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Audit: ‘Flawed payment system’ in beverage container recycling

November 19, 2013
The Associated Press

HONOLULU (AP) - Hawaii's beverage container recycling program continues to lack effective inspection and enforcement and its financial viability could be undermined as a result, according to a state audit.

The audit made public earlier this month said state payments to redemption centers continue to be based on what centers claim to have received from consumers and not what they send to recyclers.

"Management has known about its flawed payment system for years but has done little to address the defect," the report said.

Department of Health Gary Gill, who oversees the HI-5 program, said the audit did a good job of presenting the details. He questioned how the overall findings were laid out.

"I dispute the sensationalism they use," Gill told the Honolulu Star-Advertiser.

The program has had phenomenal success keeping soda cans and other containers from landfills despite staff and funding challenges, Gill said. Consumers recycled nearly 75 percent of the 911.8 million containers sold in the state in fiscal 2013.

Acting Auditor Jan K. Yamane, however, concluded that problems identified in past audits are still around.

For two years ending in fiscal year 2012, the program paid $6.2 million in deposit refunds for nearly 7.5 million pounds of materials that could not be tracked, the audit said.

The state pays 5 cents per container to redemption centers. Claimed amounts are not validated. That can mean overpayments, according to the audit.

The department lacks adequate management to provide effective oversight, the audit said. One redemption center may have been overpaid by $2.2 million in deposit fees and could not account for a discrepancy involving more than 2 million pounds of claimed material, according to the audit.

Auditors said a priority should be a "back-end" payment system based on shipped totals of recyclable containers instead of claimed amounts.

That's a goal, Gill said, but the change could undermine the stability of the industry. Redemption centers, he said, would have to carry the debt for nickels paid to consumers for weeks longer than they do now.



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