Kahn, Kahn & Calapinta, LLP Attorneys at Law ww.kkc.com 3233 P Street, NW., Washington, DC 20007-2756 Phone: (202) 342-6980 Fax: (202) 342-6984 FAX COVER SHEET FAX NUMBER TRANSMITTED TO: 1-703-813-9322 TO: SEC Offce ofthe Whistleblower FROM: David K. Colapinto, Esq. on behalf of Anonymous Whistleblower SUBJECT: Anonymous Whistleblower TCR Filing DATE: June 27, 2016 DOCUMENTS Form TCR Anonvmous NUMBER OF PAGES* 6 53 Additional Sheets STRlCTL Y CONFIDENTIAL AND ANONYMOUS. The information contained in this facsimile message is information protected by attorney-client and/or the attorney/work product the individual named above and the privileges are not waived by virtue afthis having been privilege. It is intended only for the use of sent by facsimile. If the person actually receiving this facsimile or any other reader a/the facsimile is not the named recipient or the employee or agent responsible to deliver it to the named recipient, any use, dissemination, distribution, or copying of the communication is strictly prohibited. ¡Iyou Juve received this communication in error, please immediately notif us by telephone and return the original message to us at the above address via u.s. Postal Service. . NOT COUNTING COVER SHEET. IF YOU DO NOT RECEIVE ALL PAGES, PLEASE TELEPHONE US IMMEDIATELY AT (202) 342-6980. OMB APPROVAL OMB Numbec . . .. .. 3235 0686 Expires: October 31,2017 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Estimated average burden hours per response Washington, DC 20549 FORM TCR TIP, COMPlAINT OR REFERRAL : A. INFORMATION ABOUT L COMPLAINANT 1: , 1. Last Name Anonymous First M.1. - 2. Street Address zip! Postal E-mail Address ."'.~m ..,,n...,,~ ......._,.,"~.,.... Preferred method of COMPLAINANT 2: 1. M.1. ApartmenU 2. Street Address Unit# 3 State! Province ZIP! Postal Code Alt. Phone E-mail Address Country method of communication 1 Atorney's Name David K. Colapinto and Stephen M. Kohn 2. Firm Name Kohn, 3 Street Kohn & Colapinto, LLP Address 3233 P Street, N.W. Washington 4. Telephone 202-342-6980 SEC 2850 (8/1 i) State! DC Province 202-342-6984 ZIP! Postal Code 20007-2756 USA Fax E-mail Address dcêkkc.com & skêkkc.com TELL THE INDIVIDUAUENTITY 1: 1. Type: D Individual IX Entity 2. Name OR ENTITY YOU HAVE A COMPLAINT AGAINST If an individual, specify profession: If an entity, specify type Publicly Traded Company and Related Greif, Inc. ApartmenV Street Address 425 Winter Road Delaware Unit# State! Province OH zip! 43015 www.greif.com 4. Phone 1-740-549-6000 E-mail Address INDIVIDUAUENTITY 2: If an individual, specify profession: 1. Type: D Individual lX Entity If an entity, specify type: 2. Name USA Postal Code Internet Address See attached sheet for list of additional related companies Unit# 3. Street Address Statel ZIPI Postal Code Province City E-mail Address 4. Phone Country Internet Address r'" ..~.~".,,"~,.,.. ...... .. ." .,. . ..... ~.. D. TELL ..",~..,".""~.",,.,".,.."...,.., US ABOUT YOUR COMPLAINT .......~"'"" Ongoing violations ".p~m,,~. ~~,",.~ 1. Occurrence Date (mmldd/yy): I I 2. Nature of complaint" Corporate disclosure/reporting '."W.~ . ,_ . "",~'. 3a ,~,a ,~, t~~~~~,~.!.~~.~,~w~r,~,~n,~,~L,~,a.,d",~.n,Y",~,~~~~.~.?,rT~.~nJ~t~?nJ ~),~i~n, ~~~ ,,~~gt?n~ rn i~ g th ismatt~ r? 3b. If YES the answer to 3a is "Yes," name of SEC staff member with whom the complainant or counsel communicated 4a."Has'tiì~ê"coñ,pTä'i'~~nt'~~~~'~~'š~i"p'~~'';id'~'d'th'~'¡~f~'~~~tion to any'~tlÍe~~gency or organ'i'~'a't¡ô;:;:-'òr any other agency or organization requested the information or related information from you? 4b. If the answer to 4a is "Yes," please provide details. Use additional sheets if necessary. 4c. Name and contact information for point of contact at agency or organization, if known YES NO~ "~'5a:'-Doe's"this"cO;:plaTrÎ't~l~t;;"t~~"arÎ'~~t¡tY,(t;h"iê'ti'"the "cOmp¡aj'nant'i'š"or';ã~'a'n''(ffj-~~r," d¡r;;cto~:~ Coünsel, empÙ;'yee, 'coñ;~'lt~~t ~r ¡;~trâctor? YES ~ NO 0 5b':ífth~-'a'rÎ~;';;'t¿~q'~~~~t¡o~'5~i~"~'Y;'~?"'¡;;~'th"e"cO'mplaTn~a-rÎt ;:e'p;rt~d~th;~"~io'iat¡~'n 'to'hi~~r~h;'r supervisor, "eOmpii~~~'''~ff~~, whistleblô~er h~tí¡rÎ~e:""'" ombudsman, or any other available mechanism at the entity for reporting violations? YES ~ NO 0 "5C: if ttie-â~~~e~'Tô"q'~~';r¡ô;5b~i~"~Y~s, ~"plea~ë-pro'~¡tie'detâ'¡i'~~"-li-;;;'~d~dit¡~~'a'I~~h;ets'itrÎ~~ssary. See attached sheets. Complainant reported the issue internally as far as he could without risking his employment. 5d . 'Dat'e'ò~ "~hi'~h th~dcO ~'p'i'åi n a nt to~k'tìïè"~êü(lrl(s)"de'scr¡b~d 'i n' q~e~t1;~' 5b' (m mId d/yyyy): II See attachment. 6a. Has the complainant taken any other action regarding your complaint? YES NOlX 6b. If the answer to question 6a is "Yes,~ please provide details. Use additional sheets neæssary. 7a Does your complaint relate to a residential mortgage-backed security? YES 7b. "Typ~";T~'e~~'r¡ty"o';'T;~'e~t~~'rît, Common stock and securities issued by company 7c Name of issuer or security, if relevant 7d. SecurityfTicker Symbol or CUSIP no. GEF, '"" ''' "",,',~,, ''''''~~'''' ''',,'' ,','.c,','''' ",',,".' """",'"'~ ,..~," ,eO' Greif, Inc. 8. State in detail all facts pertinent to the alleged violation. Explain why the complainant believes the acts described constitute a violation of the federal securities laws. Use additional sheets if necessary. See attached sheets. 9. Describe all supporting materials in the complainant's possession and the availability and location of any additional supporting materials not complainant's possession. Use additional sheets, if necessary. See attached sheets. '1~a:"-ö~;~~ib~~h'~;'-~~~~i' fr~~~':;ho;; the~è(lmpià¡;-;;:t-~bt~ i-~-~-d'th~"i~få~r;:ation -tÏiãtš~pp'~rt;~t¡;~i~ - ~1;¡~-.w'Îr~-~'y 'informatio n w~;';bt~j~e(Tfr-õ'm a n attorney or in a communication where an attorney was present, identify such information with as much particularity as possible. In addition, if any information was obtained from a public souræ, identify the souræ with as much particularity as possible. Attach additional sheets if neæssary. See attached sheets. 11. Identify with particularity any documents or other infomiation in your submission that you believe could reasonably be expected to reveal your identity and explain the basis for your belief that your identity would be revealed if the documents were disclosed to a third party. See attached sheets. "".","~.m~".~*,~".m__w """"'"'~V'"_~~~*'*~".".Æ_,','__ __ '"~, V' "'.__, 12. Provide any additional information you think may be relevant. See attached sheets. ".,~'.,-- ,-- , ,""-,, E. ELIGIBILITY REQUIREMENTS AND OTHER INFORMATION "*'r'"Are¥yö~:" o-~';~;~'ý~'~at'thetjrñ-ê--yõu--a'ëC~iredth~"-;-~'i~1'i~~T'inf~"rmation"'yõ~'~ã'rë";"ubmitting t~ us, a member, offcer or employee otth'~ Department of Justice, the Securities and Exchange Commission, the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Ofce of Thrift Supervision; the Public Company Accounting Oversight Board; any law enforcement organization; or any national securities exchange, registered securities association, registered clearing agency, or the Municipal Securities Rulemaking Board? YES 0 NO G¡ o. " 2.mArey¿~~~r" ;eV~;'y'~'~ ~tth~~t'¡mé"yc;û'~a'cq~¡~~dth--e- ~"rig'i~~i' i~f~'r~aÜc;;'~"yõ~~~;''~~b"~¡ttT~'g'"io us, ~-'rnem¡;er. offcer' or emp¡öýë"ê-~~f"~'forê¡g'~'"'' government, any political subdivision, department, agency, or instrumentality of a foreign government, or any other foreign financial regulatory authority as that term is defined in Section 3(a)(52) of the Securities Exchange Act of 1934 (15 U.S.C, §7Bc(a)(52))? YES 0 NO 5( ..__ ....... ._ _. .. . __ YES 0 .. -i'''i5¡C'"y'ou~;i'cq'~'i're''th'~inf~r~tiö'ñ-bëing i;rå:.;i'd'edHto""~'~"thro~g"h the performa'næ'oran engagê~ênt required' under the federai' sêc~;:¡tiês la~~by âri independent public accuntant? NOIX 4. Are you providing this information pursuant to a cooperation agreement with the SEC or another agency or organization? YES 0 Are yo'û a- spouse',"'pã;'ent, child, or sibling of a ~'ember or employee of NO IX the SEC, or do you reside in the sàme hòusehold as a member or employee of the SEC? YESLJ 6.""D¡d'"y'ó~ acaC'¡';è the information 'b'~i~'gYprovide'-dto us from any person described"Tn questions 1 through"S'? NOiX.. YES DNOXJ ; 7.'" Hav's""yC)U 'ór-an'yone';'eprè;;ë"n'ùn.g'y~~-~~~i~ed"añy'req~est,inquirY '~rd~~~n--d that reíâies to the subject matte'r"of Ý-;~r submission '(i) from vi¡'~ S~ÉC, (ii) in connection with an investigation, inspection or examination by the Public Company Accunting Oversight Board, or any self-regulatory organization; or (iii) in connection with an investigation by the Congress, any other authority of the federal government, or a state Attorney General or securities regulatory authority? YES 0 NOíi S, Are you currently a subject or target of a criminal investigation, or have you been convicted of a criminal violation, in connection with the information you are submitting to the SEC? YES Use 0 additional NO ¡i gO. "If you answé;'ed'Hyes" to any oftti'~ questions 1 through 8, use this space to provide additional details relating to your responses. sheets if necessary. ¡"'VI"d~d;;;'"~~d;7pên'aítY~'öfpe'ri~--;Y'-~~~d~'th';ì~;s'c;rthêU~Tt~d~Šlit~~-Th¡;tth';'-i-~fõ;:mäti~~"~'~t~r;;'d"h;~;¡;"-¡st'~~'e-, F. WHISTLEBLOWER'S DECLARATION co'r'~~ct--a~;d complete'-t~"the best of my knowledge, information and belief. I fully understand that I may be subject to prosecution and ineligible for a whistleblower award if, in my submission of information, my other dealings with the SEC, or my dealings with another authority in connection with a related action, I knowingly and willfully make any false, fictitious, or fraudulent statements or representations, or use any false writing or document knowing that the writing or ; ,_ ~,~~~~~~n,! ,~~!,~,i_~_~. _~_n¥_,!§l!!~.'_!~~tj_£~!, !-_~r,rr_~,~~_~J_e.,~,t,,~~tS:'~~~~~~H~~D.try., "'~,,_,~.