Charges for the alleged theft of ‘eco-fees’ by former executives of Ontario’s tire recycling program
According to the documents from the court, the former CFO of the Ontario Tire Stewardship, Perminder Kandola, is facing 2 charges for misusing funds of the Ontario Tire Stewardship. Allegedly, theft of hundreds of thousands of dollars was performed by 2 former executives of the Stewardship. Stewardship’s money derives from ‘eco-fees’ paid by drivers in the province atop of the price of each tire purchased.
The Ministry of Environment and Climate Change offended altogether two executives. Perminder Kandola is charged twice. Original lawsuit filed against him by the Stewardship in 2016 asserts that Mr. Kandola managed to divert $346,565 from tire importers to a private bank account. Another charge was laid against Mr. Kandola and Frank Fragale, the former director of audit in the stewardship. Allegedly, he diverted $220,149 from the organization.
The lawyer of Frank Fragale confirms that Mr. Fragale was charged with a “regulatory offence” and he refused to comment it further. The alleged thefts are now being investigated by the Toronto Police Fraud Unit. So far, there is no conclusion made by the police.
Last year, problems at the stewardship which oversees tire recycling programs in the province were exposed by the Star. The tire recycling program in Ontario is funded by rubber and tire companies which charge consumers for end-of-life rubber recycling and which then pass these funds along to the stewardship. In the past, the organization received a surplus of some $50 million in fees. Subsequently, the cost of those ‘eco-fees’ per tire dropped.
An investigation of stewardship’s activities by Star alleges that executives spent those funds on high-end restaurants, political donations, trips and alcohol. Allegedly, after $346,565 disappeared for the stewardship in 2012, there was an attempt by Fragale to secretly return more than $200,000. Subsequently, a partial audit took place and it found that the tire recycling system in Ontario invites manipulation and needs to upgraded and secured. Today, some sources claim that all of the missing funds were returned to the organization.
After the Star published its investigation last January, the stewardship filed a lawsuit against its former CFO who resigned in the middle of 2015. Kandola, the report claims, created a separate bank account which bore the same name with that of the stewardship. After the money was returned, the bank account, according to the Star, seized to exist.
As to the second alleged theft, it apparently occurred within the same timeframe.
The Star reported that a theft was discovered last year when a lawyer of the stewardship’s former director of audit offered that the money will be returned if the name of the former employee, allegedly an accountant, was kept confidential.
Then the investigation led to Kandola who eventually was accused of the theft. The full story is available in our previous articles. After a long time of demands for a comprehensive forensic audit by the organization which oversees recycling in Ontario and a threat of a court order, the stewardship invited Ernst & Young for an audit. The auditors will thoroughly investigate the possible fraud in the supply chain.
Article by The Star.