Whatever happened to ...The end of Laidlaw


Courtesy of EcoLog Environmental Resources Group

On January 28, 2004, a U. S. federal judge ordered two former high-level employees of Laidlaw Environmental Services (LES) to pay about US$590,000 in penalties for overstating the company's earnings. The U. S. SEC said that Kenneth Winger, the former CEO, and Paul Humphreys, the former chief financial officer, filed reports from the fiscal years 1997 to 1999 with more than US$530-million in false income. According to the SEC, Humphrey initiated the scheme while Winger went along with it by signing his name to documents. The executives recorded approximately US$38-million of cash generated by speculative derivatives transactions, further distorting the company's true financial picture.

It was a sad stumble for Winger -- a Canadian who started with Alberta-based transportation giant Trimac, that launched hazardous waste company Tricil in 1973 as a joint venture with chemical company CIL (now ICI). Winger was a Tricil director when Laidlaw Inc. bought the company in May 1991, and was put in charge of subsidiary LES a couple of years later. He led LES in a dramatic reverse takeover of hazwaste incineration company Rollins Environmental, and grew the business to an eventual market cap of $588 million (although it carried a large $3.2-billion debt). Parent company Laidlaw Inc. (founded by famous entrepreneur Michael Degroote) had resolved to leave the environmental services industry and focus on its core transportation businesses. To further dilute its holding in LES, Laidlaw succeeded in a hostile takeover of the Elgin, Illinois-based Safety-Kleen. The purchase was bitterly contested by Philip Services Corp. (PSC).

Complicated wrangling -- which included the use of shareholder 'poison pill' agreements -- eventually drove the price up two billion dollars. Under Winger's leadership, LES -- for a time renamed Safety-Kleen -- seemed to grow rapidly, and then imploded with the securities scandal, eventually filing for Chapter 11 bankruptcy protection on June 9, 2000, amid a half-dozen class-action shareholder lawsuits.

On December 24, 2003, after two-and-a-half years under the leadership of Ronald Rittenmeyer, the company's new chair, president and CEO, the company emerged from Chapter 11 bankruptcy protection. By then, Safety-Kleen had sold the former LES chemical services division, including assumption by the purchaser of more than US$250-million in potential liabilities, and resolved a long list of problems arising out of the accounting irregularities, shareholder lawsuits, and concerns from the State of South Carolina regarding the long-term care of a major hazardous waste landfill.

Customer comments

No comments were found for Whatever happened to ...The end of Laidlaw. Be the first to comment!