~~_'"'''~''' "'~ ,,~,"d " Print name Date G. COUNSEL CERTIFICATION (If Applicable-ee Instructions) i certify that I have reviewed this form for completeness and accuracy and that the information contained herein is true, correct and complete to the blower on whose behalf this form is being submitted by viewing the whistleblower's valid, unexpired government issued identification (e.g., drivets license, passport) and will retain an original, signed copy of this form, with Section F signed by the whistleblower, in my records. i further certify that i have obtained the whistleblower's nonwaiveable consent to provide the Commission with his or her original signed Form TCR upon request in the event that the Commission requests it due to concerns that the whistleblower may have knowingly and willfully made false, fictitious, or fraudulent statements or representations, or used any false writing or document knowing that the writing or document contains any false fictitious or fraudulent statement or entry; and that I consent to be legally obligated to do so within 7 calendar days of receiving such a request from the Commission. best of my knowledge, information and belief. i further certify that i have verified the identity of the whistle .~............r~...'...."..'........... Signature -~ - ........... ........ ....::..... L~".. ?l=jf~L& STRICTLY CONFIDENTIAL AND ANONYMOUS WHISTEBLOWER DISCLOSURE THIS is A CONFIDENTIAL DOCUMENT THAT is INTENDED ONLY FOR OFFICIALS OF THE U.S. SECURITIES AND EXCHANGE COMMISSION ("SEC") AND U.S. GOVERNMENT LAW ENFORCEMENT AGENCIES TO INVESTIGATE BLOWER ALLEGATIONS THE ANONYMOUS AND CONFIDENTIAL WHISTLE DISCLOSED HEREIN AND TO PROCESS COMPLAINANT'S ANONYMOUS wmSTLEBLOWER CLAIMS. ANY OTHER USE OR DUPLICATION is PROHIBITED WITHOUT THE EXPRESS WRITTEN APPROVAL OF COMPLAINANT AND COMPLAINANT'S ATTORNEYS, KOHN, KOHN & COLAPINTO, LLP. THIS DOCUMENT MAY ALSO BE PROTECTED FROM DISCLOSURE BY LAW, SEC REGULATIONS, THE COMMON INTEREST PRIVILEGE, OR ADMINISTRATIVE OR COURT ORDER. FOR MORE INFORMATION, PLEASE CALL DAVID COLAPINTO AND STEPHEN KOHN AT (202) 342-6980. Attachment to Form TCR Introduction This TCR Form contains anonymous and confidential whistleblower allegations concerning violations of U.S. securties laws and regulations by Greif, Inc. (NYSE: GEF) and its offcers, agents and related companies and subsidiaries, including but not limited to: Drumco of Arkansas, Drumco of Tennessee, Indianapolis Drum Service ("Indy Dru") and Mid-America Steel Dru Co, Inc. These companies are part of Container Life Cycle Management ("CLCM"), a network of steel and plastic industrial container reconditioning facilities that comprise the North American branch of EarthMinded LCS (Life Cycle Services), which is the "largest global reconditioning business.") The evidence provided by the whistleblower, combined with a review of Greils public statements and SEC-mandated disclosures, reveals that the company directly misleads its investors by intentionally under-funding its SEC-mandated environmental financial reserves and providing false statements of material fact or omitting material facts from filings, disclosures, and public statements in violation of Items 101 and 303 of Regulation S-K and the ) See Greif, Inc., "History" (available at: http://\V\Vw.greif.comlcompany/history). general antifraud provisions of Section 10 of the Exchange Act and Rule IOb-5 promulgated thereunder. There are two principal categories of materially misleading and false information by GEF that form the basis of these securties law violations. First, the company intentionally understates its risk of liability for environmental violations while at the same time the company has knowingly committed (and continues to laws and regulations. commit) serious violations of environmental Second, the company has knowingly manipulated the lowering of its environmental financial reserves by millions of dollars despite knowingly increasing its risk of liability by millions of dollars for ongoing serious environmental violations that are knowingly concealed from regulators by the company. The following information is provided on behalf of Complainant in support of the allegations set forth herein and in the accompanying Form TCR. Greits CLCM sites recondition plastic and steel industrial containers, a process that involves taing used plastic or steel industrial containers typically used to store and transport chemicals, cleaning them thoroughly, checking them for proper structural integrity and selling them for reuse in the shipment and storage of chemicals and other industrial products. By law, containers must be sent to reconditioners like Greif empty, or with only trace amounts of industrial materiaL. The statute that governs thc disposal of solid and hazardous waste2 considers a container "empty", i.e., grants an exemption to, containers that meet the following criteria: all wastes have been removed using the "practices commonly employed to remove materials from 2 The Resource Conservation and Recovery Act (RCRA) governs the disposal of solid and later in this disclosure statement. hazardous waste. The Act is discussed in further detail Page 2 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP that type of container, e.g., pouring, pumping, and aspirating,,3 and no more than an inch of residue remains at the bottom of the contaner or inner liner. 4 These containers, known as "RCRA-empty" in the reconditioning industry, are not subject to the law's disposal and transportation requirements, which saves waste-generating and transporting companies significant amounts of money in compliance costs.5 6 According to the Reusable Industrial Packaging Association ("RlPA"), the trade association that represents over 90% North American reconditioners, manufacturers, and distributors of reusable industrial packaging, empty package certification is important to the industry for two main reasons: i. "Certification is vital because it is a packaging user's principal guarantee of compliance with the Hazdous Materials Transporttion Act, and two of the nation's most importt environmental laws: the Resource Conservation and 340 C.F.R. § 261.(b)(I)(i) (2015). 4ld. § 261.(b)(I)(ii). 540 CFR 261.7 defines when a packaging is considered empty. For non-bulk packaging such as drus, the packaging first must be emptied as completely as possible using common emptying practices. In no case may the residue constitute no more than one inch or 3 % of the original capacity ofthe packaging. 6 See 47 Fed. Reg. 36092, 36093 (August 18, 1982). The EPA has issued the following guidance on this issue: "(A Jpparently many individuals... believe that the practice of leaving one inch of residue in a container qualifies the container as being empty, whether or not the container has been empty of all of its contents by methods commonly employed to remove materials from that type of container... When the two paragraphs §261. 7(b)(I iei) and (ii) are properly read together, it should be clear that one inch of waste material is an overriding constraint and may remain in an empty container only if it canot be removed by no (sic J normal means. The rationale for this provision is that there are certain tas and other extremely viscous materials that will remain in the container even after the container is empty by normal means. Rather than requiring the complete removal of these materials by extraordinar means, EPA is allowing up to an inch of such material to remain in a container." Page 3 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP Recovery Act (RCRA); and, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), better known as 'Superfund,.,,7 2. "Empty Packaging Certification is also a legal business record. It documents the fact that the packagings transferred to a reconditioner or dealer were empty and, therefore, not subject to the complex and expensive EPA Hazardous Waste Regulations created by RCRA.,,8 However, Greif regularly receives containers with significantly higher than trace amounts of industrial material-sometimes containers arrive at Greils facilities half-fulL. Additionally, Greif regularly accepts unlabeled containers containing completely unown chemicals. Instead of rejecting a container that contains hazadous or toxic waste and sending it back to the original source as is required by law, Greif accepts the container and improperly disposes of whatever is inside of it by buring it in violation of its permits, dumping it into the public water supply, or by mixing chemicals together and shipping them out as non-hazardous waste in violation of numerous federal laws (as explained in further detail below). Grief knowingly violates a nurber of environmental and occupational safety laws by engaging in the grossly substandard handling and disposal of hazardous wastes and dangerous toxic chemicals. Because of this, Greif is not only liable for its own bad practices, but also facilitates the violation of federal environmental and hazadous waste disposal laws by its customers, who rely on Greils head-in-the-sand approach to environmental compliance as a way of cheaply getting rid of their own hazardous 7 Reusable Industrial Packaging Association, "Responsible Packaging Management" (available at http://'''l,re_U5_alilepackagirig,grgL\y¡i,content/ujJlg_ad5LRe;;ponsi b le,lfl¡;J(¡¡i ng -l\tanageincnt, :2QJO.pdf) (20 i 0). 