Litigation-proven Quebec recycling company has a strong grip on the industry

If Montreal thinks it will be easy to extricate itself from its dealings with the recycling company accused of having withhold money of the city and ship contaminated paper bullets abroad, he only has to look at Ricova’s relations with other municipalities in Quebec.

Ricova Services Inc., based in Brossard, Quebec, has operated the only two recycling sorting centers in Montreal since 2020, in Lachine and Saint-Michel, and collects selective collection in two of the city’s boroughs.

A review of court documents and municipal contracts shows that it also collects recycling in at least seven municipalities on the island of Montreal.

And when she didn’t get the contract, as happened in 2019 in the western municipality of Côte Saint-Luc, she was quick to file a lawsuit for alleged loss of profits.

As its reach expanded, Ricova came under increased scrutiny for the quality of its work and accounting practices.

At the city’s two recycling centers, the sorted materials have high levels of contamination, making them difficult to sell and ultimately recycle.

According to a recent presentation to city council, the level of contamination in sorted bales of paper hovered around 25% in both centres, although this level was reduced to 15% in Saint-Michel in January.

The improvement is probably due to the new Ricova equipment installed last November.

At the more modern Lachine plant, Ricova blamed faulty sorting equipment and filed a $5.5 million lawsuit last year against the manufacturer to buy new machines. This case is still before the courts.

Montreal’s $50 million recycling center in Lachine opened in 2019. Ricova took over the facility in 2020 after previous operators went bankrupt. (Ivanoh Demers/Radio-Canada)

The Inspector General recommends terminating the contract

The city’s inspector general began investigating Ricova after receiving several complaints about a potential conflict of interest.

Known as BIG, the office oversees city contracts to prevent and identify risks of corruption, fraud, or other illegal acts.

In his reportInspector General Brigitte Bishop alleged that the company failed to give Montreal its fair share of recycling profits.

She said Ricova Services Inc. sold recyclable materials to one of its sister companies, Ricova International Inc., which then sold them to outside buyers at a higher price.

In total, the report alleges Ricova withheld more than $1 million it owed the city for recycled materials it sold over a 12-month period.

She recommended the city cut ties with the company “as soon as possible” and blacklist the company for five years.

Ricova denies any fraudulent activity and it looks like the company won’t give up its Montreal contracts without a fight.

The company sent a legal letter to the city last month, threatening to sue if the city follows through on Bishop’s recommendation to cut them.

In a recent report, Brigitte Bishop, Montreal’s Inspector General, called on the City to sever ties with Ricova as soon as possible. (Office of the Inspector General of Montreal)

In an email response this week to CBC News, Stephanie Dunglas, a spokesperson for Ricova, asked why an investigation was conducted in the first place.

“Yes [the city] felt that Ricova International’s takeover of recycling was a problem, so why didn’t we talk about it before buying the operations of the bankrupt sorting centers? At no time since the resumption of operations has the City of Montreal expressed its opposition to the sale of sorted materials to Ricova International. »

Dunglas added that any contentious impressions are a “misconception”, saying that “the company’s mission is to serve our customers, but like any business, we also have the right to defend ourselves”.

With the threat of legal action, the city has remained silent on its next steps.

But how does Montreal cope with a company that seems to control so much of the recycling industry and has proven that it will go to court to defend its interests?

Failed deals and lawsuits

The documents show that Ricova has a habit of submitting the lowest bid for contracts, but has not always been able to meet its commitments.

In 2018, the Borough of Côte-des-Neiges—Notre-Dame-de-Grâce terminated its contract with Ricova after residents complained collection delays.

The company blamed these problems on an unexpected increase in the amount of recyclable materials that were asked to be collected.

A year later, Ricova loses a recycling contract in Côte Saint-Luc, even though its bid is $30,000 lower than that of its competitor. (By law, public tender rules mean the lowest bid wins the contract as long as the company meets all the requirements.)

When a company submits a bid for a contract, bidders are asked to provide five references.

