When Wastewater turns into Gold
In the meantime, the payment of gate money has been forbidden in France. But financial technology also means being able to skilfully circumnavigate any kind of interdiction. And naturally Veolia also masters this discipline in its international dealings. In 2005, after having bought their technical services, the multinational also purchased the city of Braunschweig’s wastewater management service. The Mayor Mr. Hoffmann rejoiced: taxes’ stability were guaranteed for 10 years! And € 238 mio was considered as an extraordinarily large profit from a privatisation. But as only € 112 mio flowed into the municipal budget, there was quite a lot of perplexity. Enquiries revealed that the city had, at the expense of its citizens, renounced € 38 mio so that Veolia could build up financial reserves. An incredible bluff followed, as the whole truth emerged: in fact, the Global Player had not disbursed one cent of its own money for the wastewater of Braunschweig. The tax payers of the future generation would see to it! The deal was completely financed by a loan taken by the wastewater service absorbed by Veolia, which offered the proceeds of the next 30 years as mortgage – and this with a non-recourse forfeiting of instalments clause. In other words, the good citizens of Braunschweig will, for the next 30 years, be paying for the interests and the interests’ interests of the loan in addition to their water taxes, independently from Veolia’s performance, off take or bankruptcy! It is in this wondrous manner of financing that the French multinational intends to deal with its future acquisitions. One of their first announcements was that less would be repaired, and large sums invested in the sewer pipes network. To this aim, it is stipulated in the concession that a further € 7.5 mio a year would be allotted to the multinational, covered by a loan similarly mortgaged. And so, at the end of the 30 years, the tax payers of Braunschweig will have forked out an additional € 215 mio for the operator’s investments. On top of this, Veolia would like to buy the name “Braunschweiger Public Services”. Being able to creep under the long-established etiquette of the local municipal service is worth something to the Global Player. But who, in the end, will pay to be thus bamboozled?