Solid Waste & Recycling

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Hot-Wiring Strathroy

On September 15, Green Lane Environmental Group filed a Statement of Claim with the Ontario Superior Court against the Town of Strathroy and competitor TCR Environmental Corp. The lawsuit comes as little surprise to observers of the waste...


On September 15, Green Lane Environmental Group filed a Statement of Claim with the Ontario Superior Court against the Town of Strathroy and competitor TCR Environmental Corp. The lawsuit comes as little surprise to observers of the waste management industry in Southwestern Ontario. The two companies have competed fiercely in recent years for municipal and commercial waste disposal contracts in the rural towns between Hamilton and Windsor, Ontario. And Green Lane’s disappointment in losing the Strathroy bid is widely known.

Green Lane is a private company that owns an important landfill on the southern edge of London as well a nearby recycling and composting facility fed by the company’s numerous Blue Box recycling and waste disposal contracts. Green Lane’s owners are prominent London businesspeople who don’t like losing market share to newcomer TCR. Bob McCaig is a former school principal who left teaching to take over the market development side of the family business in 1966. His brother Don manages operations.

TCR is publicly traded on the Alberta Stock Exchange (ASE) and owns a waste processing plant in Aylmer, Ontario that has won contracts many of which once belonged to Green Lane in such places as Aylmer, Tillsonburg, Strathroy, Malahide, South Dorchester, Elgin County and Dutton-Dunwich. The “wet/dry” plant processes bags that contain either wet compostable materials or dry recyclables. The company says its system is cheaper than the Blue Box and diverts more waste — up to 80 per cent — from landfill. Waste diversion has become the Holy Grail for municipalities and TCR has successfully portrayed itself as an environmentally friendly alternative to landfill operators like Green Lane.

TCR has also won prestigious awards from such entities as the London Chamber of Commerce, Environment Canada, the Recycling Council of Ontario and the Solid Waste Association of North America. These endorsements have encouraged the company to expand; TCR completed a reverse takeover this year of Bach-Hauser Inc., a U.S. shell company registered in Las Vegas, Nevada that trades on the NASDAQ over-the-counter market and owns the licensing rights outside Canada to TCR’s “Total Recycling System®.” Each month Bach-Hauser press releases announce the signing of expressions-of-interest with countries like Guyana, China and the Philippines. The vision of Aylmer-type plants sprouting up around the globe has attracted stock market investors plus millions of dollars in private placements from wealthy individuals.

Green Lane alleges that Strathroy breached its contract when it awarded a multi-year contract to TCR Environmental even though Green Lane’s bid was lower. The suit also claims that TCR made negligent misstatements about diversion rates in its bid. Strathroy and TCR deny the charges that have yet to be heard in court. Unfortunately for the McCaigs, their complaints and the lawsuit make them look like angry landfill owners threatened by TCR’s “new technology.”

However, a two-month investigation by this magazine indicates why Green Lane thought it needed to launch its lawsuit. Interviews with key executives from the two companies and with municipal officials plus an extensive document review provide a compelling backdrop for Mr. McCaig’s accusations about TCR Environmental not doing what it claims during the time of the Strathroy tender, as well as there being something wrong with the Town’s award. TCR has recently run afoul of the environment ministry and former executives have reported concerns to the Alberta Stock Exchange that is investigating the company.

The saga offers disturbing insights into how waste disposal contracts may be awarded in small municipalities.

A plain brown envelope

Company President & CEO Bill Hett — the former environmental services manager for the Town of Markham — first showed me TCR’s Aylmer plant in the late spring of 1998. Garbage trucks tip their loads directly on the main plant floor. The waste is conveyed through a bag breaker and sorting line where people manually push materials like aluminum cans and plastic bottles into collection chutes for recycling. Anything not recycled passes through a grinder and on to an adjacent composting barn. Organic waste (plus such things as shredded pizza boxes) is composted in channels that are periodically thrashed by an automated turner. After 21 to 28 days the mulch is moved to outdoor compost curing pads and screened to remove contaminants.

