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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 March, a jury acquitted him of taking bribes but convicted him of three counts of tax evasion, charges that prosecutors had supported with testimony about his extravagant lifestyle and trips paid for by Suez and other companies.

Suez officials say that their dealings with Campbell were proper and that he did not receive favors for helping the company on its contract.


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Atlanta runs its own water system again and is spending $3.9 billion to upgrade the water-sewer infrastructure.

Atlanta and other cities looked to private companies after years of mismanagement and budgetary neglect left their public systems in poor shape.

In 1993, the failure of Milwaukee's waterworks to screen out a parasite led to a flu-like outbreak that sickened 400,000 people and killed more than 100.

Two years ago, Los Angeles agreed to a $2-billion sewer upgrade to settle allegations that the city had allowed thousands of spills.

Mayor Dean Mazzarella of Leominster, Mass., said private-sector expertise was a boon to his city of 44,000, which was struggling with a leaking waterworks until it struck a deal a decade ago with USFilter. The company designed and built a new treatment plant, and now Veolia, which bought USFilter, oversees Leominster's water and sewer operations.

"We've got nothing but good things to say," Mazzarella said. "They're such a big company, they have the ability to tap into a larger talent pool, to reach for people on the cutting edge of technology and understanding."

Water rights groups doubt such success stories will be widely repeated. Privatization breeds corruption and reduces accountability, they contend.

Earlier this year, residents of Toms River and Camden, N.J., complained about a lack of accountability after United Water admitted it had failed to warn customers about contamination of drinking water.

In Toms River, the company neglected to notify some customers for six months of elevated levels of naturally occurring radium in the water. In Camden, the company delayed reporting high readings of TCE, an industrial solvent that may cause cancer and liver damage.

New Jersey regulators fined the company $4,000 in Camden and $64,000 in Toms River.

Rich Henning, a United Water spokesman, said the reporting failure in Toms River was the result of confusion over a change in testing protocols. The company has replaced its local manager and is conducting an internal investigation.

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