Publicly-traded TCR Environmental Corp.’s waste processing facility in Aylmer, Ontario claims to divert “up to 80 per cent” of waste from landfill disposal through aggressive recycling and composting. The plant and its municipal clients — most notably Tillsonburg — have won prestigious awards from Environment Canada, the Recycling Council of Ontario and the Solid Waste Association of North America (SWANA). And it’s supposed to make investors rich.
However, documents obtained by this magazine and interviews with former senior executives suggest that the facility may be little more than an elaborate scheme to sell stock.
As readers of this magazine will recall, TCR takes garbage collected at curbside in bags containing either “wet” or “dry” material from Aylmer, Tillsonburg, Strathroy, Malahide, Central Elgin, Dutton-Dunwich and South Dorchester. Touted as a cheap alternative to the Blue Box, the plant recovers recyclable materials and turns most of the rest (compostable organics) into a valuable soil conditioner.
At least, that’s the theory.
However, this autumn the company underwent a change in management. “Implosion” might be a more apt description. Between August 23 and September 9, TCR’s former President & CEO William Hett and Chairman John A. MacDonald (the former Hamilton mayor) resigned, along with Vice President of Corporate Development Daniel Stevens and Vice President of Project Development Ian Moncreiff. Some of the allegations in certain memos and resignation letters are explosive.
“The letter accused the board of exercising no control over the finances of the company that he described as a ‘non-business like operation’.”
In a memorandum to TCR’s board dated August 17, 1999, Mr. Hett wrote, “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, formerly environment manager for the Town of Markham, 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.”
On September 3, the Ontario Ministry of the Environment slapped TCR with a field order for violating its C of A (for not making compost, abatement staff say). The company has until mid-November to comply.
Mr. Hett’s memo describes a company in chaos. He lists numerous pieces of broken equipment, major trading accounts and payroll in arrears with lawsuits pending and staff quitting. He stated that plant manager Gord Carless “misrepresented, misinformed, mislead and now undermined” his ability to move forward on key issues and that he “had a history of cavalier behavior” with the environment ministry and all local officials. (Mr. Carless is now international development manager for TCR’s sister company, Bach-Hauser.)
Despite the warnings, Mr. Hett concluded in his September 8 resignation that, “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.” The letter accused the board of exercising no control over the finances of the company that he described as a “non-business like operation” in which critical financial and operational information was withheld from him.
Mr. Hett wrote that approximately $900,000 received by the company through private placement was with “total disregard for the requirements of the daily operation . . . unilaterally and without discussion with the board, that I am aware of, utilized to pay down notes payable to unknown sources.” This, at a time when the company couldn’t afford to repair the brakes of the loader. When Mr. Hett pointed out that the company was losing $90,000 per month and had racked up approximately $500,000 in accounts payable, he was told to concentrate only on marketing TCR’s services. He quit.
Mr. MacDonald’s September 9 resignation repeats many of these allegations and quotes the plant manager admitting occasions when “garbage was packed to the ceiling and the east door [was] plugged.” He added, “In the interest of accuracy, it is my intention to notify all regulatory and enforcement agencies of the contents of this letter.” He did.
On August 17, Mr. Hett and Mr. MacDonald, with police oversight, escorted the plant manager and his wife (the bookkeeper) from the plant. They found the company’s books in a horrendous state and discovered the documentation for a separate company bank account they say was under the control of Mr. C. Todd Monaghan, a shareholder in TCR and former chairman. Cheque stubs in Mrs. Carless’ drawer indicated huge sums had been used to pay anonymous note holders, in contradiction of the share offering’s “use of proceeds” section. Mr. Monaghan says these accusations are false.
Page four of TCR’s 1998 Annual Tonnage Diversion Report to the Ministry of the Environment states that just over 20 million kilograms of waste was received by the Aylmer plant. Of this, approximately 2.7 million kgs was recycled, 149,620 kgs was “shipped” compost, and just over 7.9 million kgs was officially landfilled. This leaves almost half the waste (9.1 million kgs) unaccounted for. The company says this is the compost stored outside (with volume reduced via moisture lost while curing). This reflects a diversion rate closer to 14.25 per cent than the 80 per cent the company claims if the stuff is just sitting piled up on the back of the company lot.
Greenlane Environmental, which operates a competing landfill and Blue Box system, is suing TCR for negligent misstatement in bidding for a service contract with the Town of Strathroy. Canadian Waste Services is suing for unpaid bills, as is consultant Marsun Lipsit. The cases have yet to be heard in court.
Steve Janes, TCR’s new interim chairman, says the company has made management changes and will replace the plant’s equipment. He says the results of the new system will be exciting. Hopefully that will be so, but the question arises: What on earth have individuals and municipalities been investing in up until now?