8 ¡d. Page 4 of 53 Confidential Whistleblower Dise10sure Kohn, Kohn & Colapinto, LLP wastes without the "inconvenience" of following proper disposal procedures themselves or paying an outside company to properly to dispose of the waste. Greif s knowing and illegal practices also endanger its employees, many of whom receive insuffcient training and are sent on the job underequipped and ill-prepared to deal with the toxic chemicals they are asked to handle on a daily basis. Greifs records are filled with employee incident reports detailing a host of employee injuries, some severe. Because Greif places its employees in such a perilous position, it is only a matter of time before something more catastrophic~and completely preventable~happens. This Form TCR concerns material misstatements and omissions of fact made by Greif, Inc., in curent reports, quarerly reports, and anual reports concerning the environmental risks associated with its steel and plastic drum reconditioning business; Greif s failure to adequately disclose known serious violations of multiple environmental safety laws and regulations is discussed, including laws that prevent the discharge of pollutants into the air and navigable waters without necessar permits; and the company's intentional under-fuding of its environmental reserves. ~dilitional Information in Response to TCR Question S This Form TCR concerns allegations related to an entity of which the whistleblower currently serves as an outside consultant. Specifically, the whistleblower works for a third pary that conducts occupational safety and health audits at Greifs facilities worldwide. Howcver, the results of audits of Greifs CLCM facilities that are the subject of the allegations raised in this Form TCR are not treated by Greif management in the same manner as audits at Greifs other facilities. Greif has knowingly concealed the discovery of serious environmental violations, which have been internally reported to company management and safety compliance of1cials. Page 5 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle As discussed in more detail below, Greifs senior management regularly receives the results of safety audits, gap analysis sureys, and employee safety perception surveys, all of which demonstrate a complete and total knowing disregard for environmental regulations and sound employee occupational safety practices. The whistleblower has, on multiple occasions, raised these concerns with a sympathetic member of Greif s safety team; however, despite the protestations of both the whistleblower and Greifs CLCM safety manager, none of the ilegal and/or dangerous practices have been changed. Additional Iiiforniation in Responseto TCR Question8 In late 20 i 0, Greif entered the industrial container reconditioning business by acquiring Druco of Arkansas, Druco of Tennessee, and Indianapolis Drum Service. Greif stated that its entry into the drum reconditioning business followed "considerable research, analysis(,j and internal discussion" and hailed it as a "natural extension of Greif s core business" of offering customers "value-added services".9 Greifs foray into steel and plastic industrial container reconditioning was at the behest of some of its largest customers. During its QI 2013 Earnings Conference Call, David Fischer, Greifs President and CEO, was asked by a Wells Fargo Analyst about the new reconditioning business, specifically how it was contributing to Greifs overall growth.lO Fischer told the analyst that a "growing number of very large customers" required them to offer container recycling and reconditioning as an "imperative of doing business with them."¡¡ 9 Greif, Inc. 2010 10-K Report (2011). ¡O Greif, Inc. Earings Conference Call (QI 2010). ¡¡ ¡d. Page 6 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP Greif markets EarhMinded LCS as being "committed to operating responsibly, protecting the environment as well as the health and safety of the people who work with us." However, Greif has successfully managed to avoid close governent scrutiny thans to a brazen cover-up campaign of spreading misinformation and omitting material facts in communications with investors, analysts, and governent officials. A. Greifs Knowledge ofCLCM Facilty Deficiencies i. Receipt of Safety and Gap AnalysesÆmployee Safety Perception Surveys As previously mentioned, Greif receives the results of the safety and health gap analyses and safety perception surveys performed at each of its CLCM facilities. The company is sent a spreadsheet that lists the scores assigned to certin key business sections, such as Regulatory Compliance and Employee Engagement. Along with the spreadsheet detailing the results, the manager of each facility receives an e-mail from the safety consultant who conducted the audit. The results were also sent to Greils upper management, including Jeff Wood, Vice President of Global Risk Management, and Scott Mounts, Greif North America's Director of Environment, Health & Safety. Jeff Wood reports directly to Pete Watson, Chief Operating Officer from Januar 2015 to November 2015 and President/CEO from November 2015 to present. The whistJeblower has maintained copies of both the spreadsheet results and the e-mails explaining the results to which the spreadsheets were attached. J 2 Each of the audits discussed below was conducted by the whistleblower's employer-a third party risk assessment company. The audits were designed to provide an overview of a given facility's performance, along with key areas of improvement, to both the facility's management and to Greils corporatc officers. The results detail just how poorly Greils CLCM 12 The full spreadsheets for each audit can be made available. Page 7 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle division performs as compared to the rest of the company's divisions. Corporate expectations were that each facility maintain a composite score of at least 90%. As the results below indicate, scores at the CLCM facilities did not come close to 90%, with some facilities earing a combined score of below 50%-a figure that should have raised serious red flags with Greits corporate offcers. On September 24-25, 2013, Greits Memphis, Tennessee, CLCM facility underwent a safety and health gap analysis. On October 28, 2013, the auditor sent a copy of the findings to the facility's management. 13 The results were as follows: Safety & Health Gap Analysis Section 2013 % Score Management Support & Leadership Regulatory Compliance Employee Engagement Facility Inspection Combined Score (all sections) 32 35 58 80 48 The auditor provided several points of focus for the facility, including: developing an anual safety training calendar which includes regulatory training and, more significantly, conducting a thorough industrial hygiene surgery of the site for asbestos, exposure to chemical fumes, dust and noise. 14 As par of the gap analysis process for Greif facilities, the auditor interviews four employees in a private area away from management. In addition to scoring these interviews based on specified criteria, the audit will document key employee quotations that are representative of safety issues or provide paricular insight for management's consideration. In 13 See 2013 Memphis Audit Results. 141d. Page 8 of 53 Confidential Whistleblowcr Disclosure Kohn, Kohn & Colapinto, LLP the Memphis gap analysis, one such comment communicated to Grief management was, "Drums come in that we do not know what is in them.,,15 At the same time the Memphis facility was being audited, its employees were asked to paricipate in a safety perception survey though which they could provide anonymous input on their perceptions of the facility's safety programs. Employees were asked to give their opinions on 15 statements related to their feelings on job safety, with responses rated on a scale of i (strongly disagree) to 4 (strongly agree). When asked, "The message around here is that production must not compromise safety", the aggregate score was a 2.44/4.16 Upon being asked, "Do you have any suggestions or ideas to improve safety at the plant?", the following employee comments were noted: . "I think we could use masks to help our safety from breathing in unsafe toxics and chemicals." . "We should have safety meetings regularly; some people who are new are not aware of the things that they're exposed to and need to be addressed.,,17 These comments indicate that the employees who were surveyed had serious concerns about safety, with one admitting that new hires are not told with what kind of industrial material(s) they wil be working. On September 26-27,2013, Greifs Arkadelphia, AR, CLCM facility underwent a safety the findings to the facility's and health gap analysis. On November 5, the auditor sent a copy of management. The results were as follows: 18 151d. 16 See 2013 Memphis Safety Perception Survey. 171d. Page 9 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP Safety & Health Gap Analysis Section 2013 % Score Management Support & Leadership Regulatory Compliance Employee Engagement Facility Inspection Combined Score (all sections) 38 65 64 87 61 The auditor provided the facility's management with several areas in which to improve, most notably conducting a thorough industrial hygiene survey. 1 9 From the employee interview portion of the gap analysis, one comment communicated to Grief management was, "( wJe get drums in the plant that we don't know the contents.,,20 The following employee comments were noted II response to the safety perception survey question, "Do you have any suggestions or ideas to improve safety at the plant?" . "The plant stays a mess, the only time anyone cleans is when we have visitors ...Almost all paperwork is pencil-whipped and more or less for show. No one follows any safety rules. We don't have safety meetings, and training consists of signing a piece of paper. When asked why production doesn't clean up around and under their machines, we are told by management that they don't have the right people or timefor this." . "Get proper P P E for everyone in the plant when hazardous product is being burned." . "This plant needs more air suits for protection from dangerous chemicals. They only have three and employees are working without the necessary P P E." . "1 personally have not attended a single safety meeting since my employment began." 