A desalination plant that tricked the government over a period of 18 months into thinking that the drinking water it was producing met permitted levels of chloride will not be subject to any criminal investigation, it emerged this week.
Furthermore, the companies that owned it during the problematic period will be allowed to face off against each other in the final stage of a tender to build an even larger desalination plant next door.
As punishment, the Sorek A plant — south of Tel Aviv on the Mediterranean coast — will have to supply the state with 30 million cubic meters of desalinated water without charge (equivalent in value to around NIS 60 million, or $17 million) during the coming years.
A former chief scientist at the Environmental Protection Ministry has calculated that on the basis of the plant’s contractual obligations to pay for irregular quantities of salts, the fine should have been nearly eight times higher.
Sorek A — the country’s biggest desalination plant and one of the largest in the world to operate a reverse osmosis system — let levels of chloride, the main ingredient in sea salt, exceed four times what was specified in its franchise agreement in order to save what amounted to NIS 12 million ($3.4 million) until its cover was blown.
An inquiry committee headed earlier this year by Energy Ministry Director General Udi Adiri called in its report, published in August, for “effective and deterrent enforcement” and a “significant financial sanction” to be applied, saying the plant had not only benefited from savings but was also liable for an estimated NIS 46 million ($13 million) in fines within the terms of its contract with the state.
The chlorides reached 90 milligrams per liter while the maximum level agreed with the state was 20 milligrams per liter, according to the report. (It came nowhere near the Health Ministry’s standard of 400 milligrams per liter, above which such water is considered to endanger public health.)
With the conclusion of the Adiri Committee, a special enforcement team was set up that included representation from the state prosecution. The prosecution did not see reason to open a criminal case. It was the team that decided to order the plant to supply 30 million cubic meters of water without charge.
It also ruled that the franchisees and the operating company needed to strengthen their corporate governance, look at changing the management, employ an external consultant to improve operation and ensure a quality product, and increase the number of daily water tests. And it concluded that the state should improve its computerized systems so that irregularities could be identified more efficiently in the future.
Meanwhile, a committee jointly set up by the ministries of finance and energy to deal with desalination tenders announced earlier this week that the two companies that owned the franchise for Sorek A when the fraud took place — IDE Technologies and Hutchison Water — could still compete against one another for the “best and final offer” stage of the contest to build and operate Sorek B. IDE is owned by ALFA Partners and Yitzhak Tshuva’s Delek Group. Tshuva pledged to antitrust authorities that in order to compete for Sorek B, he would sell his holdings in one of the three desalination plants in which he had an interest.
The tender committee’s decision comes despite a November ruling by Judge Arnon Drael of the Administrative Affairs Court in Jerusalem that it acted with extreme lack of reason by allowing IDE Technologies and Hutchison Water to proceed to a face-off in the final tender stage for Sorek B despite the fraud uncovered at Sorek A. He ordered the tender committee to reconsider the entire issue which it did, ultimately reaching the same conclusion to greenlight the companies’ participation in Sorek B. The two companies, according to Hebrew media reports, have offered a price of NIS 1.6 per cubic meter of water, which is NIS 0.5 lower than the cheapest price the state currently pays.
The inquiry into all five of Israel’s desalination plants, which began in May, was sparked earlier this year after complaints about yellow drinking water were received from residents of the central city of Holon, which had just begun to receive desalinated water from Sorek and another plant at Palmachim.
A review of water quality data collected by the government-owned Mekorot water company, which works under the Water Authority at the Energy Ministry, highlighted discrepancies.
The inquiry discovered a system at the Sorek plant known to workers as the “morning sample procedure.” Just before the daily water sample was taken, workers would manually and temporarily alter the procedure for filtering out the salts so that the chloride content would appear to be within limits. The reality, said the report, was that the water supplied for most of the rest of the day was different from that which featured in the daily tests and reports.
The management knew full well that chloride levels could increase during the day but chose to “turn a blind eye” rather than monitor the possibility. The point? “To demonstrate fulfillment of the agreement’s requirements with the state while reducing the plant’s operational costs.”
Writing this week in the Hebrew-language business daily The Marker, former Environmental Protection Ministry chief scientist Sinaia Netanyahu calculated that the real sanction, within the framework of the plant’s contractual obligations, should have been closer to NIS 450 million, equivalent to 225 million cubic meters being provided without charge. The chain of events raised “worrying questions” about the state’s handling of the issue, she said.
“Why was such a low compensation agreement set? And why were the same franchisees allowed to compete for the Sorek B tender?” she asked. Her answer: That the state, dependent for such an important resource on such a small number of companies, had little room for maneuver and little power to implement an effective, deterrent enforcement system that could sanction companies by ending agreements or preventing them from participating in government tenders.
Why did the Water Authority not identify the problem for a year and a half, she continued. How were payments to Sorek A authorized over such a long period without the quality of the product being checked? And how did the Energy Ministry plan to restore the public’s faith in faucet water, which just a third of the population consumes — a low percentage given the massive investments involved.
At the Palmachim desalination facility, “tens of cases” were discovered in which chloride levels exceeded the limits by around 20 percent, an excess concealed behind doctored reports. Laboratory reports were found to have been altered, as became evident when the inquiry committee obtained the originals. The Energy Ministry has not yet concluded its investigation into this case.