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Nineteen months after paying $11 million fine for minority business fraud, clout-heavy company gets another city contract

Nineteen months after paying an $11 million fine to cover “substantial shortfalls” in minority contracting, a clout-heavy company is back on the gravy train of Chicago city contracts.

Allied Waste Transportation has a new, $152,204 contract to provide “horse waste removal and hauling” services to the Chicago Police Department’s mounted unit, which has 30 horses, 30 officers and an annual budget of nearly $2.7 million.

Allied Waste is a perennial city contractor with close ties to Bridgeport trucking magnate Fred Barbara that ran Chicago’s failed blue-bag recycling program and still operates three waste transfer stations that City Hall attempted to lease.

Allied and its blue-bag subcontractors were heavy contributors to the Hispanic Democratic Organization, a once-powerful political army at the center of the city hiring scandal that culminated in the conviction of former Mayor Richard M. Daley’s patronage chief and Streets and Sanitation commissioner.

In January, 2012, Allied agreed to pay the city $11 million to cover substantial minority contracting “shortfalls” on hundreds of millions of dollars in contracts to transport city refuse from transfer stations to landfills.

Every one of those contracts was supposed to set aside 16.9 percent of all spending for minority contractors and 4.5 percent for companies controlled by women.

One of those minority-owned firms was Brunt Brothers Transfer Inc. Company owner Jesse Brunt pleaded guilty last year to acting as a minority “pass-through” on city sewer-cleaning work actually performed by a company whose investors included Daley’s son, Patrick, and nephew, Robert Vanecko.

From 2007-through-2009, Allied claimed over $9 million worth of MBE participation for Brunt Bros., roughly 20-25 trucks a day. Yet, Brunt Bros. owned at most five trucks that could be used on Allied’s contract,” according to a statement from city Inspector General Joseph Ferguson.

After acquiring Allied in 2008 and replacing top management, Republic Services got a tip about alleged minority business fraud at Allied, hired an outside counsel to investigate, then “voluntarily disclosed” the matter to the city and the U.S. Attorney’s office.

The investigation determined that Allied’s minority and women-owned contractors had acted as “pass-throughs” to white contractors that performed the work.

Republic and Allied agreed to “overspend” — by $12 million — on minority contracting going forward to reduce the past “shortfall” and to pay the city $11 million used “exclusively” to strengthen a minority business program that Ferguson has called “dysfunctional” and “beset by fraud.”

On Monday, Law Department spokesman Roderick Drew argued that Allied has atoned for its past mistakes by: retaining a private firm to assess the qualifications of its minority partners; replacing any MBE or WBE firm suspected of acting as a pass-through; instituting a comprehensive nationwide compliance program and “over-spending” to the tune of “more than $12 million” to date.

“The city was very pleased with Republic and Republic’s senior management for recognizing the seriousness of these issues, disclosing them to the proper authorities, including the city, and taking steps to prevent them from occurring again,” Drew wrote in an e-mail to the Chicago Sun-Times.

“As part of the settlement, Allied was allowed to continue performing work on existing contracts and remained eligible to bid on future ones. The city also states that it would not seek further sanctions against the company.”

Barbara is a grandson of Bruno Roti Sr., who was one of Chicago’s earliest organized-crime bosses and an associate of Al Capone’s, according to FBI files.

The Sun-Times has reported that Roti relatives and associates cashed in on the city’s scandal-scarred Hired Truck program. Barbara also made a fortune hauling garbage to landfills until 1996, when blue-bag recycling was launched.

The following year, Barbara sold his three companies — including the Shred-All Recycling garbage transfer station — to American Disposal Services in a deal potentially worth $100 million. American Disposal subsequently acquired Allied.

Allied has employed Barbara as an operations analyst and made monthly payments to him based on the amount of trash city trucks dumped at the Shred-All station.