"He must be unaware of the ruling of the Superior Court of Justice of the Canary Islands that the only variant of the specifications, which is not a substantial alteration thereof (?), was the possibility of deferring the single payment of 50 million euros to several annuities." That is what the president of the Cabildo, Pedro San Ginés, stated last week, after La Voz de Lanzarote made public the ruling issued six months ago by the TSJC, which ordered the review of the award procedure for the integral water cycle, considering that "surprising alterations" of the specifications were made "for the benefit" of Canal de Isabel II.
However, contrary to what San Ginés stated, that ruling indicated that there were "several" substantial modifications in the conditions of the award and specified that it only detailed one as an "example". It even concluded that it was "unquestionable" that the Water Consortium chaired by San Ginés "ended up making a substantial modification of the governing conditions of the contract award procedure, to the point that the one actually held is radically different from the one that was the object of the initial tender".
"This is clearly evident from the illustrative table that appears on page 9 of the lawsuit," the ruling added, siding with the plaintiff, Club Lanzarote. In that table, this company detailed the rest of the alterations that were made "for the benefit" of Canal, which took over the management of water in Lanzarote through a negotiated procedure and with conditions very different from those that had been offered in the public tender that had been called and declared void.
By virtue of that negotiation, not only was the payment method of the initial fee of 50 million euros modified, allowing it to be paid in 5 years, but other changes were also introduced that directly affect the money that the Consortium has ended up receiving for the privatization of this public service, as well as the term of the concession.
- FIVE MORE YEARS OF CONCESSION
The first of the changes that benefited Canal de Isabel II affects the duration of the contract, since it was put out to tender for 25 years and in the negotiated procedure it was finally awarded for 30 years, increasing the term by 20 percent. And this, as Club Lanzarote denounced at the time, allows the company to amortize the investments in more years, by staying with the water business in Lanzarote for five more years than planned.
- MILLION-DOLLAR REDUCTION IN THE VARIABLE FEE FOR INCOME
In the negotiation with Canal de Isabel II, all the percentages of variable fee that the successful bidder had to pay were also modified, drastically reducing them. In total, in the tender that they declared void, three types of annual fee were set: one on the total income obtained (fee A), another on the possible profits that the company obtained above the forecasts that it had established in its offer (fee B) and on the subsidies or bonuses that it received from other administrations (fee C).
In the case of "fee A", the specifications of the initial tender established that the successful bidder had to deliver 4 percent of its income to the Consortium, but in the negotiated procedure it was accepted that Canal would pay only 1 percent, with a reduction of 75 percent on what was initially stipulated. As for "fee B", it was initially 15 percent and in the award the concept was modified by dividing it into two, one of 5 percent and another of 15 percent. Both alterations, and especially that of "fee A", meant giving up tens of millions of euros over the life of the contract.
- THE CONSORTIUM REFUSED TO KEEP 50% OF THE SUBSIDIES
In addition, there is the alteration suffered by "fee C", which was even greater. When the tender was called, the Consortium demanded to keep 50 percent of the subsidies or bonuses. With this, it was intended that aid to desalination, among others, would not be entirely in the hands of the successful bidder. However, the contract with Canal reduced that fee by 88 percent.
In this way, Canal can keep practically all the money that arrives in Lanzarote in the form of aid for water desalination. Specifically, the successful bidder keeps 94 percent of that money, while the Consortium only receives 6 percent.
- MORE INVESTMENTS IN WORKS, BUT CONTROLLED BY CANAL
In return, what Canal increased in its offer was the money destined for investments. The tender established a minimum of 15.7 million in works and the company committed to execute 54.4 million. This, which was what the president highlighted in his day to defend the award, was done at the expense of the reduction of the variable fee, which would have meant millionaire income for the Consortium.
In this way, whoever started managing that money and the award of the works was Canal de Isabel II, through Canal Gestión Lanzarote. It should be remembered that the cases of corruption in which the Madrid-based company is involved are mainly focused on the alleged rigging of tenders, through which its directors supposedly kept commissions. Both the then director of Canal de Isabel II, Adrián Martín -who was the one who signed the contract with Pedro San Ginés-, and the first manager of Canal Gestión Lanzarote, Gerardo Díaz, have been arrested and are charged with corruption in two of the judicial proceedings opened on this company and some of its subsidiaries.
- FROM INITIAL DISBURSEMENT OF 50 MILLION TO DEFERRED PAYMENT IN 5 YEARS
To these "alterations" is added the one detailed in the TSJC ruling, which according to San Ginés is "the only variation" that was made with respect to the specifications of the tender. In this case, what was modified was the payment method of the initial fixed fee, which amounted to 50 million euros and which in the tender was established to be paid at the beginning of the contract. However, when negotiating with Canal, it was allowed to pay it in installments, paying only 15 million as an entry and the rest in annuities until completing the total sum in 5 years.
This fact, added to the rest of the "alterations" that the ruling described as "surprising", led the TSJC to conclude that "very difficult" could "this controversial action of the Consortium overcome the obstacle posed by the opinion of the Advisory Council", which should issue a report within the process of reviewing the contract that the ruling ordered to carry out.
