Not so seamless transition as Dublin City Council 'makes hames' of Greyhound transfer
IT WAS supposed to be a “seamless transfer” from the public to the private sector when Dublin City Council’s domestic waste-collection services were taken over by Greyhound Recycling and Recovery Ltd on January 16th. Instead, it was shambolic.Assistant city manager Séamus Lyons now regrets using this phrase, given the widespread problems that arose from customers being notified too late, collection dates being changed without notice and uncollected bags of rubbish piling up on some streets.
The council had been losing €24 million a year on waste services; management decided last year that it was going to follow the example of other local authorities in the Dublin area by “exiting” from this loss-making area and selling its interest to the private sector.
It did not, however, enter into a contract with Greyhound to take over waste collection for a specified period. Instead, it sold the “asset” of its 140,000-strong customer base to the company, handing over their names and addresses as well as all the grey, brown and green bins.
This was done on the recommendation of management consultants Ernst and Young, which had been commissioned to advise on the sale of the council’s asset – and which received a fee of €250,000 for drawing up a list of potential bidders and then whittling it down to Greyhound.
Asked how much the council received for its asset, Lyons says this would not be revealed as it was “commercially sensitive information”. Greyhound has insisted on the figure being kept confidential because “it might give others an indication of its pricing strategy”.
Given that the city’s waste collection was losing so much money, the company’s bid could not have been high.
In addition, it is in line to get a generous share of whatever arrears it manages to collect from the council’s former customers – “bad debts” are estimated at €6.2 million.
This aspect of the deal is currently being investigated by the Data Protection Commissioner on the basis that it may be against the law protecting people’s privacy. Lyons however says a report that customers’ bank details have been given to Greyhound is “absolutely false”.
Greyhound is also being allowed to impose a “modest increase” in its €100 annual service charge from July 1st to offset an increase in the landfill levy from €50 to €65 a tonne.
A further rise in the charge is likely in mid-2013 when the levy is due to rise to €75 a tonne.
Dún Laoghaire-Rathdown County Council was the first local authority in Dublin to privatise domestic waste collection in mid-2010, when it sold out to Panda. However, the changeover was made more palatable by giving customers a free service for the first six months.
Panda also agreed to charge 20 per cent less than the council and to hold this level until 2013. Arrears were also written off, so the privatised service started with a clean slate and all customers were notified in advance that they could opt out if they wished.
This meant that any risk of breaching data-protection legislation was covered. In the end, 95 per cent of the council’s customers “migrated to Panda without any hassle and I don’t think we got a single complaint”, according to a senior Dún Laoghaire-Rathdown official.
Asked how he felt Dublin City Council had handled the transfer, he says: “I think they made a complete hames of it. The city was charging too little anyway, whereas our charges were economic, so Greyhound had to increase the charge if they were to make any money.”
Greyhound had already taken over South Dublin County Council’s waste-collection services and had the city’s green bin contract for the past three years. Its record in running it is characterised by Lyons as “steady and good overall – although there have been blips”.
The company’s website describes it as “the leading domestic waste-collection service provider in Ireland with over 20 years’ industry experience, over 350 staff and we are going from strength to strength [because] we are committed to providing a first-class service”. The website also includes a selection of “customer testimonials” from householders in south Dublin, variously describing Greyhound bin collectors as “obliging” and “most helpful” and its customer care team as “exceptionally nice” and “so friendly and professional”.
Dublin City Council has set up a “liaison group” with Greyhound to deal with what Lyons sees as “teething troubles” with the transfer of its waste collection services. City councillors, who opposed it from the outset, have also been given a special helpline number to call.
“They [Greyhound] have put extra crews on standby to pick up bags and bins anywhere they’re notified about them,” Lyons says.
“Demand is dropping off dramatically, with the average ‘presentation rate’ on green bins at 80 per cent and black or brown bins in the high 60s.” He also points out that the council still has some control over Greyhound through its permit regime for all waste-management operators in the city.
“I’m satisfied that the situation is improving as the days pass and the number of issues arising is dropping off.”
Forty of the 110 binmen employed by the council have been redeployed to street-sweeping and the rest are being reassigned to other sections.
“Administrative staff will be reassigned over the next number of weeks,” he says. “There have been no redundancies.”
Greyhound will be making an announcement shortly about the number of jobs it has created as a result of taking over the city’s waste-collection service, which is now ultimately owned by an Isle of Man-based holding company – a fact the council only recently learned.
Limited liability in the Isle of Man: Greyhound no longer has to publish financial accounts
THE GREYHOUND waste group reorganised its corporate structures in December 2010 so it would no longer have to publish financial accounts.
The Irish-registered companies that make up the group switched from limited liability status to unlimited, thereby obviating their obligation to file accounts to the Companies Registration Office.
However, the owners of the group, brothers Michael and Brian Buckley, transferred their shares in the companies to limited liability companies in the Isle of Man.
Limited liability companies in the Isle of Man do not have to publish accounts.
The net effect is that the two brothers end up with the benefits of limited liability but don’t have to publicly disclose their companies’ financial accounts.
A spokesman for the Greyhound group said it operated in a very competitive industry and the obligation to publish accounts might have given an advantage to competitors.
He said the establishment of a shareholding structure using limited liability companies in the Isle of Man allowed the brothers to avoid having to publish accounts while still having limited liability protection. He said the group had business interests in a number of other jurisdictions and exported much of the waste it collected after separating it into its constituent parts.
It was also involved in the transformation of waste into fuel, which was then exported.
“Research and development has been the backbone of the business since it was established,” said the spokeman for Greyhound.
The last filed accounts for Greyhound Recycling Recovery Ltd – which is now an unlimited company – are for the period to the end of March 2009, when it made a pretax profit of €50,594 (2008: €1.5 million). Accumulated profits at the end of the year were €8.4 million.
The Buckley brothers were paid royalties that year of €578,541 by the company and rent of €384,000. During that year the brothers bought a property from the company for €2.85 million.
Greenstar and Panda, two competitor waste companies operating in the Dublin market, are limited liability entities. COLM KEENA