Three Hundred Citizen Groups Call on Secret World Bank to Open Up Bechtel Case Against Bolivia

August 29, 2002

 

Contact Info:
Soren Ambrose (Washington, DC) 202-285-5836
Martin Wagner, Earthjustice (Oakland, CA) 510-550-6714
Jim Shultz, The Democracy Center (Bolivia) 011 591 4 429
0725/001-591-707-43631, jshultz@democracyctr.org
Marcos Orellana, CIEL, 202-785-8700

More than three hundred citizens groups from 41 countries presented
a petition to a World Bank-affiliated court today, demanding that it allow
public participation in a controversial case in which Bechtel Corporation
is suing Bolivia for $25 million.

Bechtel is suing South America's poorest country for a portion of the
profits it wasn't able to earn after a public uprising in response to
Bechtel’s water rate hikes forced the company to depart from the country
in April 2000. (See Background story at PBS.org)

Bechtel's legal action is being heard by the International Centre for the
Settlement of Investment Disputes (ICSID), an international tribunal
housed at the World Bank that holds all of its meetings in secret.

"Bechtel is demanding $25 million dollars from some of the poorest
families in the world," said Oscar Olivera, a leader of the coalition of
Bolivian peasants, workers and others that formed in opposition to
Bechtel. "The fact that a World Bank court is preparing to hear this case
behind closed doors, without any public scrutiny or participation, is a
clear example of how global economic rules are being rigged to benefit
large corporations at the expense of everyone else."

A wide range of groups joined in the demand to open up the process.
They include trade union organizations (e.g., the 2.5 million-member
Canadian Labour Congress and Public Services International, which
represents services sector workers around the world); environmental
groups (e.g., Friends of the Earth); consumer organizations (e.g.,
consumers associations of Canada, Japan and Zambia and U.S.-based
Public Citizen); research groups (e.g., Institute for Policy Studies in
Washington, Transnational Institute in Amsterdam, and the Integrated
Social Development Centre in Accra); and numerous religious institutions
(e.g., Maryknoll Fathers and Brothers in Peru and the American Friends
Service Committee); as well as noted authors Naomi Klein, Maude Barlow
and Vandana Shiva.

The groups called on the panel to make all of the documents and meetings
in the case public, to travel to Bolivia to receive public testimony, and to
allow Bolivian civic leaders to be an equal party to the case.

The citizen’s letter will be accompanied by a formal "petition to
participate" by Olivera and other Bolivian civic leaders to the ICSID
tribunal hearing the case. The tribunal is comprised of one member
appointed by Bechtel, one appointed by the Bolivian government and a
third, its president, appointed directly by World Bank President James
Wolfensohn. The ICSID panel is scheduled to hold its first hearing
sometime in early September (though Bank officials say they are barred
from disclosing exactly when or where the hearing will take place).

The legal team representing the Bolivian petitioners includes Oakland,
CA-based Earthjustice and the Washington, DC-based Center for
International Environmental Law, both of which have been involved in
attempts to intervene in similar investor-state lawsuits filed under the
North American Free Trade Agreement.

AFTERMATH OF A REVOLT AGAINST WATER PRICE HIKES

In the late 1990s the World Bank forced Bolivia to privatize the public
water system of its third-largest city, Cochabamba, by threatening to
withhold debt relief and other development assistance. In 1999, in a
process with just one bidder, Bechtel, the California-based engineering
giant, was granted a 40-year lease to take over Cochabamba's water,
through a subsidiary the corporation formed for just that purpose
("Aguas del Tunari").

Within weeks of taking over the water system, Bechtel imposed huge rate
hikes on local water users. Families living on the local minimum wage of
$60 per month were given bills equal to as much as 25 percent of their
monthly income. The rate hikes sparked massive citywide protests that
the Bolivian government sought to end by declaring a state of martial law
and the deployment of thousands of soldiers and police. More than a
hundred people were injured and one 17-year-old boy was killed. In April
2000, as anti-Bechtel protests continued to grow, the company's managers
abandoned the project.

Bechtel filed the legal action against Bolivia last November, demanding
compensation of $25 million, a figure that represents far more than
Bechtel's investment in the few months it operated in Bolivia. Bechtel's
action also aims to recoup a portion of the company’s expected profits
from the project. The company filed the case with ICSID under a bilateral
investment treaty between the Netherlands and Bolivia. Although Bechtel
is a U.S. corporation, it established a P.O. box presence in the Netherlands
in order to make use of the treaty.

The rules in the Dutch-Bolivian treaty are similar to those in NAFTA and
the proposed Free Trade Area of the Americas. According to Sarah
Anderson, Director of the Global Economy Project at the Institute for
Policy Studies in Washington, DC, "There’s been an outpouring of
international support for the Bolivian petitioners in this case. So many
people have become familiar with such investor-state lawsuits from the
NAFTA experience and they see them as one of the most extreme
examples of excessive power granted to corporations.” According to
Anderson, “The Bechtel v Bolivia case could be a preview of what is to
come if the FTAA is enacted. That agreement would give foreign
investors throughout the hemisphere the right to sue governments
directly over laws or regulations that might diminish their profits."

Documents & Photos
Public domain photos of document delivery to ICSID/World Bank - 8/29

Letter from Supporting Civil Society Groups (.pdf)

Petition Filed

Corporate, Institutional, and Government Contacts:
Bechtel Corporation: Jock Covey, External Affairs Department, Bechtel
Headquarters, San Francisco (415) 768 5444

ICSID: Claudia Frutos-Peterson, Counsel handling the case, World Bank,
Washington, DC, (202) 458-7930

World Bank, James Wolfensohn, President, Washington, DC, (202)
473-1000 main WB number

Government of Bolivia, Alberto Valdes, Charges d'Affaires in the Bolivian
Embassy in Washington, DC, (202) 483-4410

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View an update on this issue

View the Civil Society Letter (also available in Spanish)

View the Legal Petition

Photos from the event

Please contact Marcos Orellana for additional information.

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