Once again Waste Management Inc. has been found unfit to do business in a community. The San Luis Obispo (CA) County Board of Supervisors ruled that WMI was unfit to continue the collection contract of a company it had taken over. This decision was upheld by the Superior Court of San Luis Obispo which ruled that the County acted within its jurisdiction to deny the assignment of the franchise in light of USA Waste/ WMI's compliance history. In the 1999 annual report, WMI addressed a concern that state and local jurisdictions have enacted such "fitness" laws. This really isn't a problem unless you have some reason to believe it will apply to you. This becomes even more of an issue for "unfit" corporations when the local jurisdictions can look into the history of the parent company and any other subsidiaries, as well as the individual company applying for a permit.

In recent months Waste Management has been bidding adieu to most of its foreign holdings, as well as some domestic ones, at a staggering rate. Once longing to be the largest entity of its kind in the world, WMI has regrouped and announced it is selling all of its operations outside North America, as well as some in North America (Bloomberg, May 19).and will try to be the biggest in the USA, and maybe the Western Hemisphere. It is curious that while WMI has sold off its European, Australian and New Zealand holdings, it appears to have retained the poorer cousins in Asia and South America. A reasonable person might wonder if that is because corporations expect less resistance to their will in less developed nations. In some ways it reflects the racism that is often a part of selecting sites for landfills, transfer stations, etc., in this country. So it has been ciao to the following holdings:

• April 4, 2000 Business Wire reports WMI has sold its wholly-owned subsidiary in The Netherlands for $330 million.

• April 25 WMI announces an agreement has been reached to sell certain North American solid waste business and 1 million cubic yards of disposal to Waste Corporation of America for $110 million, with WCA assuming closure and post closure liabilities. This is subject to approval by state and federal agencies.

• April 25 WMI announces completion of the sale of its waste services in Finland to Lassila & Tikanoja plc for $100 million.

• May 1 WMI sells Biogro(USA), which manages sludge from municipal water treatment facilities, to Synagro for $200 million.

• May 1 CNNfn announces WMI has completed the sale of operations in The Netherlands.

• May 12 WMI announces the sale of its waste services operations in Italy to Emas S.p.A. and Italcogim S.p.A. for approximately $70 million.

• May 19 WMI announces it is in talks to sell its waste services operations in Sweden to Severn Trent Plc.

• June 5 WMI sells Pacific Waste Management (Australia) for $220.9 million SembSITA Pacific.

• June 5 WMI announces an agreement to sell its waste services in the United Kingdom to Severn Trent Plc for approximately $570 million, subject to the approval of regulatory officials.

• June 9 WMI sells Waste Management Nuclear Services (USA) to GTS Duatek for $65 million.

• June 21 WMI announces it has sold its waste services operations in Germany to Cleanaway Deutchland Holding BmgH. for $80 million.

On June 21&22, The Wall Street Journal reported that Waste Management Inc. had consented , without either admitting or denying the SEC findings, to" 'cease and desist from committing or causing violations of certain of the antifraud, books and records, and internal control provisions of the federal securities laws.' " The order was related to the company's disclosures about expected earnings and revenue for the second quarter of 1999. The SEC did not assess any penalties or fines in part due to the dismissal of the executives responsible for the "allegedly" misleading disclosures, and since it launched its own investigation and cooperated in the SEC's investigation. An internal memo dated June 2, 1999, stated "We as a corporation don't have the ability to produce accurate and timely financial information." When the problems came to light, WMI stock fell from $53.5625 to $33.9375 a share in one day, and then continued to fall until it bottomed out in the teens.

Waste Management said it is " 'working hard to regain our credibility with our people and investors.' " But shareholder John Doerfler, a 75 year old retiree, is quoted by Bloomberg as skeptically saying " 'The company is in such a shambles, I don't know if it will ever pull out of it.' "

The SEC continues to investigate stock sales by executives of WMI in May 1999, totaling nearly $57.6 million . Thomas Newkirk, an associate director in the SEC's division of enforcement stated that the WMI case should make it clear to other companies that " 'it's reckless to make any kind of forward-looking statement when the accounting system collapses.' " He also added, " ' Our investigation continues.' "

SPOC, the grassroots organization in rural western New York is asking for help to continue their fight to stop WMI from rebuilding/expanding a landfill along the historic Erie Canal. An appeal of the state environmental commissioner's decision is the only recourse left to them at this point, and legal assistance is required. Please visit their website at SPOC, Homestead, and our own Albion site.

