"Everything went wrong": After water crisis, Mississippi official looks back critically at Jackson's deal with global titan Siemens
When the water stopped flowing from faucets in Jackson, Mississippi, after flooding this summer, officials from across government struggled to explain an infrastructure failure that was so sweeping in scale.
But to De'Keither Stamps, a Mississippi state lawmaker and former Jackson city council member, there was one notable event that contributed to the city's water woes— a $90 million deal that was supposed to avert this outcome.
Stamps was talking about a contract the city signed a decade ago with the international company Siemens that was supposed to upgrade its water infrastructure, improve its finances, and set Jackson's municipal water system on a path to sustainability. By upgrading and modernizing, Siemens told city officials, they could replace an antiquated billing and metering system and generate funds for Jackson to modernize its water system.
"As the system performs it will pay for itself," is how Stamps remembered the pitch.
As became clear in August, that is not what occurred. Heavy rainfall and flooding led to problems at the deteriorating O.B. Curtis Water Plant and a drop in water pressure citywide for seven days. President Biden issued a disaster declaration and Mississippi Gov. Tate Reeves issued an emergency declaration. The National Guard was called in to help with water distribution, schools and businesses were forced to close and residents were told to shower with their mouths closed because the water was not safe.
The Siemens contract a decade earlier was supported by many in city government, but not Stamps. First, he believed that the city should have focused on the sewer system, which had its own share of problems. And once he looked at the contract, he says he could not envision it being successful.
"I know how to look at budgets, look at maintenance costs, look at operation costs, and break it down, and so I looked at this and said, 'Well, this is not gonna be able to flesh out,'" Stamps said. "Everything went wrong."
The arrangement was different from a typical project of this type, he said. Rather than pay Siemens with a cut of money saved on the back end, Jackson took out a loan and agreed to pay the full cost upfront. Trouble first surfaced when the biggest piece of the plan—replacing water meters across the city— encountered an unexpected problem: thousands of the new meters didn't work.
"Some meters were measuring in gallons," Stamps says, "when they were supposed to be measuring in cubic feet."
That meant people in Jackson were seeing water bills that were significantly higher than they should have been. Adding to the complications were problems with the computer systems, and the CBS News investigative team found multiple stories of Jackson residents receiving water bills for thousands of dollars.
Back in 2014, local NAACP member Wayne McDaniels raised his voice while addressing the Jackson City council. "It's a done deal now," he said. "And we're the ones who have to bear the cost."
As it became clear the new improvements were not working, the city of Jackson sued Siemens and its subcontractors, alleging in part "a massive fraud orchestrated by Siemens" that "caused more than $450 million in losses to Jackson." Jackson Mayor Chokwe Lumumba, who was not in office when the contract was signed, announced in 2020 that Siemens and its subcontractors had agreed to settle with the city without admitting any wrongdoing. Siemens agreed to essentially repay the $90 million.
"I committed to you that I would sue Siemens for the harm they caused our city and the community-at-large. Promise made, promise kept," Lumumba said at a press conference announcing the settlement.
Siemens provided a short statement to CBS News saying that the agreement," settled [the] issue," and "the project did not end as either party hoped."
Stamps told CBS News that the $90 million settlement was not enough to solve the dire financial challenge the city faced.
The law firm that represented Jackson took a $30 million fee. Tens of millions of dollars more went to pay back loans the city took to keep the water system functioning and make much-needed repairs. And according to a city audit, Jackson will be paying back millions on the original loan it took to pay Siemens in the first place. That loan has an average 6% interest rate and is not scheduled to be paid off until the year 2040.
"It's sad," Stamps told CBS News. "Sometimes I gotta laugh to keep from cryin'."