21 18 See 2013 Arkadelphia Audit Results. 191d. 20 See 2013 Arkadelphia Audit. 21 See 2013 Arkadelphia Safety Pcrception Survey. Page 10 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle Roughly two years later, Greif/CLCM safety representative Steele Johns was concerned that the CLCM facilities were not scheduled to be audited despite his continued observation of serious safety and environmental issues. He contacted the whistleblower's employer directly and requested that the facilities be audited, which Greif management subsequently approved. On October 6-7, 2015, Greils Milwaukee, Wisconsin, facility was audited. Approximately one month later, the facility's management received the results of the analysis,22 which were as follows: Safety & Health Gap Analvsis Section Management Support & Leadership 2015 % Score 15 14 Regulatorv Compliance Emplovee Engagement Facility Inspection Combined Score (all sections) 34 79 32 Once again, the auditor provided a series of areas on which plant management should focus moving forward, including: immediately addressing chemical safety, specifically the "inherently unsafe" "practice whereby employees mix many different chemicals together without regard for their chemical characteristics,,;23 conducting a comprehensive industrial hygiene assessment in order to understand the chemical exposures inherent in operations; and addressing deficiencies in the electrical systems and handling of hazrdous materials.24 In the report, the auditor noted the following observations: 22 See 2015 Milwaukee Audit Results. 23 Specifically, the auditor noted that the facility uses one shop-vac for emptying all incoming totes of any residual chemicals, a highly dangerous practice that results in the mixing of flammable, corrosive, and otherwise hazdous materials with each other. 24 ¡d. Page Ii of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP . "Employees reported multiple instances in which chemical reactions occurred during the mixing of incidental chemicals from incoming drums, producing smoke. They reported that the procedure in these circumstances is to evacuate the building until it appears that the smoke has dissipated." . "Drums containing incidental chemicals from the drain tables at the tote-cutting area are not labeled, creating a hazard in the event of a spil and violating Hazard Communication requirements. I recommend that these drums be labeled appropriately with their chemical content." . "Residual chemicals from incoming totes are all combined within waste totes, regardless of chemical class or hazard characteristics. The tote used for this purpose retains an old chemical label, in violation Hazard Communication requirements. I recommend separating residual chemical waste based on chemical class and hazard characteristics as well as appropriately labeling these containers with their contents (High-Hazard Observation)." . Multiple photos of employees at the plant pouring chemicals out of "empty" containers. . Employees "reported a regular practice of smellng chemicals in an attempt to determine their identities and the hazard level.,,25 On October 13-14, 2015, Greits Indianapolis CLCM facility underwent a safety and health gap analysis. On November 6, 2015, the auditor sent a copy of the findings to the facility's management. The results were as follows: 26 Safety & Health Gap Analysis Section Management Suooort & Leadership Regulatorv Comoliance Emolovee Engagement Facility Insoection Combined Score (all sections) 2015 % Score 50 61 73 78 65 In the e-mail containing the summar of the audit, the auditor singled out the plant's 25 See 2015 Milwaukee Audit. 26 See 2015 Indianapolis Audit Results. Page 12 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle management and front-line supervisors, stating that they "need to tae an active par in the safety-related processes and activities designed to drive improved safety performance.,,27 The audit report states that the facility's management admitted that Hazd Communcation training was not conducted pursuant to OHSA requirements28 The facility audit revealed several problems, including unlabeled secondar containers in the immediate vicinity of the tote wash line, debris in multiple spots posing a possible tripping problem, and, most importantly, the auditor observed residual chemicals from incoming drums being combined within waste drums-a "High-Hazard Observation,,29 This evidence clearly demonstrates that Greif personnel were repeatedly made aware of significant failings in its operations, yet implemented few if any of the recommendations provided by the consultants. Multiple sites that were audited in 2013 and then audited again in 2015 received scores at or below previous scores, with many of the same problem areas identified by both the auditor and employees. For example, the Arkadelphia, Arkansas, CLCM facility was audited on September 26-27, 2013, and was audited again on October 29-30,2015. The auditor reported observing a cloud of smoke from residual chemicals being burned off by the burner and called for a full industrial hygiene surey30 When the auditor forwarded the 27 ¡d. 28 See 2015 Indianapolis Audit. 29 ¡d. 30 See 2015 Arkadelphia Audit Results. Page 13 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP results to the facility's management,3! he included for comparison purposes the facility's 2013 scores.32 The results were as follows: Safet & Health GaD Analvsis Section 2013 % Score 2015 % Score 38 65 64 87 33 63 Mana2.ement Sunnort & Leadershin Re2.ulatorv Comnliance Emnlovee En2.a2.ement Facilitv Insnection Combined Score (all sectionSt 61 56 92 57 As demonstrated by the chart, the combined score for Greils Arkadelphia facility fell by four points from 2013 to 2015. Because Greif CLCM employees routinely work with dangerous and often unknown chemicals and industrial materials, ensuring their safety should be a top priority for Greif and its plant management. Unfortnately, the relentless pursuit of profit at the CLCM division has resulted in a workplace culture that values production over safety. Additionally, in multiple instances in both 2013 and 2015, the safety gap analysis process specifically communicated to upper management at Greif the presence of significant quantities of known and unknown chemicals coming into CLCM facilities in plastic and metal containers to be reconditioned, a reality that simply eould not have been possible if those facilities had been following federal laws pertaining to hazardous materials. 3! The results of the 2013 gap analysis and safety perception survey were sent to, among others, Jeff Wood. At the time, Wood was Greils Vice President of Global Risk Management. 32 See 2015 Arkadelphia Audit Results. 33 According to the whistleblower, Greils corporate office expects its facilities' combined scores in safety audits to be at least 90% and attches significant financial bonuses/penalties for its non- CLCM plant managers based entirely on these scores. Pagel40f53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle ii. 2010 Indiana OSHA Inspection Greif has been put on notice that its industrial steel and plastic container reconditioning unit has a multitude of issues not only by its outside safety auditors, but also from state governent investigators. From May to December 20 i 0, the Indiana Occupational Safety and Health Administration (IOSHA) conducted an inspection of the Indianapolis CLCM facility, which was in the process of being acquired by Greif. The inspection was prompted by an employee complaint that "employees are experiencing coughing and breathing problems due to exposure to chemicals inside of the drums, especially when dumping the chemicals into the tarue" The following information is contained in IOSHA's documentation of the inspection, which would have been available to Greif in 2011. The IOSHA inspectors documented the facility's regular practices, which included: allowing non-empty containers of hazrdous chemicals into the facility, processing the containcrs and mixing all of the incoming chemicals together in drums, and shipping those drums out of the facility as non-hazrdous waste. Additionally, inspectors noted employee health problems stemming from the improper handling of chemicals, regular chemical incidents management obstructing the inspection. at the facility, and a pattern of Examples of illegal and/or dangerous practices observed at the facility include: Area of Concern Non-empty containers brought into IOSHA Findings . . ".. .measurable quantities of chemical(s) are present in each of the drums... These plastic drums contain chemicals (some reagent grade 99100%), and a large percentage of these chemicals are moderately to highly facilty/hazardous toxic, flammable and/or reactive. These chemicals include, but are not drums shipped limited to acids (hydrochloric, nitric, phosphoric, sulfuric, hydrofluoric, out as nonacrylic), caustics (sodium and potassium hydroxide, ammonia, ammonium hazardous waste. bifluoride, amine-containing compounds), oxidizers (hypochlorites, nero xi des ), flammables/combustibles -(acetone, alcohols, styrene, diacetyl), Pagel50f53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle highly toxic single or multi organsystem substances (isocyanates, diacetyl, acrylic acids, phosphine, ammonia, chlorine), and suspected or confirmed carcinogens (benzene, nickel, formaldehyde, tricWoroethylene)." "This employee also said that the totes come prett full most of the time, and most of the totes are about a couple of inches fulL. This employee also said that the totes are emptied into drums which are labeled as nonhazrdous. " "... the drums are not labeled with anything, and the employer just seals them and ships them out." "... both of the (inspectors) observed multiple totes labeled as corrosive