On June 12, Rev. Joe Parrish, Ph.D., Biological Chemistry and Rector of St. John's Church, Elizabeth, NJ, testified before the Environmental Protection Committee of the City of New York. Rev. Parrish made a point by point presentation to the committee with the conclusion "we believe the entire proposal of the Linden, NJ, barge to rail transfer station is probably not feasible...The train export option for New York City garbage has been virtually eliminated. Thus serious consideration of waste reduction must be made."

Two options were then presented as alternatives to deal with garbage and food wastes. "(1) A major compost facility or facilities will be needed to handle a significant portion of the food wastes from the City of New York." Parrish went on to explain that this could be done at the Fresh Kills landfill in an area furthest from residential areas, due to odors that would be emitted from a composting facility. This compost could be used for agricultural purposes. And "(2) Another use for food wastes is the production of ethynol, the likely replacement for EPA-banned MTBE, methyl tributyl ether, that has been the oxygenate of choice for gasoline for much of the United States." Parrish added, "Oxygenates produce a cleaner and more healthy burning fuel because it replaces gasoline's highly carcinogenic aromatics which now compose one-fourth of gasoline." Residues from this process could be further composted and sold for agricultural land enrichment.

Read more about Rev. Parrish's efforts along with his community to stop WMI in Elizabeth, NJ by visiting the Stop Waste Management Elizabeth webpage.

• May 5, 2000 Bloomberg reports that WMI has agreed to pay the legal fees of Louis Paolino, Jr. and other executives in pending state and federal lawsuits. Paolino and others were sued by WMI for overstating their profits when Eastern Environmental Services was bought out by WMI 2 years ago. In what seems a rather sweet deal to those of us who usually pay our own way, the former Eastern exec's were wise enough to make legal expenses a part of the buyout deal, which was upheld by the court.

• May 10, 2000 Bloomberg reports that WMI's first-quarter earnings fell 84% due to costs of correcting accounting errors and discontinuing a pension plan.

• May 11, 2000 Business Wire reports that Robert E. Dees Jr., was appointed as Senior Vice President of People. A little pretentious, perhaps?

• May 12, 2000 PRNewswire reports WMI, Mace Security, Louis Paolino and others have dismissed fraud suits against each other and will submit to non-binding arbitration.

• May 16, 2000 Reuters reports Maurice Meyer, CEO of WMI, announced the replacement of internal systems that cost the company $397 million last year. They should begin testing the new system in the 3rd quarter.

• May 19, 2000 Bloomberg reported May 19 that WMI operates about 300 landfills, 40,000 vehicles and employs 55,000 people.

1999 Archives

In keeping with the example of WMI shareholders, Dean Buntrock, co-founder and former WMI executive through December 31, 1997, is suing the company for nearly $40 million for pension and benefits he feels are owed him by his former employer. In a February 25 article in the Chicago Tribune, David Greising characterizes Buntrock as "taking bows" for everything that went right at WMI over the 40 years he was associated with the company, and "quite naturally, all that went wrong was somebody else's fault." After enumerating several substantial fines and charges ranging from fraud and environmental crimes to bribery and anti-trust charges that occurred under Buntrock's leadership, Greising concludes his article: "Garbage is always a dirty business. But the way Waste [WMI] was run while Buntrock was in charge, the garbage wasn't limited to the stuff in the trucks."

Check out the Corporruption newsletter for more about Buntrock. And to find out what some students at his alma mater think of him, check out their website: "Buttrock Commons: The Shame of St. Olaf College."

A Reuters article quoted in the last issue of Trash Talk reported a $1.3 BILLION lawsuit brought by WMI against Eastern Environmental Inc., alleging they had overstated their (Eastern's) profits in an effort to defraud WMI when Eastern was purchased by WMI. That suit has been answered by.... you guessed it,another lawsuit! Rueters reported February 17 that six former Eastern officials have sued WMI, seeking recovery of legal fees from the lawsuit WMI brought against the Eastern officials. The officials "claimed reimbursement was promised in the merger agreement...and in their original employment contracts." Try and figure this one out.

On April 10, Bloomberg reported that Rodney Proto, former president and CEO of WMI received a $3.4 million interest-free loan from the company without telling the board. Proto did repay the loan, taken out to pay federal taxes, following the sale of shares worth $16.5 million. That transaction has been questioned in light of the value of the stock falling by over 30% after several executives sold large quantities of stock.

And...Business Wire reports April 12 that WMI has appointed William E. Prachar as vice president of BUSINESS ETHICS AND COMPLIANCE. What a brilliant idea!

