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French Water Operator Under Corruption Probe In Armenia


Armenia - The Public Services Regulatory Commission meets in Yerevan, 17Jun2015.

Law-enforcement authorities in Armenia have launched a criminal investigation into what they call corrupt practices by state utility regulators and a French-owned company running the country’s water distribution network.

The company, Veolia Jur, on Monday angrily denied the allegations made by the Armenian police over the weekend.

A statement by the police said that in late 2017 the then chairman of the Public Services Regulatory Commission (PSRC), Robert Nazarian, and seven other senior officials from the regulatory body travelled to France on a visit fully funded by Veolia Jur. The water operator, which is part of France’s Veolia utility giant, covered their travel and accommodation expenses worth a total of over $26,000.

The statement charged that these payments amounted to a bribe which Veolia Jur’s director general, Christian Lefaix, and another senior executive paid in return for securing the PSRC’s subsequent decision to allow the company to raise the price of drinking water. The police also claimed to have found financial irregularities in Veolia’s contracts with Armenian suppliers worth 3.7 billion drams ($7.7 million).

The preliminary investigation was initiated by an aide to Prime Minister Nikol Pashinian. It will now be continued by another law-enforcement body, the Special Investigative Service (SIS). An SIS spokeswoman said on Monday that nobody has been formally charged yet in connection with the investigation.

Veolia Jur expressed “indignation” at the allegations, accusing the police of violating the presumption of innocence before the completion of the probe. “The company does not accept the incriminating tone of the police,” it said in a statement. A spokesman for the operator promised to give more detailed explanations by Tuesday.

The PSRC also rejected the “baseless” accusations. A statement by the commission said that the 2017 trip to France was part of “experience sharing” that did not predetermine the commission’s decisions.

Veolia managed the water and sewerage network of Yerevan from 2007-2016. It has been in charge of water supply in the entire country since November 2016. Its 15-year management contract with the Armenian government signed at the time calls for annual rises in the water price which can be reversed after 2023. The PSRC statement emphasized this fact.

Earlier this month, Veolia asked the PSRC to raise the price by another 7 percent, saying it needs additional revenue to upgrade the aging water network. Inessa Gabayan, the recently appointed head of the State Committee on Water Resources, strongly objected to the proposed measure. Citing a recent series of water main breaks and other accidents in and outside Yerevan, she said that many Armenians are dissatisfied with the company.

Veolia managed to phase out Soviet-era water rationing in the vast majority of Yerevan’s neighborhoods after taking over the municipal network. “By 2030 the entire population of Armenia will be supplied with drinking water [around the clock] thanks to Veolia,” the company pledged in November 2016.

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