During my tour I was struck by the fact that there was nothing very unique about TCR’s system. Despite TCR and Bach-Hauser’s use of words like “proprietary,” “technology” and the “®” trademark symbol beside “Total Recycling System” (despite it not being a registered trademark), it’s an easily copied equipment array as may be seen in many waste processing plants. Ironically, the operation is very similar to that of Green Lane in London. The compost barn, though larger, is the identical in-channel type and uses the same automated turner. The main difference is that source separation (via the Blue Box) provides Green Lane with relatively uncontaminated compost whereas TCR’s end product contains debris that must be screened out and has had problems with heavy metals content in the past.

As I wondered why this plant had attracted investors, Mr. Hett assured me that low single-truck collection costs and TCR’s labor-intensive efforts to “recycle the toothpaste cap as well as the tube” allowed clients like Tillsonburg to achieve 85 per cent diversion.

In the spring of this year Mr. Hett delivered to me copies of documents that purported to verify TCR’s diversion rate claims. The first was the company’s 1998 Annual Waste Tonnage Diversion Report to the environment ministry. The second was a report from an apparently independent audit of the Aylmer plant performed by consulting firm C.E. Knutson & Associates and its engineering subcontractor Paul Flood. Both documents stated that TCR was achieving 70 per cent diversion from landfill. The number was below the 80 per cent that TCR claimed, but the reports contained upbeat suggestions that correction of technical glitches would boost rates. The reports helped TCR convince more municipalities to switch from Green Lane.

An article I wrote about this information triggered a letter-to-the-editor from Bob McCaig in August 1999. In it, Mr. McCaig stated that TCR’s two contract waste haulers had not been paid for months and had revealed to him they were taking far more waste to landfill than TCR was reporting. Of the roughly 20,000 tonnes of garbage received by the Aylmer plant in 1998, Mr. McCaig wrote, more than 10,000 tonnes was sent to landfill. Mr. McCaig stated that most of TCR’s stored compost material is contaminated and would likely only be suitable for use as daily cover in a landfill. Subtract the hauler-reported landfill numbers and the stored compost heaps, he wrote, and “the net amount actually recycled is just 532 tonnes or just over 2.5 per cent — perhaps one of the poorest recycled-material recovery records in the industry.”

Mr. McCaig’s assertions were interesting but there was no proof. So I was intrigued when Bill Hett phoned me in September to let me know that he’d resigned from TCR. He wouldn’t specify his reasons but a package of documents sent to my office anonymously answered my questions.

The first was a memorandum Mr. Hett had sent to TCR’s board of directors and Mr. C. Todd Monaghan (a shareholder and former Chairman) on August 17, 1999 in which he stated, “TCR is not today, an operational plant. The plant has not made one ounce of compost in 81/2 months. The plant has not screened one ounce of compost in 10 months or sold any compost in a year.”

Mr. Hett referred to violations of the plant’s Certificate of Approval from the environment ministry, including unscreened compost on storage pads, air purification equipment venting directly to the air, and “unfit compost buried on pad and covered.”

The second document was Mr. Hett’s September 8 res

ignation letter in which he wrote, “The company does not appear to be able or inclined to support the daily financial needs of the Aylmer operation or to operate ethically or professionally.” Mr. Hett accused the Board of exercising no controls over company finances and described TCR as a “non-business like operation” that frequently withheld critical information from him.

The company was losing more than $100,000 per month, couldn’t meet payroll, and had racked up $500,000 in overdue accounts payable. The Aylmer plant had run out of landfills that would extend credit, a situation that eventually led to a lawsuit from Canadian Waste Services for $247,000. Mr. Monaghan refused to reveal to Mr. Hett the identities of the holders of about $2-million long-term notes payable, or the terms and conditions of the notes. Hundreds of thousands of dollars were paid to note holders through a Toronto bank account during this time of cash-flow crisis.

The third document was the September 9 resignation letter of John A. MacDonald, the former Hamilton mayor. Jack MacDonald, who had been TCR’s Chairman since February 25 1999, repeated Mr. Hett’s allegations and quoted the Aylmer plant manager Gord Carless admitting occasions when “garbage was packed to the ceiling and the east door [was] plugged.”

“This is the worst operated company I have ever seen,” Mr. MacDonald wrote. “There were no reliable records, no budgets in use, no specific goals or targets, no recognizable chain of command, no proper reporting system, no effective cost control and there was no satisfactory financial management.” The letter outlined actions by Mr. Monaghan that frustrated attempts to fix the mess.

