Audit: Hawaii’s recycling program is susceptible to fraud

HONOLULU — Hawaii’s redemption and recycling program is susceptible to fraud because it relies on beverage distributors and redemption centers to self-report what they import and recycle, according to a state audit.

The audit report released Tuesday found that officials have not addressed flaws in the state Deposit Beverage Container Program despite previous audits identifying problems more than a decade ago, the Honolulu Star-Advertiser reported .

The state reimburses redemption centers for the refunds they pay to residents for deposit fees on certain containers.

“Essentially, the Deposit Beverage Container Program is an honor system,” State Auditor Les Kondo said in a statement. “There are no incentives or controls for distributors and redemption centers to report accurate numbers. In fact, inherent to this system is a financial incentive to misreport.”

The state auditor hired a certified public accounting firm that redeemed beverage containers at 10 redemption centers in the state. The visits by KMH LLP included two stops at a Reynolds Recycling location on Oahu. The firm redeemed glass bottles for 61 cents and plastic bottles for $3.95.

The recycling center was reimbursed for $69.31 and $14.99, which were reflected in cash receipt logs that appeared to be altered, according to the audit.

Police might investigate the changes cited in the report, said Bruce Iverson, director of marketing and development for Reynolds. The amounts that are paid out are compared to the corresponding weights of the materials that are cashed in and “have to match up,” he said.

The report recommended for the department to consider program modifications that “shift accountability and oversight responsibilities to the distributors and redemption centers.”

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Information from: Honolulu Star-Advertiser, http://www.staradvertiser.com