The Cayman Connection

Republic Services claims no environmental woes to snare a billion-dollar-plus loan with the help of its offshore insurer. 

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Republic Services, owner of the radioactively-contaminated West Lake Landfill in St. Louis County, scored a $1.2 billion loan from a consortium of the world’s largest banks in 2014 by assuring its lenders that the company had no environmental problems that would effect its bottom line, StlReporter has learned.

Under the terms of the agreement signed on June 30, 2014, Republic claims that “existing environmental laws and existing environmental claims” could not reasonably be expected to a have a  “material adverse effect” on the company’s operations.  “Material adverse effect” is defined in the agreement as being a change that would negatively impact “operations, business, properties, assets or conditions, financial or otherwise, of the borrower and its subsidiaries taken as a whole.”

“No Problemo”

The assurances that the company has no notable environmental headaches came despite public controversy surrounding the environmental and health hazards posed by the company’s West Lake property, an EPA Superfund site, and corresponding calls for the buyout of nearby homeowners.

To qualify for the 2014 loan, the banks required Republic to assume liability for potential environmental issues and indemnify them against claims. Republic complied to the terms by designating an offshore subsidiary — the Bom Ambiente Insurance Co. of the Cayman Islands — as the company’s insurer. Unlike most of its other subsidiaries Bom Ambiente is exempted from the terms of the loan agreement.

Aon Insurance Management, a leading captive and reinsurance company, represents Bom Ambiente Insurance through its offices in the Cayman Islands, which are located in the same posh office building as a major offshore law firm.

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Spokespersons for Republic and Aon declined to comment.

So-called “captive insurance” companies are set up by their parent corporations as a means of providing affordable risk management services based on the concept of self insurance. Many risk-prone businesses locate their in-house insurance operations in the Cayman Islands to take advantage of favorable governmental regulations and the absence of income and capital gains taxes.

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Republic Services,  one of three parties liable for the EPA-mandated cleanup, opposes removing the West Lake waste. Instead, the company favors the terms of the original 2008 record of decision calling for capping the materials in place. That proposal is being reconsidered due to public opposition.  The cost of removal is estimated at $400 million or ten times the original plan.  But there seems to be more riding on the final decision than the cost of the clean up.

The future of the company may be at stake.

The banks that signed off on the five-year loan are among the most prominent financial institutions in the world. They include: Bank of America, JPMorgan Chase, Wells Fargo, Barclays, BNP Paribas, Union Bank and SunTrust. Bank of the America, the lead lender, has committed $87 million.

The loan agreement spells out how Republic can borrow the money over the course of the agreement through regular loans, advances on credit, or so-called, short-term “swing-line” loans. The agreement does not stipulate the purposes for which the Republic uses the borrowed money. But Bridgeton Landfill and Rock Road Industries, two Republic Services-owned companies connected to the troubled West Lake property, are among the hundreds of Republic subsidiaries that are a party to the loan agreement.

In Schedule 5.12 of the loan agreement, Republic says it has no issues to report related to environmental matters. But the company’s February 2016 Security and Exchange Commission 10-K report discloses that for 2014 Republic accrued more than $227 million in costs coping with environmental matters at its troubled West Lake property.

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In short, the company readily acknowledged the high cost of addressing environmental matters at West Lake to the SEC earlier this year, but denied any problems would have a “material adverse effect” in paying back its debt in the 2014 loan agreement. To do otherwise would be a breach of the loan agreement and could be considered a default.

A Slow-Motion Train Wreck

Republic Services acquired the environmentally-troubled Bridgeton and West Lake Landfills in 2008 when it merged with Allied Waste Services. The impacted landfills are now closed, but Republic continues to operate a transfer station at the same location, which has been an EPA Superfund site since 1990.

The history of radioactive contamination at West Lake dates back to 1973, when the waste was illegally dumped. Federal, state and local regulatory authorities have been aware of the problem for more than 40 years, but failed to act.

The inaction made matters worse.

In December 2010, Republic told the Missouri Department of Natural Resources that an underground fire was burning at the Bridgeton Landfill, which is directly next to the West Lake Landfill and part of the same Superfund site. The stench from the fire raised dormant public concerns.

By February 2013, MDNR had cited Republic for noxious odors. The next month the Missouri Attorney General sued the company for violations of state environmental laws. That case is still pending. A negotiated agreement between the state and Republic Services to build a barrier to stop the fire from advancing closer to the radioactive waste is also stalled, as is federal legislation that would hand the cleanup over to the U.S. Army Corps of Engineers.

During these delays, the fire has moved closer to the radioactive material.

Meantime, the MDNR and the EPA have confirmed that radioactive materials are known to have migrated off site, further contaminating air, soil and water. Private lawsuits have also been filed against the company.

