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$10m case: Undercover sting reveals fears recycling scheme would go broke

Top bosses at Queensland’s recycling program feared the non-profit would go out of business if refund depots were found to send cans through the system more than once.

The concerns are detailed in court documents from a $10 million civil case involving an undercover private investigator who went to a return point with a large “bale” of crushed cans as part of a covert sting.

Canned: The Supreme Court case was dismissed, ordering United Scrap Metal Traders to pay costs to the Container Exchange. File image.Credit:Ben Rushton

Non-profit Container Exchange (COEX) has overseen the recycling of more than six billion cans, bottles and other beverage packaging since the 10¢ refund scheme launched in 2018.

But it was forced to defend a civil case in the Supreme Court initiated in 2019 after canceling a contract with an operator following allegations that “bales” of aluminum cans — cubes containing tens of thousands of machine-crushed and tightly pressed cans — were being accepted for a refund depot.

Crushed cans were fine to accept because they are easier to transport, but COEX had warned operators that baled cans posed a fraud risk as they were “probably” already recycled and the money disbursed through a refund scheme in Queensland or Interstate.

Court documents show that COEX wrote to United Scrap Metal Traders CEO Steve Henderson in February 2019 to allege that the Murarrie-based company had accepted several tons of baled cans from Bundaberg.

But United Scrap Metal Traders complained in written submissions that COEX did not initiate an audit or question the company about its concerns, but instead said: “On behalf of ANSIC, a private investigators company whose motto is si vis pacem, para bellum (if you want peace, prepare for war) to carry out a ‘secret’ sting operation involving a agent provocateur to attend USMT’s premises and attempt to sell it a bale of aluminum cans in an effort to get it to process material alleged to be ineligible for the Scheme.

United Scrap Metal Traders – one of the top performers in terms of volume – strongly denied any wrongdoing, arguing that employees never bought or processed large bales, but instead took small “biscuits” that were loosely compressed for transportation.

United Scrap Metal Traders sought more than $10 million in damages after COEX canceled its contract to operate a refund point.