After corruption scandal, SF voters deserve chance to end Recology’s trash monopoly

Allegations of bribery and corruption highlight urgent need for reform

Leonard Stefanelli, the former president of a San Francisco waste management company called Sunset Scavenger, once used Mafia terminology to describe his dream of controlling The City’s trash business.

“La Cosa Nostra — ‘Our Thing’ — is a traditional term used to refer to the so-called Sicilian Mafia,” Stefanelli wrote before his death in a 2018 memoir entitled, “Garbage: The Saga of a Boss Scavenger in San Francisco.” “It aptly described the program that I was beginning to envision, if it became a reality.”

Examiner reporter Michael Barba included this anecdote in a sweeping history of Recology, the waste management company at the center of the public corruption scandal roiling City Hall.

Barba wrote that Stefanelli, who became president of Sunset Scavenger in 1965, “would ultimately be ousted before his dream came to fruition.”

But Stefanelli’s dream of forming one powerful company to control The City’s garbage business did eventually come true. Two waste management companies founded by Italian immigrants maintained an iron grip on The City’s trash collection for decades before finally uniting in 1987. That year, Recology’s predecessor companies, including the company formerly known Sunset Scavenger, merged to form Norcal Waste Systems.

In 2009, Norcal changed its name to Recology.

Today, Recology enjoys a monopolistic stranglehold on much of The City’s local and commercial garbage disposal. This due largely to a 1932 ordinance that divided San Francisco into 97 garbage routes and allowed only permitted companies to work them.

“Its predecessor firms bought out all their smaller competitors and secured every permit issued under the ordinance, creating an early version of the monopoly” before eventually merging, wrote Barba.

Recology’s monopoly power may explain why some of the company’s executives have allegedly taken to acting like villains in a crime movie.

Federal authorities have charged two former Recology executives, Paul Giusti and John Porter, with allegedly funneling $1 million into nonprofit accounts controlled by former Department of Public Works Director Mohammed Nuru. Giusti has plead guilty to bribery and fraud and agreed to cooperate with federal authorities. Nuru and Porter are currently awaiting trial.

The U.S. Attorney’s office says Recology wanted to keep Nuru on its good side, since his position came with power to sway decisions on whether to hike trash rates on the company’s customers. So its executives “showered Nuru with gifts to please him, according to court documents in three cases the U.S. Attorney’s Office filed against the firms and two of their former executives,” wrote Barba.

So far, the widening public corruption investigation has ensnared multiple defendants, including city employees.

In March, Recology agreed to pay $95 million in refunds to the local ratepayers it allegedly got away with overcharging because of its cozy relationship with Nuru.

In September, three Recology subsidiaries admitted to conspiring to bribe Nuru and agreed to pay a $36 million fine as part of a deferred prosecution agreement with the U.S. Attorney’s Office. That includes a $7 million penalty Recology previously agreed to pay San Francisco as part of its earlier settlement with the City Attorney’s Office.

Recology and its predecessor firms, which Barba describes as “plagued by scandal for decades,” have faced allegations of corruption before.

In 1990, the Los Angeles Times reported that the FBI appeared to be looking into then-Assembly Speaker Willie Brown’s previous work with one of Recology’s predecessor firms, but no charges were ever filed.

In 1999, Norcal “became embroiled in a bribery scandal over a lucrative garbage contract while growing its business in Southern California,” wrote Barba.

“A Norcal vice president and a consultant for the firm pleaded guilty to federal charges for conspiring to bribe a top San Bernardino County official in exchange for his official influence,” Barba reported.

In 2006, authorities accused the company of conspiring to bribe San Jose Mayor Ron Gonzalez and a top aide, but a judge later threw out the charges.

“This is not bribery,” wrote Superior Court Judge John Herlihy, dismissing the case which accused Gonzalez of making a secret agreement to give Norcal an extra $11.25 million in taxpayer money as part of deal to help the Teamsters union. “This is politics.”

Recology’s behavior in San Francisco, however, has clearly gone beyond the legal limits of political influence. Recology has agreed to pay tens of millions of dollars in fines and refunds in connection with the latest scandal.

“I want to make it clear that this type of mistake and this type of conduct was wrong and unacceptable,” said Recology CEO Sal Coniglio, who declined an interview request from Barba. “We must ensure that nothing like this ever happens again.”

One way to achieve this goal: Reform the 1932 ordinance to break up Recology’s monopoly.

Supervisor Aaron Peskin has formed a working group to study a possible ballot measure to make garbage collection less susceptible to corruption. Possible ideas include reforming the system to include competitive contracts, forming a publicly-owned waste management agency or tweaking the 1932 ordinance to include anti-corruption protections.

Reforming San Francisco’s garbage politics won’t be easy. Nearly 77% of The City’s voters rejected a 2012 proposal to reform the waste collection contracting process. Keep San Francisco Green, a Recology-funded political group created to fight reform, received support from both the Democratic and Republican parties here.

But would San Francisco voters enthusiastically support Recology’s monopoly in light of the company’s corrupt behavior, which includes bribery, money laundering and overcharging customers who currently have no other choice?

Peskin should stay on the case and make sure voters get a chance to rethink this trash monopoly.

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