the provision of clean water and sanitation facilities in slums is an attractive target for corruption, greed, collusion and exploitation,” the HFP researchers pointed out.

In areas where there is a lack of accountability and political oversight, “resulting in collusion between government officials and private-sector water providers”, slum dwellers have to pay a very high price for water, and sanitation falls by the wayside.

The result is that the civil society is weakened and ability of slum dwellers and external players to change the system and help the residents out of poverty is curtailed, the HFP report commented.

Conflict

There is also evidence that water shortages threaten increased violence and conflict, especially in “high-density, multi-ethnic, politically unequal environments of concentrated poverty, as is often found in many slums,” the HFP report said, citing reports of water-related protests and conflicts in Bolivia, Pakistan and India.

Risk of disease

As larger numbers of people move into already crowded areas, they are often forced to live in unacceptably poor sanitary conditions, sometimes even at close quarters with animals, giving rise to opportunities for new disease vectors, noted the report. In slums located in tropical climates, the chances of new forms of diseases evolving are high.

What to do

Randolph Kent, who heads HFP, pointed out that the projections were for 20 to 30 years in the future, “but the idea is to provide enough time to countries to plan ahead”.

He suggested setting up low-tech, cheap service delivery systems – for instance, to provide water, use segmented flexible rubber hoses that can be easily connected and disconnected. The hoses are produced by several independent companies, can be serviced and maintained by unskilled technicians, and offer plenty of design options.

For waste removal, the report suggested an improvement on the traditional chamber pot – use antibacterial plastic buckets that can be fitted with mechanically sealing covers, as on commercial compost bins. The bucket can be carried either by hand or taken by cart to a dumping point like a municipal sewer, then cleaned by hand or at a semi-automatic hot water and bleach station, and delivered to the family for re-use.

[1] The “Urban Catastrophes: The WatSan dimension” report is one of three outputs of a USAID-funded study of key future crisis drivers. The reports will shortly be made public on the HFP website.

Source: IRIN, 23 Mar 2010