Kilpatrick case incomplete; indict racketeers Judge John Feikens, Dave Bing, Anthony Earley, James Nicholson, IMG, Walbridge, Weiss, other major white-owned contractors
Their goal: theft of Detroit’s water department
“The city shall not sell or in any way dispose of any property needed to continue the operation of any city-owned public utility furnishing water and sewerage service, unless approved by a majority of city voters voting on the question at a regular or special election.”
Sec. 7-1504 of the Detroit City Charter.
DETROIT – The federal racketeering indictments of former Mayor Kwame Kilpatrick, his father Bernard Kilpatrick, former water department director Victor Mercado, contractor Bobby Ferguson, and former mayoral aide Derrick Miller say that their alleged activities related to city contracts constituted the “Kilpatrick Enterprise.”
The five have not yet been tried or copped to plea bargains on the charges. But given the U.S. Justice Department’s narrow focus on Black city administrations, and the racial constitution of federal juries, it is likely that the numerous concrete details cited in the indictment will result in guilty verdicts or guilty pleas.
In addition to prison sentences, the federal indictments ask for restitution, but only to the federal government. This is why the five, along with many other more high-ranking officials and corporate CEO’s who constitute the Feikens Enterprise, should be tried by the real victims, the people of Detroit.
“The Kilpatrick indictments are just the tip of the iceberg,” said tunnel inspector Jim Casha, who exposed malfeasance and likely fraud by major white-owned DWSD contractors that he has dealt with since 2000. (See VOD’s earlier article, “One man’s war against Detroit contractor corruption.”)
“How could Judge Feikens oversee DWSD for 33 years and let them get away with it?” Casha asked.
“It is to be expected that given the tortured legacy of this region’s racial and cultural relations that the residents of Detroit will be tarnished and tainted by the criminal pursuits of the former mayor,” said political pundit Greg Thrasher.
“Residents of the city will not escape the broad brush of negativity created by the indictment of the former mayor and others arising out of this criminal probe. Yet the contractors that partnered with the former mayor have yet to be indicted; more importantly excuses are already in the air about them being victims instead of criminals. I doubt if the cities and residents of those cities that housed these contractors’ firms and executives will be tarnished by their activities as well.
“Already the posturing and noise is in the atmosphere about the need to regionalize the Detroit Water and Sewage operation despite it having already been under federal district court oversight for years. The political buzzards are perched for attack.”
The “ buzzards” who should face indictment are headed by U.S. District Court Judge John Feikens and his “Special Master” Thomas Lewand of Bodman, Longley and Dahling, LLP. Along with members of Feikens’ Business Leadership Group (BLG), which operated from 2002 to 2009, they have paved the way for the privatization and regionalization of DWSD, in violation of the City Charter. At the same time, they have accelerated huge rate increases and debt payments, causing what community and union advocates call “irreparable harm” to the people of Detroit.
Members of the BLG included current Mayor Dave Bing, DTE CEO Anthony Earley, Ford Executive Tim O’Brien, Doug Rothwell of Business Leaders for Michigan (now head of Michigan Governor Rick Snyder’s transition team and formerly Governor John Engler’s chief of staff) and DWSD contractor Jim Nicholson of PVS Chemicals.
Detroiters also must try head executives of the Infrastructure Management Group (IMG), Detroit Wastewater Partners, Detroit Meter Partners (which includes Walbridge Aldinger and Weiss Construction), and Carlyle/Synagro. James Rosendall of the last enterprise is currently serving an 11-month sentence related to bribery of city officials, but the companies themselves have never been sued or indicted.
Along with numerous other large white-owned corporations who have raped DWSD and the city for years, they have filled the pockets of mayors, city council members, DWSD officials and others with hefty campaign contributions and outright bribes.
The real goal of this Feikens Enterprise is the theft of the entire water department, with its lucrative contracts and revenues, from the people of Detroit. DWSD supplies 675 million gallons of water per day to more than four million people in eight counties and 126 communities as far north as Port Huron and Flint.
City Councilwoman JoAnn Watson has said, “It was the citizens of Detroit who paid for, and continue to pay for, the bonds which built the Water Department, and it is our citizens who own it.”
The Feikens Enterprise has “irreparably harmed” the people of Detroit, according to Maureen Taylor, president of the Michigan Welfare Rights Organization.
“We at Welfare Rights feel that anyone who played a part, no matter how big or how small, in increasing water rates, knowing full well that thousands of households would be deprived of water and face severe crises as a result, from Judge Feikens on down to the lowliest persons, must be tried and held accountable,” Taylor said.
Up to 45,000 Detroit households annually are experiencing water shut-offs, which were not so endemic prior to Kilpatrick and Mercado’s entrance on the scene. The shut-offs result from delinquent bills and non-payment of large fees attached to the installation of automated meters under a four-year $153 million contract with Detroit Meter Partners, comprised of Walbridge and Weiss. Executives of both companies including the omnipresent Walbridge CEO John Rakolta are regular contributors to mayoral and city council campaigns.
“They put little blue tags on our doors in telling us to make an appointment to have automatic meters installed,” Wanda Roquemore, president of the Alger Block Club, told the City Council in 2008.
“Then last week, they shut off everybody’s water in a three block radius for ‘non-compliance’ even if they didn’t owe a bill. We found out that the meters are not free; you have to pay $150 to $350 for a plumber to install equipment to service the meter. They’re starting with the North End; soon it will be all of Detroit.”
Unknown numbers of families have lost their children after state social services discovered they were without water. Thousands more have lost their homes after exorbitant unpaid water bills were attached to their property taxes.
