One day in January 1996, householders in Tucum�n Province, Argentina, turned on their taps to discover that their water had turned black. The French company Vivendi S.A., which had only just taken control of the water system, blamed the color change on excess manganese in the water. It was harmless, Vivendi said.
But the provincial government, which had changed hands since the privatization of the water system was negotiated, saw a chance to blacken Vivendi’s name. The health minister called the water “bacteriologically contaminated.” The governor said it was “neither potable nor usable.” The government told citizens not to pay their water bills, and many did not. Within two years Vivendi was out of Tucum�n and in arbitration, trying to recover more than $300 million in lost profits.