that were not empty and actually exceeded the one-inch limit for a RCRA empty container." "Although most of the totes contained one-inch or less of liquid, the (inspectors) observed multiple totes that contained more than one-inch of liquid (up to and including 2.5 to 3.0 inches ofliquid)...the (inspector) also observed the liquid inside of a 275-gallon plastic tote of YT-181 Methyl Tin Mercaptide vigorously moving and sloshing around..." Employee health Employees reported experiencing "headaches, some breathing problems, problems sore throats and sinus problems due to chemicals..." "... they are experiencing shortness of breath and chest tightness from exposure to the chemicals on the Tote Line. This employee also said that these health effects come and go, but everybody who works on the Tote Line has health problems." "...2-3 employees have died from cancer." "This employee also said that employees are getting cancer mostly in the Poly Area and Regrind Area (Line). This employee also said that they are experiencing health problems like high blood pressure, breathing problems and eye and skin irrtation." Chemical incidents Employees reported mixing "every chemical known to man" in 55-gallon drums, and subsequently "they witnessed several reactions... when chemicals were mixed together. These reactions included, but were not limited to large quantities of smoke (white, yellow) emitted from inside the drum, spattering, crackling and bubbling of liquid inside of the drum, and over-pressurization of ".. . the drum once...sealed." every few weeks they see the liquid in the drums bubbling. This employee also said that they sometimes have to go outside to get fresh air (because the chemicals are too bad in their work area)." Page 16 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP "Employees interviewed said they have seen smoke and fumes coming from the grates and tan before, but they have leared to just live with it." "Employees interviewed also said that the liquid in the dru began to Employees interviewed also said that they got some of the chemical that was inside of the tote on their hands, and this chemical turned their hands white and made their fingers go numb." bubble, and clear smoke came out of the dru really heavy.. . Management's Inspectors who conducted industrial hygiene testing to identifY employee obstruction of the exposure to hazrdous chemicals believed that "none of the personal investigation sampling...performed...was representative of what Regrind and Tote Line employees are exposed to during normal operation." "Several employees interviewed said that prior to the (inspectors J arriving onsite, the employer' staged' and prepared trailers loaded with drums and totes which were a lot cleaner than normal.. Several employees interviewed also said that the employer stores all of the 'nastiest' chemicals in trailers in the yard, and will only run these trailers after the (inspectors J leave.~' "Shortly after the (inspectorJ opened the referral inspection on the Tote Line, the employer instituted a system where employees...were required to Employees interviewed also said that the red card system was implemented because IOSHA was really looking at the Tote Line, and prior to implementing the red card system normal operation was to mix everything together In the 55-gallon Jerr Spegal, Tote Line SupervisorlManager, stated that the red attach a red card to the top of certain totes.. . drums.. . card system has been in place for a month. However, the (inspector J finds Employees interviewed said that the employer implemented the red card system because IOSHA was there, and they had heard and/or thought that the employer would go back to mixing everything together once IOSHA left." this hard to believe.. . "the (inspector J also informed the employer that employees could not be discriminated against for speaking to or assisting the (inspectorJ.. . However, several employees stated that the employer was intimidating and 'interrogating' employees after the interview was over... Several employees also told the (inspector J that they were not comfortable talking to the (inspector J anywhere onsite because the employer was either listening, or they knew that they employer would harass them after the interview was over." "(A customer of the Indianapolis facility J also stated she was aware that the (inspector J was inspecting Indianapolis Drum Service because they called her recently to pick up drums which were heavy (i.e., contained more than one inch of liauidl... (She J also stated that lndianaoolis Drum Service sent Page 17 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP these 'heavies' because of the (inspector)." "On September 17, 2010, the (inspectors) spoke with and re-interviewed Jerr Spegal..Durng this interview, the (inspector) again asked Jerr if any reactions or anything unusual has happened while moving any of the 55-gallon drus.. . Jerr responded and said nothng unusual has happened while moving the drus. Upon hearng this, the (inspector) asked Jerr if nothing unusual has happened, why are several employees telling the (inspector) that a dru exploded a week before?" IOSHA issued multiple citations to the Indianapolis CLCM facility based on this inspection, totaling $308,000 in fines in early 2011. Through the negotiated settlement process, those fines were reduced to $110,000, which Greif paid with a check written from its Earhminded/CLCM subsidiary on March 8, 2011. Moreover, based on the whistleblower's personal experiences with the CLCM facilities, conversations with a Greif safety representative, and the 2013 and 2015 gap analyses of the CLCM facilities, the nature of the reconditioning operations described above have not changed significantly since the drafting of the IOSHA report in 2010-2011. iii Violations of Occupational Safety & Health Regulations In addition to receiving regular reports from its safety consultants, Greif knowingly violates, ignores, and skirts several occupational health and safety laws and regulations, which places its employees at extreme risk of suffering illness or injury. The Occupational Safety & Health Administration ("OSHA") established the Hazard Communication Standard ("HCS") in order to provide companies that handle hazardous materials guidelines to follow when developing and instituting employee notification plans. The HCS requires, in relevant part: "(CJhemical manufacturers or importers...classifY the hazards of chemicals which they produce or import, and all employers to provide information to their employees about the hazardous chemicals to which they are exposed, by means of a hazardous Page 18 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP communication program, labels and other forms of warng, safety data sheets, and information and trainig.,,34 Under the HCS, an employer that "manufactures, processes, formulates, blends, mixes, repackages, or otherwise changes the composition of a hazardous chemical is considered a 'chemical manufacluer,.,,35 Because its CLCM facilities routinely blend, mix, and otherwise change the composition of hazardous chemicals, Greif is required to comply with OSHA's HCS regulations, As discussed in more detail below, none of Greifs CLCM facilities are in compliance with the HCS. Employees are not provided suffcient information or training and labels with precautionar statements are missing from several containers. The whistleblower has access to a number of incident reports that detail employee on-the- job injuries at Greif s CLCM facilities, all of which were shared with members of management thoughout Greif as they occured. A sampling of the contents of the incident report file: Plant Location/ Date Memphis, TNJ6 October 2,2012 Description of Event/Injury Chemical(s )/Hazard(s) Involved "Agency worker lifting plastic drum to place an on conveyor, lost grip, dru slipped out of EPA listed hazardous hands and residual material splashed under waste lenses and into the eye." Hydrofluoric Acid, Arkadelphia, AR-- "Employee states.. .he was placing a RCRA Smoke May 20, 2013 empty drum into the burer when an odor for (sic J the drum caused him to have difficulty four days later during the weekend he had some difficulty breathing." Emplovee breathing.. . 3429 C.F.R. § 1910.1200(b)(l) (2015). 35 OSHA, "Hazard Classification Guidance for Manufacturers, Importers, and Employers" (available at https://www.osha,gov!Publications/OSIIA.3844.pdJ) (2016). 36 See Memphis Supervisor Investigation Report (October 3, 2012). 37 See Arkadelphia Supervisor Investigation Report (May 21,2013). Pagel90f53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle was later emphysema. Arkadelphia, AR" diagnosed with end-stage "While sorting plastic pails from the metal "Unkown pails at the burer, one employee tossed a July 9, 2013 irritant chemical" plastic pail to a second.. .The plastic pail contained approx. 3" of liquid in the bottom. The injured employee caught the pail and the contents.. . emptied onto his shirt on his left side. The employee felt buring immediately and held his shirt away from his skin.. .No product label was legible on the container. A partial label identified the contents as a skin irrtat.. The morning after... the area was a dark red and painfuL. Additionally, blisters have formed on the forearm and waist." Arkadelphia, AR3" October 2, 2013 "While stacking plastic drums on the top row "Chemical of a trailer, some liquid spilled onto the unlabeled All ar coverings were removed and the forear was washed employee's left forear. from an triple rinsed drum~' and rinsed." Indianapolis, IN'v August 12, 2015 "(EJmployee got unknown substance on the "Unkown substance" inside of his upper right ar and on the right side of stomach while unloading drums in yard(.) This chart represents an extremely small sample of the types of injuries Greif s employees suffer at each of its CLCM facilities. Since Greif entered the industrial plastic and metal container reconditioning business, losses from workers' compensation claims paid out and propert insurance costs have been enormous. In 2013-14, Greif reportedly paid more in workers' compensation claims at the six CLCM facilities than at all of its other locations across 38 See Arkadelphia Supervisor Investigation Report (July 10,2013). 