EBIC's Corporate Profile
Waste Management Inc.
(Controlled by USA Waste --- as of 1998)
Waste Management=s history and record
The company formerly known as WMX is the largest waste disposal firm in the world. It is also one of the largest corporations - period - in the world (1) The company was founded in 1968 with the merger of waste disposal firms operating in Florida, owned by H. Wayne Huizenga, and companies in Chicago owned by Dean Buntrock. The company began its rise to the top of the Fortune 500 as Waste Management (WMI). In 1992 the company changed its name to WMX, only to change it back to Waste Management in 1997. From its very beginnings WMI has been involved in skirmishes with regulatory and law enforcement agencies. Indeed, the company has achieved an impressive record of criminal and civil charges in aggressive pursuit of domination of North America=s waste flows and disposal capacity. 2)
Spokespersons for the company continued to routinely defend the company's record by claiming that the crimes it has been convicted of were committed by renegade employees violating company policy. However, not everyone accepts this view of WMI's business practices. In a major national price fixing class action, the plaintiffs= exhaustive investigation revealed how despite WMI=s (and BFI=s) claims to the contrary both waste majors were run as highly centralized operations. They had developed sophisticated accounting programs that allegedly enabled them to engage in predatory, monopolistic pricing in many different locations. ADiscovery has confirmed that, far from being an aggregation of autonomous regions and districts, defendants= operations are high centralized, with senior executives from corporate headquarters monitoring, controlling, dictating and enforcing pricing and marketing strategies, and virtually every important aspect of field operations.@ (3) In September 1990, facing a stunning list of alleged misdeeds, WMI broke ranks with BFI and, without admitting any wrong doing, settled out of court for $19.5 million.(4)
Furthermore, San Diego district Attorney Edwin Miller, in his 1992 report on WMI=s legal civil record, noted that his office was unable to determine "whether Waste Management's history, as reflected by this report, has been due to a failure of proper management, or has been the result of deliberate corporate policy."5)
In December, 1996, Federal Judge Odell Horton in the Western District of Tennessee issued an opinion ordering a WMI subsidiary to pay $ 91.5 million to a group of businessmen that claimed the company had cheated them. The judge's ruling held that the officers in Chemical Waste Management had engaged in a fraudulent scheme to "cheat [the] plaintiffs out of money." The judge added, " What is troubling about this case is that fraud, misrepresentation and dishonesty apparently became part of the operating culture of the Defendant corporation.... There was no reason for Defendant to undertake such conduct other than greed." (6) In so ruling, the judge may have answered the question raised by San Diego District Attorney Edwin Miller quoted above.
On June 13, 1997 the Indiana Department of Environmental Management turned down Chemical Waste Management's application for a permit to operate a hazardous landfill in Fort Wayne, IN. IDEM Commissioner, Michael O' Conner stated "With ChemWaste's poor environmental track record, I could not approve their expansion request." Carl Miller, an associate attorney for the city of New Haven, Ind. remarked that the state "would have to grant a permit to Satan before they could grant a permit to this outfit."(7)
One of the key questions that remained was: Could anyone reform a company with a record as tarnished as this? Some community groups decided enough was enough.
In November, 1996 several community groups from around various WMI=s sites in Pennsylvania, in conjunction with the Community Environmental Legal Defense Fund, filed suit against the Attorney General of Pennsylvania demanding that Pennsylvania initiate action to revoke the company's charter for continued systematic abuse of the privileges conferred upon the company by law. If such an action were to be taken, it would represent the ultimate sanction for a corporation: the death penalty. Unfortunately, this case was thrown out of court. But for many grassroots activists the fact that a major waste trafficker like Waste Management and its senior executives and shareholders retained the privileges of limited liability was a scandal.
The cash flow colossus WMX eventually attracted the attention of an entirely different breed of activist who saw in the discredited company a major financial opportunity. Boston-based financier Robert A. G. Monks of the Lens Fund and billionaire George Soros concluded as early as 1996 that the company was a ripe target for take-over. The money management activists adopted what Dean Buntrock --- in a lawsuit he would file in February, 2000 against his company and take-over participants ---- characterized as a coordinated pincer movement.
As the Soros Fund was accumulating WMX stock, the Lens group exerted pressure to replace top management in the name of corporate accountability and succeeded in changing CEO's twice, Chief Financial Officers twice, before finally helping move control of the company from Oak Brook. Illinois to Houston.
