Brumby's big spend: dirty water deals don’t come cheap

Blind Freddy must have done due diligence on Australia’s biggest government contract.

Premier John Brumby bragged about his government’s acumen in pulling off the deal to drought proof Victoria with the announcement of AquaSure - based on the expertise of French corporation Suez Environment and its parent company GDF Suez - as the successful bidder.

GDF Suez and Veolia, French corporations who have been key players in the consortia bidding for the Victorian desalination contract, can each boast a colourful past in relation to international breaches of human rights. The bright shining trail of shady trade is available at the tap of a keyboard.

In fact, so dissatisfied is the City of Paris with the services of the two water corporations that it will take back control of its water supply in a process called remunicipalisation.

What sort of due diligence was carried out before $3.5 billion was thrown at a water problem so it would just go away; so that John Brumby and Tim Holding can continue to preach the furphy of rainfall independence?

It is apparent that a government which seriously considered soliciting union members’ superannuation savings to fund this Faustian deal has made no effort to apprise itself of information available on websites such as the Centre for Public Integrity and Transparency International. Just five minutes would have provided sufficient information to exercise caution as bearers of public trust.

The sort of due diligence required should have considered:

• General company data: everything about Suez Environment needs to be known - who owns it, its antecedents, its structure, its operations and where they are situated. If something comes up that has not been discovered in the usual due diligence process, then the due diligence carried out has failed. Successful due diligence leaves no surprises.
• Litigation history and documents: it could be argued, as Tim Pallas did recently on ABC News, Suez Environment is a separate legal entity from GDF Suez. Litigation and fines against GDF Suez are relevant to the Victorian contract with Suez Environment. Due diligence is about discovering everything - even the dirty washing of the relatives that can reflect on the entity under review.
• Environmental matters: the old dictum that the apple does not fall far from the tree holds true in most cases. Environmental vandalism by the parent company means that there is an almost iron-clad guarantee that a similar culture will be engendered in derivative companies. Transmission of corporate culture is virtually guaranteed.

To bring the way the Brumby Government does business into even further disrepute, it now appears that the failed bidder, Veolia is due for a consolation prize of $10 million. The taxpayers of Victoria are asking themselves what happened to businesses taking risks. Is the Victorian Government now underwriting risk management for international corporations?

Taxpayers will bear in mind that all this, including an almost doubling of their water bills, is going on in the midst of a global economic and financial crisis.

More than a year ago, Transparency International released its Global Corruption Report. The introduction to this 2008 revelation leaves little room for doubt:

Corruption in the water sector is the root cause and catalyst for the global water crisis. Water is the resource without substitute. It is paramount to our health, our food security, our energy future and our ecosystem. But corruption plagues water management and use in all these areas. Chair Transparency International, Huguette Labelle.