Suez

Introduction

History

"SUEZ is the result of a merger between Compagnie de SUEZ and Lyonnaise des Eaux, which took place in June 1997. At the time, Compagnie de SUEZ, which had built and operated the SUEZ Canal until it was nationalized by the Egyptian government in 1956, was still a holding company with diversified equity investments in Belgium and France, mainly in the financial services and energy sectors. Lyonnaise des Eaux was a diversified company involved in water and waste management and treatment as well as construction, communications and the management of technical facilities"

Mergers, acquisitions and businesses

In July 2008 the energy division of Suez merged with French state energy company Gaz de France, creating GDF Suez. In one fell swop the merger created 'the world's fourth largest energy utility by market capitalization, behind Russia's Gazprom, France's EDF and Germany's E.ON'. 'The combined revenues of Suez and Gaz de France were about $117 billion, with earnings of almost $8.85 billion' . Suez Environment, the water and waste division is 35% part owned by GDF Suez, as such there is quite an overlap on the board of Suez Environment from that of GDF Suez.

Suez has acquired various businesses, created a plethora of subsidiaries and ignited partnerships - often of the Public Private (PPP) kind - right across the world. Similar to its apparent rival Veolia - there are accusations that Veolia and Suez work in tandem to secure public contracts - Suez has deployed an expansive strategy, which like Veolia led to financial turbulence for them in the early parts of the 21st century. Like Veolia they expanded into countries that proved problematic, again just like Veolia they have sought various forms of corporate welfare, in the form of loans (soft), grants and subsidies from International Financial Institutions and donor governments to ofset this risk. In addition, like Veolia they have sought safer and less risky new markets. Especially affarmage contracts where they sell their expertise and skills to public authorities and companies, but are not expected to invest. Thats left to the customers and local governments.

Their businesses of energy, waste and water are of the most profound social and environmental importance. All societies require and desire efficient energy, waste and water sectors. Consequently, they are all politically sensitive policy areas. Its no surprise that Suez have a formidable and far reaching lobbying operation, with extensive political connections on their board and memberships and links to a huge amount of lobby networks, trade associations, think tanks and other institutions. Unsurprisingly Suez has secured a host of loans from various International Financial Institutions (IFI's) over the years; a situation tantamount to a form of corporate welfare. Yet Suez enjoys this corporate welfare, which comes ultimately from the worlds taxpayers and/or the tax payers and water customers of their host country, despite being embrolied in various corruption scandals over the years. It seems the worlds policy makers are so fervent in their belief in private provision; they are prepared to ignore and overlook scandal, incompetence, greed and failure in the private water sector.

Lobbying

In a world of ever increasing water use, especially by industry and business, its no revelation to report that they are working hard to ensure a favorable regulatory and legislative environment in which they operate. The possibility of increased social and environmental regulation far from being welcomed is seen as a risk. They state that 'The Group’s businesses are subject to environmental protection, public health, and safety rules that are increasingly restrictive and differ from country to country'. They go on to say that 'the competent regulatory bodies have the power to institute administrative or legal proceedings against the Group, which could lead to the suspension or revocation of permits or authorizations held by the Group or injunctions to cease or abandon certain activities or services, fines, or civil or criminal penalties, which could negatively and significantly affect the public image, activity, financial position, earnings, and outlook of the Group' and that 'Regulatory changes may also affect prices, margins, investments, operations, and, therefore, the activity, earnings, and outlook of the Group' . Yet they often attempt to portray themselves as guardians of the environment and the worlds natural resources rather than being concerned foremostly with costs and margins. Its no surprise then that they would attempt to influence the regulatory environment wherever they operate.

Lobbying assists in Masking their real objective which is to maintain the commoditisation and marketisation of those resources. Positioning themselves as best placed to benfit from the continuation and expansion of such a system. A clear example of this mindset is the CEO Water Manadate. The Polaris Institute write that 'Touted as an extraordinary call to action, it is a devious initiative by some of the global water giants to position themselves as environmental stewards while also exercising even more control over water management'. Moreover 'The last four areas (and their associated pledges) read like a handbook on how for-profit water companies can bring their agenda into every aspect of global, national, regional, and local water policy making. For example, in the collective action, public policy and community engagement areas of the Water Mandate, the CEOs state that corporations need to work closely with all levels of government, civil society and international institutions' .

Political Connections

As seems to be the way with the big water companies Suez has filled its boardroom with ex parliamentarians and political officials. Given the political nature of its operations this is unsurprising...however the disproportionate influence they enjoy raises questions over whether the same influence or voice is enjoyed by citizens. This influence is assisted by the contacts, expertise and experience that the Suez employess and board members who have a political track record bring.