LIHUE — An audit by the state Office of the Auditor of the state Department of Health’s beverage-deposit program revealed the program may be susceptible to fraud.
The report, released on Tuesday, details the financials of the program, which revealed the possibility that funds may have been misappropriated due to an “honor system” that they believe is easily manipulated.
On Kauai, there are six redemption centers, the fourth most of any of the islands in the state. Of the six redemption centers on Kauai, one was chosen for testing in the auditor’s report, Reynolds Recycling at 3343 Wilcox Road, Lihue.
One of the centers selected was on Maui, one on Hawaii and seven on Oahu.
The individual results of each redemption center were not included in the audit.
The Reynolds location in Lihue at Nawiliwili Harbor is managed by Kenneth Ramos. Ramos said he learned of the audit Wednesday morning and does not know how the location fared when it was tested. Ramos stated he was not the manager during the time the location was tested.
“The main office brought someone in from Honolulu,” Ramos said, explaining that he was on vacation in August and then had surgery in September and was on leave until November.
Reynolds has two redemption centers on Kauai, the second in Kapaa, and their administrative headquarters is in Honolulu.
Bruce Iverson, director of advertising and marketing, said, “The Kauai locations were in compliance with all tests that were done. We did have one location that was cited, but it was not the Lihue location.”
In order to test redemption centers, the auditor performed a series of tests.
“We redeemed beverage container deposits at each of the selected redemption centers and traced the redemption transaction through the redemption center’s reimbursement request/reporting process and subsequent payment by the program,” the audit reads, adding that testing was conducted between August and November.
There were 24 total centers tested during the audit.
The testing revealed that “There were differences noted between the amounts reported on the Monthly Distribution Report form and the distributor’s supporting records. There potentially exists fraudulent overpayments of deposit refund reimbursement to redemption centers.”
The redemption centers deposit beverage container rates in the state are done by the pound. There are four objects collected at the centers: aluminum, bi-metal, glass and plastics.
The rates the center pays out are $1.60 for aluminum, 30 cents for bi-metal, 12 cents for glass, 94 cents for plastic (mixed sizes 68 ounces or less) and $1.32 for small-size plastic (17 ounces or less).
In the fiscal year 2018, the program had revenues of $24.6 million and expenditures of $17.5 million, resulting in a $7.1 million increase in fund balance to $37.7 million as of June 30.
The program’s container deposit liability increased to $1.9 million as of June 30. To refund deposits and to pay for other liabilities and expenses, the program had $41.9 million in equity in cash and cash equivalents and investments in state treasury as of June 30, the audit stated.
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Ryan Collins, county reporter, can be reached at 245-0424 or rcollins@thegardenisland.com.
This racket has been brought many times over the years for theft and suspicious individuals or rings working for the company.
They retaliated against bad PR and residents complaining by shutting down a recycling center and also threats were made by employees via social media against people who complained publicly.
This is one of those checks and balances that go unchecked and the state of hawaii’s Incompetence was announced yesterday in the Honolulu Advertiser that they are seeking a consultant to research and implement a solution.
The state of Hawaii has well paid directors to monitor and audit the companies that have government contracts but are either really lazy or way over their heads (nepotism and incompetent) to do their jobs.
This has been identified for several years on Kauai. Where theft was obvious and complaints were filed and nothing was done until TGI and other social media outlets started to report about the fraud, waste, and abuse.
Most of their employees have criminal records and or cannot do simple math. They then carry out the theft plan on unsuspecting customers. The underpayments to customers was covered up by putting the rest of the payment into their tip jars. It was an old school trick and people stared to catch on because the difference in payments at different recycling centers were noticeable by large amounts of $20 or more.
The racket has caught the attention of state officials but the problem is the same as the Honolulu rail, the county bldg st where trees are planted in the middle of the street and is a no bid contract scheme and the Kauai porta potti schemes. There’s many Monroe like when the PA office hired a private investigator to issue a summons when they had 2 qualified employees able and willing to do the job.
The old plantation mentality of scratch my back and I scratch yours is alive and well.
How about an audit or report as to what happens to all recyclables, where is final destination and amount recovered for future use.