Part 1

Company management also did not agree with the observation of the prosecutor that “periodic inspections and monitoring” could have prevented the Nubarashen poisoning incident.

With an agreement concluded by the Armenian government, operation of water supply and waste water removal for the city of Yerevan and 32 adjacent villages was leased to the French Veolia Water company.  It covers all the water services activities, such as production, distribution, customer services, and maintenance. The contract came into force on the 1^st of June 2006. Under the conditions of the ten year contract, Veolia assumed the responsibility of providing water on a 24 hour basis during the allotted timeframe.

The company also   received $18.75 million in World Bank financing to implement these obligations. A body called the “Community Development Programs Office” (CDPO)  attached to the Yerevan Municipality was set up to monitor implementation of the obligations set forth by the credit program during the first five years. From the CDPO bulletins regarding Yerevan Djur’s annual business projects it becomes clear that the initial encouraging successes registered by Yerevan Djur in the first year (a certain improvement in water distribution in Yerevan, clarification of supply timetables) did not continue. In the sixth year of the contract, 2012, according to informed individuals, the company only succeeded in supply in water to Yerevan for 16 hours daily at most.

Illegal connection

Yerevan Djur General Manager Gor Grigoryan doesn’t accept these indices and claims that in 2012 the company has already been able to guarantee 23 hours of water; the mark set for 2016. He says that in the capital Yerevan the minimum water supply is twelve hours daily and that this is the case in a very small section.

Yerevan Djur presented such a high figure to the municipality two years ago, confirming an almost 23 hour water supply. In reality, residents were complaining about the supply and complains particularly increased during the summer. This issue became a prime issue of municipal consultations. Those in the know claim that tensions between the municipality and Yerevan Djur kept rising.

 Only 15% of the water reaching Yerevan is being paid for

The company explained away this shortcoming by pointing to 81-86% of leakage loss and proposed the closing of fountain and water cascades in the capital to decrease losses and improve supply, as well as the installation of water meters. We should note that according to Yerevan Djur calculations, water fountains only comprise 2-3% of overall water loss. In addition, these fountains are shut down from November to April. Thus, closing them completely wouldn’t have made much of a difference.

Fish seller

The municipality did not accept the company’s demand and instead proposed that the company create a monitoring unit within the company; something which the company was obligated to have anyway according to the contract with the Armenian government. The new unit was tasked with exposing employee inadequacies in the company’s sub-divisions, locate illegal connections to the system and write them up, control water losses, monitor repair work, implement work to locate and monitor flow losses, monitor complaints/advisories about water supply quality, and to assist in decreasing water leakage in Yerevan and adjacent villages and increase company revenues.

This proposal was not favorably viewed by Yerevan Djur management but they were forced to make concessions since complaints against the company were rising. “In general, the company failed to decrease water losses and to economically use drinking water. The 84.6% system-wide loss figure is unacceptable in the fourth year of the contract. In the first four years, the company has failed to bring that figure down by even 1%, even though all the necessary factors to do so are in place…” This is the opinion expressed by the CDPO in March 2010 regarding Yerevan Djur’s annual report for the fourth contract year.

Starting on April 19, 2010, a Water Balance Coordination and Supervision Directorate (WBCSD), a separate subdivision under the direct control of the company’s general manager, began to operate. This Directorate only lasted for one year. During that time it studied ¼ of the company’s service area – the 7 districts of the capital and certain adjacent villages. 15,305 violations were registered and fines were levied as a result. This brought in 166 million AMD in revenues to the company.

Gagik Margaryan

The violations were diverse and included illegal connections, defective water meters, seal breaking, etc. In one house, residents using water were not subscribers. In one community, the Zovuni gardening organization, all the residents weren’t paying their water bills, this when Yerevan Djur Customer Relations Director Gagik Margaryan had a summer house there. Many cases came to light when residents wanted to become subscribers but the company never signed contracts with them. In another case, water meters were not registered in the company’s computer database.

As a result of all this, the amounts collected from citizens disappeared and company revenues didn’t grow. “This was shown as a business loss,” said WBSCD Director Mikayel Davtyan. According to his calculations, only 15% of the water entering Yerevan was being paid for. The non-payers not only included physical and legal entities but government agencies.

