Synagro Technologies, the company that operates the organic composting facility on South Lake Road near Taft, filed for bankruptcy last month to seek a court-approved restructuring of its mounting debt. In addition, a $10,000 check, Synagro's annual sponsorship for the Taft Chamber of Commerce, bounced, the Taft Midway Driller learned.
A Synagro spokesperson, who asked not to be identified, told the Taft Midway Driller that Synagro intended to make good on the payment and said the bankruptcy filing was merely for reorganization.
A bankruptcy is to handle claims by creditors, which includes debt holders and suppliers. The Taft Chamber of Commerce's claim should be in the bin with the rest.
Synagro once looked like black gold to The Carlyle Group, a huge private equity underwriter (PEU). Synagro's sewage sludge contract with the City of Detroit looked like a done deal, then it didn't. With pressure from Carlyle and Synagro executives two salesmen tried to fertilize the deal with bribes. The Detroit Free Press reported:
In October 2007, seven weeks before the Detroit City Council was to vote on the sludge-hauling contract, Rosendall was feeling heat from Synagro headquarters.Yet, prosecutors didn't pursue charges against Synagro or its PEU owners:
In a phone conversation with an aide to Kwame Kilpatrick, Rosendall complained of getting his butt kicked by his bosses in Houston. Executives, he said, were feeling pressure because they had promised the Carlyle Group that the Detroit deal was in the bag.
Detroit was to be Synagro's largest municipal sludge-disposal contract, bigger even than New York City. The company expected profits of up to $5 million a year for 25 years from annual revenues of $47 million.
Carlyle, one of the world's largest private investment firms, bought Synagro months earlier, largely because of the potential in Detroit.
"It's hard to explain why charges weren't filed against the company, given the turning of a blind eye by senior executives," said Wayne State University law professor Peter Henning, an ex-federal prosecutor and white-collar crime expert. "There are any number of cases in which companies have been charged for this kind of conduct, when you have the involvement of more senior employees."Approval of bribes is hardly turning a blind eye.
"Synagro is a party to this conspiracy ... and yet, for some reason, they are not here."
Legal experts say corporate executives can be charged if they had knowledge of their employees' illegal conduct -- or deliberately ignored it.
Jennifer Arlen, an expert in corporate criminal liability and a law professor at New York University, said the Justice Department has been less receptive to charging a corporation itself because that can hurt innocent shareholders.
Innocent equity owners, like The Carlyle Group?
Carlyle was unhappy with the demise of the Detroit contract, and up to $5 million a year in lost profits.
That's why Synagro entered bankruptcy and is merely "reorganizing." It's another Carlyle PEU Tale.
