The Big Sleazy

New Orleans

In a city where corruption is akin to business as usual, efforts
to privatize both the water and sewer systems in New
Orleans have been stung by bribery scandals.
The latest scheme was masterminded by a politically connected
engineering executive, Gilbert Jackson, who was
linked to a four-city corruption ring that also entangled the
mayor of East Cleveland, who himself is serving a lengthy
prison sentence in part because of a water privatization
scandal. "reference coming"

In January 2006, Jackson admitted he accepted $19,500
from a lobbyist representing Severn Trent, a multi-billiondollar
British company vying to win a contract to operate
New Orleans water and sewer system in the late 1990s. At
the time, Jackson’s company was advising the city’s Sewerage
and Water Board on how to structure the privatization
plan. He was sentenced to six years and ten months in
prison following his conviction on nine federal corruption
charges. The federal probe also ensnared numerous public
officials and business figures in East Cleveland, Cleveland
and Houston.

Not even the local media was shocked. “So now we learn
that, even before the board was considering privatization,
the process was corrupted to the point of illegality,” the
Times-Picayune wrote. “Is anyone out there surprised?”

New Orleans dropped its privatization plans in 2004, after
five years and $5.7 million worth of study. The 20-year, $1.5
billion contract would have been the largest ever awarded
in the U.S. It fizzled after city residents and the state legislature
overwhelmingly approved measures giving voters the
power to approve or reject any privatization contract worth
more than $5 million.

Both Suez and Veolia cited the measures as reasons they
withdrew their bids. “If we now have to run an election
every time we want to get a job,” a Suez executive said, “it
makes public-private partnerships cost-prohibitive.”

A few years before the water and sewer scheme was
hatched, bribes began flowing to help another private company
keep its contract to operate two of the city’s sewage
treatment plants.

The president of Professional Services Group (PSG) (which
was implicated but not charged in a corruption scandal in
Bridgeport, CT) was convicted and imprisoned for bribing a
Sewerage and Water Board member in hopes of extending
PSG’s contract in the mid-1990s. The board member was
also convicted and jailed. PSG’s parent company, Aqua Alliance,
pleaded guilty and paid a $3 million fine. Veolia,
which was not implicated, began investing in Aqua Alliance
in 1990 and owned a majority share by 1997.