During a meeting of the Board of Water Commissioners in Jan. 2007, Mercado was blatant about the goal of rate increases, which that year averaged 4 percent for suburbanites, and 9.3 percent for Detroiters, with an additional sewage “look-back” adjustment for Detroiters to be tacked on later.
He blamed Detroiters’ unpaid water bills, and a pending water affordability plan, for the differential increases for Detroiters.
“Last year I indicated that if we did not see a significant improvement in the collection rate from Detroit retail customers,” Mercado said, “[they] may see significant rate increases in the near future. For the 2007-08 rate proposals, we have significantly increased the allowance for…bad debt expense. Together with the enhanced water assistance program, these programs have the effect of turning what would have been a moderate (roughly two percent) rate increase into an increase of approximately nine percent.” Media from all over the world have come to Detroit to document its water shut-off policies, which endanger not only the health of the individual families, but the public health. In most countries, such shut-offs are outlawed due to the danger of cholera and other diseases.
“The residents of Detroit have been irreparably harmed by all their actions, so we do not support selective enforcement,” Taylor said. “We have been demanding forensic audits of DWSD, the schools and other public institutions for years. When has the FBI ever been on the right side of any battle? There are no clean hands here, including those of the Board of Water Commissioners (BOWC).”
The BOWC must approve all DWSD contracts and rate hikes before they are signed off by the Mayor and/or the City Council. Taylor said MWRO members attended every BOWC meeting for the last 28 months, objecting unsuccessfully to contracts, rate increases, and water shut-off policies.
“Mary Blackmon and the rest of the Water Commissioners should also be held accountable,” Taylor insisted.
Thousands of city workers and their families who lost their livelihoods and in many cases their homes during the orgy of privatization carried out during the Dennis Archer, Kilpatrick, Kenneth Cockrel, Jr., and Bing administrations have also been “irreparably harmed.”
“The crimes of this group [the Kilpatrick Enterprise] go beyond the current charges,” said John Riehl, president of Local 207 of the American Federation of State, County and Municipal Employees, which represents DWSD and Public Lighting Department workers.
“We continue to fight their unfinished scheme to give DWSD’s governance over to a regional authority. The Infrastructure Management Group Inc. had been brought into DWSD by Feikens and Mercado in 2003 ostensibly to manage large contracts,” he explained.
“Instead of stopping the now evident massive contract corruption they undertook the shrinking of the city workforce and assisting Kilpatrick in privatizing and downsizing Detroit’s public services. This policy continues under Mayor Bing. Hopefully these five receive long prison sentences but we want more. We demand the restoration of the city services that they cut back. They and their big business backers stole millions from our city. We want our money back.”
Riehl acknowledged that the federal government has clearly targeted Black city administrations. But he said he believes Kilpatrick’s original indictment for lying in court about his extramarital affairs was simply a stumbling block for those who wanted control of DWSD. Now that Kilpatrick has been indicted on DWSD contract-related charges, he said, those forces will move ahead with their ultimate goal of a DWSD takeover.
In the wake of the “Kilpatrick Enterprise” indictments, Detroiters are hearing the all-too-familiar clamor for such a takeover from Oakland County Executive L. Brooks Patterson, Macomb County Water Commissioner Anthony Marocco, and others who did nothing and paid nothing to build DWSD’s massive, nine-country, 146-community infrastructure over the past century.
Newly-elected State Rep. Kurt Heise (R-Plymouth, Northville, Wayne, Canton Twp.) announced during his campaign that he plans to introduce legislation to regionalize DWSD. Such plans have been defeated in previous decades under threat of veto from various governors, but Michigan’s new Governor Rick Snyder cannot be expected to pose the same threat.
Neither can Bing, a BLG veteran who has said that he and Snyder are “joined at the hip.”
“My plan would keep ownership of the system with the people of Detroit, but would transfer decision making to a regional board elected by community customers of which Detroit would be a member,” Heise said. “State law would also be amended to allow the new Authority to refinance existing and future improvements, saving hundreds of millions of dollars that could stabilize water bills and provide new investment for infrastructure repair both in Detroit and the suburbs.”
The Macomb County Interceptor has already been sold off, without a vote of the people of Detroit, which the Charter mandates before the sale or transfer of any utility assets. The system includes seven interceptors made up of 21 miles of massive pipes, 12 metering stations, and the Clintondale Pump Station. It reaches as far as 20 Mile road and Romeo.
The 30-year agreement involving the interceptor’s divestiture also established a five member “Directors Council” comprised of Detroit’s mayor or the DWSD Director, Macomb County’s Public Works Commissioner, Oakland County’s Water Recources Commission, the Wayne County Executive or his designee, and a “Working Chair of the Consortium” selected by the Council.
It is a perfect take-off point for the authority proposed by Heise.
Heise’s proposal to refinance $5.4 billion in DWSD debt comes directly from plans laid out by Judge Feikens.
In a 2006 ruling, Feikens ordered Mercado to procure the services of banking firms (at DWSD expense) to examine the department’s current bond structure, and options for restructuring its debt.
The department was not then and is not now in deficit. At the time, it had AAA bond ratings. But Feikens told Crain’s Detroit Business, “. . .preliminary figures point to possible savings of up to $60 million a year if bond terms are pushed out to 50 years while keeping rates where they are at.”
On Dec. 20, Moody’s Investor Service downgraded $4.6 billion in DWSD bonds to “upper medium grade” from “high grade,” (Aa3 from A1) and revised its outlook on those bonds to “negative.” This means higher interest rates for banks who buy DWSD bonds. Such downgrades are a traditional ploy to force municipalities and other governments to accede to Wall Street demands.
Heise’s proposal to re-finance DWSD debt would bring another windfall to Wall Street, on top of billions in taxpayer bail-outs over the last several years.