Enforcement actions from Ontario’s Ministry of the Environment confirm some of the allegations. On September 14 environment ministry abatement officer Dave Thompson slapped TCR with a Field Order requiring it to clean up its site and start making compost again. The company has since complied with the Field Order by repairing the automated controls on the compost turner and replacing the incline conveyor belt and other recycling equipment.

On October 13, Ron Quip, an officer of the ministry’s Investigations and Enforcement Branch, charged the company for violating condition 32 of its Certificate of Approval. Between August 28, 1998 and March 9, 1999 the company had failed to maintain a legally mandated $35,000 financial assurance with the ministry. The company pled guilty and was fined $5,000 in November.

Mr. Monaghan disputes the allegations in Mr. Hett and Mr. MacDonald’s resignation letters. He says that Mr. Hett had signing authority on the Toronto bank account and that his signature is on many cheque stubs. He says that TCR’s accounting firm Good, O’Donnell & Redden has verified that no private placement funds were misappropriated by TCR and that Mr. MacDonald could have found this out for himself. He claims that Mr. Hett resigned because he lost the confidence of the Board and also that Mr. MacDonald used money the company had hoped to use toward construction of a shelter over the compost screening equipment to pay instead to furnish an office in Hamilton.

Legal suits made-to-measure

Court records reveal there are various outstanding lawsuits against TCR. The oldest is from the company’s founders Tony Hermans and his son Jack who incorporated what later became Three County Recycling in 1991 and later took it public. Mr. Monaghan, a stockbroker with First Associates Investments Inc. of Toronto, was introduced to the Dutch expatriate mushroom farmers and composters in 1994 and raised about $1.6-million from a syndicate of investors. He renamed the company TCR Environmental and appointed a number of his associates to the Board.

Growing financial and operational problems gradually caused a rift between the Hermans and Mr. Monaghan. Odor complaints made the Aylmer plant a pariah with neighbors and charges and fines from the environment ministry followed.

“Todd Monaghan promised us more funds would be forthcoming,” Jack Hermans says, “but the money never materialized.”

Brian Adams, who became TCR’s President & CEO in 1996 after the Hermans left TCR, says the Hermans’ were visionaries but also “handymen” who were in over their heads with the plant’s technical challenges. (Interestingly, Mr. Adams resigned from TCR in October 1997 because he felt that Mr. Monaghan, the Board and plant manager Gord Carless were running the company as they saw fit while keeping him in the dark and telling him to focus on marketing.)

By August 1996 the Hermans resigned, then had to take the company to court in order to enforce an agreement with TCR and obtain funds they say they were owed. TCR paid certain amounts but launched a counter suit of its own. Court documents show the company has asked the court to freeze the Hermans’ remaining 333,000 shares permanently. It blames the Hermans for the expenses associated with all the environmental infractions that occurred during the period of their employment and asks for damages totaling $5-million.

The outcome of the litigation doesn’t matter anymore to Tony Hermans. He died of a massive heart attack on March 27, 1999 at the age of 68.

Other lawsuits include one for $50,000 from Ian Reihl, an accountant who served as a TCR director after the Hermans resigned and who also happens to be Mr. Monaghan’s next-door neighbor in the tony Oak Ridge golf course development near Port Perry in Scugog Township. Mr. Monaghan says that Mr. Reihl, who had been hired to conduct a forensic audit of the Hermans’ share holdings, had submitted unreasonable invoices for his work as a Board member. Marsun Lipsit, a consultant who did design work on an air biofilter in 1996 and 1997, is suing TCR for $46,000. Again Mr. Monaghan says the invoices are not reasonable and that he expects to settle the claims soon.

Two other former TCR executives who quit around the same time as Mr. Hett and Mr. MacDonald are also suing the company. The first, Dan Stevens, 28, is suing TCR for $63,000 in unpaid salary and commissions. Mr. Stevens is a merchant banker and former political aide to MPP Lillian Ross, parliamentary assistant to Ontario Cabinet Minister David Tsubouchi. On August 23 the Vice President Corporate Development was the first to resign his position after he helped raise more than $750,000 in private placements for TCR from a group of five prominent Hamilton businessmen that includes a retired police chief and the former federal MP Duncan Beattie.

