Sedif-Veolia: In the Murky Waters of Europe’s Largest Concession Contract
Concessionaire of the Syndicat des eaux d’Île-de-France’s water concession contract for 126 years, Veolia was renewed for another twelve years in January. However, members of the Cour des comptes have reported irregularities and shortcomings in the tender process.
The case seemed closed. After a multi-year process, the Syndicat des eaux d’Île-de-France (Sedif) announced at the end of January that it had selected its historic concessionaire, Veolia, for its new water concession contract. A contract of an extraordinary scale, valued at 4.2 billion euros, concluded between the French giant and the public entity that describes itself as "the largest public water service in Europe."
Presided over since 1983 by the mayor of Issy-les-Moulineaux (Hauts-de-Seine) André Santini, Sedif manages drinking water for municipalities or inter-municipalities that serve 4 million users in seven departments of Île-de-France. At the end of March, the two partners signed this new twelve-year concession contract. From January 1, 2025, Veolia will continue to ensure the production and distribution of water for around 130 municipalities in Île-de-France, as it has done for 126 years.
However, a small hitch could derail this smooth operation. According to our information, members of the Cour des comptes have reported shortcomings they observed in this procedure under Article 40 of the Code of Criminal Procedure to the National Financial Prosecutor's Office (PNF).
Responsible for overseeing the tender process within Sedif, they reportedly resigned before the end of their mandate and returned to their original administration, believing they lacked the means to carry out their mission properly. Contacted, these senior officials did not respond to our requests. Neither the PNF nor the Cour des comptes responded to our questions.
The actions of the Cour des comptes members are extremely rare and seem to embarrass all those involved in the project. For it brings this tender process back into the spotlight. One incident, in particular, has caught attention: a computer glitch allowed Veolia to access all confidential files of its competitor Suez. Despite this, the tender process continued, leading to Veolia's victory.
"This procedure should never have gone to completion given the numerous irregularities," says Marc Laimé, author of many books on water management by local authorities, who has reported all the twists and turns of this tender on his blog.
This gigantic concession contract is the final round of the industrial and stock market battle launched by Veolia against its competitor Suez in 2021. It marks the KO victory of the former over the latter: Veolia is now the "national champion" of water in France, as the executive desired, exercising a de facto private monopoly in this domain.
"This contract is the archetype of the 'French-style' concession, which is at the heart of Veolia's model. It is the leverage on which this group has built its international expansion. Even though it has many concessions in France, it is this reference in the Paris region that matters to promote the delegation of the management of common goods everywhere," analyzes Raymond Avrillier, who, since his battle against the Grenoble water concession in 1992 at the heart of a corruption scandal, continues to closely follow these cases.
**Water so pure it’s not drinkable**
Pure water, without limestone, without chlorine. This is how Sedif sold its new water contract with Veolia to users. Faced with the multiple pollutants threatening water resources, the syndicate, encouraged by its concessionaire, chose to plunge into techno-solutionism. Low-pressure reverse osmosis is the answer to all the problems encountered. "An expensive technology, contrary to users' needs, which endangers the water supply security system for the entire Île-de-France region," denounces Jean-Claude Olivia, head of Coordination Eau Île-de-France, which has been bringing together critical voices on water management since 2008.
Modeled on seawater desalination techniques, this very energy-intensive technology is supposed to eliminate all pollutants through nanofiltration. "Water so pure it's not drinkable," warned François Leblanc, former deputy director-general of the Paris water authority before the parliamentary inquiry committee on water. In fact, the water produced by this system is water stripped of all mineral salts, like the kind used in irons.
"To make it drinkable, Veolia will maintain the old production lines to be able to mix the water," continues Jean-Claude Olivia. The association has compiled a lengthy argument criticizing the project. Sedif responded by denying all the objections raised by the associations.