In early 1997, the company changed its name back to Waste Management Inc. and sold off many of its poorly performing international divisions. But continued pressure for reform forced out WMI's CEO Phil Rooney in February, 1977. WMI's founder Dean Buntrock temporarily filled the vacuum while new leadership was sought by activist shareholders, fearful about their investment as management consolidated WMI=s ownership of subsidiaries, taking over 100% of Wheelabrator
Waste Management was, according to one of the key take-over players, Aa company in which any sense of accountability had long since disappeared. Where profits were too easy. And where the level of mismanagement was almost criminal, indeed it may turn out that the SEC characterizes it that way. The service that we rendered was a relatively straightforward one. We came in. We went to annual meetings. We posed subjects. We got votes. We required directors to answer. ... we began to organize a private Internet system among the principal shareholders just to keep track of what they said to each of us. And that turned out to be a very important weapon that we were able to bring to bear in changing the management. ... we got people who had never been to annual meetings. Like Harvard Management, Alliance Capital, Fidelity. All of the great name of American investing all came to the annual meeting and identified themselves.@ (8)
The upshot of the battle for control was that Robert S. Miller, a career Aturnaround specialist@, became WMI=s acting CEO in October, 1997. Soon thereafter, planning began for a Abig bath@ in the form of a staggering $3.54 billion write-down which included five years of inflated prior earnings and rewriting WMI=s environmental reserves by $175 million. This represented more than fifty per cent (50%) of the book value of WMI=s assets. The stage was set (by the behind the stage players) for selling the mature giant WMI to the much smaller Houston-based USA Waste Services, an acquisition minded company in an early growth phase and headed by former BFI executive and waste industry insider John Drury.
Dean Buntrock eventually retaliated against those he believed were ruining his own dubious life= work, complaining in a lawsuit that this massive write-down in the name of fiscal responsibility was actually motivated to make Waste Management a more attractive merger target. AThe >big bath= would poise the acquiring company to realize increased profits once the merger was completed as the assets written off would no longer require amortization or depreciation.@ (9) Success of the 1998 merger between USA Waste (a company with no experience operating such a giant waste manager) and WMI was said to hang on anticipated cost savings of $800 million for the combined companies.
A March 11, 1998 WMI press release quoted Lens= principal Nell Minnow saying that the merger was Aa match made in heaven@ and a spokesperson for George Soros, now reportedly WMI=s largest shareholder, saying Awe see the stock going places.@ (10) In fact, it was going south and fast.
The merger was far more complex than anticipated. USA Waste=s accounting systems proved incapable of producing reliable information. The newly merged company reportedly was forced to hire 1,600 accountants at $3 million per day simply to manage the books. (11) During a November 9, 1999 conference call between Wall Street and the new WMI, a corporation whose mission supposedly includes the stewardship of the environment, one company analyst was quoted telling WMI senior managers: AIf I were in your position I would be so embarrassed, I wouldn'=t have stood up in front of hundreds of people on a public conference call. I would have resigned. I think the events over the last year and a half would force anybody, any professional to call it quits. I=m grappling for words because part of it is frustration, part of it is seeing twenty billion dollars of market value just dissipate in the last six months.@ (12)
Poor Buntrock --- whose company had inflicted incalculable distress on communities across the USA and beyond --- lamented that Miller=s handiwork Acost the Company 74% of its market value and caused it to violate the federal securities laws in the process.@ (13) Furthermore the founding father of corporate waste trafficking claimed that Abehind the scenes both Lens and Soros began furiously unloading their Company shares not long after the merger. Within months, Lens= position had been reduced to a fraction of its prior levels.@ (14) ARecognizing the oncoming debacle and that the market did not foresee it, management insiders at the Company began furiously unloading their Company stock into the market. The Company=s CEO, Rodney Proto, sold over $50 million worth of Company stock (netting a profit of $16.5 million for himself) in May, 1999 alone. In May of 1999, Miller sold 41,375 shares of the Company stock for proceeds in excess of $2.1 million.@ (15) Finally, in July, 1999, WMI=s latest CEO, Rodney Proto, publically admitted for the first time that the merger said to be made in heaven was proving hellish. Proto projected a revenue shortfall of one quarter of a billion dollars. The share price cratered.