Violations registered by the WBSCD between May 3, 2010 and April 20, 2011

Legal acts of exposed infractions were sent to the Yerevan Djur directorate and the general manager. However, they say that they received answers to only 100 of the 500. “We sent another communiqué to see how many had been made subscribers, but the letter remained unanswered. They nullified some of the legal acts we wrote up without having the right to do so,” says M. Davtyan.

Pascal Royer

On March 10, 2011, Davtyan wrote the following to then Yerevan Djur General Manager Pascal Royer: “Practice shows that legal acts leaving our directorate aren’t discussed but are nullified without basis. As a result, no monies are collected in favor of the company. We wish to note that such documents with legal force started to be nullified not by the demand of the general manager, but rather by the decision of Customer Relations Director Gagik Margaryan.

130 cases regarding revealed violations were sent to the courts. The amount to be collected was about 60 million AMD. “Every month they collect 50-60 million AMD and this was only a portion of their revenues presented as water loss. By working well, that loss could have been decreased to 70%,” says WBSCD Director M. Davtyan. On March 18, 2011, he presented Yerevan Djur General Manager Royer with the company shortcomings in a letter and stated that if all the violations exposed just in 2010 were removed and fixed, then water loss by the end of the year would have dropped by 5%. “This means that company revenues would have grown by 1/3^rd, the amount of water supplied would have increased by 33%, and the water rate could have dropped by 60 Drams,” the letter reads.

Mikayel Davtyan notes that when they conducted inspections of certain sites, the water loss decreased immediately and revenues rose. When they left, the opposite happened. Due to infractions, it’s calculated that water loss amounts to 260 million AMD; more than 30% of the amount monthly in Yerevan.

	Illegal water connections

This even surprised the Community Development Programs Office.” They demanded additional clarifications regarding the fifth year of the “lease Contract”. In a letter dated January 25, 2011 to all Yerevan Djur directorates and the general manager, they wrote: “The fact that water loss hasn’t decreased remains a mystery even though: 

a)      10,589 were discovered, of which 3,920 were illegal connections

b)      102 breakdowns were discovered, which comprise 

It was proposed to the company to present differentiated between commercial and technical water loss figures.

In its one month of operation, the control directorate gave special attention to breakdowns of an operational nature, to which immediate responses would lead to water loss reduction and a rise in water quality. However, according to directorate employees, the company did not eliminate a majority of the infractions found and that many were never followed up. In a letter dated February 1, 2011, the Operations Directorate sent a letter to then General Manager Gor Grigoryan regarding non-response to emergencies, stating: “ To date,  most of the breakdowns discovered by the Water Balance Coordination and Supervision Directorate have either not been fixed or, if they have, there is no relevant information about them…attached is the  corresponding list.”

Ashtarak trunk road; ilegal connection

General Manager Pascal Royer also didn’t respond to the communiqués of the control directorate. M. Davtyan says that as a result, shortcomings in the system increased. “Due to Mr. Royer’s unexplained indifference, the abovementioned infractions are overlooked, favoritism is practiced, and directorates and employees regarded as inconveniences are being eliminated. As a result, the true picture is not reaching the European management of Veolia Water. During his years as manager, he and his cohorts did everything to make the company unproductive, leading to irrational usage of credit and financial resources, improper and incorrect use of leased property, and water loss. All this not only damages the national strategic resources of the Republic of Armenia but immediately negatively impact the company’s financial status…”

This time, Pascal Royer’s response was quick in coming. All the employees of the WBCSD received notices from the general manager on April 4, 2011, informing them that their work contract was being terminated. “According to Decision 2 taken by the Yerevan Djur Council on April 14, 2011, an administrative restructuring will occur resulting in a new job position list. By this decision your job position has been terminated. The company has no other work to offer you.”

Mikayel Davtyan stated that as of April 20, 2011, when he and the others were still regarded as Yerevan Djur employees, writs against 50 legal and 830 physical individuals for illegal water connections were never given due process.

(Scoop, a Danish-based network for investigative journalists, assisted in the preparation of this investigative article)