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Corporate Profile: Laidlaw Environmental Services

by Christopher M. Sevanick and Brian Lipsett


Historically Laidlaw Waste and Laidlaw Environmental Services have beensubsidiaries of Laidlaw, Inc., which in turn is a 47.5% owned subsidiaryof Canadian Pacific. In 1997, Laidlaw sold both their hazardous waste andsolid waste divisions. Rollins Environmental Services reportedly boughtLaidlaw's hazardous waste business. The new company has retained the nameLaidlaw Environmental, and Laidlaw recieved a 66.66% controlling interestin Rollins.1This "reverse acquisition" is similiar to how Laidlaw gained 40% of AlliedWaste Industries' stock when Allied "bought" Laidlaw's solid waste business.Laidlaw then sold their 40% stake in Allied to a group of investors, oneof them, Leon Black, a former ally and associate of convicted junk bondking, Mike Milken. Black was a managing director at Drexel when the companyplead guilty to 6 felony charges and paid a $650 million fine for securitiesfraud in 1988.2

Laidlaw's Beginnings and Expansion

In 1959, at the age of 37, Michael DeGroote paid $75,000 for a small truckingfirm named Laidlaw in Hagersville, Ontario. DeGroote's business grew theway many waste businesses do, by acquisition -- one small company at atime. DeGroote eventually sold his stake to Canadian Pacific in March 1988for cash and Canadian Pacific shares valued at $499 million. He resignedas a Laildlaw director in December of 1990.

Troubles at Laidlaw, however, continued to dog DeGroote even after heleft. In August 1992, Laidlaw denied all charges but agreed to pay US andCanadian shareholders $7.65 million in a class action settlement whichclaimed that the officers had "misrepresented the financial condition ofLaidlaw."3In 1993, DeGroote and associates paid $23 million to the Ontario SecuritiesCommission in a settlement for insider trading involving Laidlaw stock. 4

In the meanwhile, Degroote busied himself building a new waste empire.In 1991, DeGroote took over Republic Waste from Browning Ferris Industriesfounder Tom Fatjo.5In 1995 DeGroote gave up control of Republic to Waste Management Inc. founderWayne Huizenga. However, DeGroote is still one of Republic's largest shareholdersand is Vice-Chairman.6

Dealings and More Expansion

Laidlaw played a major role in helping BFI launch their hostile takeoverof Attwoods in 1994. Laidlaw sold BFI their 29% stake in Attwoods to for$132.5 million. Laidlaw used these funds to buy up US Pollution ControlInc. (USPCI), a deal which, according to some accounts, made Laidlaw thelargest hazardous waste manager in North America.7

Environmental Problems/Violations

While Laidlaw's management has wheeled and dealed, their core businesshas been fouling the environment and getting into trouble. Below are justsome of the various problems that Laidlaw has run into in recent years:

Recent Developments

As described earlier, Laidlaw has "sold" both their solid waste and hazardouswaste divisions. So now the history of Rollins and Allied come into play.Both have interesting track records.

Rollins Environmental Services
Business Week ranked Rollins Environmental's board of directors asone of the worst. Business Week said of these companies. "The companiestended to fail the tests of independence or accountability."26Rollins has been cited for more than 100 violations, both state and federal,but has not paid any penalties.27And in 1989,"Rollins was fined $ 1.9 million for its involvement in illegalshipments of hazardous ash; this year, after running eighteen years onvarious temporary permits, it received a final operating license."28

Allied Waste Systems
Allied's Chief Executive Officer, Roger Ramsey, was the Vice Presidentand Chief Financial Officer for BFI from 1968 to 1976. In 1983, BFI pleadedno contest to charges of price-fixing and conspiracy in Atlanta from 1974to 1979. Allied Waste Industry, Inc.'s Fort Mill transfer station was issueda consent order in response to charges of leakage and operational problemsthat affected the environment. Container Corp., a South Carolina subsidiaryof Allied that was responsible for the Fort Mill transfer station, paida $55,000 fine and the station was closed.

Organizing Tip-For all intents and purposes, Laidlaw's trackrecord is still relevant since the same management will be probably beoperating the facilities. Ask them, in public, for the background and experienceof the management for your local facility. Formore on strategy and organizing see our Strategy Guide.

