Veolia caught breaking EU lobbying rules

From

http://www.corporateeurope.org/docs/open-letter-to-veolia-dec-2008.pdf

See also Turning on the taps in Brussels: Veolia Environnement’s lobbying activities on water at an EU level

Corporate Europe Observatory
De Wittenstraat 25
1052 AK Amsterdam
Netherlands

OPEN LETTER TO MR JEAN-CLAUDE BANON
VEOLIA ENVIRONNEMENT REPRESENTATIVE IN BRUSSELS

Veolia Environnement
Rue des Deux Églises 26 – B
1000 Bruxelles

OBJECT: Veolia Environnement’s EU lobbying activities in the water sector

Dear Mr Banon,

Veolia Environnement is the world’s largest private water operator as well as the biggest in Europe. As such, it holds a great responsibility when lobbying European Union institutions, because it is able to mobilise more resources than any other stakeholder in its efforts to influence EU decisions concerning the water sector.

Since it became independent from Vivendi-Universal in 2002, your company has very prominently advertised its commitment to the environment. In 2006, Veolia Environnement began disclosing some data about its lobbying activities, under the slogan “Responsible Lobbying”, an approach promoted by the UN’s Global Compact office. To assess in how far Veolia’s lobbying is indeed transparent and responsible, Corporate Europe Observatory has undertaken a thorough examination of your company’s lobbying activities at the EU level, summarised in the enclosed report, “Turning on the taps in Brussels – Veolia Environnement’s lobbying activities on water at an EU level”.

Our findings show that the data disclosed by Veolia fails to give a full picture of the extent and content of its EU lobbying undertakings. Secondly, the lobbying information published in 2007 is even more incomplete than what was disclosed in 2006, when at least details of a few specific cases and a list of the main EU institutions targeted were provided. For instance, Veolia only mentions its involvement in two water sector lobby groups (EUREAU and Aquafed), one business lobby group (Business Europe), and one think-tank (Confrontations Europe). Our research shows that Veolia is involved in lobbying via at least 7 water sector bodies, 11 business lobby groups, 5 think-tanks and various other public or private entities relaying directly or indirectly Veolia interests. We were also able to identify several important lobbying cases which Veolia Environnement did not disclose, ranging from revolving door cases to the appointment of personnel in key EU working groups, as well as Veolia’s controlling role in an influential European Water Research body (WSSTP) and attempts to influence the legal framework to expel competitors, particularly local public water operators.

We also identified what appears to be a serious contradiction between Veolia Environnement’s public environmental commitments and the reality of its lobbying activities. We found that Veolia exerted pressure in favour of expensive and energy-intensive clean-up technologies rather than promoting water conservation measures; that, while acknowledging the necessity to control water demand, Veolia nevertheless asked the Commission to promote “alternative resources” (desalination, water reuse…), perhaps to compensate for the loss of business resulting from the much-needed decrease in water consumption in Europe. We believe this behaviour is caused by the structural interest for Veolia Environnement in having as large a water treatment market as possible.

We consider Veolia’s privileged access to EU decision-making – documented in our report – to be potentially very damaging for EU water policy.

Veolia’s lobbying is neither transparent nor responsible. We therefore ask Veolia Environnement to abandon the false claims the company has made in the context of the Global Compact as well as in its sustainability reports until the company has significantly improved the transparency around its lobbying activities. This should include registering in the European Commission’s register of interest representatives, but must go beyond this register’s very limited disclosure requirements. To enable public scrutiny of whether Veolia’s lobbying is socially and environmentally responsible, the company must disclose the policy issues it lobbies on, the objectives of this lobbying, the institutional and financial means employed, names of lobbyists employed, and an assessment of the impact of those activities.

With kind regards,
Martin Pigeon
Corporate Europe Observatory

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More about Veolia

History
Veolia’s history began in 1853 under the name Compagnie Générale des Eaux (CGE). Created by a group of businessmen and high-ranking officials from Napoléon III’s imperial court, the company was granted a number of privileges: a fixed price for water and a guaranteed monopoly in exchange for developing water services5. The company’s first contract was in Lyon, France, in 1854, but it soon expanded into other French and European cities, working closely with the public authorities to develop the “public services management delegation” model (now known as public private partnership). Like France’s other water utilities, CGE was notoriously used as a source of funding by all political parties, which may be why they escaped the great nationalisation waves of 1946 and 1981.

The company’s evolution was initially gradual, moving into waste treatment in 1953 and then, following the appointment of Guy Dejouany as chief executive in 1976, expanding more rapidly, moving into new sectors including energy, media, transport services, construction and property. In 1998, following links to several cases of corruption, CGE changed its name to Vivendi. The re-named group went on a growth frenzy, acquiring shares or merging with several groups in the media and
entertainment sector, reaching its peak in 2000 when it merged with Universal Studios. But the 2001 crash put an end to the rapid expansion. Vivendi Universal lost €23.5 billions in 2002, the worst corporate loss for any French company in history; Jean-Marie Messier, the chief executive, was forced to resign and was subsequently charged with fraud and fined by the US Securities and Exchange Commissionb. Having lost much of its accumulated wealth, Vivendi Universal sold its shares in Vivendi Environnement, making it effectively an independent company. It changed its name to Veolia Environnement (VE) in April 2003. Veolia Environnement

The company, now led by chief executive Henri Proglio (who has spent his entire career within the company), adopted a more modest profile, restructuring and reducing its long-term financial debt and prioritising internal growth. It returned to profit in 2004, and resumed acquisitions: in 2006, it bought waste management operator Cleanaway, it made an unsuccessful takeover bid for the French construction company Vinci, and has considered taking over its main competitor, Suez
Environnement. The company’s new strategy, it says, is focused on sustainable development, long-term vision and a corporate sense of responsibility. The environment is claimed as the company’s main axis of development. b The U.S. Securities and Exchange Commission (commonly known as the SEC) is a United States government agency having primary responsibility for enforcing the federal securities laws and regulating the securities industry/stock market

FIGURES (2007)

Turnover: €32.62 billions (+14%, 34% water, 28% waste management, 21% energy, 17% transportation), 80% in Europe, 44% in France

Net income: €927.9 millions (+22.3%)

Net financial debt: €15.1 billions (+3.4%)

Long-term operating financial assets (2006): €5,1 billions

Total market capitalisation (19/11/2008) : € 9,169.570 billions (-68.94%)

Employees: 319.502

Clients: 67% public authorities, 33% industrial companies

Capital structure
Capital Research & Management Company (American mutual fund) 12%, Caisse des Dépôts (French state-controlled fund) 10%, individual shareholders 7%, Natixis Asset Management (French corporate bank) 7%, Groupama (French insurance company) 6%, EDF (French public electricity company), VE treasury stock 4%, employee shareholders 1%, other institutional shareholders 49%.

Veolia Environnement Europe Services: lobbying and fiscal relief in Brussels
The Veolia EU office in Brussels has a representational role: keeping up with EU legislative work and reporting to headquarters, analysing EU legislation impacts on the group’s activities and liaising with internal specialists, networking with MEPs, European Commission (EC) officials and other industrial partners, identifying and where possible exploiting opportunities for new activities.

In early 2008, the office was incorporated into a new company, Veolia Environnement Europe Services, developing its remit to “finance or facilitate the short, medium or long-term financing of the group it belongs to, or companies this group wants to finance”13. On the 31 January 2008, the capital of this new company was increased from €100,000 to almost €2.5 billions (€2,440,100,000)14, transferred in cash. Belgium recently introduced new fiscal measures on companies’ capital, known as the notional interests’ deduction, allowing companies to substantially alleviate their taxable base according to their equity capital.