The Independent, 11 April 1997.                 Back

Murky water.

United Water, the Anglo-French winner of the 50-year contract to run Papakura's water services, continues its battle against allegations of corruption in South Australia.

By Colin James In ADELAIDE.

United Water, winner of the ground-breaking Papakura water contract, is no stranger to political controversy.
Since its creation in South Australia just over two years ago, the company has been immersed in an apparently bottomless politically-tainted quagmire.

United Water was formed by two of the world's biggest water companies, the French-owned Compagnie Generale des Eaux and the London-based Thames Water Company to bid for a $A1.5 billion contract offered by the South Australian government.
The contract, the biggest of its kind in the world, was to operate and maintain the water and sewerage systems of Adelaide, the capital of South Australia, for 15 years.

United narrowly beat the hot favourite, British company North West Water, to win the contract in late 1995 after a bidding contest unrivalled in Australian corporate history.
The contest was eventful for many reasons. CGE and another French bidder, Lyonnaise des Eaux, were under investigation in France following allegations they had bribed public officials.

Then the French government began exploding nuclear devices at Mururoa, much to the dismay of the South Australian government and its two prospective French partners.
North West Water and Thames encountered their own problems when it emerged their water prices had skyrocketed in England at the same time as executives were being given exorbitant pay rises and water supplies were running out because antiquated systems could not cope with a prolonged drought.

The South Australian government forged ahead, with the minister responsible for the deal, John Olsen, determined to bring it to conclusion.
As a former leader of the State Liberal Party and an aspirant to the job of Premier held by long-standing rival Dean Brown, Olsen publicly staked his political future on the contracts success.

The race between United Water, North West Water, and Lyonnaise des Eaux (rebadged as South Australian Water Services after teaming up with property giants Lend Lease, P&O Australia and Adelaide development company the Hickinbotham Group) came to an end in October 1995, when the final bids were handed in.
Despite widespread speculation North West Water would win the deal, United surprised the pundits when it was chosen as the preferred bidder.

A high-powered negotiating team then spent nine months thrashing out the finer details of the contract; including lavish promises of cost savings and the creation of a multimillion-dollar water industry.
Then, just as the contract was about to be signed, it was revealed that United's winning bid had been delivered four hours late to the headquarters of SA Water, the government body overseeing the process.

If that were not enough, SA Water and Olsen found themselves in hot water when it was revealed North West Water and Lyonnaise des Eaux had not been told United had been granted an extension to lodge its bid after claiming its computer system had crashed.
Not only were they not told. Their bids were opened, photocopied and distributed before the United bid arrived.
Details of the late bid had been successfully kept under wraps by Olsen, his minders and a special committee of government ministers charged with ensuring all went according to plan.

But the lid came off during a hearing of a parliamentary committee set up to scrutinise the deal - and to ensure South Australian taxpayers were going to be winners, not losers.
The South Australian government had no option but to stall the signing of the contract until the bidding process had been investigated by the Crown Solicitor and the Auditor-General.

Under immense pressure to report quickly, the two men came back with reports which revealed a bungle of unprecedented proportions.
Not only had the bid been late and the others been copied, it turned out an independent probity auditor had signed off and gone home before the United documents arrived, the executive responsible for the contract process had gone out for dinner and an integral part of an elaborate security system, the video recorder, had run out of tape.

However, the Crown Solicitor and the Auditor-General both reported they found no evidence of impropriety during the bidding process or on the evening of 4 October 1995 - a night which has plagued Olsen and the South Australian government ever since.
The events have been used repeatedly by the leader of the Labour Opposition and former Kiwi radio journalist Mike Rann as part of a sustained attack on the water contract, now into its third year.

Rann began in early 1995 by attacking the French companies over the corruption allegations. Then the Mururoa testing prompted Rann to go to Paris where he took out a full-page ad in Le Monde in protest.
Then his focus turned to the events of 4 October.
Rann spent most of 1996 pushing his colleagues on the water contract select committee to keep demanding to see a copy of the contract, a request repeatedly refused by Olsen on the grounds of commercial confidentiality.

In November 1996, politics in South Australia took a nose-dive when Olsen and a group of supporters dumped Brown, the reigning premier, in a brutal coup which shocked even the most hardened political observers.
Rann jumped at the chance and used a grievance debate in the last hour of Parliament in December to unleash a torrent of allegations against United.
He used parliamentary privilege to claim the National Crime Authority and the SA Police anti-corruption branch had investigated allegations of bribery and improper fraternisation during the bidding process. Both authorities reported they had cleared the process and found no evidence to support Rann's charges.
Two weeks later, Auditor-General Ken MacPherson reported he, too, could find no impropriety after an extensive investigation.
The next twist came in January when Rann was called to a secret rendezvous where he was handed 800 pages of highly sensitive and confidential government papers on the water contract by a "prominent Liberal".
Rann immediately started to use the documents to destabilise Olsen, who revealed the papers had come from the filing cabinet of Brown's top adviser. Olsen's tactic was to stop Rann in his tracks by tabling the lot in State Parliament.
But it didn't stop Rann for long. A month ago, one of his better performers, Kevin Foley, was anonymously handed a photocopy of the water contract Olsen had wanted to keep secret.

The furore continues.
While Foley has gone through the contract and is using it to ask penetrating questions about what United Water promised, and whether it is being delivered, Olsen tried to get the police to investigate who leaked it to him.
The police have decided not to pursue the culprit, thought to be a Liberal politician disgruntled with the coup last November. In the meantime, United Water is getting fed up with constantly being attacked in the political arena and in front of the select committee, still calling witnesses to hear evidence. The company can argue, convincingly, that so far the contract has been a good thing for South Australia.While exports are not growing as quickly as hoped, the contract in Papakura and another in Indonesia are two solid runs on the board. Service delivery, infrastructure maintenance and emergency response times in Adelaide also have noticeably improved. But, while United keeps its head down and gets on with doing the job it is being paid around $1 million a year to do, the brouhaha shows no sign of abating.