Welcome to another Trash Talking Friday, the only trash talk that smells like roses and looks like Brad Pitt right after it’s finished cleaning a gutter! 

Each week, I send you Ideas to ponder about. Ideas that have the potential to change your life, and hopefully help you become a better human being by understanding yourself. This week, in the third and final article of the Gangster Paradise series I talk about, 1) Corporate corruption, 2) Government corruption     

 Let‘s get into it!

Request: If you enjoy this mail, kindly forward it to others in your network who you think might enjoy it too! If this mail is a forward that you received and enjoyed reading, sign up by sending a mail to [email protected] and start receiving this trash talk in your inbox every Friday!

Part 3: Gangster Paradise: The Murky Underbelly of the Waste Management Sector India

The third and final article of this three-part series covering the murky underbelly of the waste management sector will cover, organized corporate mafia and the political and bureaucratic mafia present in the Indian waste management sector.

April 2010: I entered a large room with a massive oval conference table. Seated on chairs in this room were about twenty individuals from a private company that many of you may have heard of off, Moser Baer. Moser Baer was in the business of manufacturing CD‘s, TV and solar equipment and this meeting was to discuss rates for a scrap tender that the company had floated. I was pretty impressed! This organization had amassed so many bodies in a room to discuss rates openly with vendors. The idea at the time seamed to point towards getting vendors to offer the best possible rates for the vast amount of scrap that the company generated on a daily basis and on the face of it, the process looked transparent. I took a seat at the end of the table and an elderly gentleman opened our company‘s quotation and started asking us how much higher could we go from the stated quotes. He then started disclosing rates offered by other vendors which were considerably higher than ours. For certain items the rates being quoted by other vendors were so close to what recycling facilities were offering that it made little sense when you calculated you cost of collection and logistics. I left that meeting perplexed, wondering what it is that we as an organization were not doing to be able to compete. Little did I know that the system was rigged to ensure that certain darling vendors get the contract for financial kickbacks paid to management. 

So how does it work? Well there are many ways that companies continue to lose money due to internal corruption and vendors manipulating the system or process. Here is how it‘s done. 

Weight Manipulation: In many organizations that are generating large volumes of recyclable and don‘t have an internal weigh bridge, this practice is rampant. In order for this scam to be successful you need the involvement of the security guard and someone in midlevel or lower management. The vendor wins the contract by offering rates that are much higher than the prevailing market rates. He or she knows that at these rates their business will not be financially sustainable. Someone from within the organization often discloses existing rates for scrap to their preferred parties and them tell them to quote substantially higher to secure the contract, knowing that the company does not have an internal weigh bridge. The vendor deploys his truck and collects the said material and then proceeds to weigh the truck at a local private weigh bridge located outside the company‘s premises. The truck is always accompanied by a security guard to ensure that there is no weight manipulation, but money corrupts absolutely. Five tons is reduced to four, and the spoils distributed amongst all concerned. This is a common practice taking place across the country with few being spared including large multinational companies.  

Rate Manipulation: The inverse happens here. Rates quoted are on lower side with commissions being paid to employees of the company who have helped secure the tender by approving the rates, or helping in the approval process.  

The Gatekeepers: Security guards at large, midsize or small companies know exactly what is happening in the company, especially in terms of movement of goods. They know who the vendors are, how much of a certain material leaves the premises, at what rates and who the decision makers are. Not only do they work as informants, they are a vital part of a corrupt system, including allowing the movement of materials out of the company without paying from them, assisting in theft and wrongly logging the name of materials being loaded onto trucks (For example mixing aluminum with Iron and recording the entire lot as Iron). They are easily corrupted and readily provide information pertaining to rates the current vendor is offering, the amount of scrap being generated, how the internal system works, providing names and numbers of key employees within the organization. They also act as gatekeepers by ensuring that information does not reach concerned within the organization. How? Through numerous articles of mine, I have already informed you that the sector remains mostly unorganized from collection to processing. Most vendors who want to quote rates, do so by handing them rates written on a piece of paper. Guess who this piece of paper is delivered too? The security guard, whose responsibility it then becomes to deliver the rates to the concerned department. In many cases not only are the rates not delivered, the existing vendor is also informed and the cycle of intimidation starts.  

Housekeeping, security, garbage & theft: Garbage is mostly a separate contract and most companies are very reluctant to pay for garbage disposal. They usually have the scrap vendor remove the garbage for them for free. Such is the case with many leading multinational companies, including E-commerce firms. Garbage in many cases is used as a concealing agent much like make up! What hides inside is known by only to a few. Garbage is used to transport materials like cell phones, shoes, clothes, and various other electronic items from within the facility to the outside world. As garbage is mostly not checked & if checked not thoroughly enough, there have been many instances where the vendors in cohesion with security and housekeeping staff engage in this practice. Housekeeping staff is responsible for bringing out the waste from within a facility or warehouse to the loading docks and without their involvement this process cannot and will not work. At the loading docks there are cameras and security personals who are responsible to check the garbage to ensure that items of values from within the facility are not being stolen, so they act as a second line of defense. Since the garbage is not weighed and taken away for free on a gate pass the security at the gates lets the vehicle through. Millions of dollars of goods from electronics to clothes are stolen in this manner every year.  

