Colombia: Taking a Stand in Cali
Edwards, Beatrice
Emcali is the public company that provides water, energy and telecom services to two million people in and around Cali, Colombia and good jobs at good wages to nearly 3,000 public workers....
...In July 2002, auditors for the Bank found that Emcali was financially unsalvageIIt d able and must be sold...
...They certainly have the experience necessary for this sort of thing...
...The workers demanded guarantees against privatization along with repair of the public systems that had been destroyed and neglected in preparation for privatization...
...This would mean further dismissals and more sidewalk entrepreneurs, although competition is increasingly keen for unoccupied squares of cement near high-volume foot traffic in Cali...
...Emcali was established in 1961, as the city of Cali grew...
...And since it's a phantom plant, it's not surprising that it had an imaginary investor...
...These workers are virtually 100 percent organized and belong to SINTRAEMCALI, a public service union fighting a long-standing battle against the privatization of the company...
...The 35-day SINTRAEMCALI occupation and the government agreement not to privatize the company followed...
...The operating costs of Emcali were under control, according to the first honest manager to run the company in a very long time, and credit for payday union ment of existing debt had already overnment been negotiated...
...This particular development plan is Emcali...
...Bu known at the IDB, on the one hand, still deman as "modernizing the state," and on the other as "strengthening the competitiveness of microenterprises...
...The second source of auxiliary income for the already affluent at Emcali was the phantom power generation plant, Termoemcali...
...subsidiary of Bechtel, held the majority share of 54 percent, and the Corporaci6n Financiera del Pacifico held the remaining 3 percent...
...The Corporaci6n Financiera del Pacifico was actually chartered in the Cayman Islands and by 2000 had been liquidated...
...SINTRAEMCALI took desperate measures in December 2001 to prevent privatization: The union occupied the administrative tower of Emcali on Christmas Day, after the government announced its plan to sell and concession the company...
...If Emcali is such a losing tthe IDB is proposition, why are private compaing its sale...
...At the time, the agreement was a victory for SINTRAEMCALI and for the community using its services, but the price has been high...
...Nevertheless, the IDB is pushing for privatization and to privatize has reserved funds for that purpose...
...Curious...
...To date, the plant has yet to produce a single kilowatt of power, although Emcali has disbursed over $70 million for its services...
...Despite the redundant studies, the water treatment plant was, in the end, poorly located so that in the unlikely event that it ever does The E open, it will treat only 30 percent of the effluent issuing from the city of Cali...
...In the near future, we can probably expect the inauguration of a new regulatory commission to oversee the operations of a privatized Emcali...
...3. In October 2002, the new comptroller for the city of Cali, Amparo Cardona Echeverry, filed charges against the former director general of Emcali, Iuan Fernando Burgos, managers and current and former board members for unnecessary contracting, negligence and embezzlement...
...1 Nonetheless, the national government agreed not to privatize Emcali and not to raise the rates for public services beyond those charges included in the 2002 budget...
...Since the Colombian President has just sprung the Cali Cartel kingpins from jail, they might be in the running...
...2 For the authorities at Emcali, the real longterm bribery bonanzas came in the form of two endless streams of unsupervised financing...
...Using the company's now untenable 38 NACIA REPORT ON THE AMERICAS 38 NACLA REPORT ON THE AMERICASPRIVATIZATION IN THE AMERICAS financial condition as an excuse to cut personnel costs, management dismissed unionized workers through a "voluntary retirement" program that the selected volunteers claimed was coercive, while hiring scores of clients, relatives and associates on external contracts in repayment for political favors...
...When this deal closed, InterGen announced that the complex financing package reflected the investors' "creative use of financial tools," and the IDB posted 0 MCALI tower occupied by union members...
...Emcali began to issue large contracts for small services, with corresponding kickbacks to the appropriate board and council members...
...Presumably the Corporaci6n disappeared because it ran out of officers: The president, vice-president, chief operating officer and technical manager were all censured and fined by the superintendent of the Colombian banking system in 1999 for lack of verifiable assets and incompliance with their fiduciary duties...
...For 35 days, the union occupied the tower, and reached an agreement with the government on January 29, 2002, after several days of high-tension police posturing in Cali and Bogoti...
...The new manager of Emcali and SINTRAEMCALI argued that the company's disappointing balance sheet for 2001 did not display continuing losses, but rather realistic one-time adjustments that had to be made to reflect accurately the dimensions of previous thefts...
...At the time, Emcali was run by a Liberal Party sect under the thumb of retired Senator Gustavo Balcazar, and while sitting on its board of directors, city council members routinely helped themselves to 15-percent-or-so "commissions" for the awarding of lucrative contracts...
