Time to hold Veolia to account

10 February 2009

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The tramway under construction in Jerusalem, February 2008. (Anne Paq/ActiveStills)


During the bidding process for an eight-year, $4.5 billion dollar contract to operate Stockholm county’s subway, the French company Veolia came under heavy pressure in the Swedish media for its involvement in Israel’s tramway project that links illegal Jewish settlements in the West Bank to Jerusalem. With its involvement in this project, Veolia is directly implicated in maintaining illegal settlements in the Occupied Palestinian Territories (OPT) and the company is playing a key role in Israel’s attempt to make its annexation of Palestinian East Jerusalem irreversible. In 2005, Amnesty International-France and the Palestine Liberation Organization (PLO) already warned Veolia to stay away from the tramway project. Despite international actions against Veolia’s participation in the tramway project, the company still refuses to take action, at the risk of increased damage to its already questionable image and losing business in Europe.

Recently, Diakonia in Sweden organized protests calling on the Stockholm Community Council to exclude Veolia from bidding for the subway contract. The council received thousands of signatories from people demanding that the council choose an operator that was not associated with violations of international humanitarian law. On 20 January, the council announced that Veolia, after operating the subway for the past 10 years, had lost the contract to Hong Kong-based rail operator MTR. When Veolia was not re-awarded the contract to run bus services outside Stockholm in 2007, Veolia Transport Manager Joachim Ytterstene stated that “We are very sad to hear this. We worked hard on this offer during the whole year and it feels really heavy to receive this decision.” If the loss of a contract to run a bus service with about 650 employees and 180 buses is painful, then it is obvious how painful the loss of the biggest European public contract procurement process will be. The recent bidding experience in Stockholm should help to get the message across that Veolia should withdraw from the Israeli tramway project.

Last November, activists and lawyers in France, Great Britain, the Netherlands, Norway, Spain, Sweden and Switzerland have joined forces to campaign for the withdrawal of the French transport giants Veolia and Alstom because of their involvement in the Israeli tramway project. In France, Veolia Transport and Alstom were required by an order of the Nanterre Court in July 2008 to provide sworn translations in French of all contractual documents relating to the tramway project. The legal team for the PLO and Association France Palestine Solidarity (AFPS) concluded that the released documents demonstrated that Alstom and Veolia are directly involved in the execution of the contract, even if they have argued they are not signatories to the concession between the City Pass Consortium and the State of Israel. The City Pass Consortium, which holds the contract with the State of Israel for the construction of the light rail project, consists of Alstom and Connex (Veolia Transport), two Israeli companies and two banks. The legal team found that the same principle applies to Alstom Transport, which also has an engineering, supplying and construction contract. As a result, Alstom Transport was added to the case before the Nanterre Court, as the PLO and ASFP hope to prove that this contract is also illegal and to prevent the company from continuing its work on the tramway. On 2 February, a subsequent hearing at the Nanterre Court was held regarding Alstom and Veolia Transport, and a decision is expected on 10 April this year.

Meanwhile, we requested a local London council in the UK to exclude Veolia from public contracts due to its “grave professional misconduct.” Under the UK Public Contract Regulations 2006, a contracting authority may exclude an economic operator from bidding for a contract or may reject any such bid where it is found that the individual or organization has committed an act of grave misconduct in the course of his business of profession. The regulation follows European Law, Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts. In our letter to the council, we used the same legal arguments to demonstrate that Veolia’s involvement in the Jerusalem tramway project involves assisting Israel to violate international law.

Israeli settlements in the OPT and the annexation of East Jerusalem are illegal under international law. Numerous UN resolutions and the 2004 advisory opinion of the International Court of Justice on Israel’s wall in the West Bank have confirmed this. The settlements violate Article 49 of the Fourth Geneva Convention — which states “The Occupying Power shall not deport or transfer parts of its own civilian population into the territory it occupies” — as well as Article 53 forbidding destruction of property. In some cases in East Jerusalem these violations amount to war crimes, i.e. “grave breaches,” as they involve extensive appropriation of Palestinian property not justified by military necessity (see Articles 146 and 147 of the convention).

These grave breaches are being facilitated by Veolia’s part in the construction and future operation of the tramway serving the settlements. The tramway also constitutes a significant alteration of the infrastructure of the OPT contrary to the Hague Regulations of 1907, Section 3, which Israel accepts as binding international law. Through its involvement in the building and future operation of the tramway linking Israel’s illegal settlements with West Jerusalem, Veolia is facilitating Israel’s grave breaches of the Fourth Geneva Convention, and is complicit in its perpetuation of those actions. In other words, Veolia is involved in aiding and abetting ongoing war crimes. It is also facilitating, exacerbating, aiding and abetting Israel’s breach of the Hague Regulations. These same arguments apply to Alstom.

Veolia attempts to dodge its responsibility with false claims that Veolia Stockholm and Veolia Jerusalem are independent units. However, this is not the case. Veolia Environment has four divisions — water, waste management, energy and transport services. In 2005, the company’s four divisions adopted a single name, Veolia, and a new logo. As explained on the Veolia website, this move signaled the desire of the entire company to link Veolia divisions in a coherent way and increase its visibility. Veolia’s revenues and profits are calculated as a whole, and the corporation is quoted on Euronext Paris and the New York Stock Exchange. Even when reporting results, Veolia regards its subsidiaries as divisions of itself and, significantly, Veolia regards its subsidiaries’ contracts as its own. This is clearly illustrated in Veolia’s statement that “The company won and renewed multiple contracts in its priority development zones, including: … Shropshire in the UK in the Environmental Services (Waste Management) division.” It is evident that Veolia treats itself as a single entity. Also in its marketing and public corporate structure Veolia treats itself as a coherent whole. As such, the conduct of one division is the conduct of Veolia as a whole and affects each division accordingly. If one division of Veolia is involved in activities of grave misconduct and profits from such conduct, then the parent company must necessarily be implicated in such misconduct and most certainly profits from such misconduct. That means that Veolia as a whole — all of its divisions and subsidiaries — are implicated in such misconduct.

The activities of Veolia and Alstom clearly constitute misconduct sufficiently grave to warrant the exclusion of all its divisions from public contracts in Europe. It is difficult to imagine what misconduct could be more grave than the aiding, abetting, facilitation or exacerbation of war crimes and human rights violations. The London council that received our letter about Veolia have side-stepped the whole issue by saying that a 1988 Act of Parliament prevents a decision under the 2006 Regulations, because it is unlawful to make an adverse decision based on the country where any company operates. But this is not an attempt to enforce a public sector boycott of all companies that trade with Israel: it is restricted to excluding from public contracts companies that demonstrably break international law or help Israel to do so. Legal action is therefore likely to follow in London and the court will make it clear if the refusal to even consider excluding Veolia was lawful. If the court confirms that public bodies can lawfully exclude Veolia from public contracts, then campaigners can follow this up by ensuring that Veolia and Alstom are shut out of future public contracts across Europe.

Adri Nieuwhof is consultant and human rights advocate based in Switzerland. Daniel Machover is attorney and co-founder of Lawyers for Palestinian Human Rights based in Great Britain.