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French/U.K. consortium to run Papakura’s water supply In a disturbing first for Aotearoa, a consortium including two of the world’s biggest water companies has been given a franchise to run water and waste-water services for the Papakura District Council. The consortium is called United Water International Pty Ltd and its major shareholders are Compagnie Generale des Eaux Societe Anomyne (CGE) of France and Thames Water Plc of the U.K., each owning 47.5% of United Water. The deal includes "various parcels" of land including eight hectares at Drury. The franchise fee is $13,100,100. The franchise is one step short of full privatisation, an issue of huge controversy, particularly where it involves an essential like water which is also a natural monopoly. The Papakura Council sees itself as the pioneer in such matters, and indeed has been paraded around the country to teach other local bodies how to do things in an approved manner. One such visit was to Christchurch, sponsored by the Building Owners and Managers Association (BOMA) which, like ACT and the Business Roundtable, has been an incessant critic of the Christchurch City Council. In their eyes, the Council has failed to respond to such business lobby group demands, resulting in Christchurch (which has kept ownership of most of its local services such as its power company, port and main bus company) being one of the most popular councils in the country, with some of the lowest rates amongst main centres, and a recent award of ninth best city in the world to visit. Papakura’s (PDC’s) missionary zeal is seen in its "rationale" for the deal, reported by the OIC:
The Business Roundtable has for some time been advocating the privatisation of water and sewerage services. It commissioned a report in justification of this view from CS First Boston New Zealand Ltd and in February 1996 called for privatisation, describing those opposed as "pandering to populist and ideological pressures" (Press, 12/2/96, "Water, sewerage services ‘should be in private hands’", p.5). The CS First Boston report estimated that the "accumulated investment by local government in water supply and wastewater assets is of the order of $6 billion. This is larger than the investment in Telecom Corporation of New Zealand’s network and roughly comparable to the national investment in the electricity transmission and distribution system." Franchising and contracting-out "if there is a strong political preference to retain ownership" was one of the report’s conclusions, though privatisation was its obvious preference. Competing against United Water for the Papakura franchise were utilities investment company, Infratil, U.S.-owned Waste Management, and U.K. owned Anglian Water, which is the operator of two new waste treatment plants for Wellington also involving Waste Management (see our commentary for January 1995, and also Press, 24/12/96, "Infratil considering concession", p.23; 11/7/97, "Water rivals decide to go with business flow", p.16). The OIC describes the companies involved in United Water as follows:
This is being overly modest. The following information comes largely from research published by Public Services International (PSI), which represents 20 million workers in public services around the world. The international water industry is dominated by a handful of transnationals. Unusually, they are overwhelmingly dominated by two French companies: CGE and Lyonnaise des Eaux. They, with a third company, SAUR (owned by French construction company Bouygues), share 80% of the water business in France. Other large water TNCs include: Aguas de Barcelona of Spain; Northumbrian (based in U.K. but owned by Lyonnaise); North West (U.K.); Servern-Trent (U.K.); Thames; and Welsh Water (U.K.). Thames, one of the privatised water companies given a 25 year monopoly by the Thatcher government in 1989, also has overseas contacts in China (with P&O) and South Australia (again in partnership with CGE). Water remains a highly contentious issue in the U.K. because of the enormous profits made and poor service from the new owners. In the U.K., 70% of all the investment made since privatisation has been paid for by consumers, and there has been public criticism of the lack of investment in renewing the infrastructure. North West Water, which also operates in Malaysia and Mexico, discovered their profits over the next four years would be £400 million higher than forecast – and reduced prices by £90 million, paying the remaining £310 million to its shareholders. But it is CGE that is of most interest, because of its size. CGE is not simply a water company. In 1995 it had 215,000 employees and was involved in water, sanitation, energy (including waste-to-energy plants and independent power generation), waste disposal, construction, health services, heating, cable television, mobile phones, catering, and running the bus services in the southern half of Portugal. It is a partner in the huge British Telecom/MCI alliance currently being completed. It, along with Lyonnaise des Eaux and other water companies, have a history of corruption. PSI reports:
