Earthjustice Press Release, February 18, 2003 (



Citizens excluded from $25 million suit against Bolivia for company's
failed water privatization scheme

Washington, DC- The Bechtel Corporation was handed a powerful victory
last week, when a secretive trade court announced that it would not
allow the public or media to participate in or even witness proceedings
in which Bechtel is suing the people of Bolivia for $25 million. Aguas
del Tunari, a subsidiary of the California-based engineering giant, is
suing South America's poorest nation over the company's failed effort to
take over the public water system of Bolivia's third largest city,
Cochabamba. After taking over the water system in 2000, the company
imposed massive water rate hikes, which resulted in widespread protests
countered by military force that killed one person and wounded 175

Oscar Olivera, a leader of the coalition of Bolivian peasants, workers
and others that formed in opposition to Bechtel, said, "Now the World
Bank is not only imposing its ideas and programs on us, it is also
preventing the people affected from participating in a case that
directly affects our lives. This is profoundly undemocratic."
Bechtel's legal action is being heard by the International Center for
the Settlement of Investment Disputes (ICSID), a tribunal administered
by the World Bank that holds all of its meetings in secret. Bechtel is
suing Bolivia for the profits it claims it would have made from the
water privatization scheme had the rate hike protests not led to its
unplanned departure from the city of Cochabamba in April 2000. (See
background story at

The President of the tribunal arbitrating the case responded last week
to a petition filed by Oscar Olivera and a coalition of other Bolivian
citizens and public interest organizations seeking to participate in the
case. (View the petition The
President's letter asserted that the tribunal had no power to permit
affected citizens to participate, a stance inconsistent with other
arbitral tribunals and U.S. courts, where interested parties are
regularly allowed to submit "friend of the court" briefs. The letter
also indicated the tribunal's rejection of the groups' requests that
documents and hearings in the case be open to the public. (View the
letter denying access

The tribunal is comprised of one member appointed by AdT, one appointed
by the Bolivian government, and a third - the tribunal's president -
appointed by the President of the World Bank.

"The panel explicitly rejected all of our requests for public
participation in this closed-door process," said Martin Wagner, an
attorney for the US-based law firm, Earthjustice. "It is inexcusable
that a panel considering an issue as fundamental as the right to water
should be able to exclude the very people whose rights will be affected
by the case."

According to Sarah Anderson, Director of the Global Economy Project at
the Institute for Policy Studies in Washington, DC, "There has 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."


In August 2002, a coalition of citizens' organizations from around the
world requested in a letter to the tribunal (View letter and signatories that the
panel make all of the documents and meetings in the case public, that it
travel to Bolivia to receive public testimony, and that it allow
Bolivian civic leaders to be an equal party to the case. The tribunal's
response to the petition serves as a rejection of this request as well.

"The ICSID Tribunal's decision reveals structural deficiencies in the
ICSID arbitration system," said Marcos Orellana an attorney for the
Center for International Environmental Law (CIEL). "By failing to
recognize its power to allow affected citizens to participate in the
case, the Tribunal's decision would allow corporations such as Bechtel
to manipulate and compromise the integrity of international arbitration,
as well as countries' ability to protect the public welfare."

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

"The World Bank's secret trade court has now made it absolutely clear
that it wants to continue doing its work behind closed doors, without
pubic scrutiny or participation by the people expected to pay Bechtel
off," said Jim Shultz of the Bolivia-based Democracy Center. "Neither
the public nor the media will be allowed to know when the tribunal
meets, where it meets, who it hears from, or what they say. This secrecy
is just a preview of what communities in the U.S. can expect under the
proposed FTAA [Free Trade Area of the Americas, an extension of NAFTA].
Local governments from Alaska to Chile will be dragged before secret
panels as multinational corporations, like Bechtel, seek to undo local
environmental, health, worker and consumer protections, branded as
barriers to free trade."


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, Aguas del Tunari imposed
huge rate hikes on local water users. Families living on the local
minimum wage of $60 per month were billed up to 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 deploying 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.

Aguas del Tunari filed the legal action against Bolivia last November,
demanding compensation of $25 million, a figure that represents far more
than the company's investment in the few months it operated in Bolivia.
The 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, its subsidiary recently
established a presence in the Netherlands in order to make use of the

The rules in the Dutch-Bolivian treaty are similar to those in NAFTA
and the proposed Free Trade Area of the Americas.

Brian Smith
Western/International Press Secretary
426 17th Street 6th Floor
Oakland, CA 94612-2820
PHONE: 510.550.6714
FAX: 510.550.6740

Neil Watkins
World Bank Bonds Boycott
Center for Economic Justice
733 15th Street, NW, Suite 928
Washington, DC 20005
Tel: (202) 393-6665
Fax: (202) 393-1358