A tale of horror, high fares, privatization and how we give our nation’s wealth to foreign companies

New french rail
French train in 1942

In the two years from 1942 to 1944, some 76,000 French Jews were deported to Nazi death camps by Societé Nationale des Chemins de fer Francais (SNCF), France’s national railway corporation under the Vichy Republic. Of those Jews, it is estimated that 74,000 were killed.

In 2014, after numerous lawsuits and a failed PR campaign that attempted to portray wartime railroad employees resisting orders to deport Jews, the SNCF created a $60 million reimbursement fund for French Holocaust survivors and their families. It was small compensation for entire families murdered.

SNCF in 2010 ranked 214th globally on the Fortune Global 500 list. Employing more than 180,000 people in 120 countries, the network includes about 20,000 miles, and some  14,000 trains are operated daily. The company has its headquarters in the Rue du Commandant Mouchotte, Paris.

New French Train
French train in 2007

The train operator is the main business of the larger SNCF Group, which in 2014 had $30.1 billion total sales. The chairman of the SNCF group is Guillaume Pépy.

That’s the background on horror in a foreign country.

But that’s not the end of the story of us and SNCF.

A company named Keolis Commuter Services operates trains throughout the United States. Keolis is owned by the SNCF at 70% and the Caisse de dépôt et placement du Québec – translated as Quebec Deposit & Investment Fund (public pension plans in the province of Quebec) – at 30%. Keolis sales increase the profits of SNCF and its French and Canadian owners.

Keolis is the new face of privatization – a scheme that uses public taxes to fund private firms to do government work. Running a commuter line should be the responsibility of local or state government. Paying a private firm insures higher costs or lower service, because revenues must pay not just expenses, but profit margins of 10%, 20% or more.

The other difference between a public agency and a private one is that the politicians can’t get payoffs from public operations, only from private ones. Unless you are from Oz, the potential for corruption (and more expenses for the taxpayer) is obvious.

Even assuming that Keolis is doing a great job, why would Americans sanction sending profits to Paris, instead of keeping them here? And why to a company involved in transport of Jews to concentration camps.

To add yet another layer of disgust to this story, let’s examine the Massachusetts Bay Transportation Authority (MTBA), which hired Keolis to run its commuter rail service – where rates have zoomed to between $200 and $400 for a monthly pass.

Yesterday, the Boston Globe reported:

The Massachusetts Bay Transportation Authority decided Monday to pay its commuter rail operator at least $66 million more than planned over the next six years, after the company lost more than $30 million last year and continues to struggle with on-time performance.

Keolis Commuter Services will get more money to add locomotives and coaches, take care of the new equipment, and operate under recently revised train schedules. But the changes renewed questions about whether the original Keolis deal, the largest operating contract in the state’s history, was sustainable over time.

Keolis is losing money and Boston commuters are screaming about lousy service. The original contract has the private company losing money, so now the politicians have decided to subsidize the loss, rather than ending the contract and assuming control.

The increased payments to Keolis were approved for the MBTA at the same time as the authority is trying to convince the unwary public that it should also privatize its cash-counting and warehouse operations.

The Boston bean-counters seem to have a new motto: if privatization doesn’t work, send more good money after bad, and then propose more privatization and guarantee another fiscal failure.

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