A federal judge has given the City of Jackson 30 days to produce records showing how the Mississippi capital used nearly $90 million in settlement funds it received from Siemens Industry, Inc., over botched water-sewer repairs and a failed billing system.
U.S. District Court for the Southern District of Mississippi Judge Henry T. Wingate issued the subpoena on July 9 seeking documentation, including financial records, audits, reports and communications related to the City’s use of the funds.
“This subpoena is issued by order of the Court for the purpose of determining the whereabouts, usage, oversight and integrity of federal and settlement-derived funds received by or on behalf of the City of Jackson, Mississippi, in connection with its water/sewer infrastructure,” the order states. “Noncompliance may result in contempt proceedings.”
The judge sent the subpoena to several parties, including JXN Water interim third-party manager Ted Henifin, the Mississippi Department of Environmental Quality and two law firms that originally filed the 2019 lawsuit against Siemens Industry, Inc., on behalf of the City of Jackson.
The subpoena comes months after Henifin told members of the Jackson City Council that he planned to raise the water utility rates for the second time in about a year. The rate increase is necessary to cover the cost of continued operations of the water and sewer systems because federal dollars allocated for repairs and to bring the City’s water infrastructure back into compliance with the Safe Drinking Water Act have dried up, he explained.
“We’re coming to request enough money to keep sewage off the streets and keep water available for everyone all the time,” he told the Council on April 8. Council members pushed back on Henifin’s proposal to raise the rates, saying that it would be too much for the city’s residents to bear.
“If your collection rate was higher, you probably wouldn’t be coming and asking for a 12% increase; it may have been a 2% increase,” Ward 4 City Councilman Brian Grizzell told Henifin. The Council ultimately rejected his proposal to raise the rates, although, under directives laid out in the federal stipulated order, Henifin can still raise rates without its approval.
He told reporters that same day that he would also petition members of Congress, like U.S. Sen. Roger Wicker, R-Miss., for flexibility on how the agency could use the federally allocated funds. By June, however, both Henifin and U.S. District Judge Henry T. Wingate began to inquire about how the City of Jackson had spent the 2020 Siemens settlement funds.
‘Recovered Every Penny’
The City of Jackson, under the leadership of then-Mayor Harvey Johnson, entered into a contract with Siemens Industry, Inc., in 2013 for the company to overhaul the City’s water-sewer billing system and infrastructure repairs.
“Not long after Siemens and its subcontractors installed the new billing system, residents reported not receiving any bills, sometimes for months or years,” the Jackson Free Press reported in March 2020. “Those who did receive water bills reported inaccurate—and unusually high—amounts, which they often did not pay.”
By 2019, the City of Jackson, under the leadership of then-Mayor Chokwe A. Lumumba, filed a lawsuit against the company and several subcontractors, saying that Siemens had botched water meter repairs and overinflated the cost of the meters. In the lawsuit, the City of Jackson accused the company of “massive fraud” and a “bait-and-switch” maneuver that tied the City into a deal that Siemens could not follow through on.
“Siemens committed fraud with respect to who was performing the work on the project, what the system would do, and what savings the system would generate, among other things,” the lawsuit alleged.
“Far from delivering on its promise of $120 million in guaranteed savings, Siemens caused more than $225 million in losses to the City,” it continued.
Siemens Industry, Inc., later released a statement saying that the company disagreed with the mayor’s characterization.
During a Feb. 19, 2020, press conference announcing the settlement, Lumumba said the City had “recovered every penny that was taken from our community by the Siemens Corporation.”
“In May 2017, I stood before you as I campaigned to become your mayor and I told you that we would build an administration that would be centered on ending corruption and determined to fight against contracts that do not serve the people,” the former mayor said at the time. “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 lost his bid for re-election during this year’s municipal Democratic primaries after his 2024 indictment on federal bribery charges. He is set to face trial next year.
‘The $60 Million Went Somewhere Else’
The July 9 subpoena follows a June 16 court hearing for JXN Water Interim Third-Party Manager Ted Henifin to hear testimony from residents regarding his proposed water utility rate increase, WLBT reported on June 16.
During that court hearing, Henifin told U.S. District Court for the Southern District of Mississippi Judge Henry T. Wingate that he had no account of how the City of Jackson spent the totality of the funds Siemens had awarded the City in 2020.
“The $60 million went somewhere else,” WLBT quoted Henifin as saying on June 16. “It didn’t go to the water and sewer system.”
Henifin clarified later that day, however, that the City of Jackson used “a small portion” of the funds “to pay outstanding bills for water and sewer, but none of it went to existing debt,” WLBT reported.
“We’re not sure where the rest of it is,” he told the judge.
The Mississippi Free Press reached out to JXN Water for clarification on these statements but did not hear back by press time.
The Mississippi Free Press reached out to the City of Jackson and Mayor John Horhn, who is weeks into his new administration, for comment on this story, but did not hear back by press time.
MDEQ Communications Director Jan Schaefer confirmed to the Mississippi Free Press on July 11 that the agency had received the subpoena and would provide any relevant documentation to the court, but did not provide further comment.
Correction: An earlier version of this story incorrectly stated that the U.S. Department of Justice issued the subpoena. This story has been corrected to say that U.S. District Court for the Southern District of Mississippi Judge Henry T. Wingate issued the subpoena. We apologize for the error.