1 "Pricing Surfaces on LaidlawFund Tranches," Institutional Investor, Bank Letter, March 10, 1997.
2 "Allied Waste Announces Completionof Shareholder Transactions Closes Senior Discount Note Offering," PR Newswire,May 15, 1997, "Drexel to Pay $650 million in Guity Plea," Chicago Tribune,December 22, 1988.
3 "Class Action Suits Lure Shareholders:But Laidlaw case shows it's not easy money," Eric Reguly, Financial Post,September 30, 1993.
4 "Cragnotti pays $ 2.67 million,"Tony van Alphen, Toronto Star, April 29, 1993.
5 "Fatjo and Hall Return to WasteManagement Business with ENVIRx," Integrated Waste Management, July 22,1992.
6 "Odd Union Intrigues Wall St.;Waste Manager Joins with Insurer," Terrence L. Johnson; and Stephen Phillips,The Cleveland Plain Dealer, May 26, 1996.
7 "Attwoods PLC - BFI Offer Extended,etc," Extel Financial Limited, Regulatory News Service, November 4, 1994,"Laidlaw expands hazardous waste business with purchase of Union Pacific[sic]" The Ottawa Citizen, December 7, 1994.
8 "Waste Plant Fined $10,000 AfterLime Leak," Rob Moritz; The Nashville Banner, October 31, 1995.
9 "Law Laid Down for Laidlaw,"Louisiana Industry Environmental Advisor April, 1994.
10 "Laidlaw Hammered by DEQ,"Louisiana Environmental Compliance Update, March, 1994.
11 "EPA Targets Waste-BurningViolators For Penalties," Reuters, November 15, 1994; "EPA Cites MonsantoFor Hazardous Waste Violation; Seeks $555,900 Fine," PR Newswire, November16, 1994.
12 "Laidlaw: No Collusion," APOnline, December 13, 1994.
13 "EPA Fines Two South CarolinaIncinerators," South Carolina Environmental Compliance Update, March, 1994.
14 "EPA Announces Hazardous WasteCombustion Enforcement Iniative," Arnall Golden & Gregory; GeorgiaEnvironmental Law Letter, October, 1993.
15 "Sewer District Annexes Laidlaw,"Shelly Haskins; Spartanburg Herald-Journal, July 11, 1996.
16 "SCDHEC Issues Twenty-ThreeConsent Orders," Haynsworth, Marion, McKay & Guerard, L.L.P.; SouthCarolina Environmental Compliance Update, April, 1993.
17 South Carolina EnvironmentalCompliance Update, November, 1993.
18 "SCDHEC Board Order RequiringTrust Fund and Limiting Capacity Survives Two Preliminary Challenges,"Haynsworth, Marion, McKay & Guerard, L.L.P.; South Carolina EnvironmentalCompliance Update, August, 1994.
19 "DHEC Levies $214,000 LandfillFine," The Herald (Rock Hill, S.C.) August 21, 1996 Wednesday.
20 "Don't Let Industry Hide Audits,"William Want, Special to The Herald; The Herald (Rock Hill, S.C.) May 11,1996 Saturday.
21 "Laidlaw fined $94,000, "Financial Post, March 24, 1993.
22"$10,000 Fine For Laidlaw DecriedAs 'Pro-Polluter'," Alexander Norris, The Gazette; CP The Gazette (Montreal),September 17, 1996.
23 "Company Hired To Sniff OutOdors Near Hilliard School," Jeff Ortega; The Columbus Dispatch, December21, 1996.
24 "School Principal Hoping NewSewage Building Will Clear Air," Randall Edwards; The Columbus Dispatch,September 15, 1996"
25 Laidlaw-A Corporate Profile,CCHW, 703-237-224.
26 "Campbell Board Best, ADMWorst," Reuters, November 14, 1996.
27 "Mrs. Robinson's neighborhood,environmental activist Florence Robinson;" The Sierra Club Bulletin, July,1996.
28 "Up in smoke; Clean Air Actamendments," The Nation, October 23, 1989.