Bloomberg reported on January 26 that WMI plans to sell some of its North American assets and all of its international operations in the hopes of raising $3 billion. WMI also announced that it will more than double its corporate staff from 300 to 750, mostly accounting and information-technology staff. The report states that WMI has 305 landfills, 41,000 garbage trucks and 68,000 employees since its merger with USA Waste Services. Chief Executive A. Maurice Myers spoke on CNBC and was quoted by Bloomberg: "We'll be primarily a North American operation in Mexico, the U.S. and Canada. And we'll be the biggest operator in those areas and we'll still be the biggest waste management in the world...Everyone's got waste and everyone still disposes of that 5 pounds of waste everyday."

Bloomberg also reported that it would exclude some investors from meetings in New York this past January, leaving smaller investors without access to the review of the company's business. "U.S. Securities and Exchange Commission Chairman Arthur Levitt has criticized companies that reveal market-moving information to institutional investors and analysts before releasing it to the public...The trash company, the seventeenth-worst performing stock in Standard & Poor's 500 Index in 1999, has blamed an inability to track revenue and costs for its reduced profits."

Bloomberg quotes El Norte, a Monterrey daily, as reporting that WMI is suing the Mexican city of Acapulco for as much as $60 million for "not fulfilling the terms of a license to collect trash there." The case will be resolved by an arbitration panel under the North American Free Trade Agreement. Mexico may be sorry that they're not one of the international assets being sold.

• January 31, 2000 Business Wire reports that WMI has announced an agreement for the sale of its waste services in Finland for $100 million.

• February 6, 2000 Bloomberg reports WMI, which took 3rd quarter charges, announces it doesn't plan to report unexpected 4th quarter charges. Also reported is the firing of some managers in Florida. "'There are a few bad actors out there in the ranks, and he's [Myers] doing his part to get rid of them'" according to Doug Augenthaler a CIBC World Markets analyst quoted in the article.

• February 7, 2000 A U.S. District Court in Richmond said Virginia laws aimed at restricting transportation of solid wastes into the state were unconstitutional, clearing the way for WMI to increase the amount of New York garbage it dumps in Virginia landfills. Virginia plans to appeal.

• February 15, 2000 The Washington Post reports that D.C.'s government has fined WMI about $20,000 for failing to pick up recycled materials "hundreds of times in the last month" according to D.C. officials. Waste Management has a two year, $7 million contract for the collection of recyclable materials.

• February 23, 2000 Business Wire announces that William L. Trubeck has been appointed as senior vice president and chief financial officer of WMI.

• March 3, 2000 Business Wire reports the appointment of Zachary T. "Zack" Lowe as Vice President of Corporate Security. He joins WMI after 30 years with the FBI. Business Wire reports WMI has 55,000 employees, 1,400 collection operations, 300 landfills, 325 transfer stations, 170 recycling processing facilities and a fleet of approximately 33, 000 collection trucks in North America.

• March 8, 2000 Connecticut considers a legislation proposing a moratorium on all new incinerators. It passed in the Environment Committee by a vote of 19 to 0.

• March 23, 2000 Bloomberg reports WMI will implement a fuel surcharge beginning April 1 to offset a project fuel cost increase of $100 million this year.

• March 26, 2000 Cohen, Milstein, Hausfeld & Toll announce that citizens in Ohio and West Virginia were "victorious" in a SLAPP suit filed by Waste Technologies against citizens who "had spoken out." WTI (not to be confused with our WMI, well, maybe a little) "sought over a million dollars against approximately thirty citizens..." Citizens were protesting an incinerator located in East Liverpool, OH, 1100 feet from an elementary school.

• March 27, 2000 Reuters reports a fourth quarter net loss of $114.7 million after "special charges." See February 6 above.

• April 3, 2000 Business Wire WMI Canadian waste services subsidiary completes acquisition of as much as the Competition Bureau would allow of BFIL, a Canadian subsidiary of Allied Waste Industries, Inc.

• April 4, 2000 Business Wire reports WMI has sold its wholly-owned subsidiary in The Netherlands for $330 million.

• April 12, 2000 Bloomberg reports Waste management to sell Italian Unit for $70 million.

• April 13, 2000 WMI, Bloomberg reports parent company of Pacific Waste Management sells PWM for $230 million, $5 million less than announced the previous week.

1999 Archives

Waste Management involved in a law suit? The question has become not are they, but which one do you want to know about first? November 22, 1999 Bloomberg reported that WMI had reached a settlement with shareholders of the former Wheelabrator Technologies Inc., over a 1998 $874.5 million stock buyout. Stockholders of Wheelabrator filed more than 20 lawsuits, alleging their stock was undervalued. An agreement was reached for an additional $75 million and $425,000 in attorney fees. Waste Management ended the year, according to a December 31, 1999 report by Reuters, by filing a $1.3 BILLION lawsuit, alleging that Eastern Environmental Services Inc. had overstated their profits in an effort to defraud WMI when Eastern was purchased. The suit also names former WMI chairman and CEO, John Drury and former president of WMI, Rodney Proto along with Louis Paolino, Jr., chairman of Eastern, of personally benefiting. A Bloomberg report on the same date also stated that the suit alleges that Paolino created financial incentives to encourage Drury and Proto to acquire Eastern.