To those unfamiliar with the world of high finance, the reporting discrepancies and ongoing issues at West Lake would seem enough to raise eyebrows among Republic’s individual and institutional investors, including  firms tied to billionaires Bill Gates and Warren Buffett.

But that hasn’t happened.

Apparently, Republic’s word is its bond among stock market traders. From a business perspective, environmental stewardship and standard accounting practices are based on the letter of the law. West Lake be damned. After all, the five-year, $1.2 billion loan is a fraction of  Republic’s long-term debt, which stands at $7.5 billion and counting.

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“One Good Reason to Avoid Landfills”

In a sarcastic email exchange, a Missouri Department of Natural Resources expert gives his candid assessment of the situation at West Lake Landfill, circa 2013. In a word, it’s “HORRIBLE.”

 

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For years, the Missouri Department of Natural Resources (DNR) has remained quiet regarding the situation at the West Lake Landfill. The state regulatory agency claims it can’t comment publicly because of pending litigation filed on its behalf by the Missouri attorney general against Republic Services, owner of the smoldering, radioactive landfill.

As a result, DNR’s reticence has helped spur mistrust among residents, who remain enraged over the stalled clean up of the EPA Superfund site in North St. Louis County, where an underground fire has been smoldering for more than four years.

The DNR email cited in this story — which was released by the state agency under the Missouri Sunshine Law, takes a small step towards breaks the state agency’s silence.

Unfortunately, it’s bad news.

In a word, the state official who penned the correspondence considers the stench wafting from West Lake Landfill as “HORRIBLE.” At the same time, he appears relieved that he isn’t responsible for dealing with the problem.

“The gas seeping out is HORRIBLE,” said Chris Cady, a DNR project manager for the agency’s Brownfields Clean Up Program. When Cady sent the message on March 28, 2013 to a family member, he also mentioned another danger: “If that wasn’t enough, a remote section of the landfill has thousands of tons of radioactive tailings from uranium enrichment by the Malinkcrodt (sic) Chemical St. Louis plant during the cold war which was moved and re-disposed there in 1973.”

Of course, there is nothing “remote” about the location of the radioactive waste at the landfill. The contamination is present prominently in two location, one of which borders the front of the landfill along St. Charles Rock Road. Moreover, since Cady wrote the email three years ago, the underground fire has moved even closer to the radioactive materials.

Cady, a PhD, also took exception to a warning raised in 2013 by an unnamed academic expert who also holds a doctoral degree. “Now some university professor (darn those PhDs) says the landfill gas could explode in a dirty bomb scenario and contaminate everyone with rad waste. Which is bogus, but simply adds fuel to the fire,” Cady wrote.

The recipient of Cady’s email responded by saying “the dirty bombe (sic) scenario is funny, or would be if it wasn’t so sad.”

Cady titled the subject of his email: “One good reason to avoid landfills,” and described the situation as a “mess.” He judged the problem to be “a bad one, [a] real public health threat and an emergency.” At the same time, Cady seemed to dismiss the risks posed by the radioactive materials, and said that the subsurface smoldering event at West Lake was not that “uncommon” despite their presence.

Based on his cavalier tone and condescending attitude, it’s a safe bet that the agency he represents is not intent on doing anything beyond kibitzing in private, and letting the fire run its course. In the meantime, about the only action the DNR can be counted on to do is  doles out more contracts to privateers.

A Longstanding Relationship

Five years after B&K Construction illegally dumped Cotter Corp.’s radioactive waste at the West Lake Landfill, the two companies continued doing dirty business with each other. 

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In July 1978, Cotter Corp., the owner of the radioactively-contaminated site on Latty Avenue, solicited a bid from  B&K Construction to “decontaminate” 14.5 acres at the location in Hazelwood. B&K proposed doing the job for more than $492,000, according to a company record made public today by the Environmental Archives.

Five years earlier, in 1973, B&K had dumped radioactive waste belonging to Cotter at the West Lake Landfill in Bridgeton. The EPA Superfund site has yet to be cleaned up.

Cotter’s proposal was broken into two parts. B&K offered to remediate the  north end of the 3.5-acre Jarboe Property at 9200 Latty Avenue for $139,900,  and bid more than $355,900 to clean up 11 acres at Cotter’s property next door.

The proposal called for hauling the radioactive waste materials back to the 22-acre airport site, where they had originally been stored years earlier.

An investigation by the Atomic Energy Commission discovered the illegal dumping at West Lake in 1974. Though the AEC found violations of its regulations had occurred, neither company was held accountable for its actions.

 

Out of Sight, Out of Mind

Documents show toxic leachate from West Lake Landfill was dumped in the Mississippi River for decades. 

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Until last year, Republic Services, the owner of the troubled West Lake Landfill in Bridgeton, Mo., shipped as many as 200 truckloads of toxic leachate  daily to the Metropolitan Sewer District’s Bissell Point treatment plant on the Mississippi River.