Despite all the hype, the activist money managers should have known better. Companies like WMI remain, as they have since day one, on the bottom rung of technological innovation. Based on a crude Amore waste = more profit@ equation, they rely on more rather than less waste to keep share price high and actively collaborate in suppressing the democratic will of communities unwilling to host unwanted dumps and threatening burn plants. The name of the game is: Maximize your company=s share of the national waste stream and bury it in company-controlled landfills --- over the protests and basic rights of local communities. Mega-dumps earn more before tax income than all other waste company operations combined. But after three decades promoting itself to investors as the answer to the global waste crisis, the chickens came home to roost as WMI was exposed as the industry leader --- in all things including cooked books --- writing off a decade=s worth of inflated earnings reports. (16)
The USA Waste take-over yielded a bitter harvest. New SEC investigations were launched, including one which resulted in the charge WMI had violated federal anti-fraud law in June 1999 by misleading investors and stock analysts that its second quarter earnings were on target (17). Shareholders successfully sued WMI, winning a $200 million settlement on litigation stemming from the massive accounting irregularities that resulted in the restating of more than $3 billion in earnings. (18)
Widespread public alarm over the state of the industry=s finances saw the skies fill with golden parachutes. (19) AThe industry=s 10 most highly compensated executives in 1998 were pushed out last year by long-term directors who gained millions through pay-outs from mergers and acquisitions, and, in a few cases, by seniors sales staff who exercised their options and fled the firm.@ (20) WMI=s Proto was among those pushed out in 1999, Afollowing a string of damning events, including disappointing earnings, accounting mistakes, faulty financial forecasts, troubles integrating the two companies, and questions surrounding his insider trading.@ (21) In 2000, 8 of the industry=s 1999's top ten earners exited.
WMI=s multi-billion dollar debt represented the opportunity Vivendi, the French water, waste and entertainment services transnational, was seeking to become a hazardous waste manager. Its North American affiliate ONYX agreed in 2000 to buy WMI=s Hong Kong and Mexican hazardous waste facilities, as well as WMI=s US-based hazardous waste treatment company AES. (22)
Eight public pension funds joined Louisiana School Employees= Retirement System to sue WMI. Their class action alleged senior WMI officers had cashed-in over $70 million of their own stocks before news of yet another huge profit shortfall sent share prices plunging. (23) The SEC rapped WMI=s knuckles in its June, 2000 order stating that the company fraudulently misled investors and stock market analysts. (24) Waste News ran the following quote: AThe waste industry has always been a cowboy industry. There has never been a standard.@ (25)
WMI=s cowboys departed having done nothing to alleviate the waste crisis other than enrich themselves. One industry observer claimed: ATurnover rates will affect stockholder confidence and draw down even further the falling prices of these large public firms, which will in turn jeopardize many 401 (k) and IRA accounts, which hurts us all.@ (26)
The activist shareholders who dethroned Dean Buntrock deluded themselves into believing that a Anew@ USA Waste-WMI would represent a less perilous financial and ethical model for managing America=s wastes. But how could it be ? For the corporate philosophy remains callously short-sighted and unsustainable: overcoming the resistance of unwilling hosts (often rural, poor and minority) with unending rivers of urban trash and industrial wastes. Or in the language of economists, corporate waste trafficking inflicts enormous "externalities" on communities. They are third parties with no interest in the waste disposal contract between waste producers and waste managers other than bearing its economic and environmental costs and its psychic toll.
Record of Arrests and Prosecutions: The RAP Sheet on Waste Management 1970-1991
WMI's criminal record largely involves the predatory business practice of monopolization. According to a report by the Ventura County Sheriff=s Department issued in September, 1991, the company=s record goes back to its very beginnings in the 70's and includes the following:
Criminal violations, 10; states involved, 5; total fines and penalties, $ 5,112,950.
Antitrust civil cases 23; states involved, 23; penalties, $ 23,187,000.
Environmental civil cases, 22; states, 12; total fines and costs, $ 5,424,885.
Administrative cases, 87; states involved, 13; fines and penalties, $ 3,345,408.
Chemical Waste Management, a subsidiary of Waste Management, had the following judicial and administrative environmental actions:
Total actions, 81; states involved, 12; fines and penalties, $ 15,251,690.
