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's investigation concluded Ricova withheld at least $1 million it owed to the city over a 12-month period. 

Brigitte Bishop tabled a damning 35-page report at city hall Monday. 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, citing a "high risk of recidivism," Bishop recommends blacklisting the company: declaring Ricova ineligible to be considered for contracts and subcontracts with the City of Montreal for a period of five years.

Bishop investigated the roles of four Ricova entities involved in the execution of the contracts: Ricova RSC Inc. and Ricova Lachine Inc., 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 Ricova Services Inc., to runs its 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 said Ricova International Inc. retained at 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 report said.

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

Bishop's office has turned over its findings to Quebec's anti-corruption squad, UPAC, to determine whether a criminal investigation is in order.

Ricova refutes allegations

All Ricova entities are controlled 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 describes the 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-Québec."

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

City shocked, vows to act quickly

The Projet Montréal administration said it is shocked by the findings of "serious misconduct" in the Bureau de l'Inspecteur Général (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," said Marie-Andrée Mauger, executive committee member responsible for the environment. 

Mauger said a business relationship with Ricova was "imposed" on the city in 2020 when the company bought the assets, including the contracts, of the previous operator, who had gone bankrupt. 

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

'A serious blow' to Montrealers' confidence: opposition

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

An investigation by Radio-Canada's Enquête that was broadcast in February said the city of Montreal is considered among the worst offenders when it comes to exporting what is supposed to be recycled paper but is contaminated by tonnes of plastic bags — some of which litter the Indian landscape and are often burned as a source of fuel.

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

At the time of the Enquête report, Ricova president Colubriale said that the material he sends overseas is relatively clean, saying there "may be something wrong" in how the city does its evaluations.

Montreal responded that 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, the official opposition at Montreal city hall demanded more predictability and an action plan from Mayor Valérie Plante's administration. 

"This report is the straw that breaks the camel's back," said Ensemble Montréal 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 the Enquête program, 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."