U.S. Plastic Lumber announced on January 3, 2000, that they were in no way implicated in connection with the suit filed, clearly distancing themselves from their chairman, Louis Paolino, Jr.

A column in the January 10, 2000, issue of Waste News by their editor, Allan Gerlat, suggests that WMI market their stock to lawyers, since with WMI's history of litigation, attorneys have a vested interested in WMI. Gerlat suggests there are two ways to look at the Eastern lawsuit, either that WMI is finally getting at some of the causes of their problems, or that they are looking for scapegoats.

In January, Roderick Hills, a WMI board member, said that evidence was found that Drury and Proto had made improper investment in 1997 in a Canadian waste company, Capital Environment Inc. According to Hills, "They sold assets to a company which they had invested in," in violation of a Canadian anti-trust order to sell assets.

On January 10 it was announced that U.S. Plastics Corp. had dismissed it's chairman, Louis Paolino, Jr., and that former WMI CEO John Drury had resigned from its board. Bloomberg reported that Paolino had filed a lawsuit of his own that alleges WMI misrepresented its financial condition before it bought Eastern in 1998 with stock.

On January 13, Bloomberg reported that WMI had filed papers with the SEC showing that they are investigating Drury for other financial conflicts. Drury's attorney said that "When all the facts are known, this will prove to have been a tempest in a teapot."

On January 21 it was announced that a $72,760,263 lawsuit brought by WMI Investors against WasteMaster Inc., was dismissed with prejudice. The suit claimed that WMI Investors was defrauded in the acquisition of stock through Continental Investment Corp.

These lawsuits are in addition to the multitude of other lawsuits brought recently by WMI stockholders accusing the company using accounting practices which predicted higher profits.

• November 23, 1999 Bloomberg announces that WMI has named Thomas L. Smith as head of its information systems to, in their words, "fix its troubled computer systems." Bloomberg also refers to WMI as "the fifth-worst performing stock in Standard and Poor's 500 Index this year." Later Bloomberg ups them to the seventh-worst performing stock.

• January 11, 2000 Bloomberg announces that WMI was unable to find a single buyer for their internal assets, and they will begin selling them off in pieces, to "cut debt and finance a buy back to boost shares that have fallen 72 percent since May 4..." They go on to add that WMI has given 4 profit warnings since July and took charges of $1.3 billion in the 3rd quarter of 1999 for "landfill writedowns and bad debt after billings delays."

• January 12, 2000 Waste News reports that WMI is expected to announce the sale of most, but not all international assets by the end of February.

• January 13, 2000 Business Wire reports that WMI is number 8 in Business Week's Worst Board of Directors, siting a question of "Where was the board?" during financial "meltdowns" and "performance woes."

• January 19, 2000 Public employees environmental group, PEER, releases the results of a survey of Wisconsin's Department of Natural Resources employees, finding that nearly half the respondents felt that scientific evaluations are influenced by politics, feel the DNR administrator do not "stand up against political pressure in protecting the environment, and 2 in 5 believe that business has an undue influence on decisions made by DNR. One in six also reported they feared or knew of retaliation against employees who had spoken out for stronger environmental protection.

• January 20, 2000 Texas PEER announces that presidential candidate, Gov. George Bush received millions of dollars in campaign contributions from industries that directly benefited from Bush-sponsored hazardous waste law revisions. The changes moved the responsibility for cleanup from banks and landowners to state taxpayers. "Pollution policy in Texas has become a cash and carry operation--if you have the cash you can carry on as you like," said Erin Rogers, Texas PEER Coordinator.

• January 20, 2000 Utne Reader Online tackles the problem of "high-tech junk," such as the screen you're looking at right now. A company that recycles computers, Technology Recycling, of Denver, claims that for a $35 per piece fee they can pick up, dismantle and recycle your old computer. "all the lead is captured and reused...Nothing is put into a landfill when we get done--not a screw, not a bolt, not a wire--nothing." Must give landfill operators nightmares.

• January 24, 2000 Business Wire reports that WMI has hired Lawrence O'Donnell, III as senior vice president, general counsel and secretary.

  ---

To Stop Waste Management Home Page

1999 Archives