Recology to pay $36M for alleged involvement in San Francisco corruption scandal

SAN FRANCISCO - Officials with Recology -- the company contracted by San Francisco to handle waste collection -- has agreed to pay $36 million to settle a federal investigation that alleged the company bribed former city Department Public Works director Mohammed Nuru.

Federal prosecutors on Thursday alleged the company conspired through its three subsidiary companies -- Sunset Scavenger Company, Recology San Francisco, and Golden Gate Disposal and Recycling Company -- to bribe Nuru between 2014 and 2020, just before Nuru was arrested on suspicion of wire fraud.

The latest allegations come after federal prosecutors have already charged two Recology executives, who are accused of working together to bribe Nuru in exchange for favorable treatment when it came to regulating waste collection rates and approving DPW contracts.

Back in November, Recology's former group and government community relations manager Paul Frederick Giusti was charged with bribery and money laundering. Then in April, former vice president John Francis Porter was also charged with money laundering.

In the most recent allegations, federal prosecutors have charged the company with conspiracy to commit honest services fraud for spending some $900,000 over the years to bribe Nuru. The bribes included several large payments to nonprofit organizations where Nuru allegedly managed the funds; a job and summer internships for Nuru's son; and other gifts, including a two-night stay in a New York hotel.

Under the settlement, Recology admits that Giusti, working with Porter, made the bribes. The settlement also calls for Recology to cooperate fully with further government investigations, implement changes within its company, and provide annual reports to the U.S. Attorney's Office on the implementation of the changes.

"San Francisco citizens were victimized for years in a bribery scheme involving public contractors and a powerful, corrupt San Francisco public official," Acting U.S. Attorney Stephanie M. Hinds said in a statement. "San Francisco citizens expect and deserve honest services from its government."

In response to the settlement, Recology Chief Executive Officer Sal Coniglio said, "This resolution, and the improvements we have agreed to, will build on the substantial steps we have taken over the past year to strengthen our leadership team, ensure we have appropriate internal controls, and significantly modify our approach to community engagement."

Part of the settlement, which is still subject to court approval, includes a three-year deferred prosecution agreement, meaning Recology's federal charge will be dismissed if the company abides by the agreement's terms.

Coniglio added, "While we are pleased to resolve this matter, we must take this moment to recognize that this type of conduct, at any level in our company, was wrong and unacceptable. We must ensure that something like this never happens again. As a 100-percent employee-owned company, nothing matters more to us than our relationships with our customers, and we know that even beyond this resolution, we have work to do to regain their trust."

The latest settlement comes after Recology agreed back in April to pay $100 million to the San Francisco City Attorney's Office to settle allegations of excessive waste collection rate charges to customers. The excessively high rates were uncovered in 2020 as City Attorney Dennis Herrera was investigating public corruption tied to Nuru.