$5 Million a Year: The Tip of the Sukleen Waste Pile
By: Mohammad Zbeeb
Published Monday, August 27, 2012
The smell of scandal is rising from the controversial relationship between the Lebanese government and Sukleen, the country’s main waste management contractor. Al-Akhbar uncovers how an extra $5 million are still paid yearly to Sukleen despite the company agreeing to discount that sum.
In 2011, the Lebanese were made to pay an extra $5 million (which will be repeated again in 2012) to the Averda group, which owns waste management contractors Sukleen and Sukom-International (Sukomi).
The group had made a commitment to reduce its fees by 4 percent. But this was completely ignored when the new contract for sweeping, collecting, and processing the country’s garbage was signed for the period between 17 January 2011 and 17 January 2015.
The $5 million amount will have to be paid by the municipalities, although the discounted fees had been based on estimates by the Council for Development and Reconstruction (CDR) in 2009.
CDR estimates that total sanitation costs were $125.2 million in 2009. But reports by neutral auditors reveal undeclared costs hidden by the scattered contracts and their numerous addendums, the way the prices were fixed and reviewed, and the manner in which such amounts were deducted from municipal budgets.
This is in addition to suspicions surrounding the contracted companies themselves and the interests of the group they serve and its political allies.
No Reduction in Prices
This fresh scandal was uncovered by official correspondences between the government and the CDR. Energy and water minister Gebran Bassil had sent a letter to the general secretariat of the cabinet on 7 May 2012, inquiring about the “alleged” $ 5 million deduction, which does not appear to have been implemented.
The prime minister’s office referred the request to the CDR on 21 May 2012, which responded on 8 June 2012.
“The CDR had sent a memo on 29 July 2010 to the prime minister informing him that, in case of a 4-year contract extension, Averda proposes a 4 percent commercial discount from its net profits in the extension period beginning on 17 January 2011 and ending on 17 January 2015,” the response clearly stated.
It added that, “to date, the CDR has not received any instructions from the cabinet about the work of the ministerial committee in charge of negotiations with the group to reduce the current contract prices.”
“Therefore, the CDR did not initiate any procedures to reduce the prices and is still waiting for the cabinet’s decision on the matter,” the memo read.
These facts, now validated through official correspondences, demonstrate the degree to which private “feudal” interests control the workings of the state.
More significantly, it demonstrates that changes in government or shifts in the balance of power have no effect on such interests. They remain protected and secured, regardless of the apparent conflicts and divisions between so-called March 8 and March 14 parties.
The Averda case became a hot issue in 2010, under the Saad Hariri government. Ministers from the Free Patriotic Movement (FPM) and Hezbollah strongly condemned those contracts, as part of their campaign against “corruption.”
They pushed Hariri into a virulent defense of the contracts with the group run by Maysarah Sukkar, a family friend. Hariri made his famous threat during the cabinet session on 20 October 2010, saying that “either the contracts are extended or you will drown in garbage.”
That was on the eve of the expiry of the original contracts with the group set for 17 January 2011.
The cabinet meeting fell apart due to the threat and the contracts were extended, as indicated by the previously mentioned correspondences. But the discount from the net profits did not materialize, despite Sukkar’s commitment and Hariri personally announcing it in the same session.
More important, this clear case of public money waste has not been brought up since that date, except as political banter from time to time.
Fraud in Broad Daylight
In an official correspondence late last June, the CDR indicated that it had signed the supplemental contracts with Averda on 10 February 2011, which is 23 days after the contracts had expired. They covered sweeping, collecting, treating, and landfilling refuse in Greater Beirut and adjacent areas.
The supplements “extend the contracts to 17 January 2014. The technical, administrative, and financial terms of reference of the contracts shall be amended according to the recommendations of the ministerial committee formed by cabinet decision no.34 on 6 April 2010 as soon as they are issued. The contracts may be extended till 17 January 2015.”
The letter also extended the consultancy contract with engineering and architecture company LACECO, owned by former Future Movement MP Salim Diab.
CDR basing its actions on cabinet decision 34 is itself a scandal, summed up in the story of the formation of the aforementioned ministerial committee. It had been established in April 2010 and chaired by then-prime minister Saad Hariri.
Its members included the former ministers of interior (Ziad Baroud), finance (Rayya al-Hassan), and environment (Mohammad Rahhal), assisted by the head of the CDR (Nabil al-Jisr) – all members of the Hariri camp, with the exception of Baroud. It was in charge of negotiating the possibility of reducing the current price list with the contractor, the Averda group.
The decision to form the committee came after a heated debate in the cabinet meeting at the time. This was following a request by Hariri to extend the contracts for another 4 years at the same high prices.
Two days later, the minutes of the meeting sent to the ministers included the decision to create the ministerial committee to negotiate the reduction of prices. But it also included the agreement to extend the contracts till 17 January 2015 as a maximum.
Some ministers considered this a blatant forgery of the ministerial decision. FPM ministers raised the issue in the next session and insisted that the cabinet’s decision to extend the contracts should be based on the negotiations.
Nevertheless, the decision was never corrected and the issue hung in the air until October 2010, when Hariri informed the cabinet verbally that Averda had agreed to reduce prices by 4 percent ($5 million). He promised to present the report of the ministerial committee formally to the government for approval. But no new decision was taken and the issue remains stuck.
The fraud is verified by an official letter sent to the cabinet this month from tourism minister Fadi Abboud (who was also a minister in the Hariri government). He demanded that the contracts with Averda be invalidated, considering them to be null and void, given that no cabinet decision was taken for an extension.
Just for Banter
These details show how the interests of Sukleen and its sister companies remain secure, like those of Solidere and similar companies, which are closely connected to the centers of political influence in the state.
The contracts were extended without the discount promised by the contractor. The terms of the existing contract are contrary to all government reports and studies, which indicate that prices could be reduced by no less than $62 million annually, and not the measly $5 million charity contribution from Maysarah Sukkar.
All of this is a clear indication of the true motive that pushed the dominant political and financial powers to insist on devolving state functions and responsibilities to others, especially through privatization, dubbed as partnership with the private sector.
The latest example of such policies was contracting distribution and bill collection in Electricité du Liban (EDL) to three private companies linked to Hariri, Bassil, and others.
While Bassil keeps bringing up the Sukleen contracts, he led a fierce campaign for similar contracts in EDL. One can only conclude that raising the issue serves no more than to “banter” with political opponents (accused of corruption) and to score some points by keeping them silent about the other side’s corruption.
The continuity of the Sukleen contracts issue, their extension, and exorbitant cost demonstrates that such agreements are “forever.” It is enough to mention the pretext given by everyone for neglecting the extension and the fraud and who insist that there is no alternative.
In other words, they are saying the status quo should be kept at the expense of the state. So the cabinet never included the issue on its agenda, nor did the CDR implement the “forged” cabinet decision that had stipulated the launch of a new call for tenders.
This is so they can justify saying that “there is no more time to do so. We have no other choice but to extend the contracts, or we will drown in garbage.”
This article is an edited translation from the Arabic Edition.