E-Waste: The Dirty Secret of Recycling Electronics

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A pile of old monitors at a Supreme warehouse in Lakewood, N.J. Mark Asnin/Redux

Mark Asnin/Redux

Supreme's customers have included Panasonic and JVC Mark Asnin/Redux

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Varkonyi, 63, describes himself as a middleman for recyclers who, he says, want to tell their corporate and municipal clients that they don't export PCs or other potentially hazardous gear: "I buy stuff from other recyclers who then claim that they do not export anything." Varkonyi won't name his customers.

Sixteen years ago, Supreme Asset Management's corporate predecessor was started by Albert Boufarah, a man who went on to compile a colorful résumé in the computer-parts business. In the 1990s, Boufarah, a former organizer of computer trade shows, became involved with a loose-knit group of people who stole electronic equipment worth millions of dollars, according to federal law enforcement officials. Boufarah's role was to sell laptops and other stolen gear, says James M. Maxwell, the special agent with the FBI who arrested him in 1999. Boufarah cooperated with prosecutors and pleaded guilty to conspiring to possess stolen property. He received two years of probation. More than a dozen people were convicted.

Boufarah, 41, remains president and owner of Supreme. The company didn't make him available for an interview. In a statement, Supreme said that Boufarah was "unknowingly engaged with an individual who was dealing in stolen property. We resolved this problem quickly and appropriately, ensuring that the original victims received some reimbursement for their goods."

Supreme has grown from a handful of employees in the late 1990s to more than 100 today. Its facility in New Jersey encompasses 100,000 square feet. Rows of old monitors bound in plastic shrink wrap stand seven feet high. In the executive offices, a marble lobby floor and wood-paneled conference room exude an air of corporate success. Affiliated companies in Virginia, Maryland, and Massachusetts accommodate clients in those states, including Massachusetts Institute of Technology. Supreme says it processes more than 100 million pounds of e-waste a year. The trade magazine Recycling Today ranked it No. 2 in the industry in size. But the privately held company wouldn't disclose its financial results.

Like most of its rivals, Supreme charges clients several hundred dollars for carting away a shipping container of e-waste. The company promises to break apart the old equipment and dispose of the dangerous ingredients through a variety of methods, from unscrewing computer units by hand and prying loose circuit boards to cleaning leaded monitor glass in an expensive machine. Supreme says it sells the remaining glass, plastic, aluminum, copper, and steel for reuse.

Profitable Exports

It costs several hundred dollars, including freight and labor, to disassemble and recycle properly a container filled with toxin-laden monitors or TVs, industry executives say. Done domestically, that activity typically isn't profitable. But some companies engage in it as a loss leader, hoping to win lucrative contracts for recycling less toxic circuit boards and cell phones. Exporting e-waste offers a different route to making money. In Hong Kong, the e-waste import center of Asia, a container of unprocessed monitors and TVs that sells for $5,000 can net profits of $4,000, according to people familiar with the trade.

Although it claims otherwise, Supreme appears to be active in the export market. In one message in September on Alibaba.com, Matthew Evans, identified on the site as a Supreme sales manager, said: "We have in stock and ready to ship 20 containers of tested, working [monitors], 1997+ and 10 containers of tested, nonworking." In an April posting, Scott Applegate, listed as international sales manager for Reusable Assets, a company that former employees say is affiliated with Supreme and operates from the same New Jersey address, offered to sell 10,000 nonworking 15-inch computer monitors. "We have more than 100,000 sq. ft. of warehouse space in Lakewood, N.J., loaded with merchandise ready to sell and ship at all times," his message read. Evans and Applegate are listed in Supreme's phone directory, but couldn't be reached for comment.

As part of their investigation, GAO employees posed as foreign buyers of U.S. e-waste, including CRT monitors, which under most circumstances would be illegal to export. Of the several offers from the New Jersey company that BusinessWeek has identified as Supreme, one sought a buyer for 60 large containers of used TVs—perhaps 48,000 units in all—the GAO said in its August report.

Many of the 43 U.S. companies that expressed willingness to export items to the GAO undercover buyers "publicly tout their exemplary environmental practices," the report noted. On its Web site, Supreme says that "100 percent of the electronic waste we receive is reused or responsibly recycled."

The GAO stressed that the EPA's rules and enforcement efforts are inadequate because they focus only on CRTs, ignoring the export of other potentially hazardous electronic parts. The EPA has done relatively little enforcement, the GAO added.

Dangerous Batteries

The EPA counters that it has focused on educating e-waste recyclers about the CRT rule and now is stepping up enforcement. In August the agency fined Chino (Calif.)-based Jet Ocean Technologies $32,500 for shipping a container of scrap monitors to Hong Kong. "We want to encourage safer recycling," says EPA spokeswoman Rosemarie Kelley.

E-waste dumping is a growing problem not only in the developing world but also in the U.S. In October 2007 a Supreme affiliate disposed of 37 tons of refuse that contained lithium batteries at the King & Queen Sanitary Landfill in Little Plymouth, Va., according to a written description of the subsequent cleanup by Golder Associates, a consulting firm in Richmond. Lithium batteries, which are used to power laptops and other portable devices, are not supposed to be dumped like regular garbage, in part because they can ignite when exposed to water as they corrode. A related danger is that landfills produce large amounts of flammable methane gas. Supreme dispatched workers to the Little Plymouth landfill to collect the batteries, which filled up three 55-gallon drums, according to Golder. Supreme denied that it ever disposes of lithium batteries at landfills but said it helped clean up the batteries dumped in Little Plymouth.

Supreme's customers say they believe the company handles their e-waste properly. MIT, Baltimore County, and JVC all explain that they have visited Supreme's premises and observed nothing inappropriate. "Everything gets broken down at their facility," says Ed Nevins, director of environmental affairs at JVC. Panasonic said that it worked with Supreme on a single e-waste collection drive last year.

Norman Magnuson, director of operations for MIT's facilities, says that Supreme routinely provides a "certificate of proper destruction," indicating that the university's e-waste doesn't get sent overseas. "They assure us," he adds, "that everything is recycled in a safe way."

With Ellen Gibson.
Elgin is a correspondent in BusinessWeek's Silicon Valley bureau. Grow is a correspondent in BusinessWeek's Atlanta bureau.