Mr. Stevens came to TCR at the behest of Peter Preston who, until his defeat in the June 1999 election, was the Conservative MPP for Brandt-Haldimand. Mr. Preston had accepted a position on TCR’s Board in the spring of 1998 and later received stock options while he was still an elected representative. As is evidenced by a letter from February 5, 1999 to the Prime Minister of Trinidad and Tobago that he wrote on government stationary, Mr. Preston solicited business for the company from his legislative office. (Mr. Preston is still a TCR Director and is also Vice President of International Sales for sister-company Bach-Hauser.)

The second executive, Ian Moncreiff, resigned as TCR’s Vice President Project Development on August 27. The 52-year-old planner has 27 years experience as an environmental planner and is suing for $50,000. He says the way that TCR strung him along for months with promises that he’d be paid has financially devastated his family. (On the last occasion that I interviewed Mr. Moncreiff the bank was attempting to foreclose on his house.)

Mr. Monaghan says that Mr. Stevens, despite his helping raise $750,000, was only an office manager for TCR and denies that there was any contract to pay Mr. Stevens commissions on private placements. He says that Mr. Moncreiff’s “outlandish claim” will be settled for a much lower amount.

Mr. Monaghan was TCR’s Chairman from 1997 until March 1999 and was also Chairman of the Investment Dealer’s Association of Ontario from September 1998 until September 1999.

In a s

ubmission to the ASE, Mr. Moncreiff wrote, “Mr. C. Todd Monaghan, who at the time of my departure was neither a director nor an officer, [still] possessed the ability to make decisions and take action on behalf the company, outside the prescribed authority of the Board. I like most, found this to be most puzzling.”

Mr. Monaghan denies that he controls the company from behind-the-scenes or that the Board rubber-stamps his decisions. “I control no share proxies at all,” he said in an interview. He says that the Aylmer plant was built on leased land that could potentially be expropriated for a roadway — something that lawyers overlooked that may have to be rectified through litigation. The plant couldn’t obtain conventional mortgage financing and so, because of their commitment to TCR, he and his family loaned more than $2-million to TCR (i.e., they are the “unspecified note holders” referenced in Mr. Hett’s resignation letter).

Mr. Monaghan says people don’t realize the viciousness of competition in the London area. He refers to incidents of equipment vandalism at the Aylmer plant that TCR reported to the police and attributes to people working for Green Lane. He said that he suspects Green Lane may have been behind a physical assault on former plant manager Gord Carless and another incident in which someone drove a car over Mr. Carless’ hand.

“The police told us that Bob McCaig claims to have ‘spies’ inside TCR,” Mr. Monaghan says.

Dinner with Steve Janes

After the executives resigned in August and September (along with former Board member Wally Wheten, ex-public works commissioner for Hamilton-Wentworth), Steve Janes, P.Eng. was appointed Interim Chair of TCR on September 29, 1999 along with the company’s new President & CEO Brian Sheridan.

Mr. Janes is a London, Ontario-based consultant with more than 40 years experience helping municipalities deal with

planning issues and waste regulations and approvals. He’s well known in the catchment area of TCR and Green Lane’s services, having once served as the local government commissioner for Elgin County. He undertook a performance audit of Green Lane’s Landfill Environmental Assessment in his capacity as a consultant to the City of St. Thomas (just south of London) and Elgin County in 1996 and 1997. Simply put, Mr. Janes is a person who municipalities have come to trust for independent advice, and getting him on its Board was a coup for TCR.

And it was Mr. Janes, accompanied by Mr. Sheridan, who met with Mr. Hett and Mr. MacDonald to give them their severance cheques at Chagall’s restaurant in the Hamilton Sheraton on October 6. Mr. Hett was owed approximately $75,000 and Mr. MacDonald was owed $33,000.

The men were paid the money but only after an unpleasant episode precipitated by Mr. Janes’ demand that they sign letters and releases that TCR had prepared for them. In signing these the men were to agree to talk to no one and to retract the allegations in their resignation letters. These had found their way into the hands of the ASE that was asking TCR to respond.

The men were insulted and refused. “I told Mr. Janes that making my payment depend in any way on signing his letter could make us parties to a crime,” Mr. MacDonald says.

Both men instead wrote their own toned-down letters the next day. TCR attached these to its ASE submission and characterized them as a full retraction. (“I never retracted a single word,” Mr. MacDonald says.) The company blamed both men for TCR’s finan-

cial and operational problems during their tenure and suggested that Mr. MacDonald had tried to take over

the company by opening a Hamilton office.

