How a Government Tire Recycling Program Opened the Door to Sleaze
Remember when recycling was new and sexy and every 1980s sitcom included it as a subplot in at least one cringe-inducing episode? It was around the time that McDonald’s took away that convenient styrofoam container — you know, the one that stored a Big Mac on one side and a delicious pile of fries on the other.
Times change. Recycling is mundane, but it’s bigger than ever — and there’s no doubt about the environmental benefits. Unfortunately, there can also be unforeseen financial benefits for less-than-honest operators, especially if a program’s creator doesn’t keep watch on who’s minding the till.
If that creator is the government, things can get messy. Consider this cautionary tale of a massive program that went rotten so badly that it had to be scrapped.
First, skip across the Detroit River, or the St. Lawrence.
In 2009, the Ontario government created a non-profit body dedicated to recycling tires. Called the Ontario Tire Stewardship (OTS), the agency was tasked with overseeing the collection and recycling of all discarded tires, funded by fees added to the cost of every new tire bought, be it in on a new car sold from a dealer or from a pile of el cheapo summer radials at Walmart.
Those fees have since come down, from nearly $6 per light-duty tire to $3.55 now (commercial trucks and bus operators pay $12.95 for their donuts). Still, that puts about $70 million a year in the hands of OTS to doll out to recycling partners. Well, not for long.
Announced today, the Ontario government is shutting down OTS in the wake of fraud allegations, scandalous money transfers, and executives who spent those fees on booze, lavish vacations and donations to the governing political party.
The Toronto Star, which printed a series of damning reports on the mismanagement and at OTS, reports that the troubled agency will be gone by next year.
Those reports showed the “accountability, the transparency, the protection of the public interest wasn’t sufficiently strong,” said Glen Murray, Ontario’s environment minister. “The system was very vulnerable to the kinds of things that the Toronto Star exposed. When I read it, it confirmed my concern that in fact the system had too many loopholes in it.”
A cheaper, industry-driven solution will likely replace the ill-fated venture. So, how sleazy did things get at OTS? First, the small stuff.
Tens of thousands of dollars recently went towards expensive hotels, wine, fine dining and cruises for executives and board members, plus those political donations. Nice to have, but defensible. It’s nothing you wouldn’t find at the top of other agencies. However, it’s just the tip of the iceberg.
After chief financial officer Perminder Kandola left the agency in late 2015, OTS filed a lawsuit alleging he transferred $346,565 from a tire collector to a personal bank account named “Ontario Tire.” The province later charged Kandola for failing to pay into the stewardship fund. Not long after that, OTS’ former director of audit, Frank Fragale, is alleged to have diverted a $200,149 tax rebate check to a private account.
Kandola’s story isn’t over. In January, the Financial Transactions and Reports Analysis Center of Canada (Fintrac), which tracks money laundering and terrorism, uncovered suspicious transactions from Kandola’s bank account.
In early 2016, his bank tipped off Fintrac after the then-unemployed Kandola bought $69,805.88 in gold bars. (He had quit his CFO position a few months earlier.) Over the course of the first four months of 2016, he had “received $868,931 from various accounts and withdrawn $764,697,” the Toronto Star reports.
The bank wanted to know where the money came from, telling Fintrac, “we’ve found it unusual for the client to hold personal accounts with roughly 7 different financial institutions and to be pooling funds from all sources in a short period of time to his CIBC personal deposit accounts, which have not been opened for long (December 2015 and January 2016.)”
A forensic audit is underway at OTS. Fintrac’s findings went further, however. The body discovered that a small auto recycling firm that does business with OTS received 74 direct deposits totaling $2.6 million that OTS has no record of.
Whatever program rises from the agency’s stenchy ashes had best convince tire buyers that the extra money they’re handing over to be “green” is actually benefiting the environment.
More by Steph Willems
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"donations to the governing political party." And which party would that be? Actually it was two parties, both on the left. From the Toronto Star: "In January 2016, a story revealed credit card statements and invoices that showed tire executives spent consumer-paid eco-fees on expensive trips and dinners with copious drinks, along with donations to the Liberals and NDP. One invoice showed the stewardship paid $3,200 to send four executives to the Liberal’s 2015 Summer Golf Classic “with special guests Hon. Kathleen Wynne & Members of the Ontario Liberal Caucus.” Last year, stewardship chair Glenn Maidment said they were “absolutely” justified in paying to see Wynne on the golf course and share concerns about plans for the $49.5-million surplus. Maidment called the additional donations to the Liberals and NDP “modest contributions as a way of supporting the democratic process.”"
There is nothing wrong with burning cardboard in your fireplace if it does not have tonic coatings and you do it in a safe responsible manner, at least you are using it and not putting it in a land fill. I mow my leaves in the Fall and some composite their leaves. I have a lot of trees and it is easier to mow them in stages. Some could argue that I am burning fossil fuel to do that but I am also saving my back and at least the leaves get ground up and benefit the soil and the grass. I use a recycling mower which is easier and better than collecting grass clipping. I have curbside recycling but I also use the county recycling binds that go to a county facility and are sorted by county prisoners. I am not a greenie nor a tree hugger but within reason I don't mind doing a few environmentally favorable things. Sometimes I reuse a plastic container but if I choose not to then I recycle them. Kirk Douglass's father collected and sold rags to support his family.