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Investigation Needed into Bechtel's Failed Water Services

Public Citizen
Contact: Erica Hartman (202) 454-5174; Wenonah Hauter (202 454-5150


April 5th, 2004

WASHINGTON, D.C. - Bechtel Group Inc., one of the lead contractors in
the reconstruction of Iraq, has failed its contractual mandate to
develop essential water delivery and sewage disposal, according to
information Public Citizen forwarded today to the inspector general of
the U.S. Department of Defense (DOD).

In a letter to DOD Inspector General Joseph E. Schmitz, the public
interest organization called for an investigation into why Bechtel has
not fulfilled the duties spelled out for the first year of its contract.
The letter contains information gathered at Public Citizen's request by
an Iraq-based investigative journalist Dahr Jamail, who traveled widely
and interviewed public officials, engineers, and families struggling to
deal with the lack of clean water. The information outlines the ongoing
problems in several cities in Iraq and documents Bechtel's broken
promises to Iraqis. 

"U.S. taxpayers are funding Bechtel's reconstruction contract without a
means to demand accountability," said Wenonah Hauter, director of Public
Citizen's Water for All campaign. "It is clear that Bechtel's lucrative
contract is not helping the people of Iraq gain access to the water they
desperately need to survive. The U.S. government should not subsidize
profit-driven corporations that care more about dollars earned than the
people served. Water is an essential commodity, not an option."

On April 17, 2003, Bechtel was awarded a 12-month contract now worth up
to $1.03 billion, authorizing the company to oversee the rehabilitation,
reconstruction and expansion of key elements of Iraq's infrastructure,
including municipal water delivery and wastewater systems.  The
contract, which has been extended to December 2005, was part of a
limited bidding process that forbade public review and was initially
kept secret from Congress.

        Independent evaluation of Bechtel's work in the past year has
been nearly impossible, in part due to security precautions and the lack
of transparency in the contract process.  But the information Jamail
gathered details Bechtel's contractual failures in Hilla, Najaf,
Diwaniyah, Sadr City and smaller villages where families face crisis
conditions due to the lack of access to clean water.  

        For example, one of Bechtel's earliest priorities was to ensure
the provision of potable water supplies to the population of southern
Iraq in the first 60 days of the program.  However, one year later,
there is little evidence that this mandate has been achieved; instead,
rising epidemics of cholera, kidney stones and diarrhea - all
water-borne illnesses - point to the failure of Bechtel's mission. 

        Further, the city of Hilla has a water treatment plant and
distribution center that is specifically named in Bechtel's assessment
report as one that would be rehabilitated within six months to meet
urgent needs for water. The six-month period ended Oct. 17, 2003, but
there is little evidence that the company is responding to the water
delivery needs of Hilla's population.

        The plant's manager noted that when the war began, water ran in
every house. In the war's aftermath, looting and a lack of electricity
caused the water infrastructure to stop working. Now, despite help from
UNICEF, the Red Cross and several nonprofit organizations, the plant is
supplying only 50 percent of the needed water for the people of Hilla.
The surrounding villages have no water, and they have not been given the
pipes they need to access the plant.

        While Bechtel fails in its duties, knowledgeable Iraqi engineers
and hydrologists are left on the sidelines.  Moreover, the U.S.-based
company appears to be positioning itself to assume private corporate
control over municipal water systems in Iraq if the United States
decides to open up systems to privatization. (An order to open all state
assets in Iraq except oil to privatization has been put on hold.)
Bechtel is one of the 10 most active water privatization firms in the
world, with hundreds of contracts globally.

        Public Citizen noted in the letter that Bechtel's track record
of supplying running water systems in other countries is not good. In
Bolivia, for instance, a popular uprising forced Bechtel out after the
company raised rates so high that most Bolivians couldn't pay their
monthly water bills
       
        To address the issues raised in the letter, available at
http://www.citizen.org/documents/bechteliniraq.pdf, Public Citizen
made seven recommendations, including:

*        A broad federal government investigation must be launched to
scrutinize Bechtel's expenditures and actions in Iraq, with the power to
impose or seek punitive measures for contract violations and
over-expenditure, and to provide oversight, regulation and
accountability of Bechtel's work in the application of its contract. The
U.S. Congress should be informed of the findings.
*        Expert Iraqi engineers and workers in the water and wastewater
services sector must be allowed to put their skill sets to work
immediately.
*        An institutional regime of local Iraqi oversight, which would
include a legitimate body of Iraqi experts on essential services and
representatives of civil society, must be immediately implemented.
*        Contracts issued on a no-bid basis must immediately be reopened
and submitted to a competitive bidding process.
*        Bechtel and the U.S. government should explicitly rule out plans
for the privatization of Iraq's water. Bechtel specifically should not
be eligible for privatization contracts.
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Public Citizen is a national, nonprofit consumer advocacy organization
based in Washington, D.C. For more information, please visit
www.citzen.org.