The total fines and penalties for this period (1970-1991) of the company is at least $52.3 million (27).
Since then, the company has continued to run afoul of the law but it is more difficult to track their record for this period because law enforcement sources have not published any further compilations of the company's criminal and civil violations. What follows is a compilation from news media accounts of their problems.
Record of Arrests and Prosecutions: The RAP Sheet on WMX/WMI 1991- October 2000
These are some of the more recent sanctions against WMI, its employees, and its affiliates:
December, 1991: Chemical Waste Management was fined $3.3 million for violations at its facility in Sauget Illinois(28)
October 15, 1992: Chemical Waste plead guilty and paid a record $11.6 million fine for 6 violations of environmental laws at a Superfund site it was supposed to be cleaning up in Pennsylvania. As a result of the plea agreement, lawyers for the Department of Justice put in the record a letter stating that the company was not guilty of doing anything really bad. Interestingly, this is the company=s only actual Aconviction@ for an environmental crime(29).
In October, 1994, a jury hit WMI with a $587,900 penalty. The money was awarded to a former whistle blower who worked at Chemical Waste Management's South Side Chicago toxic waste incinerator. He was fired after attempting to bring operating violations to the attention of WMI CEO Dean Buntrock. "They fired me for telling them what they didn't want to hear," says Jack Tursman.(30).
In November, 1994, WMI paid $60,000 to settle a class action lawsuit charging improper cleanup and monitoring of groundwater contamination at Waste Management's GROWS landfill in Bucks County, PA(31).
In March, 1996, WMX reached an antitrust settlement with the DOJ ending the use of Aevergreen@ contracts in several markets. These contracts are self renewing contracts which are allegedly in widespread use in the industry. There were no fines or penalties (32).
In December 1996, a federal judge in Tennessee issued an opinion and court order requiring WMI=s Chemical Waste Management subsidiary to pay tens of millions for their involvement in a fraudulent scheme. (33) (See above)
On March 7, 1997, Glen Odell, project manager for WMI=s proposed Rail Cycle project near Barstow, CA, was arrested on wire tapping charges. The company claims that Odell is a Astraight shooter,@ that they stand behind him, and the charges will be found Abaseless.@ (34)
$ In October of 1997 it was revealed that 3 workers had died in separate accidents in 1996 at a Waste Management facility in Brooklyn, New York. The deaths and other safety violations resulted in almost $100,000 in fines and penalties against the company by OSHA. The New York Daily News which reported the deaths concluded: AThe city wouldn=t tolerate mob-run carting operations. And it shouldn=t stand for firms that endanger workers.@ (35)
$ In November of 1998, Waste Management agreed to pay a $125,000 fine to the state of Virginia for improperly disposing of medical waste. The company allegedly shipped medical waste from New York City to Virginia in trucks not approved to carry hazardous materials and then illegally disposed of the waste in a landfill in Virginia.(36)
$ On December 14, 1998 Waste Management Inc. agreed to settle a class action lawsuit brought by shareholders by paying $220 million. It is believed to be the largest securities class action settlement ever entered into by a single defendant. The lawsuit alleged that WMI falsely inflated its stock prices and overstated earnings. Sherie Savett, lead counsel in the litigation said of WMI=s practices: AWaste Management overstated its income by 1.32 billion over an 8 year period.@. AIn fact from 1994 through the third quarter of 1997, approximately 47% of the company=s reported income was fictitious because reported expenses were understated by hundreds of millions of dollars.@ John Drury, CEO of the post-merger Waste Management said of the settlement, AThe settlement means resolution of claims we knew existed when we acquired the former Waste Management and eliminated the need for costly and protracted litigation.@(37)
