Bankruptcy court addresses Detroit water shutoffs

July 16 — A dog and pony show put on by the U.S. Bankruptcy Court in the Detroit municipal bankruptcy proceedings took an unexpected turn on July 15 when Moratorium NOW! Coalition activist Kris Hamel, who is also a WW managing editor, told the judge he needed to put a moratorium on mass water shutoffs and ameliorate the suffering of the poorest Detroiters.

The hearing was for objectors to the city’s emergency manager’s “plan of adjustment,” which outlines deep cuts in health and pension obligations to city retirees and the “clawback” of workers’ annuity funds in order to pay the city’s alleged debt to the banks. Out of more than 600 objections that were filed by rank-and-file workers, residents and retirees, 100 objectors were chosen to appear at the hearing and given five minutes each to address Judge Steven Rhodes. Because the austerity plan is essentially a done deal according to the EM and corporate media, many objectors did not bother to show up. But several dozen testified as more than 100 spectators watched from another room.

Poignant and heart-wrenching testimony was given by retirees, especially regarding the now high cost of their health care. A cancer patient told of skipping her appointments because of high doctor visit co-pays, while another said his health care costs have gone from $152 to more than $1,000 per month since draconian health care cuts became effective in March. Moratorium NOW! organizer and city worker Andrea Egypt also addressed the court, saying the situation in Detroit “parallels the austerity measures imposed on the public workers in Greece by the officialdom, the banks and the corporations.”

Mass water shutoffs an ‘international disgrace’

But it was when Hamel, the last objector of the morning session, took the podium that for the first time the mass water shutoffs were brought into the city’s bankruptcy case.

“The Detroit Free Press reported [EM Kevyn] Orr’s office calling the water shutoffs, quote, a necessary part of Detroit’s restructuring, close quote. The real agenda,” continued Hamel, “is to make the water department more attractive for privatization to union busters like Veolia Corporation, known worldwide for its crimes against humanity, especially against the Palestinian people.

“While the poorest Detroiters have their water cut off for owing $150, JPMorgan Chase, UBS [United Bank of Switzerland], Loop Financial and Morgan Stanley were paid $537 million in termination fees on interest rate swaps out of $1 billion in bonds issued from 2010 to 2013, bonds that were earmarked to fund repairs of the water infrastructure system, not line the pockets of these four banks. Orr, while cutting off water to the poor and raising water rates, has not taken one step to recover this $537 million giveaway to the banks.”

Hamel challenged the court: “As you have stated on prior occasions, Judge Rhodes, the buck stops with you in these bankruptcy proceedings. It is up to you to stop the national and international disgrace and humanitarian disaster of mass water shutoffs in the city of Detroit. You must immediately enjoin these shutoffs by placing a moratorium on them today and ordering Orr to implement a real water affordability plan for the poorest Detroiters.

“And it is up to you to order Orr and his cronies to stop shilling for the banks that Jones Day [Orr’s former law firm, which represents the EM-run city) lists as its clients, and to recoup and recover the $537 million paid to the banks out of water bonds meant for the people. Chase and UBS have a record of criminal fraud regarding swaps like these all across the U.S. Go after the banks, not the poor, because in Detroit, the city most devastated by years of bank fraud and racist predatory lending, the people are paying the banks rather than the other way around. This is not equitable.”

Water shutoffs ‘a problem affecting this bankruptcy’

The audience applauded Hamel’s testimony, and then Rhodes demanded that the Jones Day lawyer for the city address the water shutoffs. Her lack of knowledge was immediately apparent and the judge ordered her to bring to the afternoon session a representative of the city who could address the crisis and the way the city was handling it.

From 11 a.m. to 2 p.m., activists with Moratorium NOW! and other groups gathered in front of the courthouse for a people’s speakout against the plan of austerity. Retirees and others who had testified in court were interviewed by local media and spoke at the rally.

At the 2 p.m. session, Darryl Latimer, deputy director of the water department, was presented to the court and grilled by Judge Rhodes. It soon became clear the city has no program for reaching customers with overdue water bills and that a whopping 30 percent down payment is needed for the “payment plan” offered by the city. While Latimer stated there is flexibility with the 30 percent, many observers said that that was an outright lie. Latimer also lamely claimed that they don’t shut off water to people, only to addresses, and that residents are not warned of the shutoffs. He said that informational inserts have been put in with bills and that a “water fair” is being planned.

“Your residential shutoff program has caused not only a lot of anger in the city but also a lot of hardship,” said Rhodes, who added, “It’s caused a lot of bad publicity for the city that it doesn’t need right now.” The judge admonished Latimer that the water shutoffs are “a problem affecting this bankruptcy” and that the city “has to do much, much better” to advise residents of payment plan options and impending shutoffs.

“If your report is accurate,” Rhodes told Latimer, “it sounds like efforts are needed to help residents maintain their water services. That’s a solvable problem. Mr. Orr needs to come up with a much more aggressive plan to solve that problem.”

Rhodes ordered Latimer to appear in court on July 21 with EM representatives to “report on what initiatives the water department is taking.”

The water shutoffs being addressed in bankruptcy court was top news for the day, with radio and television reports including interviews with Hamel and retirees.