Privatisation has led to rapid price rises, say PSI. In the U.K., water prices have risen far faster than inflation since privatisation – partly to pay for investment, and partly to fund dramatic increases in dividend payments. PSI quote a study comparing municipal water companies in Sweden with their privatised counterparts in the U.K. The Swedish companies were cheaper, performing worse only on their rate of return on capital. In France, recent privatisations raised costs. In St Etienne, where the local council brought in Lyonnaise and Generale in 1990, prices rose from 3.52 francs in 1990 to 8.50 francs in 1996. According to French parliamentary report, twenty years ago, French citizens paid 20-30% more for privatised water than did those who had access to municipally-run services. By 1988 that difference had soared to 58%. (PSI Focus No. 2, June 1995, pp 4-7; The CCPA Monitor, April 1997, "The Problems with Privatising Water", by Jan-Willem Goudriaan and David Hall.) Weyerhaeuser buys Fletcher’s 17,000 hectares in Nelson/Marlborough Weyerhaeuser Company of the U.S.A. has approval to acquire approximately 16,925 hectares of freehold forest and 718 hectares of land over which forestry and tenancy rights have been granted, in Nelson/Marlborough from Fletcher Challenge Ltd for US$190,000,000. This approval is for 51% of a joint venture whose assets also include 60,002 hectares of Crown forestry licences. Approval from the OIC is apparently not required for the Crown forestry licences because "they do not constitute an interest in land (section 16 of the Crown Forest Assets Act 1989)" (letter from OIC to CAFCA, 19/9/97). Of this total of 78,000 hectares, 80% is planted in radiata pine, 15% in douglas fir and the rest in minor species. The other joint venture partner is named as UBS Resources Investments International, part of UBS Asset Management (New York) owned by the Bank of Switzerland (e.g. Press, 12/4/97, "US softwood giant buys Nelson forests", p.25). UBS Resources Investments International is investment manager for the ubiquitous RII New Zealand Forests I Inc which has been buying up forestry mainly in Nelson, Marlborough, Wanganui and Northland, for several years. The OIC describes it as being owned by U.S. pension funds and non-profit, charitable and educational institutions. As we reported last month, Fletchers has in the last year sold East Coast Forests to Glenealy of Malaysia (see the December 1996 OIC decisions) and a number of forests in the Auckland and Coromandel area to Evergreen (46% owned by Xylem Fund I L.P. of the U.S.A.) The proceeds are intended to pay for Fletcher’s purchase of Forestry Corporation (see September 1996). This sale leaves Fletchers with no significant forests left in the South Island. Although this is Weyerhaeuser’s first forestry purchase in Aotearoa, it is not its first appearance here, and is certainly not for want of trying. It was reportedly a bidder for the Forestry Corporation, and as the OIC reports:
All the OIC tells us about Weyehaeuser is that
Foreign Control Watchdog (August 1997, p. 43) provided more detail. Weyerhaeuser is the world’s biggest private owner of softwood timber, with global annual sales of $US10 billion. It owns 2.2 million hectares in the US and leases a further 9 million hectares in Canada. Despite having massively divested of non-core businesses, it is one of the 100 largest companies in the US. Watchdog quoted information from the Ralph Nader-connected organisation "Essential Information". This documented
Watchdog continued: As Weyerhaeuser says that it plans to set up processing facilities in Nelson, it’s useful to look at the recent record of its American plants.
Or:
Nor is there anything new about Weyerhaeuser being fined huge amounts for environmental offences.
… Weyerhaeuser is amongst the TNCs … promoting the spread of "audit privilege" laws across the US (21 states have already passed such laws). They are more accurately called Corporate Dirty Secrets Laws or Right to Know Nothing Laws. To quote Rachel’s Environment & Health Weekly (26/6/97):
CanWest takes over Frader Group Owner of TV3, TV4 and the More FM radio network, CanWest NZ Communications Ltd, itself owned by CanWest Global Communications Corporation of Canada, has approval to acquire Frader Group Ltd, a private New Zealand company, for an originally suppressed amount, released in February 1998 as $33 million.
