A company that built a recycling plant with the Goshute Indian Tribe in Tooele County has declared bankruptcy, sending the tribe into a possible financial and political crisis.
The bankruptcy case, along with a major dispute over ownership, is causing some tribal members to question the safety of the Goshutes' $810,000 investment in the recycling venture.It also is raising concerns about the tribe's controversial bid to locate a repository for high-level radioactive waste at its reservation in Skull Valley, about 25 miles southwest of Tooele.
"If this is what happens with a little recycling plant, what would happen if they try to get into something big like a (nuclear waste) facility?" said Cullen Battle, an attorney who has been contacted by a number of Goshutes who are increasingly wary of the tribe's business dealings.
L.E.&B. Inc., which built the $4 million recycling plant in Bauer, Tooele County, filed for Chapter 11 bankruptcy protection on Dec. 14. Its president and CEO, John Chivers, was also president and co-owner of EnviroSolutions International, a company that operates the recycling facility, which opened last April.
EnviroSolutions was formed in February, with the tribe owning 24 percent of the company and L.E.&B. owning about 52 percent. The other 24 percent was owned by a group of shareholders known as National Ecology.
On Dec. 16, Chivers was ousted as president, ostensibly because he bounced Enviro-Solutions' payroll checks to about 55 employees on Dec. 9, said Danny Quintana, the tribe's attorney.
The bounced checks "made us madder than hell and we gave (Chivers) his walking papers," said Quintana, who is downplaying the significance of this month's events and is trying to distance the tribe from Chivers and L.E.&B.
Quintana said the tribe has covered EnviroSolutions' payroll and has bought out Chivers, replacing him as president with Leon Bear, a member of the tribe. The tribe now owns a majority share of the recycling facility, Quintana said.
Not so, said Chivers. The tribe may have replaced him as president but it does not own a majority share of EnviroSolutions and it does not own the recycling plant, Chivers said. Further, Chivers said that he and L.E.&B., not the tribe, covered the payroll checks that bounced.
L.E.&B. entered into a partnership with the tribe in 1993 to build a recycling facility, which the tribe viewed as an ideal way to bring some long-term revenue to the economically depressed tribe. Tooele County contracts with L.E.&B. to take its municipal garbage, paying the company $16 per ton. After removing the recyclables, L.E.&B. ships the waste on to the ECDC Environmental landfill in Carbon County.
The Indians were supposed to have invested $2.7 million with L.E.&B. for the construction project and then EnviroSolutions would eventually purchase the entire facility, with the Indians having the option to buy out the majority share of the company, Chivers said.
However, the tribe came up with only $810,000, he said.
"We had a group of people making a lot of promises to us," Chivers said. "We followed them down the garden path and here we are. They have overstated. They have not performed. They are not everything they pretend to be.
"All of it has created big problems for L.E.&B."
Chivers said the tribe's failure to deliver on its financial promises got L.E.&B. in trouble with its creditors on the construction project, forcing it into bankruptcy. Chivers said he is currently trying to woo another company to rescue L.E.&B. from its $2 million debt.
"It sounds like a pretty messy situation and the tribe could be in a very insecure position with regards to its investment," said Battle.
Quintana insists that the tribe and its business ventures are sound. The tribe is still intending to build a $30 million tissue and paper recycling plant next to the existing recycling facility, which he says is "really going to do well."
The tribe is also negotiating with the federal government to locate a storage facility for spent fuel rods from the nation's nuclear power plants.
That proposal has been vigorously opposed by environmental groups and Utah Gov. Mike Leavitt, who has said he does not want any high-level nuclear waste to be disposed of in Utah.