When I obtained a copy of TCR’s submission to the ASE and showed it to Mr. MacDonald he was enraged. On November 7, he and Mr. Hett sent their own submission to the ASE in which they meticulously reviewed what they claim are more than 35 misstatements and errors in TCR’s submission and noted that Mr. Monaghan’s signature was on the Hamilton office lease. The ASE says it has received the submissions and will respond as appropriate.

Hot-wiring Strathroy

In the spring of this year, TCR’s marketing claims led to it being awarded an unprecedented number of contracts from towns and counties near London, Ontario such as East and Central Elgin and Dutton-Dunwich. A letter that Dutton-Dunwich wrote to Green Lane on March 9 was typical, stating that it chose TCR’s proposal over that of Green Lane because TCR would divert more waste from landfill and because of the simplicity of the two-bag system.

In the case of Bayham Township the marketing was especially successful. Deputy Mayor John Nezezon confirmed that Bayham awarded TCR a

5-year contract without even calling

a competitive tender.

On March 12, 1999 and July 15 TCR received reports from Dan Baxter (the former personal assistant to Premier Mike Harris) and Mac Penney (the former executive assistant to former Minister Dave Johnson) of Government Policy Consultants in Toronto. GPC had been commissioned by TCR to determine a political contact and media relations program to embarrass the government into revoking Green Lane’s landfill certificate. TCR appears to have decided it could not afford the suggested $100,000 program but the reports indicate TCR’s willingness to contemplate backroom political strategies to defeat Green Lane.

Mr. Moncreiff says that waste contractors use the term “hot-wiring” to describe situations in which a company and a municipality (often a small one without a full-time waste director) cooperate to write a contract tender and bias the terms so that the services of the company will be favoured.

The Town of Strathroy’s tender — the one at the center of Green Lane’s lawsuit — is interesting in this respect.

On March 31 the Town of Strathroy tendered a three-year waste disposal contract and received three bids. The tender documents called for a “wet/dry bag collection” system in accordance with the town’s garbage and disposal collection bylaw that specified bags. TCR received the Town’s waste at that time.

Green Lane and its partner Blue Water Recycling tendered the lowest bid at $1.8-million over the life of the contract. At $2.02-million, McQ Handling was in the middle. TCR’s bid (made in partnership with Preferred Waste Collection and Recycling) was the highest at $2.03-million.

Green Lane’s proposal offered not only the lowest price but also added-value services. The company’s plan amounted to a four-stream separation program within the context of wet/dry collection. As Green Lane explained in local newspaper ads, garbage and compostable materials were to be collected in a two-compartment truck; a second two-compartment vehicle would pick up fibre and recyclable containers. Since residents already owned Blue Boxes they were offered the flexibility of using boxes or bags.

“We satisfied the wet/dry criteria,” Mr. McCaig says.

However, on June 21, 1999 Strathroy awarded the contract to TCR Environmental and Preferred Waste. Letters exchanged during the contract evaluation period shed light on how the Town made its decision.

On April 19, Chuck Knapp, administrator with the Town, wrote to Green Lane to inform the company that he’d seen the company’s advertisement for its proposed system and that Green Lane’s proposed modifications of the two-bag system would be different than what was assumed by the Town’s bylaw.

“Our understanding,” Mr. Knapp wrote, “through the drafting of that specific wording, was that TCR Environmental Corp. may be the only local or area site with M.O.E. Certificate of Approval that fit that characterization or description. In essence, the Town and its Recycling Committee had endorsed the disposal site currently being used.” Despite the fact that Green Lane and TCR have almost identical compost facilities, Mr. Knapp stated that he did not believe Green Lane could meet the centralized composting requirement of the tender.

The next day Bob McCaig wrote back that he and his partners were certified by the

ministry to compost and recycle waste, and that waste would be collected in bags as per the bylaw except where residents might prefer to use Blue Boxes. Box or bag, what was the difference to Strathroy as long as the price was lower?

On June 22, Mr. Knapp wrote to Green Lane that it had just awarded the contract to TCR and Preferred Waste. In the third paragraph of Mr. Knapp’s letter Mr. Janes is mentioned.

“During your presentation,” Mr. Knapp wrote to Mr. McCaig, “reference was made to an audit conducted by consultant Steve Janes recently with respect to the City of St. Thomas. [Where Green Lane is based.]

