Saturday, May 08, 2010

City Hosed Indianapolis Taxpayers To Benefit Veolia, Big Surprise

The IBJ's Chris O'Malley has an excellent investigative story about how badly the City of Indianapolis screwed over taxpayers in this city to put tens of millions more in the pockets of Veolia, the French-owned private operator of our water utility. A link does not currently exist to the story on the IBJ's website. Among the findings of O'Malley is a 2007 amendment to the one-sided agreement that off-loaded $48 million in retiree medical obligations to the City of Indianapolis that Veolia assumed when it took over management of the water company after the City purchased it. The 35%, $111 million rate increase the Ballard administration submitted to the IURC includes this $48 million obligation. An analyst for the Office of Utility Consumer Counselor complains that the amendment was entirely one-sided in Veolia's favor.

O'Malley cites other shifts in costs the City took on from Veolia, including:
  • Costs related to meters, hydrants, valves and service taps were reclassified as capital costs. DPW was required to pay Veolia $5 million for costs incurred prior to amendment.
  • DOW agreed to increase fixed-fee payments by $1.9 million, compounded each year by an inflation index more favorable to Veolia.
  • Veolia offloaded to the city the responsibility for pesticide monitoring costs and water conservation program.
This amendment was agreed to during Mayor Bart Peterson's last year in office. Many of us involved in Greg Ballard's campaign knew that many nefarious things happened during the original purchase of the water company and subsequent thereto that bordered on criminal, if not outright criminal. Certain law firms and consultants pocketed tens of millions of dollars in deals that royally screwed Indianapolis ratepayers and taxpayers. Both Mayor Bart Peterson and former City-County Council President Beurt SerVaas had financial interests in the outcome of the purchase that neither disclosed during the negotiation and approval of the sale. Then-candidate Greg Ballard promised to conduct a thorough investigation of those transactions once he became mayor; however, that promise was made before Bob Grand and Joe Loftus of Barnes & Thornburg started calling the shots in this administration. A complete cover-up of those transactions ensued and now Ballard is embarking on what amounts to the largest tax increase in Indianapolis history through a sale of the utility that is nothing more than a thinly-veiled effort to fund hundreds of millions of dollars in pork barrel projects that will be paid by Indianapolis water ratepayers.

Ballard demanded that Citizens Energy assume the Veolia contract with the water company and the United Water privatization for the wastewater utility assets, although Citizens Energy could operate these utilities much more efficiently if these agreements did not exist, particularly the Veolia agreement. Guess which law firm represents the private operators? Guess which law firm is driving this deal? In fact, so many of the same players who were involved in the screwing we got during the 2002 purchase of the water company are sitting at the table once again negotiating the fine print of this deal. It is disgusting beyond description. Like I've said on many occasions, the City of Chicago hasn't got anything on the City of Indianapolis when it comes to public corruption.

Incidentally, the law firm primarily handling this transaction for the City of Indianapolis is Baker & Daniels. Yes, that's the same law firm that participated in the last transaction. Yes, that's the same law firm that now employs the City's former chief legal counsel at that time, Scott Chinn, and former deputy mayor to Peterson, Melina Kennedy, who is now the front-runner for the 2011 Democratic mayoral nomination. No wonder she is silent on the pending sale to Citizens Energy. It looks like the law firm that served us so poorly in these past transactions will be a winner regardless of the outcome of the 2011 election.


Paul K. Ogden said...

I believe Veolia's law firm was and is Barnes & Thornburg. Indy's all about buying poltical influence by hiring the right attorney.

Gary R. Welsh said...

Will Ryan Vaughn recuse himself or continue to partipate in these deliberations as if his law firm has no financial stake in the outcome. I don't understand why the Dem council members haven't been all over it. They must like corruption ala Monroe Gray.

Marycatherine Barton said...

Chris O'Malley couldn't be any clearer, and, again, IBJ deserves more applause, and more subscriptions. I aim to subscribe.

Yes, Indianapolis is as corrupt as Chicago, and we fleeced taxpayers need to stop rewarding both major parties that run Indpls, or as some of their highbrows say, 'govern' us Marion Countyites. Thank you, AI.

IndyTimes said...

The story is available online to subscribers, under the "This Week's Paper" tab. By the way, you can subscribe to IBJ for a year in print (52 issues) and everything online for just $69. The information is here

Gary R. Welsh said...

I have ended all paid subscriptions to media sources. I sometimes do the job of their reporters and I send plenty of traffic to their websites. It would be nice if they acknowledged it and provided free service to bloggers like me who do our work as a public service. Mickey Maurer has enough money. I'm not putting any more in his pockets.

Blog Admin said...

So Veoilia's firm is Barnes and Thornburg. Who represents Citizens Energy? How are the other big Indy law firms, ICE and Baker and Daniels, tied into toe utility sale?

I know the GOP Council caucus hired a Baker and Daniels lawyer to advise them during the Council committee hearing, and I keep hearing on Democrat blogs like IndyDemocrat and iPOPA that the reason Melinna Kennedy isn't speaking out on the water deal is her firm's association with it. But are they directly involved in the transfer?

Gary R. Welsh said...

I can't confirm B&T represents Veolia; that's Paul's assertion. I know the firm represents United Water. I've asked repeatedly for a public disclosure of the clients his firm represents, but I've gotten nowhere. Supposedly the firm is now required to register as a lobbyist for these firms, but there is nothing available online and no reporting is required until next year after the deal will have already been voted on. Also, the new lobby law has so many loopholes the firm could be representing someone before the city and not be required to report it.

Paul K. Ogden said...


There was a federal court case in 2008 where B&T represented Veolia. That's where the assertion came from.

Barnard said...

Normally you're pretty accurate but in this case some facts need clarification. Baker and Daniels did not represent the City or Veolia on the 2007 deal (Taft represented the City and Barnes represented Veolia).

Also, Baker did not represent the city on the original 2002 agreement, Taft did.

Just throwing things out there in hope that they might stick is becoming more and more frustrating for us readers.

Gary R. Welsh said...

Barnard, I'm pretty sure I recall reviewing documents where B&D's lawyers were involved in the purchase of the water company. There were several law firms participating in the transaction. It's hard to keep straight which law firm represented which client. Do you care to share which client B&D represented, if they didn't represent the City or Veolia?

Wilson46201 said...

speaking of silent politicos: Marvin Scott is the Chair of the Indianapolis Waterworks Board. For an ardent Tea Partier like him, he's not said much about about this recent razzle-dazzle from Ballard.

Gary R. Welsh said...

A resolution thanking those that participated in the 2002 water purchased included the following individuals from Baker & Daniels:

Baker & Daniels: Theodore Esping, Thomas Froehle, Amy Kosnoff, Darla McKee, Jason Schiesser, Joseph Scimia and Allyson Tibbs.