More Shenanigans at SEMAPA

Seven and a half years after the Water Revolt, in which people of Cochabamba spilled into the streets to take back their privatized public water company from the U.S. corporate giant Bechtel, the management of the reconstituted public company continues to be a mess. [Here is our recent briefing paper on the topic.]

Today's edition of the Cochabamba daily, Los Tiempos, carries the latest set of charges against the company's (SEMAPA) general manager, Eduardo Rojas. An outside audit commissioned by the water company's elected citizen board charges the management with a variety of offenses. These include padding the company's already overstaffed payroll (many of them secretaries); hiring staff that are not qualified for their positions; and taking more than seven months to complete water service projects scheduled to be wrapped up in just three.

While I haven't seen or read the actual audit, I have no doubt that Mr. Rojas' management is a mess. I had my own interactions with him before he took charge of the Cochabamba water company, and he was not, to say the least, an impressive civil servant.

At the end of 2006, in the waning days before Evo Morales became President of Bolivia, Rojas was the national government's vice-minister in charge of negotiating an agreement with Bechtel to drop the corporation's legal demand for $50 million as a result of being kicked out. The case was being heard before a secretive trade court at the World Bank. Bechtel was eager to settle the case, as a result of a wave of bad international press and citizen organizing against the company.

In December 2006 word leaked out that the government was close to signing a deal in which Bechtel would drop the case for a token payment of two bolivianos, about 30 cents. Needless to say, many people, including the leaders of the Water Revolt, were suspicious and they demanded to see the agreement. Rojas, the man in charge, promised for almost two weeks to fax a copy and never did, giving rise to even more suspicion and landing those doubts on the front pages in Cochabamba.

Faced with the possibility of the deal collapsing, Rojas finally provided the agreement and agreed to meet with a small group of technical people to review its details. I was at the meeting. The agreement Bechtel was proposing was a complex legal deal that involved Bolivia buying back the shell company Bechtel had formed and assuming its debts. Key information was missing and Rojas didn't have a clue about the content or the implications of the agreement that he was getting ready to sign in Bolivia's name.

Personally, I was astonished that the civil servant in charge was so clueless about a matter so important. I also wasn't the only one who heard echoes of the last time Bechtel and Bolivian officials had sat down behind closed doors and worked out a deal. That was the one that gave Bechtel Cochabamba's water under terms so bad that it sparked the Water Revolt shortly afterwards.

In the end, oddly, we were able to get the missing detail only through a friendly back channel I had established with Bechtel's San Francisco office. It was in that detail that Bechtel finally admitted for the first time that it had only invested $1 million in Cochabamba, while demanding fifty times that. Soon after the deal was signed.

My second experience of astonishment involving Rojas came just months later when Cochabamba's Mayor arranged for him to be appointed as SEMAPA's general director and pushed through the appointment with almost no scrutiny. I actually ran into Mr. Rojas in the city's central plaza in the midst of it all and he told me that the appointment had come as a surprise to him as well. He explained that he had come to Cochabamba from La Paz to talk to the Mayor about the possibility of leading SEMAPA and suddenly found himself in a news conference announcing his appointment.

It is no surprise that his tenure has had such major problems. SEMAPA's board has initiated an administrative process to demand responses to the charges in the audit. If the mismanagement the audit suggests is true, I think they should send him packing immediately and find someone competent to replace him.

Critics of the water revolt and fans of privatization will likely seize on all this to declare that privatization is a better solution. They might want to wait a minute. If you want to see how much better privatization into the hands of a foreign corporation works out in Bolivia, have a look at Enron's masterful handling of its (along with Shell Oil) massive oil spill here in 2000. Enron sent corporate officials into villages by helicopter to tell worried farmers that the spilled oil was actually good fertilizer for their crops and later declared that it was just a coincidence that thousands of their llamas and sheep died. We will publish our full-fledged investigation on that in our forthcoming book.

But making a company public is not the solution, it is just the start of a process in which citizens must understand the workings of that company and demand accountability and effectiveness. It is too bad that the kind of public scrutiny that led to the audit didn't also stop Rojas' appointment to begin with, or uncover his mismanagement long before now.

But it might also be the start of another water revolt, a less glamorous one to be sure, but one in which Cochabamba's people start to get the kind of public water system they deserve.