CanWest is also 57.5% owner of the Ten Network in Australia, and owns Chile’s La Red TV network, and Talk Radio in the U.K. Not all of the Australian interest has voting rights, due to Australian restrictions on overseas ownership of news media. CanWest is lobbying to allow it up to 50% voting shares. Lobbying and politics are not unusual for Izzy Asper, owner of over 90% of the voting power and 65% of the equity in CanWest. He has been a leader of his province’s (conservative) Liberal party, and has been a vocal supporter of the economic policies of the last decade in New Zealand, particularly the "zero restrictions on foreign investment in the media". "I was recently representing Canada in Brussels at a G7 meeting. I said to all the G7 heavyweights, Japan, the U.S. and all, ‘The only example in the world of a country that has its head screwed on and isn’t distracted by silly stuff is the government of New Zealand,’" Mary Holm of the Listener quotes him saying. "Since the reformation in New Zealand in the 80s, you’ve become the experimental laboratory for the entire world. Sir Roger has travelled to Canada and is revered … the fact is, New Zealand is one of the most professionally managed countries in the world." (Press, 11/12/95, "CanWest prefers NZ conditions", p.37; Listener, 8/7/95, "The turnaround at 3", by Mary Holm, pp. 28-32.) Promet of Malaysia gets consent to buy Princess Wharf in Auckland Promet Private Ltd (PPL), a subsidiary of Promet Berhad of Malaysia (also listed on the Singapore Stock Exchange) has approval to acquire "approximately 2.22 hectares of land, known as ‘The Princess Wharf’, located at the intersection of Quay Street and the bottom of Hobson Street, Auckland. The price is stated only as "approximately $8-15 million". It is being purchased from Ports of Auckland Ltd (POAL).
Approval for MMI of Australia to take over FAI of Australia (did not proceed) MMI General Insurance (NZ) Ltd, a subsidiary of MMI Ltd of Australia, has approval to take over FAI (NZ) General Insurance Company Ltd, itself a subsidiary of FAI Investments Pty Ltd of Australia, for a suppressed amount.
The OIC informed CAFCA on 30/10/97 that this did not proceed. ICI buys National Starch and Chemical, and Quest International, from Unilever Imperial Chemical Industries Plc of the U.K. has approval to acquire National Starch and Chemical NZ Ltd, and Quest International New Zealand Ltd, from Unilever Plc for amounts that were originally suppressed but released on appeal in October 1997: $15,142,565 and $10,527,855 respectively, both "subject to adjustment". "The acquisition is part of a world-wide purchase by ICI of the speciality chemicals businesses of Unilever plc and Unilever NV." Schering-Plough buys Mallinckrodt Veterinary Ltd Shering-Plough Corporation of the U.S.A. has approval to acquire Mallinckrodt Veterinary Ltd, a subsidiary of Mallinckrodt Veterinary International Ltd of the U.S.A. for $12.4 million. The purchase includes 146 hectares of land at Johnsons Road, Whitemans Valley, Lower Hutt, Wellington. "Schering-Plough is conducting a global acquisition of the subsidiary companies of Mallinckrodt Veterinary International…. it is a global pharmaceutical development and distribution company…" with a "growing animal health business". This decision was originally almost completely suppressed, and released only after appeal in October 1997. Hong Kong owned Bermuda company buys Symonds St site from Nauru Govt Great Eagle Holdings Ltd, which is registered in Bermuda but listed on the Hong Kong stock exchange and majority owned by Mr Lo Ying Shek and his family of Hong Kong, has approval to acquire 1.32 hectares of land in Symonds St, Auckland for an initially suppressed amount, for hotel accommodation. The amount was released in February 1998: $88,000,000. Two Malaysians buy land in Takapuna for $4m for residential development D. and W.K. Ibrahim of Malaysia have approval to acquire 0.45 hectares of land at 214 Lake Road, Takapuna, Auckland for $4,000,000 for residential development. They propose to develop the property into a "high class city housing estate" of about four units. "It is stated that this will involve an estimated expenditure for the development of approximately $2,400,000". Macraes Mining buys more land for mining at Macraes, Otago Macraes Mining Company Ltd, which is approximately 39% owned by Union Gold Mining NL of Australia, has approval to acquire a further three hectares of land for its gold mine at Macraes Flat, Otago. This is residential land in Macraes township and includes "accommodation" which will be used to house staff and contractors. The price is $176,000. The company has told the OIC that "the maintenance of the social fabric at Macraes Flat is of concern" to it. However, as with its usual practice, it objected to the initial publication of this decision and it was almost completely suppressed until it was released at the end of October after appeal by CAFCA to the OIC. It is difficult to think of explanations for this secrecy other than that the mining company wants to avoid objections by locals, many of whom oppose the mine.
Another refusal: U.S. citizen declined permission to buy land in Canterbury In its second refusal of an application in 1997, the OIC has declined consent for a Mr R.E. Hagberg, a citizen and resident of the U.S.A., to acquire land of over five hectares for lifestyle purposes in Canterbury. No further details are provided other than "it was not considered to be in the national interest".
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