39 See Arkadelphia Supervisor Investigation Report (October 7, 2013). 40 See Indianapolis Supervisor Investigation Report (August 12, 2015). Page 20 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP the world combined. It has not informed its investors of the issue, nor has it directed significant resources at fixing any of these occupational health and safety issues. iv. Internal Communications from Greif Safety Representative the Milwaukee CLCM plant's gap analysis, Steele On October 6, 2015, on the first day of Johns, the CLCM safety representative attending the visit, disclosed his frustration of the extremely hazardous and illegal situation at the company with the whistleblower and the whistleblower's supervisor. He fuher indicated that he had sent an email to a member of Greifs upper management (whom he would not name) disclosing some of his concerns, and was instructed not to document such issues over email in the future due to the trail of documentation it would create. During this discussion, Mr. Johns sent the content of that email to the whistleblower's supervisor. The email contained a report he had drafted about the Milwaukee facility, dated July 2014. In the internal Greif report, Steele noted-among several other issues- that "(nJon RCRA-empty totes are being drained.',41 Additionally, Mr. Johns has indicated to the whistleblower on multiple occasions that he has continued to express his concerns verbally to management at both CLCM and Greif. On an audio recording, he describes the likelihood of a deadly explosion occurring at a CLCM facility: "And when that happens, everybody is going to be sorry, but we knew itfrom the beginning. And this is not right. So, I've voiced my concerns to Scott (Mounts, Greif Nort America's Director of Environment, Health & Safety J, I've voiced my concerns to Geoff rWestphal, Greif Environmental Health and Safety Specialist). ,,42 41 See E-mail from Steele Johns to Whistleblower's Supervisor (July 2014). 42 Transcript, CLCM Milwaukee Facility (October 6, 2015). Page 21 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP Mr. Johns has also shared that he has "begged" Greif corporate each year for thee years to approve fuding to conduct industrial hygiene testing at the CLCM facilities to better understad the chemical risks, and has been denied each year. B. Violations of Federal Environmental Laws As previously discussed, Greifs companies violate innumerable federal laws every day as a matter of course. CLCM facilities that improperly handle, dispose of, or discharge into the air or water harful pollutants and hazardous substances put Greif at a substantial risk of incurrng monumental liability should the federal governent ever be made aware of its environmental practices. As a result, should Greif ever be prosecuted for its environmental crimes under any combination of the Clean Water Act, Clean Air Act, the Federal Hazardous Materials Transportation Law, Resource Conservation and Recovery Act, the Emergency Planng and Community Right-to-Know Act, or CERCLA, among other federal and state laws, its potential liabilities would easily reach into the tens-if not hundreds--f millions of dollars after fines are aggregated and doubled for numerous repeated violations. i. Clean Water Act The Clean Water Act, established in 1948 and amended in 1972, "establishes the basic structure for regulating pollutat discharges into the waters of the United States.,,43 The EPA uses the Clean Water Act as a mechanism for identifYing and punishing paries who dump waste into water without the required permits. The Clean Water Act makes it a crime to either negligently or knowingly "dischargeD a pollutant from a point source into a water of the United 43 Environmental Protection Agency, "History of the Clean Water Act" (available at: https://www.epa.gov/laws-regulations/history-c i ean,,,ater,act). Page 22 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP States without a NPRDES or 404 Permit or in violation of a permit.',44 Negligent violations of the Clean Water Act or punishable by one year in prison and/or a fine of $2,500 - $25,000 per day, with subsequent convictions doubling both the prison time and maximum fine.45 Knowing violations of the Clean Water Act are punishable by up to three years in prison and/or a fine of between $5,000 - $50,000 per day, with subsequent violations doubling both the prison time and maximum fine.46 Additionally, negligently or knowingly discharging an oil or hazardous substance into a water of the United States is also punishable under the Clean Water Act.47 The punishments mirror those for violating the main provisions of the Act48 Companies face sizable fines for violations ofthe Clean Water Act. In December 2013, a Louisiana businessman was indicted by a federal grand jur for, inter alia, violating the Clean Water Act, concealing material facts, obstructing justice through creating false documents and making false statements to a federal criminal investigator. 49 Roger Dies owned and operated Baton Rouge Tank Wash, which washed the interior of tans hauling chemical and food-grade loads aboard trucks. The company was permitted to discharge wastewater from the tanks into 4433 U.S.c. §§ 1319(1)-(2). 45 ¡d. 46 Jd 47 ¡d. §§ 1319(1)-(2) and § 139(b)(3). 48 ¡d. 49 Department of Justice, "Dies Indictment: Baton Rouge Businessman Indicted For Environmental Crimes" (available at l1ttp~://w",\Vju~ticeJ!,oV/usao,mdlaJpr/ciie",iricJictl1ent) (December 12,2013). Page 23 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle th .. I 50 e municipa sewer system. Dies illegally discharged more than 6 million gallons of wastewater, some of which significantly exceeded the permitted toxicity and contamination limits.51 He attempted to conceal his crimes by creating false documents and making false statements to investigators.52 The DOJ press release indicates that Dies faced up to 127 years in 53 The amount of wastewater Greif has illegally prison and $2,000,000 in fines if convicted discharged into the water supplies of the cities in which its CLCM facilities are located is unknown, but the Dies case serves as an importnt benchmark for the type of punishment reserved for egregious violations of the Clean Water Act. Greits CLCM facility in Milwaukee does not have an EPA 1D number and has been dumping hazardous waste into navigable waters without the proper permits 54 This is an egregious environmental violation subjecting the company to significant liability and risk of shut down by the EPA. In fact, a CLCM safety offcer has repeatedly attempted to address these concerns with the facility's management, who have rebuffed any attempts to alter business strategies in order to fall in compliance with the Clean Water Act. Management's determination to not comply with the CWA has been stated as an intentional effort to stay off of the EPA and other federal regulatory bodies. 50 ¡d. 51 ¡d. 52 ¡d. 53 ¡d. 54 Transcript, CLCM Milwaukee Facility (October 6,2015). Page 24 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP the radar(s) of ii. Clean Air Act Like the Clean Water Act, the Clean Air Act gives the EPA the authority to monitor and regulate the amount and type of pollutat a company is allowed to discharge into the air55 To accomplish this, the Agency has established certain standards to which industries must adhere. There are several provisions of the CAA that Greits CLCM facilities violate on a daily basis. Each of Greit s five CLCM facilities with chemical burner operations skirts the Clean Air Act by intentionally falsifYing stack emission test results in order to show compliance with the Act. This is accomplished by sending relatively non-hazdous materials through the chemical burner during testing; thus, the tests show that the facility is within the allowable parameters for air pollution. The federal governent has levied harsh financial penalties against other companies for attempting to skirt the requirements of the Clean Air Act in this manner. In 2008, McWane, Inc., pleaded guilty to two counts of submitting a document to the State of Uta containing falsified emission test results; the company's vice president and general manager pleaded guilty to one count of rendering inaccurate a testing method required by the CAA.56 A McWane subsidiar, Pacific States, was required under the CAA to perform a compliance stack test every three years to measure the amount of a certin pollutat being emitted into the atmosphere.57 Regulations 55 The EPA currently lists 187 different kinds of air pollutants as "hazardous." Many of these pollutants are produced at Greits CLCM facilities on a daily basis. See Environmental Protection Agency, Initial List of Hazardous Air Pollutants with Modifcations (available at: https: //V'iY.¡~. epa.g ov /haps/ initial, i i!it,hazardo us-air ,po llu_tants, J1Qclifi cati ons ). 56 Department of Justice Press Release, "McWane, Inc. And Company Executive Plead Guilty and McWane Sentenced for Environmental Crimes" (available at https:/ /W\V~j ustic_e,gov /archive/opaJpr/2QQ6/F ebruary/06 _enrcl_0_(j5.hJI1I) (February 8, 2006). 