Gábor Demszky is getting ready for one of his last chances to cut a ribbon since - after one year of trial runs - plans are under way to hand over the Budapest Central Wastewater Treatment Plant by 1 August. The project accompanied by the construction of a gigantic network of conduits was announced with great fanfare by the Lord Mayor's Office, which claimed that thanks to the area's largest ever environmental development project with a total cost of 120 billion forints, 65 percent of which was financed by the EU, Budapest will open up again onto its own "main road", i.e. the Danube. In principle this means that water sports and water-related leisure activities will be made possible for great masses of people by the Danube and the river might even be populated with fishes - such as great sturgeon and wels catfish - indigenous to Hungary.

The downside of this large-scale development is that the operation of the Csepel plant (given its present technical parameters) would incur an increase of at least 70 percent in water costs for the local population. However, this fact is consistently left out of official information releases; all that is cited by the city's leadership headed by Gábor Demszky is that it would appear that extra burdens will unavoidably be built into the present 340 forint per cubic metre cost of sewage charges gradually. Quite likely the honourable task of informing families of the estimated thousands of forints per month increase will be left to the new lord mayor after the autumn elections. 

French conquerors

A giant project here, increased charges there - the majority of the capital's politicians (and the public) who have got used to Metro 4 and the BKV (public transport company) scandals have thus far not been affected by the news of the completion and putting into operation of the wastewater treatment plant. For example, at last Wednesday's sitting of the local government's financial and public acquisitions committee, it transpired that apart from the Christian democrat Zsolt Zoltán Wertán, who specialises in systematic factfinding investigations, there is hardly an MP who regards him- or herself as competent in the Csepel affairs. The meeting immediately turned into tragicomedy, when scarcely a month before the wastewater plant was to be handed over, it occurred to the SZDSZ delegate Gábor Székely to have the whole project politically vetted using the municipal apparatus - and this motion was unanimously passed by the committee.  

However, the problems at Csepel have been reeking for at least five years. As it was later also established by the EU inspectors, in 2005 the Budapest local government violated regulations when managing the tender for the planning, construction and four-year operation of the plant. The inspectors cited the lack of an open procedure as a distorting element along with the fact that in the final stage the winner was selected from one "competitor". The lucky winner was the Csepel 2005 FH consortium, the two French players in the background of which, Suez and Veolia Environnement, falling under the influence of the minority government, rather present themselves in France as competitors. (The former is represented in the consortium through its subsidiary Degrémont S.A. and the latter by OTV France.) Shrewd observers also noticed that the ministry for water at the time also participated in the apparently corrupt decision, even though the department head responsible for the cohesion fund of the ministry was also one of the top directors of Veolia in Hungary until 2004.      

If at no other time, then certainly by the beginning of 2010 it had become abundantly clear to every municipal politician that the construction of the Budapest Central Wastewater Treatment Plant formed part of the - harmonised - strategy of Suez and Veolia to take over some of the Hungarian water market. A series of Index articles at the time assumed that an agreement had been made in the background (vehemently denied by all parties) between the Gyurcsány government, Suez - already controlling the Municipal Waterworks - and Veolia - supervising the Municipal Sewage Works - to divide the Hungarian water market. According to this, Veolia would have been allocated public works in eastern Hungary and Suez would have received the regional public utilities in the west. The recipe is nothing new as in 1984 the two global companies shared the local government public utility company along the Seine in Paris. Moreover, the water scandal in Pécs exploded precisely because, according to the local Fidesz party, Suez made the inhabitants of Pécs pay for the expenses related to its expansion in the Transdanubian region.   

Signs of danger

There is no such tension boiling in Budapest. Whether in regard to water, sewage works or the sewage treatment plant, the two French giants are able to "harvest" the profit in a happy symbiosis. For example, as we wrote earlier, by illegally ensuring the position of the Suez-Veolia duo in the Csepel project, the capital caused the Hungarian state, which originally financed 20 percent of the investment, and the Budapest local government, which put up 15 percent of the money, to lose out and not employ foreign developers. As a result of the violation of the law, the EU withdrew 40 million euros, i.e. 11 billion forints of support from the plant. (Of course the amount has to be made up from Hungarian funding, and it is at most a small consolation that the 40 million euros - theoretically - may still be used for similar projects. More on that later).   

