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Queensland's bottle and can recycling scheme is being sued for $19 million after scrapping contracts with two businesses following an undercover sting involving a private detective.
Not-for-profit Container Exchange (COEX) oversaw the recycling of more than 2 billion bottles and cans in its first 20 months, after the 10¢ refund scheme launched in 2018.
However, it is currently defending two unrelated civil cases in the Supreme Court after cancelling contracts following allegations "baled" aluminium cans — cubes containing tens of thousands of machine-crushed and tightly-pressed cans — were accepted at refund depots.
Crushed cans can be accepted as they are easier to transport, but COEX alleged baled cans were a fraud risk as they were "likely" to have already been recycled and money could have previously been paid out through a container refund scheme in Queensland or interstate.Advertisement
United Scrap Metal Traders at Murarrie is claiming more than $10 million in damages after COEX cancelled its contract to operate a refund point in February 2019.
Court documents reveal COEX wrote to United Scrap Metal Traders director Steve Henderson to allege the company accepted several tonnes of baled cans from Bundaberg, which were broken apart and "mixed in with other cans" to conceal "the processing of the ineligible cans from COEX".
COEX alleged Mr Henderson adopted the philosophy "dilution is the solution" in relation to the recycling scheme, with the slogan even written on a white board in the company's office.
An undercover private investigator also tried to sell baled cans to United Scrap Metal Traders.
COEX alleged an employee declined to buy the bale, but told the investigator he could use a crowbar to chip it apart, and then recycle the individual cans.
However, United Scrap Metal Traders strenuously denied any wrongdoing, arguing employees had never purchased or processed large bales, but had instead taken small "tablets" or "biscuits", which were loosely compressed for easy transportation.
"These small eight-kilogram tablets were broken up for several reasons — to confirm containers were eligible ... and to be mixed with other containers so that they could be baled properly at the COEX/ Cleanaway processing centre," Mr Henderson wrote in response.
Mr Henderson said his employee had refused to buy the bale from the detective, told him they could be bought at scrap metal value, and claimed "high-level deception" was involved when the man returned with 1620 loose cans with a signed declaration that they were eligible.
The case is next due in court on February 26.
Scrap metal recycling business Zelcliff has also launched legal action against COEX, claiming almost $9 million in damages after its contract was cancelled in 2019.
COEX claimed Zelcliff accepted baled cans, sold baled cans to another company — including some with labels from the Solomon Islands — and processed refunds in small transactions to avoid triggering the requirement for photo identification or statutory declarations.
As part of its probe, a private investigator went to Zelcliff's container refund point and tried to sell a bale of cans on January 29, 2019.
It was alleged the employee refused to buy the bale, and the investigator returned with a bag of machine-pressed cans, which was accepted.
Zelcliff's lawyers have disputed the allegations, with its arguments including that cans were sold to another company for scrap metal, not as part of the refund scheme.
In its recent annual report, COEX reported it would vigorously defend two legal claims, arguing they were "without merit".
"If the company's defence is unsuccessful, the potential financial impact may include payment of damages of up to approximately $19.5 million (although this figure is viewed as unlikely given the factual scenario) and legal costs to the claimants," the annual report reads.
"Due to the nature of the matters, the possibility of financial settlement ahead of trial is considered to be remote."SaveLog in, register or subscribe to save articles for later.License this article
Felicity Caldwell is state political correspondent at the Brisbane TimesLoading