57Id. Page 25 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP fuher required the stack test to be performed under conditions representative of normal operations; instead, Pacific States melted a different type of meta that improperly lowered the amount of emissions from the stack in order to pass a compliance stack test58 The company later submitted Emission Inventory documents based on the illegally-obtained compliance 59 As part of results. the plea agreement, McWane was ordered to pay a $3 milion fine and serve a three-year period of probation6o The $3 millon fine was the result of CAA violations at one location. Each of Greils five CLCM facilities with burner operations~located in four different states--ngages in this very same behavior., a fact that was confirmed to the whistleblower by Steele Johns, CLCM Safety Manager in conversation that was taped by the whistleblower. Therefore, it is easy to envision Greils facing astronomical moneta penalties for falsifYing stack test results. Fines have been imposed on companies for not only violating the main provisions of the Clean Air Act, but also for failure to develop and implement a plan to minimize the chance of toxic pollutats being released into the atmosphere61 In 2014, Roberts Chemical Company pleaded guilty to violating the CAA and EPA regulations by failing to develop and implement a Risk Management Plan ("RMP") that would have minimized the chances of ethyl ether being 58 ¡d. 59 ¡d. 60 ¡d. 61 See, e.g., Deparment of Justice Press Release, "Chemical Firm Admits To Violating Clean Air Act By Failing To Develop And Implement Risk Storage Plan At Former Pawtucket Facility" (avail abl e at https://vNiw.justice ,gov/u saQ_~ ri/jlr/chtnii cal, fir!1,aci1iiitS=Vi 0 lating -cl ean~a i r~act ~ faiiing~devclop-and-imple11enHisk~storage) (August 18,2014). Page 26 of 53 Confidential WhistIehlower Disclosure Kohn, Kohn & Colapinto, LLP released from one of its facilities62 An RMP also would have protected Roberts' workers, the community, and emergency first responders in the event of a release or fire involving ethyl ether.63 Roberts, whose business involved storing, distributing, and repacking chemicals (including the "extremely hazardous" ethyl ether), failed to develop and implement an RM for the storage of 27,467 pounds of ethyl ether at its Pawtucket facility.64 The plea agreement recommended that the court impose a fine of $200,000, and also required Roberts to enter a public apology.65 Greif may very well have an RMP that technically meets EPA standards, but as evidenced by its falsification of CAA stack emissions tests and its disregard for CAA compliance requirements, any RMP in place at Greif CLCM facilities is clearly not being implemented. Roberts was fined $200,000 for failing to develop and implement an RMP at one facility. Greif has failed to at least implement (and possibly even develop) a satisfactory RMP at each one of its CLCM facilities. The Clean Air Act also contains a provision that prohibits knowingly making a false material statement, representation, or certification in; omitting material information from; or altering, concealing, or failing to file a document required to be maintained under the Act66 62 ld. 63 ld. 64ld. 65 ld. 6642 U.S.c. § 7413(c)(2)(A). Page 27 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle There is no set amount for prescribed fines,67 but any fine levied is doubled upon a second or b .. 68 su sequent conviction. In 2015, an Indiana manufacturer of glass additives, Calumite Company LLC, was convicted of violating the false statements provision of the Act by, inter alia, having employees knowingly and routinely fill out daily logs that misstated emission gauge monitor readings69 This caused false information to be submitted in the company's quarterly reports. The company was fined $325,000, given a two-year probation term, and forced to implement an environmental compliance plan and training program.70 As demonstrated above, Greits CLCM facilities maintain the type of policies that have landed other companies on the wrong side of Clean Air Act enforcement. With fines for violating the CAA frequently reaching six figures for a single violation and doubling with subsequent violations, Greits potential exposure for violating the Act could be in the tens of millions of dollars. None of this has been disclosed to regulators, the public or investors. iii. Resource Conservation and Recovery Act (RCRA) The Resource Conservation and Recovery Act (RCRA), 42 U.S.c. § 6928, et seq., makes it unlawful to knowingly treat, store, or dispose of a hazardous waste either without a permi¡71 or 67 Though the amount of fines is not prescribed by the law, companies convicted of violating the CAA have faced steep financial penalties. 6842 U.S.C. § 7413(c)(2)(A). 69 See Department of Justice Press Release, "Indiana ManufaCturer Sentenced in Connection with Clean Air Act False Statements Violations" (available at httpsj/""\Vjiistjce.gov/opa/pr/indianac manufacturercsentencedccolliection-clean:aircact :false:stateinentcviolations) (June 26, 2015). 7°ld. 7142 U.S.c. § 6928(d)(2)(A). Page 28 of 53 Confidential Whist1eblower Disclosure Kohn, Kohn & Colapinto, LLP in violation of a material permt condition.72 RCRA also forbids the transportation of, or causing the transportation of, a hazadous waste without a manifest where one is required by regulators.73 The penalty violating each of these laws is up to $50,000 per day violation, with penalties doubled for subsequent violations.74 In addition to the provisions against treating, storing, disposing or transporting hazardous waste either without a permit or in violation of a material permit condition, RCRA also has provisions that make it a crime to knowingly "omit material information or make(J any false statement in any document filed or used for purposes of compliance" with RCRA hazardous waste regulations if the false statement or regulation is materia1.75 The penalty for providing a false statement under RCRA is $50,000 per day violation, with penalties doubled for subsequent violations.76 Greif would also likely be liable under RCRA records provision, which makes it a crime to generate, store, treat, transport, dispose, export or otherwise handle hazrdous waste and knowingly alter, destroy, conceal or fail to fie records required to be maintained or filed under the statute.77 The whistleblower alleges that Greils CLCM plants conduct their business in a maner that requires their employees to either fail to keep or falsify records on the materials of 72 ¡d. §§ 6928(d)(2)(B) and (C). 73 ¡d. § 6928(d)(5). 74ld. 75 ¡d. § 6928(d)(3). 76 ¡d. 77 ¡d. § 6928(d)(4). Page 29 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle which they receive and dispose on a daily basis. These allegations are supported by the conversations captured by the whistle blower between CLCM personnel and outside consultants. When discussing previous issues at the Milwaukee facility, CLCM safety manager Steele Johns stated: "They (Milwaukee) have no EPA ID number. They are stil going out and using a Home Depot vacuum and sucking the remnants out of the bottom of the (container) and putting it into a 275-gallon tote. And they'll go in and suck out all of the flammable acetones, MEK, MIBK, they'll suck it all together and just put that into the 275 (gallon) tote. And they sent it out as non-haz(ardousJ.,,78 Lastly, Greif companies are likely in violation of RCRA's knowing endangerment provision, which criminalizes knowingly transporting, storing, disposing of or exporting a hazrdous waste in violation of RCRA when said person places another person in imminent danger of death or serious bodily injur.79 The penalty for violating the knowing endangerment clause is up to 15 years imprisonment and/or a $250,000 fine for an individual or a $1,000,000 fi me or fì an organization. .. 80 Based on the evidence provided by the whistleblower with this Form TCR, it is apparent that several of the CLCM facilities are in flagrant violation of RCRA, which exposes the company to potential liability in the tens of millions of dollars once all of the potential fines are aggregated. Despite the substantial risk Greils noncompliance with RCRA poses to its investors, management has failed to disclose its trend of noncompliance in any of its disclosures. 78 Transcript, CLCM Milwaukee Facility (October 6, 2015). 7942 U.S.C. § 6928(e). 80 Id. Page 30 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP iv. Emergency Planning and Communit Right-to-Know Act (EPCRA) In 1986, Congress passed the Emergency Planing and Community Right-to-Know Act (EPCRA). The Act establishes requirements that governents and industry must follow concernng "Community Right-to-Know" reporting on hazardous and toxic chemicals. Under the EPCRA any organization that is required to have a Material Safety Data Sheet ("MSDS") for a hazardous chemical must comply with the EPCRA81 Any chemical for which an organization must maintain an MSDS is subject to the provisions of the EPCRA82 Section 304 of the EPCRA requires that facilities immediately notifY local and state Emergency Response Commissions if a hazdous substance is released into the atmosphere83 The requirement covers 355 extremely hazardous substaces and more than 700 hazadous substances that are also subject to the other federal environmental protection laws. Greils Indianapolis CLCM facility was destroyed On May 7,2014, a substantial part of by a fire. The fire resulted in the release of an unkown amount of an unkown pollutant(s) into the vicinity. Internally, a company investigation revealed that the fire was caused by the mixing of two hazardous chemicals from incoming drums that produced a volatile chemical reaction. In fact, surveillance video reviewed after the fire confirmed its cause. When questioned by the local fire deparment, health authorities, and the EPA about the origins of the fire, Greif personnel lied and stated that the facility only handled empty drus and, therefore, no hazardous 8140 C.F.R. § 370.1O(a) (2015). 82 ¡d. § 3701.2(a). 