“A figure of 60% diversion was quoted as having been determined during that audit. Mr. Janes had contacted our office to advise that he had not conducted any audits for a number of years and that the report quoted was erroneous. He advised that a March 4th, 1999, report from City Engineer John Dewancker assessed the diversion performance of Green Lane to be 52.1% in 1998.

“One of the main objectives of the local Recycling Committee was for the Town to attempt to maximize diversion. These matters no doubt played heavily in the Town’s decision to accept the tender from Preferred and Three County.” [sic]

On June 29, Mr. McCaig wrote back to Mr. Knapp, “Neither Mr. Wright, Mr. Veilleux nor myself made any such reference [to Mr. Janes] at our recent meeting with council.”

It turns out that it was in fact Mr. Hett of TCR who made an unflattering reference to the old St. Thomas/Green Lane audit numbers in his presentation to the Town. Mr. Knapp mistakenly attributed the remark to Green Lane.

I was intrigued that Mr. Janes, the independent municipal consultant, had chosen to call Mr. Knapp and compound Mr. Hett’s quote of his negative review of Green Lane’s diversion rate with even lower estimates. I asked him what had prompted him to call Mr. Knapp, a person Mr. Janes says he’s known for 20 years.

“I got a call from the town asking me about an in camera presentation,” Mr. Janes answered.” Someone from the Town asked him to clarify his study of Green Lane’s diversion rates. He answered that it had been some time since he did his study and that St. Thomas engineer John Dewancker had done more recent work.

“I said I’ll phone John and find out what it is and I’ll let you know. They said ‘please do.'” Mr. Dewancker faxed Mr. Janes a copy of the report he had done on the 1998 work that showed Green Lane’s diversion rate in the 48 per cent range.

“So I phoned back and talked to Chuck Knapp and said ‘Chuck, with respect to that question that was raised, the figures that John Dewancker gives me is 48.3 or 48.5 per cent.”

Mr. Janes said he didn’t mention TCR or its higher diversion rates in the conversation.

Mr. McCaig was also interested in who called whom first and got St. Thomas City Administrator Roy Main to investigate. Mr. Main was told the same story about Mr. Janes responding to a call from Mr. Knapp, but contrary to Mr. Knapp’s letter to Green Lane, was told that “the issue of diversion rates was not a determining factor in their decision.”

I called Mr. Knapp directly in October to ask him to clarify the situation. Because of the lawsuit he would not (understandably) answer questions unless they were posed through the Town’s solicitor Rod Dale. Through Mr. Dale, Mr. Knapp answered that Mr. Janes had called him first to offer the more recent Green Lane audit information and that Mr. Janes had also described TCR’s higher diversion rates. He cautioned that diversion rates were only one of several factors in the Town’s decision. He said he was the Town Clerk for Aylmer for 21 years, from 1973 to 1994.

Mr. McCaig’s claim against TCR Environmental and the Town of Strathroy has yet to be tested in court. However, it’s clear that Strathroy Administrator Chuck Knapp has backpedaled away from his June 22 written statement that diversion “played heavily in the Town’s decision.” And it’s clear that Mr. Knapp’s recollection about who called whom first is completely at odds with that of Mr. Janes.

Strathroy is a small town with very few government staff. I wanted to clarify this discrepancy so I contacted Mr. Knapp once again through the Town’s lawyer. Was it possible, I asked Mr. Knapp, that he thought Mr. Janes called him first but that, as Mr. Janes had said, Mr. Janes was responding to contact from a different person at the Town? On November 29 Mr. Knapp wrote back the following: “I do not believe that anyone from the Town contacted Mr. Janes. He called me and stated ‘I understand that my name was taken in vain at a recent Council Meeting’ — or something very similar to that.”

Mr. Knapp also says he had no knowledge during the contract evaluation period that Mr. Janes’ was attempting to secure a position on TCR’s Board at that time and had asked to be given 250,000 stock options in the company in exchange for helping TCR secure municipal waste disposal contracts.

I interviewed Mr. Janes in October after he became TCR’s Interim Chairman and asked him about his involvement with TCR during the time period when Strathroy was evaluating the various bids.

Mr. Janes told me emphatically that he had “no financial relationship whatsoever” with TCR (even in October) and he repeated several times that he’d only become seriously involved with the company in July of this year when he became a director.