$ In December, 1998, United Waste Management, a WMI subsidiary was one of four companies cited in Broward Beach Fla for violations at a recycling plant. The violations included improper storage of hazardous waste and failure to properly train employees. The companies agreed to combined penalties of $186,700. (38)
$ In January, 1999 the Board of Supervisors in San Luis Obispo County California rejected Waste Management=s attempt to take over a hauling operation. The board denied WMI based on the company=s history of violations and legal problems. Speaking in regard to WMI and it=s subsidiaries, Peg Pinard, a member of the board said AYou take the whole batch together and you see it=s not just one bad apple but all these companies and all these employees violating the law time after time after time.@ (39)
$ In January 1999: Waste Management agrees to pay $7.5 million to settle two lawsuits in Kane County Illinois. The suits were brought by two school districts against the county and WMI alleging that the county had illegally removed a landfill that WMI operates from property tax rolls. The settlement prevented a judge from voiding WMI=s contract, (which was never put out to bid), and might have required the company to pay back as much as $100 million to the county. (40)
Rail Cycle:
October 1998: WMI, three related companies and five people were indicted in California on 23 counts of criminal fraud. The charges stem from WMI=s Rail-Cycle project which would have shipped trash from Orange and San Diego counties to a proposed landfill in the Mojave desert.(41) The trouble began when Cadiz Land Co., an agricultural firm that grows citrus fruits and markets water, began opposing the proposed landfill. Cadiz feared that the landfill would contaminate ground water in an area in which it operates and began a campaign to stop the Rail-Cycle project. (42) The charges assert that WMI Atacitly approved the actions of employees who conducted corporate espionage against an opponent of that landfill.@ (43) It has also been reported that documents seized from Waste Management indicate the company was looking for ways to drive down Cadiz=s stock value and make them financially unable to oppose the landfill. (44) There are also charges that ACadiz=s phones were tapped, computer files were stolen and water reports were falsified.@ and A false information was disseminated about Cadiz including accusations it engaged in drug trafficking and mistreated workers.@(45) In October, 2000 the court approved an out of court settlement for $5 million, thus sparing WMI a jury trial on the stock fraud and other charges. Excluded from the settlement decision, the special task force created to investigate Rail Cycle could merely take consolation in the fact that San Bernardino County Awon=t have the biggest dump in the world in our back yard.@ A WMI lawyer was placed on two years= probation for his role in the company=s no holds barred bid to bury much of Los Angeles= trash. (46)
Can this company ever truly reform itself? You be the judge.
End notes:
1. Waste Management; an Encyclopedia of Crimes and other Misdeeds, Greenpeace/Charlie Cray, December, 1999; Harold Crooks, Giants of Garbage, (Toronto: James Lorimer, 1993)
2.Final Report: Waste Management, San Diego District Attorney, Edwin Miller, March, 1992. RE Waste Management Report, Ventura County Sheriff's Department, September 20, 1991. See Also; Waste Management; an Encyclopedia, Greenpeace/Charlie Cray, December, 1991; Waste Management, A Corporate Profile, CCHW 1990, and Crooks, Giants of Garbage, 1993
3. Cumberland Farms Inc., et.al., v. Browning-Ferris Inc., et..al., Master File No. 87-3717, Plaintiffs Memorandum In Opposition To Defendant's Motion for Summary Judgement. In The U.S. District Court for The Eastern District of Pennsylvania. 7-27-90, p. 75. Cited in Giants of Garbage, p. 148
4. Giants of Garbage, p. 163
5. Final Report: Waste Management, San Diego District Attorney, Edwin Miller, March, 1992. Re: Waste Management Report, Ventura County Sheriff's Department, September 20, 1991.
6. Gregory et. al. v. Chemical Waste Management Inc., Opinion and Order, December 11, 1996, Judge Odell Horton in the United States District Court for the Western District for Tennessee.
7. "Press Release: IDEM Uses Good Character Law to Deny Hazardous Waste Landfill Expansion," IDEM, June 13, 1997, "Company Loses Bid to Expand Landfill," Indianapolis Star, June 14, 1997