Tendering Process Scrap: As the story began in the beginning of this article, some companies hold elaborate meetings, others ask for quotes over E-mail and few use the services of auction houses such as Ariba. In most cases it‘s the procurement department of large companies that‘s involved in the process and for the mid-size companies it‘s the finance department. The ultimate sway is in the hands of the procurement department. They have all rates in front of them and the ability to convince legal and finance to close a contract based on the rates that are provide. In our personal experience, procurement specially to do with construction, air-conditioning, transportation and scrap are very lucrative financially for many working in the procurement department of large and mid-size companies. Companies can mention whatever they want in contracts including elaborate anti bribery policies, the fact is that money exchanges hands more often than you would like to think. Rates are disclosed to darling vendors, rates are ignored of new vendors, weight is manipulated and partnerships are forged that help some vendors expand their reach to new companies as employees shift their loyalties or start working for new companies.  

Partnership Model: I had only heard of this till I got a chance to sit across the table with an executive of a large Chinese company manufacturing electronic devices pitching to me as to why we should join hands with him, form a company and start exporting E-waste abroad to certain preferred vendors or set up a facility ourselves. To him it made sense, with the vast volumes of E-waste being generated by this firm, little or no E-waste recycling happening in the country and most of the E-waste being exported abroad anyhow it was a win win for all. This too is more common than you would care to know. Many large Korean and Chinese companies engage in this practice. They form a company with a local partner, assure the contract and flow of goods and start diverting the waste to companies that they are indirectly connected to and benefiting from financially.  

Corruption has always been ever present in the corporate sector and unfortunately is on the rise, though for those engaged in these practices, both business and professional life could not be better. You can say, its asymptomatic, its present but a very few know about it, those who know about it are either involved or don‘t speak up, it happens yet is hidden, it‘s a virus that‘s spreading, yet most are ok with it. It‘s part of doing business in India for many. The company that I referred to at the start of this article is no more, it filed for bankruptcy in the year 2018 as vast irregularities were found in its book of accounts. In 2019 the central bank declared the companies accounts fraudulent. There are many such stories that continue to play out across our great nation. 

There is also another massive scam that is unfolding under our feet. That of fake sustainability propaganda and EPR scams by PRO‘s, NGO‘s and their corporate supporters, which I will leave as of now and cover in another article in the coming weeks. 

I have been a government contractor for a good five years, sweeping roads, cleaning drains, collecting garbage, making roads in urban villages, making drains within residential sectors and selling organic products that can be sprayed on garbage to reduce smell and help decompose the organic matter. The system will help you make money, but its rotten and if you have self-respect and a decide to grow a conscience like I did you will exit, as fighting this system will only lead to self-destruction. The corrupt rule, the few honest officers either toe the line or are shunted from place to place where they can cause no real harm. The waste management and sanitation system within the government ecosphere has its own unique way of functioning, with some hysterically innovative ways of implementing corruption. 

The tipping fee model: I have written about this rotten model numerous times, the fact that the government is paying and incentivizing the disposal of waste is not only a gross waste of the taxpayer‘s money but can also be seen as criminal negligence against the environment and the health of the population at large. Tenders are floated with terms that only large organizations can full fill. Most of the terms within the tenders are already manipulated to ensure that certain private contractors get the said work. In many cases, the contractors form multiple companies or get others in their network to submit tenders with higher rates (Minimum three bids are needed). Most of these tenders require the contractor to collect, segregate, process (in some cases) and dispose waste at landfill sites that belong to the government for which these individual companies get a paid a fee. I have covered this subject matter in numerous articles so will not go into details here. Here is how these functions. Garbage is collected from point A and dumped at point B, with the contractor getting a tipping fee per ton to dispose waste. As it‘s in the interest of the contractor to dump more as he would get paid more, garbage in trucks is watered to increase the weight, construction debris is loaded in them and of course, there is manipulation at the weigh bridge. Tipping fee rates wary from Rupees 400 – 2400 rupees a metric ton dumped. In larger metros, the rates average between 1400 – 2200 rupees a metric ton and reduce substantially as you move to smaller cities.  

Commission rates to government departments on billing vary from twenty percent to as high as forty five percent depending on the type of work that you are undertaking. Rates are fixed for what will go to the big boss, the accounts department, the health inspectors, the supervisors, the senior and junior project engineers with other miscellaneous expenses such as paying peons and lower level staff to pull out files. Though the tendering system has moved online, corruption has not stopped, it has just forced competing contractors to start working together by forming a syndicate. 

