Report from the BIG in Montreal | Ricova would have deceived the City to monopolize recycling revenues

The entrepreneur who holds the quasi-monopoly of recycling in Montreal has used deception to sell materials recovered in the metropolis abroad, without giving his fair share of the revenue to the City, which potentially frustrates the public treasury of millions. dollars, according to an investigation by the Office of Inspector General (OIG).

Vincent Larouche
The Press

The report by Inspector General Brigitte Bishop submitted Monday to the city council denounces the “deceitful maneuvers” of the Ricova company and its related companies, that is to say ways of doing things characterized by “artifices, tricks clever or coarse with a view to deception”. The system put in place by the company without the knowledge of the administration of Valérie Plante “deprives the City of Montreal of considerable sums”, according to the BIG.

Facts uncovered during the investigation would justify terminating Ricova’s contracts immediately, the report points out, but this would risk causing disruptions in service for citizens. The OIG therefore recommends terminating the contracts “as soon as possible”. The organization also recommends that Ricova and its leader Dominic Colubriale be banned from public contracts in Montreal for five years, because in light of their way of doing business, “it is to be feared that the risk of recidivism is high”.

The Inspector General also announces that she will send the file to the Permanent Anti-Corruption Unit (UPAC) so that it can determine whether a criminal investigation is in order.

Sellers in Colombia

In 2020, Ricova took over the contracts of the then bankrupt RSC company. Since then, it has operated the two sorting centers in Montreal (Lachine and Saint-Michel), in addition to ensuring collection in several boroughs. The City pays Ricova to sort recyclable materials. Then, the contract provides that the Brossard company shares with the municipal administration the income or losses resulting from the sale of these materials.

However, the BIG says it has found that Services Ricova, which operates the sorting centers, sells all the materials to a single customer, a company in the same group called Ricova International. Dominic Colubriale, who admitted to investigators controlling the two companies, would thus sell the materials to himself, at a good price. It is this price that would be used to share revenues with the City.

Ricova International’s sellers, who are largely based in Colombia, then find outlets to sell the materials at a much higher price, in India, Canada or elsewhere in the world, according to the report.

Mr. Colubriale allegedly admitted to BIG investigators that a ton of recyclable materials sold for $100 to his company Ricova International could then be resold for $200 on the market. However, it is the price of $100 per tonne that is declared to the City, according to the BIG. The municipal administration would not have had access to the real sales figures on the commercial market.

“The investigation reveals that this price declared by Services Ricova inc. is systematically lower than that which Ricova International inc. actually gets buyers of the materials,” the report states. After deducting its operating expenses, Ricova International sets aside a profit of $20 per ton, according to the OIG.

Millions at stake

For the Saint-Michel sorting center contract alone, between August 2020 and July 2021, this deduction of $20 per ton is equivalent to more than a million dollars which are not declared to the City.

At the Lachine sorting center, a dispute with the City over sorting performance means that revenues from the sale of materials have not yet begun to be shared, but the arrangement would be the same, according to the investigation.

The BIG says it has discovered that even recyclable materials that must be sold exclusively to a specific buyer in Quebec, for example coffee pods bought by Nespresso and returnable cans taken back by the company Tomra, are first sold to Ricova International. , who then resells them for a profit. The City only receives its share of the first transaction.

According to the report, the only exception to this merry-go-round is glass, for which there is no commercial outlet at the moment, and which therefore ends up in the landfill, even if Montrealers take the trouble to put it to recycling.

Calling the OIG’s conclusions on Ricova “revolting”, the head of the environment on the executive committee of the City of Montreal, Marie-Andrée Mauger, affirmed that “an effective plan will be put in place quickly to implement the recommendations of the BIG while ensuring that collection, sorting and processing services are maintained”.

She recalled that the City had commissioned an external firm which began an audit last April of Ricova’s governance structure and the actions it puts in place to ensure the recovery of materials locally.

Ricova defended herself in a press release on Monday. “I don’t agree with what the inspector has concluded,” said Dominic Colubriale. “The reality is that Ricova International buys recyclable materials from Montreal sorting centers at prices that are generally higher than the monthly average calculated by Recyc-Québec. There is no fraudulent maneuver here,” he said.

The company says it has generated profits for the City of Montreal of nearly $5 million since the start of operations in 2020.

India and Panama

Recently, a Radio-Canada report revealed that bales of Ricova paper ended up in industrial regions of India where paper mills are in operation. Because the bales contained up to 25% contaminants, mostly plastic, mountains of Canadian waste littered the area around the factories. Residents interviewed by public television claimed that this plastic would be used illegally as extremely polluting fuel in certain local industries.

The Press also reported last month that according to a buyer who filed a lawsuit against Ricova, the company was getting paid for certain contracts through a subsidiary in Panama, a tax haven.

The OIG’s annual report filed at the same time as the investigation report also points out that with its team of 31 people, the organization opened 121 files, met 413 witnesses and carried out 56 surveillance operations last year.

With Isabelle Ducas, The Press