8. An interview conducted 4-12-00
9. Dean L. Buntrock v. Waste Management, Inc., Waste Management Holdings Inc., Robert S. Miller et.al.
filed in US District Court for the Northern District of Illinois, 2-22-00, p.18
10. Dean L. Buntrock v. Waste Management, Inc., etc, p.24
11. Dean L. Buntrock v. Waste Management, Inc., etc, p.32
12. Dean L. Buntrock v. Waste Management, Inc., etc., p40
13. Dean L. Buntrock v. Waste Management, Inc., etc., p.2
14. Dean L. Buntrock v. Waste Management, Inc., etc., p.24
15. Dean L. Buntrock v. Waste Management, Inc., etc., p. 29-30
16. "SEC and WMI," Waste News, April 6, 1998
17. Gynn, Ann, "WMI broke federal laws, SEC reports," Waste News, June 26, 2000
18. "SEC and WMI," Waste News, April 6, 1998; Daniels, Steve, "Former CEO Wins Latest Battle With WMI: The Waste Giant Can't Tap Buntrock's Personal Assets, A Federal Judge Rules," Waste News, August 9, 1999
19. "Waste's Gold Rush," Waste News, Aug. 21, 2000, where we learn: "Who wants to be a millionaire? Just about every high-level executive leaving the solid waste and recycling industries in 1999, that's who. Seven of the top 10 executives and nine of the top 21 listed in this week's Waste News Executive Pay Rankings no longer work for the companies with which they made their millions last year."
20.Duff, Susanna, "Parachutes of Gold," August 21, 2000
21. Brown, Bob, "Shakeup at Waste Management," Waste News, August 23, 1999
22. Gynn, Ann, "Onyx buys WMI assets," Waste News, Sept. 4, 2000 and Brown, Bob, "WMI, French company form Venture," March 22, 1999.
23. Barreto, Susan, "Public Pension Funds Join WMI Class Action," Waste News, Oct. 25, 1999
24. Gynn, Ann M., "WMI broke federal laws, SEC reports," Waste News, June 26, 2000
25. "Parachutes of Gold," Waste News, Aug. 21, 2000
26. "How will the high turnover rate of waste executives affect the industry," Waste News, Sept. 18, 2000
27. Re: Waste Management, Ventura County Sheriff's Department, September 20, 1991
28. "Emissions Safe, Company Says; Sauget Faces 15 Count Complaint," Robert Goodrich, St. Louis Post Dispatch September 30, 1993.
29. U.S. v. Chemical Waste Management, Oct 14, 1992, 3:CR-92-253.
30. Bukro, Casey, "A $587,900 Lesson on Whistle-Blowing; Incinerator Staffer's Retaliatory-Firing Suit Zaps Chemical Waste,", Chicago Tribune, October 24, 1994.
31. Liability: $650M Suit Against Waste Management Suit Settled, Greenwire, November 4, 1994.
32. "Two Largest Waste Disposal Companies Settle Division's Monopolization Case," Bureau of National Affairs, Antitrust and Trade Regulation Report, February 22, 1996.
33. Gregory et. al. v. Chemical Waste Management Inc., Opinion and Order, December 11, 1996, Judge Odell Horton in the United States District Court for the Western District for Tennessee.
34. Gorman, Tom, "Spying Allegations Raised in Garbage Dump Battle," Los Angeles Times, March 11, 1997.
35. Gonzalez, Juan, "Some Dying to Work There," Daily News (New York), 10/16/97.
36. Greenwire 11/3/98
37. Riccardi, Michael, "Berger Firm Nails Down Agreement in One of the Largest-Ever Securities Settlements." The Legal Intelligencer 12/14/98
38."Environmental Fines Levied," Sun Sentinel (Ft. Lauderdale) 12/23/98.
39.Wiley, Walt. "Past Record hurts WMI effort to buy Cailf. firm," Waste News, 1/18/98
40 Brown, Bob, "WMI Settles 2 Illinois Lawsuits." Waste News, 1/18/99
41. Solid Waste Report. "Criminal Justice: Waste Management Inc., Individuals Face 23 Count Indictment in California," 10/8/98
42.Nissenbaum, Dion. Rail-Cycle Plan to Hurt Dump Foe Alleged. The Press-Enterprise (Riverside, Ca.) 11/17/98
43. Gaines, Sallie. Landfill Turns Into Mountain of Trouble; Waste Management Faces 23 Counts of Corporate Espionage," The Chicago Tribune, 10/7/98.
44 Nissenbaum, Dion. "Ex-DEA Chief Joins Rail-Cycle Team; Accused of running a dirty tricks campaign to silence an opponent, Waste Management turns to Robert Bonner," The Press Enterprise (Riverside California), 10/4/98.
45. Gaines, Sallie. The Chicago Tribune, 10/7/98.
46. Page, Bob, Inland Valley Daily Bulletin, Ontario, California, 10/24/00; Wiley, Walt, "Pay Day," Waste News, 10/30/00; Wiley, Walt, "WMI lawyer faces 2 years' probation," Waste News, 10/30/00