The Contractor mafia: The contractor mafia‘s prime role is to protect its interests and that of its members. They act as a syndicate, that dictate rates that need to be put into tenders, who will partake in tenders, providing support such as helping fellow contractors win bids by submitting their own bids at higher rates and ensuring that outsiders are kept at bay. The group decides on one or two individuals as their mouth piece, whose responsibility it becomes to communicate the concerns of the consortium to the requisite government departments. They even negotiate on commission rates! That‘s right, corruption is negotiated in government offices. These contractors are mostly engaged in a different side of the waste management business, that of road sweeping and drain cleaning.  

Contractor & Government Partnership: Yes! Many government employees are in partnership with contractors. The partnership is simple, they fund the contractor and assist him to get work and get a percentage of the profits over and above their commission. Funding is provided to the contractors for earnest money deposits, salaries (government payments are mostly delayed), performance guarantees etc. Partnerships are usually done in two ways, as experience is a must in government contracts in order to be eligible to partake in large tenders. So, either a sole proprietor company is formed through a trusted source (Usually a relative or someone from a weak background from the officers village) or a joint venture is formed with a bigger contractor where he provides all supporting documents such as financial and technical qualifications on paper.  

The Sweeping scam: In Indian, many of our roads and public areas continued to be cleaned manually by individuals using a long stick broom. There are three parallel systems in play here, those individuals who are directly employed by the government, those who are employed by private contractors under their direct management and those employed by labor contractors who work for the government but are not considered permanent employees. The basic concept of the employee scam is that non-existing employees are shown on rosters of private contractors, third party contractors and the government and the tax payers‘ foot the bill for salaries and benefits of these ghost employees. For private contractors, this is a way to cover costs of commissions paid to the government and make a profit. Occasional checks are done fines are levied and threats of black listing are made, that rarely see the light of day.  

The mechanical road sweeping GPS scam: My favorite! Mechanical sweeping is increasingly being introduced across the country to clean roads. The reason behind this is to curtail the use of ghost employees that scam the tax payers, safety issues pertaining to manually sweeping of roads on highways and to curtail dust pollution arising from manually sweeping roads. The challenge with mechanical road sweeping in India are manifold, such as state of our roads, uneven surfaces and large amounts of debris found on the roads including stones and bricks. In many cases this entails that a person walks in front of the manual sweepers to first manually collect large debris so that the machines don‘t get damaged. Getting back to the scam, these mechanical sweeping machines are fitted with GPS trackers to monitor their movement, as they are also paid on a per kilometer basis. The scam is basic, fit a GPS tracker on the scooter or bike and make it run along the route that the mechanical sweeper is supposed to service and then bill the government for work that was not done. In many cases mechanical sweepers will run on part of their routes, and the rest will be substituted through stand by arrangements such as these.  

The Equipment scams: Of late there is new way to scam RWA‘s and companies by pushing technologies onto them that are neither proven nor effective in treating organic waste. The SWM rules state that any organization that covers an area of over 5000 meters or generates more than one hundred kilograms of waste per day must treat their organic waste within their premises. This is given birth to many startups and technology companies peddling their solutions as the answer solve Indian‘s waste treatment challenge at source. The government hires big consultants to assist it in determining what technologies are best suited for the job at hand. Most of these large consultants have little practical knowledge of the technology or how the waste management sector in India works. There employees are also now ever present in government meetings and have been given space to sit within government offices. Some if not all of these employees have out side agreements with these technology peddlers to promote the said technology. As of now in some cities in India, only a handful of technologies that are expensive and don‘t really deliver results are being promoted and authorized by local administration. The registration window was opened for a short period of time and has now been closed. If you happen to have a solution that is cheaper, and better than what is being marketed, you are out of luck. Case in point is the organic waste converter, a unit that has been sold in the thousands across the country, a unit that has been forced upon RWA‘s and industrial units to buy. You can read more about this on google, including PIL‘s filed against the company and government bodies for promoting and forcing the purchase of flawed technologies. May organizations buy the said piece of equipment to just ensure that they comply with the laws, while the equipment lies in their premises and rots.   

Unorganized, corrupt, mafia dominated and lacking progressive policies, the waste management sector in our country is in dire need of an overhaul. There is tremendous potential both in terms of generating employment, innovation and contributing to the country‘s GDP that this sector holds. Of late, there have been many startups that have popped up in this sector, though most of the are trying to solve the challenge through technologies such as apps and catering to the industrial sector in terms of meeting their EPR needs. What is required is more competition at the grass root level, from collection to processing, we have enough middle men in our country and don‘t need more technology middle men entering the sector. Practically speaking, corruption cannot be removed, but it can and should be reduced drastically, the sector must be provided with industry status, the mafia dealt with strongly and policies should be formulated that will promote competition, innovation and ease of doing business in the sector. We need to tackle the cause and start building the sector from ground up. In order for us to do that we must confront the uncomfortable truth that is ever present across this sector and have the courage to make progressive change on ground, not just on paper.