Siemens Sues Over Troubled NYC Water Plant

MANHATTAN (CN) – Five years after admitting that its predecessor defrauded New York City over its troubled Croton Water Treatment Plant, Siemens Electrical returned fire against the Big Apple in a $143 million lawsuit over the same project.

(AP Photo/Matthias Schrader, File)

“This lawsuit arises out of the city’s grossly negligent and reckless conduct in connection with the design and construction of the Croton Water Treatment Plant – a 1,200,000 square foot underground facility in the Bronx that can treat up to 30 percent of the city’s drinking water supply,” Eversheds Sutherland attorney Lee Davis attorney wrote in a 16-page complaint filed Monday in New York County Supreme Court.

“At a cost in excess of $3.2 billion – billions more than the $992 million estimate the city publicly announced in 2003 – Croton is one of the largest capital projects in the history of New York City,” the complaint continues.

In January 2013, the New York Times reported that Siemens Electrical, a subsidiary of the German conglomerate, acknowledged that its predecessor Schlesinger-Siemens Electrical had engaged in two separate fraud schemes involving the Croton project and three other city contracts. The paper reported that prosecutors hit two former Schlesinger-Siemens officials with felony indictments for that conduct.

Siemens’ complaint does not allude to this scandal but blames the city for failing to meet design and construction deadlines under a 1998 consent decree to resolve federal violations over water quality.

“Faced with the risk of massive penalties for missing either of these milestones, the city represented to both the United States and bidding contractors that the plant design was ‘complete,’” the complaint states. “In so doing, the city acted with gross negligence and reckless indifference to the rights of the contractors it later hired to build the plant, including SE, since the city knew or reasonably should have known that properly completing the design would require hundreds of millions of dollars in additional work and would add additional years to the project’s duration, both of which ultimately proved true and dramatically increased the costs to the contractors.”

Siemens seeks $103.7 million, plus $39.5 million in prejudgment interest, for claims of breach of contract and gross negligence.

Responding to the lawsuit, the New York City Law Department’s spokesman Nick Paolucci said: “We will vigorously contest these claims.”

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