The mammoth international waste company fighting to retain its near-monopoly on Broward County’s trash disposal business is under investigation for cheating Palm Beach County out of more than $700,000.
Waste Management is accused of dumping garbage in Broward, which deprived Palm Beach of hundreds of thousands of dollars in fees.
A company official said the allegations involved a tiny fraction of the garbage that Waste Management handled and said it was the result of unintentional errors.
At the same time Waste Management’s hauling operation has been battling allegations of fraud in Palm Beach, it has been negotiating through its subsidiary Wheelabrator Technologies for a no-bid disposal deal in Broward.
The biggest portion of Waste Management’s business in Broward is garbage disposal for 26 of the county’s 31 municipalities.
Handling waste is divided into two separate jobs, both done by separate arms of Waste Management. There is hauling, or picking up garbage usually under a franchise agreement with a local government. And there is disposal, the site where garbage is taken by a hauler to burn or bury in a landfill. Hauling and disposal are generally added together and billed homes and businesses as one amount.
AN ENORMOUS DEAL
Broward’s long-term contract represents more than a $1 billion deal for Wheelabrator.
The company has had a lock on this waste disposal for more than 20 years and is seeking to use no-bid negotiations to extend it through at least the end of the decade. Other waste firms are lobbying Broward officials to allow bids for waste disposal, arguing that competition can bring lower prices for homes and businesses.
While the jockeying continued in Broward, Palm Beach Commissioners this week rejected a $719,000 settlement agreement with Waste Management. Palm Beach Commissioners instead ordered the violations investigated by the county’s inspector general. The inspector general is expected to determine if the problem is bigger than auditors uncovered.
Commissioner Burt Aaronson noted that an independent audit only covered the period from Oct. 1, 2008 to April 30, 2011. The same study found indications that waste from Southern Palm Beach and Boca Raton had been diverted as early as 2004.
“It may just be the tip of the iceberg,” Aaronson said.
Criminal fraud, which the inspector general could refer to law enforcement authorities, is not suspected, according to Charles Maccarrone, the chief financial officer for Palm Beach’s Solid Waste Authority.
Under its franchise agreement, Waste Management must haul “all” waste to a processing and disposal facility where the county can receive a $42-per-ton fee. When the waste is hauled by Waste Management to its Broward facilities in violation of the contract, Palm Beach received nothing and the company saves the $42-per-ton.
HOW THE FRAUD WAS FOUND
The fraud was discovered during a routine review by the Palm Beach waste authority’s staff of a Boca Raton commercial waste customer’s accounts. Trying to determine whether the customer could benefit from recycling, staffers “learned that their contract waste hauler, Waste Management, was diverting some of its (municipal solid waste) to facilities owned by (Waste Management) in Broward County,” according to an authority memo prepared last month.
The memo was made public at a waste authority meeting this week. At the meeting, Waste Management was excoriated by members of the public. Delray Beach resident Kenneth MacNamee charged that Waste Management had a “deliberate and concerted plan” to cheat the county government.
A Waste Management spokeswoman bristled.
“The allegations thrown out by a few members of the community were clearly baseless,” said Dawn McCormick of Waste Management.
An independent forensic auditor found that 8,440 tons of waste had been diverted to Waste Management’s Broward disposal sites during a 31-month period surveyed. “It was only .6 percent of the waste we handle. Therefore we correctly delivered 99.4 percent of material collected to SWA (Solid Waste Authority) facilities,” McCormick said.
McCormick said the “unintentional” errors mostly occurred on Sunday when the Palm Beach facilities were closed. Some Waste Management commercial customers, such as restaurants, demanded a pickup Sunday and there was no place but Broward to dispose of the garbage.
McCormick said Waste Management would work diligently with the inspector general to “put this matter behind us.”
BIG $ FOR YOUR GARBAGE
Designating where garbage is disposed, is a highly lucrative clause written into each city’s contract with waste haulers. By controlling where garbage is disposed, governments can tack a high fee to the disposal cost.
Courts have repeatedly upheld government’s authority over where garbage is disposed. Still, “we’ve had problems with enforcing it,” conceded Ron Greenstein, executive director of Broward’s Resource Recovery Board.
County inspectors frequently check disposal sites to insure they are not handling waste that is supposed to go to the county facilities operated by Wheelabrator.
Haulers who violate their franchise agreement over disposal locations either promise to stop, pay a fine or end up in court.
But in the case of Waste Management, the disposal issue hasn’t been an issue in Broward.
In Broward County, Waste Management’s subsidiary Wheelabrator owns the two biggest garbage disposal facilities. Through Broward’s Resource Recovery Board, the company has had a disposal contract with 26 of the county’s 31 cities since the late 1980s. It is currently negotiating behind closed doors to renew its current contract, which expires in the summer of 2013.
Waste Management owns the disposal sites, so there has never been a problem of the company shipping its trash to other facilities to avoid paying the county fees like it has with other firms, Greenstein said.
Because of those reasons, Greenstein believes that the allegations against Waste Management in Palm Beach should not affect the disposal negotiations in Broward.