Court asked to nix IDE-Hutchison Sorek B desalination bid

Sorek desalination plant  photo: Eyal Izhar

4A Desalination Group claims IDE and Hutchison should be disqualified after a public committee found suspicions of fraud in their Sorek A desalination facility.

4A Desalination Group, which is competing in the tender for construction of the Sorek B desalination plant, today petitioned the Jerusalem District Court to disqualify IDE and Hutchison from participation in the tender.

A public committee headed by Ministry of National Infrastructure, Energy, and Water Resources director general Ehud (Udi) Adiri suspected fraud in the operation of the Sorek A desalination plant. IDE and Hutchison were part owners of the plant. The committee was formed following a report by "Globes" that the proportion of salt in the water supplied by the facility was up to four times as high as the standard in the franchise agreement. The committee, which sent its findings to the police, ratified the allegation in the report that the deviations in the proportion of salt were systematic, and had taken place for years.

The petition against the Ministry of National Infrastructure, Energy, and Water Resources and the special purpose vehicles set up by IDE and Hutchison to compete in the tender states, "The decision not to disqualify the IDE and Hutchison bids, despite the findings of the Adiri Committee, is extremely unreasonable. Legal precedent requires that this decision should be struck down."

The petition was accompanied by a request for an urgent hearing, since the final stage of the tender is taking place, after which the bidders will submit an updated and improved bid, on the basis of which the state will select the winning bid in the tender.

4A Desalination is a private partnership founded by Allied Infrastructures, Afcon Holdings, and international desalination giant Acciona Agua SA. The petition, filed through Adv. Giora Erdinast, Adv. Tomer Weissman, Adv. Eran Winner, and Adv. John Alkalak from the Erdinast, Ben Nathan, Toledano & Co. law firm, asks the court to disqualify IDE and Hutchison from participation in the tender to build and operate the largest desalination facility in Israel. "This step is required after the investigative committee of the Ministry of Energy ruled that the operation of the desalination plant by the same bidders (Sorek A) was tainted with planned and systematic fraud," the petition alleged.

The petitioner argues, "The Tenders Committee decided to ignore the grave findings and not to disqualify the aforementioned bids. In addition, the Tenders Committee found that the aforementioned bidders, (IDE and Hutchison), had cited their experience in operating another desalination plant (Sorek A) as evidence that they met the threshold conditions for the current tender (Sorek B)… These unsound and unreasonable decisions, which will have a devastating effect on the public's trust, demonstrate deep contempt for the fundamental principles of the rule of law and a complete abandonment of values."

Suspicions arose in April about the way that the Soreq A desalination facility was being run, following discovery of an anomaly in the quality of the water produced at the facility. It was learned that the quality of the water met the contractual requirements when the daily test was conducted, but at other times, the water produced at the facility was of far poorer quality. Following these suspicions, the Adiri government investigative committee was formed, and published its findings in August 2019. "The findings of the Committee were shocking and severe. The Committee found that the Sorek A plant was operated with systematic deceit and fraud towards the state, that the fraud was sophisticated, planned and deliberately timed, and that the water supplied during an extensive period was of poor quality," the petition states.

With the publication of the committee's report, Minister of National Infrastructure, Energy, and Water Resources Dr. Yuval Steinitz held a press conference at which he said that he regarded the matter as "extremely serious," adding, "We will uproot the culture of casual negligence in Israel. It has no place in Israel, and certainly not in our water system."

"Despite these strong and unambiguous words," the petition alleges, "it rapidly became clear that the actual response was exactly the opposite. Not only was the culture of casual negligence not uprooted, but the concerns responsible - the bidders in the Sorek B tender on behalf of IDE and Hutchison - gained a substantial benefit from the state… and advanced to the final stage of the tender."

In 2010, the state awarded Hutchison Water and IDE a franchise to build and operation the facility in Sorek. IDE, a partner in three active desalination facilities in Israel, had to sell its holdings in Sorek A at the demand of the Israel Competition Authority as a condition for taking part in the tender for the Sorek B facility. The future facility will supply 150 million cubic meters of water annually, the same as the existing facility in Sorek. The two reverse osmosis facilities are the largest in the world of their type.

Based on these arguments, 4A Desalination is asking the court to disqualify the two companies bidding on behalf of IDE and Hutchison, or to rule that the tenders committee cannot allow the bidders on behalf of IDE and Hutchison to cite their activity at the Sorek desalination facility as previous experience, and therefore to disqualify the bidder on behalf of Hutchison for not meeting the threshold conditions for participating in the tender.

Published by Globes, Israel business news - en.globes.co.il - on September 26, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Sorek desalination plant  photo: Eyal Izhar
Sorek desalination plant photo: Eyal Izhar
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