According to Ricova’s statement, Côte Saint-Luc rejected Ricova’s offer after some municipalities it listed as references gave the company negative reviews.

Ricova claims to have never had the opportunity to refute these unfavorable returns.

A cat rummages in front of the recycling plant in Sherbrooke in 2018, where mountains of unprocessed materials had accumulated. It was operated by Ricova at the time. (Alison Brunette/CBC)

According to court documents, Ricova said she was not told until after the contract was awarded to a competitor that her bid was non-compliant, which the company considered unfair.

She is suing the city for loss of profits which she claims amounts to more than $138,000.

Côte Saint-Luc is not the only municipality that has been mired in legal proceedings with Ricova in recent years.

Last year, Ricova successfully sued Laval for awarding its sorting contract to Tricentris, a recycling cooperative, without going to tender.

Laval was forced to put the contract out to tender, and earlier this month the city awarded the contract to Tricentris again – even though his offer was higher than Ricova’s.

In a statement announcing the deal, Laval Mayor Stéphane Boyer praised Tricentris, saying it “demonstrates transparency in its processes and places environmental protection at the heart of its concerns.” .

Récup Estrie, the organization responsible for recycling the city of Sherbrooke and five smaller municipalities in the Eastern Townships, is also in dispute with Ricova.

In 2018, after ongoing issues with Ricova over overflowing recycling bins at its Sherbrooke sorting center, Récup Estrie broke its contract with the company and gave it five days to get out.

A new operator is in place at the sorting center, but Récup Estrie and Ricova are still struggling with lawsuits and counter-lawsuits.

Ricova has also filed a lawsuit against three communities on the South Shore of Montreal – Chambly, Mont Saint-Hilaire and Saint-Basile-Le-Grand – in an attempt to recover money that she says was lost when the recycling market collapsed after China closed its borders to most. foreign recycling in 2018. In 2020, the judge ruled against the company. Ricova is appealing the judgment.

Uncertainty between municipalities

Several other municipalities on the island of Montreal have contracts with Ricova for collection, including Beaconsfield, Kirkland, Baie-D’Urfé and Westmount.

Hampstead signed a contract last month with Ricova, about a week before the damning report from the Montreal inspector general. Ricova’s bid was $504,000, which was $174,000 less than the closest bidder.

After the report was published, Hampstead Mayor Jeremy Levi expressed concern about how the possible fallout could affect his town’s 8,000 residents.

He said Hampstead City Council was considering dropping the contract with Ricova and going back to tendering, but decided that was not the right way to go.

The city is closely monitoring developments in the contract dispute, but if Montreal manages to withdraw Ricova’s contract, it could cause financial uncertainty for the company.

Levi is concerned that this will impact municipalities that use Ricova for collection services.

If Ricova has decided to close its operations in Hampstead, there are very few suppliers to turn to.

“It’s a niche market,” Levi said. “When you give out long-term contracts, big deals and big deals, it creates this kind of monopoly where it doesn’t bode well for new players coming in.”

Montreal Mayor Valérie Plante, center, is seen here inaugurating the Lachine recycling sorting center in November 2019. (Ivanoh Demers/Radio-Canada)

Dunglas, speaking on behalf of Ricova, said the company remains committed to providing “the highest possible quality of service to the satisfaction of our customers.”

In the case of Beaconsfield, Ricova took over the city’s collection contract after acquiring the assets of RSC in 2020.

Andrew Duffield, Beaconsfield’s director of sustainability, said the municipality has worked hard to reduce waste generation by, among other things, charging residents for their garbage.

But Duffield acknowledged that there’s not much they can do about recycling once what’s collected leaves the community.

He hopes the quality issues at recycling plants and the BIG report won’t cause residents to lose faith in the benefits of recycling.

“My primary concern was to make sure that our residents understand that even if the sorting purity levels are not yet optimal, that by ensuring that these materials go into the blue bin in Beaconsfield, they have the most chances of being recovered, recycled and then reused locally,” he said.