WASTE MANAGEMENT INC. IS USA WASTE (THEY JUST CHANGED THEIR NAME)
USA Waste was founded in 1985 by Donald F. Moorehead Jr. in HoustonTexas.
Moorehead, who also founded Mid-American Waste Systems, was following the
model of BFI and Waste Management, two companies who redefined the waste
industry by instituting a policy of rapid expansion and consolidation of
markets.
Moorehead left the company soon after its inception to concentrate his efforts
on Mid-American, but retained a controlling interest. He returned in 1994 as
Chief Development Officer, bringing in John Drury, the former president of
BFI, to run the company. USA, unlike BFI, has pursued an "oldfashioned"
method of waste management, "collecting it, hauling it and dumping it in the
ground," with minimal investment in recycling programs and incinerators.
Some of USA Waste's notable acquisitions include, Chambers Development Co in 1995,
Sanifill Inc and Western Waste Industries in 1996; United Waste Systems,
Mid American Waste Systems and the Canadian solid waste assets of Allied
Waste Industries in 1997. Currently, USA Waste is the third largest garbage
company in North America with operations in 42 states, the District of
Columbia, Canada, Mexico and Puerto Rico
*for a full list of USA Waste’s subsidiaries: http://www.ebic.org/pubs/usa-subs.html
USA Waste has followed the industry model of expansion by using reverse
stock swaps which allow them to take a controlling interest in companies and
pay in shares of stock instead of cash. USA used this method in its
acquisition of various companies, including United Waste Systems and Western
Waste. Often executives at the company being bought are retained and given
seats on USA's board of directors as was the case with John Rangos from
Chambers, Kosti Shirvanian from Western Waste etc
Another USA Waste acquisition strategy has been aggressive pursuit of troubled
companies. In 1996, USA announced that it had signed an agreement to purchase
the New York based Barretti Group, whose founder had recently been indicted on
charges of being a member of a cartel which was inflating prices and controlling
the waste collection industry.
USA Waste's acquisition of Chambers Development Company occurred
after Chambers was forced to restate its earnings in 1992.
The restated earnings showed that Chambers' profits since it became publicly
traded were much lower then previously reported. This led to a large decline
in the value of its stock and several shareholder lawsuits, after which, USA
stepped in and bought the larger Chambers. A similar situation occurred with
Mid-American Waste Systems.
Mid-American was reeling after losing $186.2 million in 1995 and co-founder
Chris Whitewas facing indictment on charges he bribed elected officials.
As with Chambers, Mid-American's poor situation made it a target for a takeover.
More recently USA Waste has set its sights on the troubled leader in the
waste industry, Waste Management Incorporated. WMI has been in financial
trouble for some time, as its money losing hazardous waste, engineering and
construction divisions contributed to losses of over $1 billion during 1997.
This raises the troubling aspect of having directors from WMI, which has been
one of the industry's leaders in violations, helping to run the new company
which would service an estimated one fifth of American households.
In order to understand USA Waste's policies and practices, several of
the key people involved in the formation and operation of the company must
be examined.
John Drury became CEO and Chairman of the Board of USA Waste in May of 1994.
Drury was president and Chief Operating Officer of Browning-Ferris Industries
(BFI) from 1982-1991 where he was in charge of all of BFI's solid waste
operations.
Drury oversaw BFI during a period when the company was cited numerous times
for both anti-trust and environmental violations. Some highlights include:
A $3.25 million plea bargain agreement with the EPA and DOJ where BFI plead
guilty to discharging hazardous waste into drinking water supplies in
Williamsburg Ohio.
A $3 million settlement with the state of New Jersey to avoid inclusion in a
lawsuit brought by the state for price fixing and bribery of state officials.
BFI also reached a settlement regarding a class action lawsuit filed
against the company and Waste Management which alleged price fixing and
customeral location, for $30.5 million in 1990.
These are merely three examples from the hundreds of violations that
occurred at BFI while Drury was at the helm.
