Suez prepares to bring legal action against Bolivia in World Bank-related court

Julian Perez, FEJUVE (Federación de Juntas Vecinal)

The Bolivian government and the water company, Aguas de Illimani (majority owned by Suez) have been involved in negotiations to terminate the concession contract in El Alto, Bolivia by “mutual agreement.” However, after several months of negotiation they have not been able to arrive at an agreement.

The points of dispute that have blocked a consensus are:

  • refusal (by Suez) to renew the three financial guarantees that back the concession for the amount of US$15 million; and
  • the time period that would be covered by the “integrated audit” to determine the amount of investment undertaken by Suez.

Suez prefers an audit that would only cover 2001 to 2004 and would be based in “book” values with the argument that an audit was already done for the first time period (1997-2001). This is the period where the majority of investment is registered and where indications of “irregularities” exist.

Over the course of this dispute, Suez has changed strategies and charged that there is an investment dispute with Bolivia, proposing a six month period to arrive at an amiable resolution. Suez is citing the Bilateral Investment Treaty (BIT) between the governments of France and Bolivia that, in case the dispute is not resolved, provides Suez with the right to submit for arbitration before the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID). The World Bank is a minor shareholder in Aguas de Illimani holding 8% of the shares.

Suez demonstrates with these actions that it was never willing to seek an “amiable” termination of the contract, but rather that it will only accept a resolution on its own conditions. The failure to renew the guarantees gives Bolivia cause to terminate the contract and intervene in the local water company due to the fact that they could threaten to declare bankruptcy. The rejection of the application for an “integrated audit” that would provide authentic figures on the actual amount of investment and establish whether Suez is or is not in compliance with the contract also demonstrates bad faith and lack of transparency that have come to characterize the actions of the transnational Suez.

For more information contact Julian Perez,