During meetings organized by the National Commission for Public Debate, one issue in particular drew attention: the fate of the effluents and discharges from the filtration processes. The project plans to discharge them, as before, into the Seine or other rivers, without concern for downstream municipalities. Questioned on the matter, Sedif had then replied that it was not their problem, that they were not "sanitation workers."
In its conclusions, the public debate commission recommended treating all these discharges. But in the meantime, the tender process was halted at an intermediate stage, theoretically freezing all changes. Questioned about this, Veolia now argues that the group "proposed effluent treatment before discharge into the river from its first offer."
Beyond the emblem, this concession contract, the largest in Europe, has also been a source of profit for Veolia for over a century. A situation criticized by many who know the case. It’s a golden contract that seems barely controlled by Sedif. According to a report by the regional chamber of accounts at the end of 2022, the water syndicate transferred 21 million euros to Veolia in 2020, 16% of its revenues. This constitutes a very comfortable margin. The following years are similar: in 2022, the group’s Île-de-France subsidiary, Vedif, recorded 22 million euros in profits. In 2023: 18 million euros.
But these are just the official figures. Because a thick fog—common in all concessions but even more pronounced in this one—surrounds the financial relations between the syndicate and its historic partner.
According to our information, the current delegation contract provides for a flat-rate remuneration of 8 million euros for overhead costs, plus a profit-sharing on overheads, to which a net result of the contract limited to 9% is added. Beyond these 9%, the contract provides for the payment of 60% of the surplus to Sedif. According to our information, these payments have not been made for several years and are kept by Veolia's subsidiary as risk provisions. This allows it to build a cushion of several million euros per year. Questioned on this point, Sedif did not respond.
The entanglement that has existed for so many years between the water syndicate and its concessionaire is such that it seems to allow for other arrangements. For example, according to our information, Vedif receives some 700,000 euros per year for the use of its brand. Sedif did not respond to this point. In its responses to Mediapart, Veolia denies "any compensation for the commercial use of the Vedif name." We stand by our information.
Will these same schemes be reproduced in the context of the new concession? In his communication, Sedif president André Santini emphasized that Veolia had made a very significant financial effort, which seemed to have been a determining factor in awarding this contract: it agreed to reduce its future remuneration by 6%. But nothing more was specified. The elected members of Sedif only received the most succinct presentation of the contract. No questions seem to have been raised about Veolia's remuneration modalities. The secret remains well kept.
**The dice were loaded from the start.**
One hundred and twenty-six years with the same concessionaire! And the new contract extends this duration until 2036. There is no other example in France of a delegation of public property over such a long period to the same private group. At regular intervals, associations and competitors have denounced Veolia's stranglehold on the largest water concession contract in France.
Under pressure from all sides, weakened by various legal cases, André Santini, who has ruled Sedif with an iron fist for over forty years, had promised to break the model of a single contract. Of course, for this right-wing politician, there was no question of returning to a public management system that would allow municipalities to take back control of this essential public good.
But André Santini had proposed to proceed by allotment, particularly by entrusting the management of the three major drinking water production plants to several concessionaires. "There is already a geographical allotment for the delegation related to infrastructure works and maintenance. There was, therefore, no difficulty in doing it for water production and distribution," notes Dina Deffairi-Saissac, a Green Party municipal councilor of Saint-Ouen and a member of Sedif, who supports a return to public management.
In the midst of Veolia's takeover bid against Suez, Sedif decided in June 2021 to completely reverse this position, which threatened Veolia's historic contract. "It only took Christian Cambon [Republican senator from Val-de-Marne and former vice-president of Sedif] to speak for everything to be overturned. In five minutes, the matter was settled. Sedif’s elected officials voted unanimously to maintain the single contract," recounts a witness today.
Questioned at the time, Christian Cambon justified his choice by his desire to organize real "competition," convinced that many groups had the capacity and financial strength to respond to this type of tender.
The result? Despite a tender launched at the European level, only Veolia and Suez, the two French giants, responded.