The shipments stopped in April 2015 after the completion of  a 7.2 mile pipeline that links the landfill with the MSD treatment plant in north St. Louis. The pipeline project corresponds with other belated measures taken by the landfill owner and the sewer district to control an estimated 300,000 gallons of noxious liquid produced at the site each each day. The increased levels of leachate are in part due to the underground fire burning at the EPA Superfund site, which is moving dangerously close to nearby radioactive waste.

In 2013, MSD refused to accept leachate from the landfill for several months because it contained high levels of benzene, a known carcinogen. This forced Republic to dispose of the toxic shipments elsewhere.

Odor complaints against the landfill have risen dramatically in recent years due to the underground fire, at the same time public concerns increased due to concerns over the radioactive waste, which is known to have migrated off site and contaminated the groundwater. The landfill is located in a flood plain about one mile from the Missouri River.

Hauling the the West Lake leachate from the site and dumping it into the Mississippi River didn’t develop overnight, however. It’s been going on for more than 35 years, according to the Missouri Department of Natural Resources.

MDNR records recently released to the Environmental Archives under the Freedom of Information Act indicate leachate was hauled from West Lake to Bissell Point on a daily basis as far back as 1980. The state regulatory agency calculated that an estimated 48,000 gallons was removed from the landfill daily and ultimately released into the Mississippi River.

Prior to last year, the landfill’s leachate operation did not have an onsite treatment plant. The stringency of MSD’s treatment process in the past remains uncertain. It is unclear whether the radioactive materials in the leachate were monitored before disposing of the shipments in the river.

 

Forget About It

Anthony

Anthony “Nino” Parrino

An Aborted Federal Probe Into Labor Racketeering in the 1970s Leaves Questions Unanswered

There are those who sometimes jokingly refer to the EPA Superfund site in Bridgeton as the “Tony Soprano Landfill,” but it may be no laughing matter.

By his own admission, the late president of the West Lake Quarry Co., had dealings with reputed St. Louis underworld figure Anthony “Nino” Parrino for 20 years.

Moreover, FBI records recently released under the Freedom of Information Act indicate Parrino fell under scrutiny of a federal labor-racketeering probe in part due to his ties to St. Louis Teamsters Local 682.

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Parrino became a federal law enforcement  target in July 1973, according to the FBI records. He first appeared on the bureau’s radar ostensibly because he attended the funeral of  the late John Vitale’s wife. Vitale was then second in command of the mafia here.

Coincidentally, B&K Construction also began dumping radioactive waste at West Lake  Landfill in July 1973. No evidence has been unearthed since then showing a direct connection between the two events.

But that may be because the federal labor-racketeering probe here hit a wall.

Any chance of connecting the dots ended in the late 1970s when political pressure from U.S. Rep. William Clay Sr. ultimately killed the federal Anti-Crime Task Force investigation in St. Louis.

Parrino remained a 682 official until 1991. By then the Teamsters International Union had been placed under the custody of the U.S. Department of Justice due to alleged corruption inside the leadership of the union.

Citing his ties to organized crime, the feds finally removed Parrino from his union post along with Local 682 boss Robert Sansone.

St. Louis politicians and business leaders opposed the federal action and stood firmly behind the two.  Among those publicly defending Parrino and Sansone was William J. McCullough, the retired president of West Lake Quarry and Materials Co. and West Lake Ready Mix Co.

In a letter to the editor published in the St. Louis Post-Dispatch, McCullough lauded both labor officials’ professional ethics. McCullough’s letter indicates that Parrino was involved in representing union interests with the quarry owners from 1965 to 1985.

It’s impossible to know what may have happened had the federal anti-crime task force not been shut down.

McCullough’s  Oct. 10, 1991 letter to the St. Louis Post-Dispatch is reprinted in full below:

The recent coverage of Bob Sansone, the president of Teamsters Local 682 and now vice presidential candidate of the international, prompts writing this letter.

For a period of 20 years until 1985, I was a senior officer and finally president of the West Lake Quarry and Material Co. and the West Lake Ready Mix Co. Labor relations was a key part of my job. We worked with labor leaders from 12 different unions, and dealings with Sansone and Anthony Parrino were always done in a professional manner.

Both Sansone or Parrino entered any grievance with an open mind and pursued it with diligence for their members. When the employee was right, both men worked for the maximum benefit for the employee; when the company was right, they pursued a course in the best interests of the employee, yet were fair to the company.

Never were improper pressure or threats put forth by either person. Both were well versed in labor law.

I do not know what Parrino’s alleged ties were or are to any other organization. I do know that I trusted him completely to deal fairly with us for the good of both the employees and the company.

William McCullough

Kirkwood