Recycling contractor withheld at least $1M owed to Montreal, inspector general charges

Montreal's inspector general is recommending the city terminate its contracts with the company that runs its two recycling centres "as soon as possible," after her office'sinvestigation concluded Ricovawithheldat least$1 million it owed to the city over a 12-month period.

Brigitte Bishop tabled adamning 35-page reportatcity hallMonday. She said the company has been systematically withholding some of what it owes the city when it resells recyclable materials.

That is a serious enough breach to justify the immediate termination of Ricova's contracts, Bishop said, except that doing so could leave Montreal without municipal recycling services, which would "not serve the public interest."

Instead, citinga "high risk of recidivism," Bishoprecommendsblacklisting the company: declaring Ricovaineligible to be considered forcontracts and subcontracts with the City of Montreal for a period of five years.

Bishop investigated the rolesof four Ricova entities involved in the execution of the contracts: Ricova RSC Inc. andRicova LachineInc., which operate sorting centres for Ricova Services Inc., and Ricova International Inc., which handles the marketing and sale of recyclable materials.

The city only has contracts with RicovaServices Inc., to runsits Lachine and Saint-Michel centres. Ricova Services Inc., in turn,sells recyclable materials to Ricova International Inc., according to the report, and those profits are then shared with the city.

"However, the investigation reveals that the price declared by Ricova Services Inc. is systematically lower than the amount that Ricova International Inc. actually obtains from the buyers of materials," Bishop concluded in her report.

The report saidRicova International Inc. retainedat least$20 per tonne, "all in contravention of the provisions of the Lachine and Saint-Michel contracts."

That means the City of Montreal was deprived of at least $1.15 million for the Saint-Michel contract alone from August 2020 to July 2021, the reportsaid.

Ricovacollects approximately 156,000 tonnes of recyclable materials from the two centres annually.

Bishop's office has turned over its findings toQuebec's anti-corruption squad, UPAC, todeterminewhether a criminal investigation is in order.

Ricova refutes allegations

All Ricova entities arecontrolled and managed by president and CEO Dominic Colubriale, which makes the company, in Colubriale's own words,"the most integrated company in all stages of the management of recyclable materials," the report said.

In contrast, the inspector general's office describesthe agglomeration as "a hodgepodge of different entities [...] that serve as integrated or separate vehicles, depending on the facts and arguments against them."

In a statement, Colubriale defended the company, saying there is "no fraudulent manoeuvre here."

"I don't agree with what the inspector concluded," he said."The reality is that Ricova International buys recyclable materials from Montreal sorting centres at prices that are generally higher than the monthly average calculated by Recyc-Qubec."

Colubrialesaidthe company has generated about $5 million in profits for the city since 2020. He saidhe will take time to thoroughly analyze the claims and shed light on what he saysthe bureau may have misunderstood.

City shocked, vows to act quickly

The Projet Montraladministration said it isshocked by the findings of "serious misconduct" in the Bureau de l'Inspecteur Gnral(BIG) report, and it vows to take immediate action.

"An effective plan will be put in place quickly to implement the BIG's recommendations while ensuring that collection, sorting and processing services are maintained," saidMarie-Andre Mauger, executive committee memberresponsible for the environment.

Mauger saida business relationship withRicovawas "imposed" on the cityin 2020 when the company bought the assets, including the contracts, of the previous operator, whohad gone bankrupt.

She said the city commissioned an external firmwhich began an audit last April of Ricova's governance structure. As La Presse reported last month, the city believes the integrated waythat Ricovaoperates could put it in a conflict of interest.

'A serious blow' toMontrealers' confidence: opposition

This isn't the first time Ricova has found itself in hot water.

Aninvestigationby Radio-Canada'sEnqutethat was broadcast in February said thecity of Montreal is considered among the worst offenders when it comes to exporting what is supposed to be recycled paper butis contaminated bytonnes of plastic bags some of which litter the Indian landscapeand are often burned as a source of fuel.

Montreal'stwo recycling centres average between 20 and 26 per cent contamination, according to numbers provided by the city.

At the time of theEnqute report,Ricova president Colubrialesaid that the material he sends overseas is relatively clean, sayingthere "may be something wrong" in how the city does its evaluations.

Montreal respondedthat it was Ricova that picked the firm that analyzes the quality of the materials that come out of the Saint-Michel recycling plant and evaluated the level of contamination.

In a statement Tuesday, theofficial oppositionatMontrealcity hall demanded more predictability and an action plan from Mayor Valrie Plante's administration.

"This report is the straw that breaks the camel's back," said Ensemble Montral Leader Aref Salem.

"This lack of vigilance is added to the lack of transparency of the Plante administration,'' said Salem. ''It was stunned last month by the revelations of theEnquteprogram, even though it receives monthly reports from Ricova on contamination rates and has itself triggered an audit."

Salem called the report "a serious blow to Montrealers' confidence."