Corporate Involvement in Jackson’s Infrastructure Set Stage for Its Water Crisis

We look at how corporate involvement in Jackson, Mississippi’s infrastructure helped set the stage for its water crisis, as tens of thousands of residents of the majority-Black city remain under a boil water advisory. After a flood in August, the main water treatment plant was damaged. While water pressure has been restored to most homes and water pressure restored to many others, viral videos show undrinkable brown liquid gushing out of many taps. Mississippi’s Governor Tate Reeves has said “privatization is on the table” for the state capital. This could lead to a repeat of problems stemming from a $90 million contract Jackson signed in 2010 with the German multinational conglomerate Siemens to overhaul the city’s water infrastructure and install new water meters meant to raise extra revenue and help the city reinvest in the system. “This contract ended up being a disaster,” says Judd Legum, who wrote about the Siemens deal for his independent political newsletter Popular Information. “There was essentially a lost decade where the system deteriorated further and there were really no substantial investments made, and that’s part of the reason why we see what’s going on today.”

This is a rush transcript. Copy may not be final.

AMY GOODMAN: This is Democracy Now! I’m Amy Goodman.

We end today’s show in Jackson, Mississippi, the majority-Black city where tens of thousands of residents who went for two to three weeks without water have now had their water restored in most cases. But in videos that have gone viral online, many say it’s brown water that’s coming out of their taps. The boil water notice is still in effect in the capital as children return from school.

Although the latest water crisis was caused by a flooded water treatment facility, it has been decades in making. As residents look for solutions, Mississippi’s Republican Governor Tate Reeves says, quote, “Privatization is on the table,” unquote. But privatizing Jackson’s water system may be part of what led to the crisis.

For more, we look at how Jackson contracted with the German multinational conglomerate Siemens in 2010 to overhaul the city’s water infrastructure and install new water meters for its billing system. The system was faulty. Siemens said it went, quote, “above and beyond its contractual obligations to help address the city’s well-known challenges, which are complex,” unquote. Judd Legum reports all of this in his piece headlined “This multi-billion dollar corporation exacerbated the water crisis in Jackson, Mississippi.” It’s published in the independent newsletter Popular InformationDedicated to accountability journalism

Judd Legum: Welcome back! Democracy Now! We only have five minutes. Describe what you have found. Tell us about Siemens, and tell us about this brown water that is coming out of people’s faucets now.

JUDD LEGUM: Well, I think the brown water is a reflection of the, really, system that’s been deteriorating now for decades. The story that I reported tracked how, starting in 2010, Siemens came to the city of Jackson, who was already suffering under a very faulty water system at that time, and said, “We have a solution. You can pay us $90 million” — it’s the largest contract signed at that time in city history — “We will install these new automated water meters. This will not only pay for itself, but generate extra revenue, which you can invest back into the water system.”

They offered a solution to the city, but it ended up being a disaster. Not only did it not meet their promises, the automated meters didn’t work really at all. Many people stopped receiving bills. People who received bills did not get them. They were often too high and they were not paid. The city filed a lawsuit. And ultimately, they agreed to a settlement — Siemens agreed to a settlement. But in the interim, there was essentially a lost decade where the system deteriorated further and there were really no substantial investments made, and that’s part of the reason why we see what’s going on today, which is a boil water order, undrinkable water and probably more trouble in the months and years ahead.

AMY GOODMAN: And let’s not forget about U.S. Consolidated. This company is owned by Tom Wallace, a former Mississippi state politician.

JUDD LEGUM: Well, that, part of the issue with this contract was that Siemens had agreed to get a fairly high percentage — I believe it was 58% — of minority-owned businesses, but instead of finding qualified subcontractors to do this, the city alleged that it essentially partnered with shell companies who did no work, including this very highly connected former legislator who owns U.S. Consolidated, essentially would just act as a pass-through. They would buy meters from one company and sell them to city for a markup. They would be installed by another company. So, essentially, this one company, U.S. Consolidated, was paid $20 million for, according to the city’s lawsuit, essentially doing no work at all.

AMY GOODMAN: What happened the $90 million settlement funds? Why is Jackson’s water system still such a disaster?

JUDD LEGUM: The lawyers who filed the suit received a third of the proceeds. As I said, there were large losses that were caused by the inability to collect fees when these meters were in operation. It was necessary to use some of it to cover those deficits. And then, although the cost of the contract was $90 million — Jackson obviously didn’t have $90 million that sitting around — they issued bonds. They spent $200 million on these bonds. They must also maintain a reserve fund in order to issue those bonds. Jackson had to reinvest less than $10million from the $90 million settlement between Jackson and the lawyers.

AMY GOODMAN: And Siemens —

JUDD LEGUM: And at this — yeah.

AMY GOODMAN: Siemens saying, Judge — Siemens saying, Judd, that they went above and beyond their contractual obligations?

JUDD LEGUM: Well, that’s what they’re saying. Obviously, they agreed to pay $90 million, the full amount of the contract, so they must have — they acknowledged, at least implicitly there, that this didn’t go well. When I contacted Siemens looking for comments on what’s going on now, they said, due to the nature of the settlement, they couldn’t discuss it any further.

AMY GOODMAN: What’s next? What has surprised you the most in your research? We have 30 seconds.

JUDD LEGUM: Well, next they’re going to try to find the money to pay for this. The state has so far been reluctant to make this happen. There is federal money coming in through the infrastructure bill last year, through the American Recovery Act, and it’s a matter of convincing the state to allow those funds to flow to Jackson. That would at least be a start in doing what’s now seen as up to $2 billion in improvements necessary to get clean water to the people of Jackson.

AMY GOODMAN: Governor Reeves says privatization is the solution

JUDD LEGUM: Governor Reeves now looks at privatization. So, history may repeat itself. We’ll have to see.

AMY GOODMAN: Judd Legum, founder Popular Information. We will link to his new website. piece, “This multi-billion dollar corporation exacerbated the water crisis in Jackson, Mississippi.”

This is it for our show. Democracy Now! produced with Renée Feltz, Mike Burke, Deena Guzder, Messiah Rhodes. I’m Amy Goodman. Stay safe.