Montreal cheated out of at least $1 million by recycling contractor: inspector general

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 defrauded the city of at least $1 million 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.

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."