By Gina Tabonares
Variety News Staff

THE four major commercial garbage haulers on Guam—Guahan Waste Control or Mr. Rubbishman, Island Waste Management LLC, LAGU Sanitation, and Pacific Waste Systems—are under investigation for fraud due to their alleged clandestine and delinquent operations.
Department of Public Works director Larry Perez said the government is losing from these commercial garbage haulers’ improper activity, adding that DPW launched an investigation last week with the Office of the Public Auditor, the Department of Administration, and the Attorney General’s Office.
In addition to the investigation into delinquent account tipping fees that have been allowed to slip for several years, Perez said the investigation will also look into allegations of unfair commercial practices, illegal holding or transferring of garbage, and bribery.
Perez said OPA, DPW and the Department of the Administration are now coordinating closely to reconcile records of tipping fees of each private garbage hauler to determine the amount of money they owe the government.
He said notice of collections will be issued to these commercial garbage haulers for their immediate account settlement or the government will issue notices to impose government sanctions, including total shutdown.
“Total shutdown means they would not be given access to the dumping site. If they cannot dispose of their collected garbage, they don’t have the right to conduct their business,” Perez said.
With more than 140,000 tons of waste generated every year from a population of at least 150,000 on the island, GovGuam should generate hundreds of millions of dollars from solid waste tipping fees.
Under the law, residential tipping fees of $10 a month are billed and collected by DPW while tipping fees for business or government generators are collected by the commercial collectors on behalf of GovGuam.
Commercial collectors remit the tipping fees paid by their customers in the prior month to GovGuam by the 20th day of the following month.
The tipping fees collected by the commercial collectors upon remittance are considered revenue of the government and not income for commercial collectors. If the commercial collectors do not remit the tipping fees actually collected, then the collectors shall be liable for full payment to the government of all tipping fees that are collected but not remitted to the government.
Delinquents
DOA records show that for LAGU Sanitation alone, the government should have collected more than $750,688 since 2003.
LAGU Sanitation, which has an outstanding balance of $175,532 as of Dec. 2006 made no payment for the whole year of 2003.
For the year 2004, the company billed its customers more than $159,000 but remitted only $18,000 to GovGuam.
Unfair business practice
Lagu Sanitation was previously owned by Ok Pyoh Santos a.k.a. Maria Santos, a Korean woman who was indicted last year for bribing the DPW director and Ordot Dump employees. GovGuam earlier questioned the company for its unfair business practice when it declared that their front-loader garbage trucks had a capacity of only 15 cubic yards.
For several years, LAGU Sanitation has been declaring a smaller sized capacity for their garbage trucks to pay a smaller dumping fee while collecting tipping fees from its clients using trucks with a 27 cubic-yard capacity.
Further investigation compelled Santos to declare the real capacity of LAGU Sanitation trucks, but GovGuam has not recovered any monies from the years of illegal undervalued declaration. There was also no record of citations for this violation.
Bribery
An indictment filed against Santos Jun Bang a.k.a. John Lagu stated that from 1998 through October 2005, LAGU Sanitation owners allegedly bribed DPW workers assigned to the Ordot Dump to reassess their 27 cubic-yard trucks to 15 cubic-yard uncompressed to deprive GovGuam of its revenues.
The commercial hauler firm, whose business operation records reflected an October 2002 registration, has actually been operating since 1998. Records are sketchy as to when the firm actually commenced operations in 1998, but the firm only remitted $8,304 in tipping fees from 1998 to May 2004.
A taped conversation of Santos and another commercial hauler owner revealed that LAGU Sanitation is not following government regulations when it comes to tipping fees, and that they would even give discounts to customers who paid in cash right away.
Guahan Waste president Phil Flores said tipping fees are not subject to discounts because the fees collected are controlled by the government and must be remitted 100 percent to the government.
Flores said Guahan or Rubbishman is not worried about the investigation because their records will show that they are complying with the law and tipping fees are remitted religiously and on time.
As of Jan. 1, 2007, the company has remitted $13,287,213 since its operation began in October 1999, said Flores.
Records show that from October 1999 to January 2007, Guahan Waste Control paid over $13.2 million in tipping fees.
LAGU Sanitation billed a total of only $750,698.00 since commencing operations in 1998. LAGU has paid only $575,166.00 of the $750,698.00, leaving an outstanding balance of $175,532.00. LAGU is rumored to hold the largest number of government accounts yet they continue to lag behind their competition in fees and actual payments to the government.
After being cited, records indicate that billable accounts for LAGU Sanitation tripled. The August 2006 billing of $22,975 jumped to $66,530 in September and remained high through the end of December.
However, government records cited by Georgetown Consulting Group showed that LAGU Sanitation, as of January 2007, owed $1.3 million of the $3.3 million in outstanding receivables, and comprised the largest amount of the $1.7 million in receivables that have not been paid in excess of 120 days.
The same document indicated that it was unclear whether the AGO is seeking recovery of this amount from the hauler company.
Guahan operators complained that they are losing some of their business with government agencies to LAGU because the Korean-owned firm can afford to offer the lowest bid as they source their profits from other forms of clandestine operations.
Clandestine operations
Authorities discovered one of these operations last year, when the Guam Environmental Protection Agency cited LAGU Sanitation for illegal operation of a transfer station in Tamuning.
LAGU Sanitation workers were videotaped operating an illegal transfer station where they separated and stored solid waste before dumping the garbage in Ordot.
GEPA found that compactors were stored for two to three days to maximize volume prior to disposal, and roll-off bins were held at the facility until full capacity was reached prior to disposal in the permitted dumping site.
Besides not having a facility transfer permit, video records showed that LAGU Sanitation workers would dump garbage from basic garbage trucks into open tub containers and compress the solid waste in order to declare tons of undervalued garbage.
Because of these violations, LAGU Sanitation, under its new vice president Kwon Joo, was ordered by GEPA to pay a penalty of $23,259.
They were also ordered to stop receiving and placing solid waste at the Tamuning facility.
The company also allegedly bills its customers at a flat rate of $15 per month for a pick up per week of a 3-cubic-yard trash bin even though the hauled garbage was only 35 percent of the total bin capacity.
LAGU Sanitation vice president Kwon Joo declined to be interviewed or provide additional information.
The Connecticut-based consulting firm, Georgetown Consulting Group, raised questions as to why GovGuam continues to allow these abuses by the commercial garbage haulers.
The complacency of GovGuam was also brought up by federal authorities in a court hearing about the local government’s compliance with a consent decree, which requires GovGuam to close the Ordot Dump before September 2007 and open a new landfill in Layon, Inarajan.
To improve tipping collections, Perez said DPW would require commercial haulers to provide a list of business and residential customers to the Department of Administration.
Perez said the list of customers will be part of the audit investigations to compare the total tipping fees charged versus the remittance paid to the government.
He said that the government would impose stricter regulations on commercial haulers.