The recycling giant Ricova has cheated the City of Montreal of at least a million dollars, discovered the general inspector, who recommends banning the company from public contracts for five years.
• Read also: Ricova recycling: the Plante administration says it is revolted
Ricova has been operating the Lachine and Saint-Michel centers since 2020. In addition to sorting, it is also responsible for selling cardboard, paper, plastic and other materials for recycling.
The agreement with Ricova provided for the City to obtain its share of the profits on these sales. However, according to the Office of Inspector General (OIG), Montreal has not received all that was due to it.
The scheme was relatively simple, details a report made public on Monday and which was sent to the Permanent Anti-Corruption Unit (UPAC).
Services Ricova, the company with which the City has its contract, sold “all” the materials to a sister company called Ricova International at a relatively low price, for example $100 per ton.
It was the profits from this sale that Ricova shared with the City.
Then, Ricova International resold abroad at a much higher price, for example at $200 per ton, but without passing it on to the City.
Photo Pierre-Paul Poulin
A Ricova truck arriving Monday at the Saint-Michel sorting center in Montreal, which is managed by the same company.
Cover transport
“The investigation reveals that [le prix déclaré à la Ville] by Ricova Services is systematically lower than that Ricova International inc. actually gets buyers,” says Inspector Brigitte Bishop.
Owner Dominic Colubriale told the OIG that the spread covers overseas transportation costs, but he admitted to keeping a minimum profit of $20 per tonne that he deemed “fair”.
The report states that it is the company’s vendors located in Colombia who conclude sales of recyclable materials to Montrealers.
Mr. Colubriale said he reduced his profit margin because he was aware that “there was a danger of the appearance of a conflict of interest” in acting as both seller and buyer of the sorted materials.
Terminate contracts
The OIG conservatively calculated that the City lost $1.1 million between August 2020 and July 2021, just by being deprived of $20 per ton. The sorting centers process more than 150,000 tonnes of materials per year.
In a statement on Monday, Ricova refuted the OIG’s findings, saying it was buying the materials “at generally above-average prices.”
Given a “high risk of recidivism”, Inspector General Brigitte Bishop recommends terminating the contracts of the two sorting centers owned by Ricova.
Fearing “a break in service”, she decided to let the Plante administration confirm the termination, and especially its date.
A hot potato for many cities
The report of the Office of Inspector General (OIG) could have an impact in several cities in the greater Montreal area.
Inspector Brigitte Bishop transmitted her findings to the Autorité des marchés publics, which would have the power to ban Ricova from all public contracts in Quebec.
This company is a major player in waste management. In addition to having the sorting monopoly in Montreal, Ricova operates the Châteauguay sorting center, which serves many towns on the South Shore.
The company also holds waste collection contracts in dozens of cities, including Saint-Jérôme, Chambly, Saint-Jean-sur-Richelieu and in the MRC of Beauharnois-Salaberry.
Service maintained
Describing the BIG’s revelations as “revolting”, the head of the environment file in the Plante administration, Marie-Andrée Mauger, assured that the recommendations would be applied quickly, “while ensuring that the collection services, sorting and processing are maintained”.
One thing that is not so simple, because if Montreal also banishes the boss of the company, Dominic Colubriale, as requested by the Inspector General, this will also put an end to waste collection contracts in five boroughs.
Ms. Mauger recalls that Ricova was “imposed” on the City when it bought the assets, including the contracts, of a company in the process of bankruptcy, Rebuts Solides Canadiens.
SEVERAL CONTROVERSIES
It’s not the first time that Ricova finds herself in the hot seat in the last few years.
- In 2018, Récup-Estrie terminated Ricova’s contract at the Sherbrooke sorting center on the pretext that the “sorting was not done”.
- In 2019, our Bureau of Investigation revealed that bales of paper from the Châteauguay sorting center were made up to look like it’s plastic-free and get through customs in India. The main buyer of paper from this center at that time was Ricova.
- In 2020, we revealed that several entities linked to Ricova were domiciled in Panama, a tax haven, including a company called Ricova international which exported paper from Montreal.
- In February, Radio-Canada revealed that containers of contaminated paper from the Saint-Michel sorting center, operated by Ricova, had been intercepted in Europe.
- Also in February, The Press argued that Hells Angels “sympathizers” were Ricova’s contractors.