When I pressed him further on the financial relationship, he admitted that — while he had “nothing in writing” — he did indeed have “a verbal commitment” for stock options in TCR. He declined to say how many. (Mr. Janes was formally granted 250,000 stock options on October 28.) He also denied that he works with C.E. Knutson & Associates, the firm that conducted the supposedly independent audit of the Aylmer plant.When I pressed him further on the financial relationship, he admitted that — while he had “nothing in writing” — he did indeed have “a verbal commitment” for stock options in TCR. He declined to say how many. (Mr. Janes was formally granted 250,000 stock options on October 28.) He also denied that he works with C.E. Knutson & Associates, the firm that conducted the supposedly independent audit of the Aylmer plant. When I asked him why his phone number was the same as that of C.E. Knutson & Associates, he replied, “I only rent a desk here.”Mr. Janes appeared surprised when I read to him from confidential letters he had written to Mr. Hett on May 6 and May 10, 1999 in which he offered TCR his services for “strategic planning assistance” (e.g., “the development of TCR market opportunities”). In the letters, Mr. Janes asked to be compensated for this work by being given a position on TCR’s Board and an “option for the acquisition of 250,000 common shares in the Corporation at the current market price to be open for a 60 month period.” The May 6 letter also offered an arrangement in which the services of C.E. Knutson & Associates for “project implementation assistance” would be compensated by payment “made by the issuance of common shares” to the company (an idea that was later dropped). The shares traded on the ASE in the 55-cent range at that time.Rightly or wrongly, Mr. Janes clearly felt in early May that he was in a position to negotiate business relationships for C.E. Knutson & Associates. Mr. Janes drew my attention to the final paragraph of each letter where he’d written that he and the company would have to interview one another further.”Nothing ever came of the proposal,” Mr. Janes said.However, the minutes from a May 17 management meeting (that included Mr. Monaghan) tell a different story.”Finally, Jack brought up the possibility of bringing onto the Board of Directors, Steve James, [sic] an engineer who wants to aid in TCR’s growth. Mr. [sic] James wishes to be paid for his efforts in stock options,” the minutes record.In June the idea was approved. Item 12 from a Board meeting agenda dated June 30 states: “A submission that is recommended for adoption by the President and the Chairman from Mr. Steve Janes on
strategic planning.” Mr. MacDonald (TCR’s Chairman at that time) says that 250,000 shares were approved for Mr. Janes at the meeting.Ian Moncreiff has a different recollection of Mr. Janes’ first involvement with TCR in a letter dated September 15, 1999 about the terms of his contract with TCR.”On October 16, 1998, shortly after I began my work for TCR, I visited the plant to meet with then company president, Bill Hett,” the letter states. “I was directed to the office of the bookkeeper, Ms. Fern Hill where I found Mr. Hett quietly meeting with Steve Janes. After the meeting had been completed, I asked Mr. Hett why he was meeting with Steve Janes. To my surprise, Mr. Hett replied that Mr. Janes was ‘helping us to procure new municipal contracts.’ In addition to my surprise, I was somewhat impressed that TCR and Mr. Hett had been successful in attracting Mr. Janes to TCR.”The curriculum vitae for Mr. Janes that Mr. Hett attached to a waste contract submission to the County of Brant Public Works Department describes him as an “Associate — ongoing” with C.E. Knutson & Associates. And it is Mr. Janes’ signature that appears on the fax cover note that accompanied the first draft of the Aylmer plant audit that was sent to Mr. Hett from C.E. Knutson & Associates’ office on April 6.It’s unclear why Mr. Janes wishes to put a distance between himself and both C.E. Knutson & Associates and TCR Environmental in the spring of 1999. Could it be because the independent municipal consultant had assisted TCR from behind-the-scenes in securing a waste disposal contract for a company in which he had (or was about to receive) an undeclared financial interest? Is Chuck Knapp’s recollection of events necessarily correct? Examination and cross-examination in a court of law may perhaps be the only way an answer to this question will be obtained, as well as answers to other questions about the awarding of the Strathroy disposal contract.I asked Mr. McCaig what he expects from his lawsuit. Mr. McCaig answered. “I just want the truth to come out.”Guy Crittenden is editor-in-chief of this magazine.


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