Our magazine already sounded the alarm last spring because of the suspicious dealings around the sewage works; our sources felt that towards the period when the final handover of the plant was approaching, the Budapest local government was watching with a suspicious degree of tolerance as the French consortium wanted to bring more billions down on Hungarian heads (Heti Válasz, 26 November 2009). As we reported, the developers submitted a claim against the capital for 4-5 billion forints, saying that "the archaeological digs, which are the responsibility of the defendant," were completed with a significantly delay. The basis of the case, which is presently on-going before the court of arbitration, appears to be trumped up since the plant was finished in time - but despite this the local government's lawyer of the time, Judit Molnár (the wife of liberal Budapest MP Imre Lakos) demonstratively armed herself with some "soft" arguments for the trials. In our earlier articles we considered whether the capital represented by Molnár could intentionally lose the case against the French, or simply use the court of arbitration as a pay-office? After this Judit Molnár had our magazine summoned to a tribunal but during the rectifying process the court judged Heti Válasz to be right in eight out of eight points.     

For some time after that, Imre Lakos' wife did not represent Budapest in the case "against" the French; she returned her commission. In the meantime, however, we found out that the Horváth, Dóczi & Lehmann Lawywers' Office, a domestic team of lawyers working for Miklós Hagyó (who is serving time in custody) had also signed a contract with the capital (to be more precise: with Enviroduna Ltd. coordinating the wastewater treatment plant development from the local government side), in order to look into the Suez-Veolia claims related to unexpected additional work. However, this did not lead to the former socialist deputy-lord mayor Hagyó making even one single objection to the excessive demands made by the French.

Scania is not to blame

The fact that the consortium wants to extract the maximum in profits from the projects underway does not contradict bare market logic. At the same time, we have numerous examples of the capital not doing all in its power to further its interest, and sometimes it creates situations that appear to be suspicious and even fraudulent. Firstly: the plant in Csepel not only purifies water, but - as an additional product - it also produces sewage sludge, which the French operators originally had to transport to the composting plant in Cséry, 12 kilometres from the wastewater plant. However, in the meantime the EU removed this location from the project, justifying it by citing the extreme pollution the environment would have suffered as a result of transporting the sludge by road (therefore Hungary has to convert to rail/water transport solutions). After this, the ministry for the protection of the environment issued an order last August to the Municipal Local Government's department for public works saying that the estimated cost of the Suez-Veolia-led consortium would have to be decreased because of the removal of the composting plant from the project.

This basically means that the capital cannot give money to the French to acquire vehicles to transport sludge, nor contribute to the costs of transporting sludge in any other way. However, as Heti Válasz reported on its website two weeks ago, the consortium nevertheless purchased some Scania tractors (as well as trailers for these), and is now preparing to collect 1.2 million euros from the local government on the handover-takeover on 1 August in accordance with the original contract. We looked into the real market value: the Scania tractors and trailers must have cost Suez up to 350 thousand euros; in other words, the capital will lose 240 million forints on the vehicles alone if the politicians do not prevent the transaction within the remaining two weeks. Seeing this waste of money, the director of Scania Hungária Ltd, Róbert Sáránszky, unambiguously remarked that the company he directs is not responsible if the French purchasers wish to sell the capital vehicles at many more times the amount of their acquisition value. Of course in reality Gábor Demszky's office will lose even more than the 240 million, since it is preparing to purchase vehicles for a project element that has been officially cancelled.

After all this it is hardly surprising that although during the trial run period the consortium did not transport a single gram of sludge anywhere, the capital will in accordance with its present stance - in addition to the vehicles - pay the Suez-Veolia group for non-existent work (since so far it has not been able to amend the contract it signed in 2005). Add to this the fact that the transportation of the sludge had to be carried out in another way - the local government is about to pay 1.2 million forints for the period of the trial run and the following half year to another consortium called BioSolid - and it becomes clear that the sludge balance is worse than tragic. Furthermore,  BioSolid is a member of the Municipal Sewage Works, which "by coincidence" is managed by Veolia. 

As we know, the French are now using their lobbying power to have the method for calculating the water cleaning fees they will charge over the next four years stipulated in writing before the autumn local government elections, thus tying the hands of the next metropolitan leadership. In addition, the Suez-Veolia duo wants to take the opportunity to provide the Csepel plant with a new level of water purification. Experts are challenging the necessity of this, although it is a fact that theoretically part of the 40 million withdrawn from the project by the EU could be utilised. The deadline would be 2012, but it is simply impossible to run an open procedure public procurement tender (and implement the project) in such a time period. If the French won the tender during an accelerated procedure based on negotiations, without an announcement and competition, the EU would again "confiscate" the money. And of course the consortium would not lose anything, again.