...by the 1980s, the company had become an important source of graft for local politicos and unscrupulous entrepreneurs...
...The increasing debt burden created by unnecessary borrowing, contracting and theft allowed the manager of Emcali and the mayor of the city to assert that an infusion of private capital was needed to continue operation and that therefore the company had to be sold...
...the news that Termoemcali set a new standard for a "more competitive cost of power to Emcali...
...Not surprisingly, the contractor made an impossibly large number of dumping trips per day, and was paid roughly five times the going rate per cubic meter of moving garbage...
...No disciplinary measures would be taken against any worker, and all workers would be paid their salaries for the period of occupation of the Emcali tower...
...Two activists affiliated with SINTRAEMCALI have been assassinated since the tower occupation ended, two members of the Beatrice Edwards is a research analyst based in Washington,D.C...
...And who will the government and the IDB choose to manage the sale...
...The Emcali board obligingly hired the Nitogoi Consortium, which delivered the initial study more than a year late and was fully compensated for an alleged cost overrun of $1 million...
...But the IDB still wants Emcali sold, and the drama is not yet over...
...Finally, a new mayor in Cali agreed to convene a public hearing to inform citizens about the finances of the enterprise and the future of Emcali...
...Enter the IDB, once again...
...The donor government set the minimum standard for subsequent ransacking by insisting that its own companies do the design work with little oversight...
...It has been financed under similar monikers throughout the hemisphere, and remarkably, doesn't seem to work for anybody anywhere...
...Two journalists who tried to expose the corruption received death threats and were forced to flee the city...
...Colombia: Taking A Stand in Cali 1. Fernev-Voltaire, Keeping Services Public: SINTRAEMCALl's campaign in Colombia to stop privatisation," France, October, 2002...
...In what later became a pattern, the same plant design studies were done repeatedly by different consulting firms (one of which simply changed the cover on the previous study and collected its fees), while security and lighting contracts for the same services were also issued and paid several times over...
...Fifteen years and $154 million later, it has yet to open...
...Rumors suggest that, as places on the commission will be limited, a certain amount of unbecoming pushing and shoving among current and former city council members hoping to be chosen has already begun...
...And they probably had a stake in it before, given the fact that anyone who vocally opposed privatization turned up either dead or seriously threatened, which is the way the Cartel tends to conduct business negotiations...
...The first was a proposed water treatment plant, financed originally with a $75 million loan from the government of Japan...
...Until the mid 1990s, these individual thefts were not enough to break the company, but between 1993 and 1998, under a new set of Conservative Party cronies, Vol XXXVI, No 4 JANUARY/FEBRUARY 2003 37 Vol XXXVI, No 4 JANUARY/FEBRUARY 2003 37PRIVATIZATION IN THE AMERICAS the pilferage turned to plunder...
...2. Edgar Buitrago Rico and Orlando Marin Cifuentes of Revista Valle 2000 were both anonymously threatened as they attempted to investigate corruption at Emcali...
...who monitors the multilateral development banks for Public Services International...
...The Emcali case is especially disturbing because the board of directors now firing public workers had pillaged the company in the first place...
...nies so eager to buy it...
...Now there is a promising career opportunity...
...While the World Bank and the IDB looked on, providing expensive technical assistance and expert advice on regulatory regimes governing the privatization and concessioning of energy assets, the finances of Termoemcali ran right off the rails...
...Details on the grant are not publicly available because the amount of funding involved was less than $750,000, but apparently the idea was to lure nearly 800 public employees out the door into an urban economy with After a 35 open unemployment over 18 percent action, the by offering them short-term small business training, valued at less than agreed not a thousand dollars per person...
...3 To prepare the reluctant retirees for life without jobs, the IDB funded imaginary microenterprise training through two Colombian NGOs...
...And the site chosen was a dump that had to be cleared by a private contractor, although the personnel of Emcali were willing and equipped to do the work...
...Before illicit enrichment became a punishable crime in Colombia, board members turned wealthy overnight without ever confronting awkward questions about the spontaneous origins of their personal fortunes...
...As demand for services increased, Emcali expanded in scope...
...The credit was awarded in 1986 and the plant was to be built in four years...
...Emcali owned 43 percent of the plant, InterGen, a U.S...
...http://www.world-psi.org> union's leadership have narrowly escaped abduction and a former union president has been constantly followed by armed men...
...1998, during the continuing sell-off of public assets, when the national government "intervened" the company for the purpose of dividing up the remaining spoils...
Vol. 36 • January 2003 • No. 4
