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Misconduct Taints the Water in Some Privatized Systems

When cities hire firms to run utilities, they seek quality at lower cost. They may get ethics scandals, violations and irate consumers.

The Nation

First of two parts

May 29, 2006|Mike Hudson, Special to The Times

In pursuit of contracts, water companies have lobbied hardest at the local level, treating office holders to dinners, sports tickets, free trips and campaign contributions.

Companies competing to manage Atlanta's water and sewer systems in 1999 stocked their management teams with former city officials and political fundraisers for Campbell.


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The City Council approved the $428-million contract with Suez and United Water in the hope that it would control costs and help the city comply with a federal consent decree aimed at stopping sewage overflows into the Chattahoochee River. The companies shifted hundreds of city water and sewer workers onto their payrolls.

Campbell called it "a great victory for the people of Atlanta," predicting that "every city in America will go to privately run water systems."

A few months later, Suez bankrolled a $12,000 holiday for Campbell and a companion in Paris, where the mayor posed for snapshots at Napoleon's Tomb and the Arc de Triomphe. Suez executives later said they'd intended Campbell's visit as a legitimate business trip, but Campbell met with company officials for just 2 1/2 hours during his five-day stay.

Meanwhile, complaints about water quality and unresponsive service proliferated, peaking in the summer of 2002.

Gordon Certain, president of a north Atlanta neighborhood association, said poor maintenance and equipment failures caused recurrent water main breaks and boil-water alerts, at times producing tap water "the color of very well-brewed tea."

Mayor Shirley Franklin, who succeeded Campbell in early 2002, said United Water and Suez neglected basic repairs, violated federal drinking water standards, failed to regularly flush impurities out of the system and billed the city for work not done.

Company officials blamed old pipes and power outages and said haphazard city records had made it impossible to calculate how much it would cost to run the system before they signed the deal.

The two sides agreed to terminate the 20-year contract in 2003, after four years. By then, FBI investigators were focusing on Campbell's relationships with a wide number of city contractors, including Suez.

In February 2006, during Campbell's corruption trial in federal court, a handwriting expert testified that Campbell had signed secret amendments to the contract that would have been worth as much as $80 million to Suez over the life of the deal. Campbell denied signing the documents or otherwise approving the $80-million increase.

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