Tuesday, August 21, 2007

East Cleveland

How the mayor of this Cleveland suburb became entangled
in a nationwide corruption scandal is among the most bizarre
tales in the annals of water privatization.

At age 22, Emmanuel Onunwor left Nigeria in hopes of
finding a fresh start in the United States. Fifteen years later,
in 1997, he became the first African-born mayor in U.S.
history. His improbable success story ended in disgrace in
September 2005, when Onunwor was sentenced to nine
years in federal prison after being convicted of receiving
bribes, kickbacks and secret payoffs.

CH2M Hill, received a 3-year, $3.9 million contract to run
the city’s water and sewer system in 2002. OMI, then a
subsidiary of CH2M Hill, handled the contract. But instead
of going through a bidding process, federal prosecutors say
the company won the contract by bribing Onunwor through
a series of intermediaries – including a front company that
worked for CH2M Hill.101 The ringleader (who did not
work for CH2M Hill) was later convicted on 36 federal
charges related to bribing officials in East Cleveland,
Cleveland, Houston and New Orleans102 (see “The Big

The OMI contract was doomed even before Onunwor’s
fall. In March 2004, the corporation said it was pulling out because the city
– which had been in a state of fiscal emergency since 1988 – owed it $5.1
million. City officials criticized OMI for giving them little warning and
presenting flawed financial projections abandon a contract that you have determined is tainted by scandalous activity, poorly serves the financial interest of
your community, and has given rise to an appearance of
misfeasance in the use of public funds.”

But that was just the beginning. The same city official and
Veolia employee who worked together to tailor the contract
for Veolia were convicted of stealing more than $300,000
from the city by submitting phony invoices and intercepting
reimbursement checks. The official was sentenced to 18
months in prison; the Veolia employee received five years’

And there’s more. A city auditor found that $77,000
in questionable charges from the sewer plant was
billed to the city, including parties, clothing, gift
cards and Christmas trees.109
In the end, the city and Veolia wound up suing
each other in federal court – the city
claiming Veolia owes it $1.6 million,
and the corporation alleging the
contract was improperly cancelled.
“The whole situation is really unfortunate,”
a Veolia spokesperson
said. “Our company does so many
wonderful things."

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