Business is booming at Supreme Asset Management & Recovery, one of the nation's largest recyclers of electronic waste. Inside a cavernous warehouse in the industrial section of Lakewood, N.J., workers in T-shirts grapple with newly arrived truckloads of old computer monitors, keyboards, printers, and TVs: tons of e-waste that contains dangerous lead, mercury, and cadmium. Such major manufacturers as Panasonic and JVC and municipalities like Baltimore County, Md., and Westchester County, N.Y., have paid Supreme to dispose of their digital detritus, relying on the company's assurances that the work is done safely.
But as the e-waste industry proliferates—some 1,200 mostly tiny companies generated revenue of more than $3 billion last year—it has also become enmeshed in questionable practices that undercut its environmentally friendly image. Next year the volume of e-waste will probably surge. In February, U.S. consumers must switch from analog to digital television service, a move that is expected to result in the mass junking of analog TVs.
Supreme, founded and still run by a man who pleaded guilty in 2001 for his role in a computer-theft ring, maintains that it lawfully disposes of e-waste after neutralizing all hazardous contaminants. But a recent probe by the U.S. Government Accountability Office found that "a large electronics recycler in New Jersey"—which BusinessWeek (MHP) has identified as Supreme—was one of 43 U.S. companies that sought to sell e-waste for export to Asia, in apparent violation of the law. In China and elsewhere, electronic gear commonly is stripped for reusable microchips, copper, and silver; dangerous metals are dumped nearby, often close to farms or sources of drinking water.
Supreme doesn't dispute that it is the New Jersey recycler mentioned in an August GAO report about the investigation. But it denies any wrongdoing.
BusinessWeek independently found postings on China-based Alibaba.com and other international trading Web sites in which people identified as sales representatives for Supreme and affiliated companies offered to sell scores of shipping containers filled with monitors of the sort that the Environmental Protection Agency has barred from export without special permission—which Supreme doesn't have, according to government records. "These monitors are all located in my N.J. warehouse and are ready to ship!!" one post said. A 40-foot-long container filled with monitors and TVs sells for as much as $5,000 in Hong Kong, according to e-waste recyclers.
Since the early 1990s, an international agreement known as the Basel Convention has restricted trade in hazardous waste, but the U.S. has failed to ratify the pact. As one limited response to the Basel initiative, the EPA adopted civil rules that went into effect in January 2007 forbidding U.S. companies from exporting monitors and televisions with cathode-ray tubes unless they have approval from the EPA and the receiving country. CRTs electronically project images on screens that are typically made of leaded glass. The gear contains mercury, cadmium, and other toxins that when released carelessly can cause neurological damage in children, among other harmful effects. The blood of children in rural Guiyu, China, a notorious e-waste scavenging site, contained lead at twice the acceptable level set by the U.S. Centers for Disease Control & Prevention, according to a 2007 study conducted by Shantou University."No Accountability"
Seven former Supreme employees told BusinessWeek in interviews that they knew about the company selling large monitor shipments overseas. Despite the sales offerings on the Internet and the accounts of its former employees, Supreme says flatly that it "is not an exporter" of e-waste. The phrasing of its statement leaves open the possibility that others export the materials. But Supreme adds that to its knowledge, all of its buyers behave lawfully. "We're doing everything we can to play by the law, to save the environment, and to run a successful business," says Brianne Douglas, vice-president for marketing. She adds in an e-mail: "Unlike some competitors, we don't simply buy and drive goods to the dock to be shipped overseas.…Items that are not reusable are broken down to a commodity level and everything—100%—is recycled."
Without commenting on Supreme's practices, some of its rivals confirm the GAO's findings that the e-waste business is rife with corner-cutting. "Ninety percent of electronics recyclers are cheaters," contends Robert Houghton, president of Redemtech, an e-waste processor in Columbus, Ohio. "This industry has a tradition of no accountability."
Thomas L. Varkonyi, proprietor of Metal Recycling in El Paso, says that Houghton's assessment applies all around the country. Varkonyi's scrap shop does a brisk business in e-waste trucked to him by recyclers. He, in turn, ships monitors and motherboards a couple of miles south to Jurez, Mexico. There, Mexican workers—"cheaper labor," he says—pry the e-waste apart, plucking out valuable metals and components that can be sold to international buyers.
Regulation of the unwanted toxins is far more lenient in Mexico. "If you wanted to break those rules, it would be easy because you can pay off anyone [in Mexico]," says Varkonyi. Nonetheless, he says he brings salvageable material and contaminated scrap back to his El Paso facility. As a result, he says, he doesn't need permission from the EPA or Mexican government. The EPA disagrees; activities such as Varkonyi's do require approval, the agency says.