83 EPA, "The Emergency Planing and Community Right-to-Know Act" (available at: https://w~\V,ejJa.g()\,/sile1ijprodu¡;tiori/fi les/2 0 15 -0 5 / docuineiiJs/ epcraJ"açLshcct. pdf) (Seplem ber 2012). Page 31 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle chemicals or fumes had been released into the community. Not only was this an outright fabrication intentionally given to local and state authorities, it was a violation of the EPCRA' s reporting requirements. Similarly, in the summer of 2014, safety representatives from multiple Greif facilities were present at the CLCM Milwaukee facility to evaluate the processes and develop safety procedures. During this visit, a chemical reaction occurred when employees mixed the contents of incoming drums. According to Steele Johns, "we were shooting jet black smoke out of those big five-foot fans, directly at the neighborhood, for 20 minutes...Of course they didn't call anybody, they don't say anything...he (the plant managerJ just took the container and put it outside, let if off-gas for a while.,,84 The EPCRA provides for substantial civil penalties for noncompliance. Section 325 allows for civil and administrative penalties ranging from "$10,000 - $75,000 per violation or per day when facilities fail to comply with the reporting requirements,,85 Section 326 of the law also allows citizens to initiate civil actions against, among others, the owner and operator of a facility that failed to meet EPCRA requirements. 86 The prospect of multiple EPCRA fines across multiple facilities, coupled with the possibility of a civil lawsuit brought by a member of the general public exposed to a hazdous material leaves Greiffacing potentially massive liability. v. Federal Hazardous Materials Transportation Law Thc Fcderal hazrdous materials transporttion law, 49 U.S.c. § 5101 et seq., regulates 84 Transcript, CLCM Milwaukee Facility (Octobcr 6, 2015). 85 ¡d. 86 ¡d. Page 32 of 53 Confidential Whistlehlower Disclosure Kohn, Kohn & Colapinto, LLP the transportation of hazdous materials in the United States. Among others, the law's provisions apply to persons who transport hazardous materials in commerce or recondition a container or packaging component that is qualified for use in transporting hazardous material in commerce.87 Greif s container reconditioning business falls squarely within the parameters of the law, and its CLCM facilities are subject to the law's provisions. One of the law's requirements is that no person "may offer or accept a hazardous material for transportation in commerce unless the hazrdous material is properly classed, described, marked, labeled, and in condition for shipment as required... ,,88 The 2010 IOSHA inspection, discussed earlier in this disclosure, provides a starling example of the recklessness and carelessness with which a typical Greif facility operated (and continues to operate): "Supposedly, Tote Line dock employees who unload the totes from the trailers are supposed to attach a laminated red card onto the top of any tote that is hazardous. Which totes are required to be 'red carded' by the dock employees was not clear, and the CSHO never received a definitive answer from employees or the employer pertaining to how or why the totes were red carded. On August 31,2010, Jerry Spegal, Tote Line Supervisor/Manager, stated that the red tags are for 'hazardous' chemicals and employees should look at the placards. However, Jerry could not define what 'hazardous' meant in terms of chemicals or what specifc placards employees were supposed to be looking for. It should be noted that the employer has never trained any of the Tote Line employees, including dock employees who unload the totes, on what the labels/placards on the totes mean or what hazards each of the chemicals they are working with possess. Employees interviewed said that the red cards were supposed to be attached to totes that were considered hazardous materials.. .(butJ could not ,pecifically explain what chemicals were considered 'hazardous materials.' Instead, employees interviewed said that they were told by the (Tote Line Supervisor/Manager J to attach red cards to 8749 C.F.R. § 171.1 (20IS). 88 ¡d. § 1712( e). Page 33 ofS3 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle any totes that had unusual labeling or placards, especially corrosives. ,,89 Although the previous excerpt is from an inspection that took place as the facility being inspected was being acquired by Greif, the whistleblower and the whistle blower' s colleagues have since observed the same practices both at this facility and at other Greif facilities. As previously mentioned, the whistleblower possesses recordings of Greif the Federal hazardous materials transporttion personnel admitting to blatant violations of laws. The following excerpt is from a conversation recorded during a walkthrough of Greils Milwaukee CLCM facility: 90 these totes here are to be cleaned? DS: So all of SJ: Yes, there are to be cleaned. What they do is they come in and set them up. . .in rows. . . pull the caps off, they stinger it out. . DS: Stinger it out? Shop-vac? SJ: Shop-vac. Using a long extension to stinger it out. Once it's been cleaned, or once all of the material has been removed from it, the totes are then taken and they're placed over here...And then when the shop-vac is full. DS: That shop-vac is used for everything? Corrosives? Flamables? All of 'em? SJ: I only see one shop-vac. DS: That's all I see. 89 See 2010-IIIOSHA Report (emphasis added). 90 The list of participants in this conversation is as follows: . DS - Dale Sabers, Cottingham & Butler Director of Safety Consulting . SJ - Steele Johns, CLCM Safety Manager . WB - Whistleblower Page 34 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP SJ: Just making an observation. And then the shop-vac is lifted up and hoisted into this...if they have a tote that has a viscous material they want to drain out, they put it up here, and then it drains down and goes into the...they just bring the shop-vac over here, set it on top of this "ingenious" system, and they pour it into that, and when it fills up.. . not withstading all of the labeling...this gets sent out a(s) non-hazardous materiaL. WB: Hmm. Alright. That's one way to do it. SJ: (sarcastically) So, we never have any spills here, so there's no need for kitt litter. DS: Jesus Christ91 As this conversation demonstrates, Greif has little regard for Federal hazardous material transporttion rules and regulations. Regular safety audits performed by the whistle blower's employer consistently demonstrate that Greif s practices result in the production of cocktails of toxic material that are shipped off-site for improper transporttion and disposaL. The penalties for violating the Federal hazardous material transporttion law are steep, as the regulations allow for the imposition of both civil and criminal penalties. Civil penalties for knowingly violating the regulations include a maximum assessment of $50,000 per violation per day, and a $100,000 violation if the violation results in "death, serious illness or severe injur to any person, or substantial destruction of propert." Criminal penalties include fines of up to $250,000 and five years' imprisonment for individuals and $500,000 and five years' imprisonment for a corporation, with jail time doubling for willful violations that result in the release of a hazardous material that results in death or bodily injur92 91 Transcript, CLCM Milwaukee Facility (October 6, 2015). 92 49 U.S.c. § 5124. Page 35 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP vi. Superfund - CERCLA The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA or "Superfud") was enacted to clean up sites containated with pollutats and hazrdous wastes. As the owner of multiple facilities that handle hazrdous waste, Greif is covered by CERCLA.93 As such, the company's practices likely place it in violation of the law. As previously mentioned, Greils CLCM facilities regularly ship hazdous waste marked as non-hazardous waste to landfills and other waste disposal facilities. Furhermore, Greils practices make it highly probable that hazadous substances have been leaked into the environment at all of its CLCM facilities. The statutory regime provides for civil and criminal penalties, with covered persons being liable for the following: 94 . "all costs of removal or remedial action incurred by the United States Government... "; . "any other necessar costs of response incurred by any other person..."; . "damages for injury to, destruction of, or loss of natural resources, including the reasonable costs of assessing such injury, destruction, or loss resulting from such a release"; and . "the costs of any health assessment or health effects study caried out..." Violators are subject to imprisonment and fines for failing to provide immediate notice of release of hazardous materials; knowingly failing to notifY the EPA of hazrdous material treatment, 9342 U.S.C. § 9607(a)(l). 94 ¡d. § 9607(a)( 4)(A)-(D). Page 36 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP storage, or disposal; and falsifYing or destroying records95 Additionally, the EPA can levy substantial penalties-up to $25,000/day (and $75,000/day for subsequent violations).96 Lastly, the owner, operator, or other person responsible for for the release of a hazardous substace or incident involving the release of a hazadous substance can be liable for the "total of all costs of response plus $50,000,000 for any damages... ,,97 C. Violations of Federal Securities Laws At no point before, during, or after it entered the plastic and steel industrial container reconditioning business did Greif ever disclose the information in the preceding paragraphs to its investors, analysts, or govemment officials. Regardless of whether Greif violated a specific SEC rule related to environmental disclosure, this withholding of information rus afoul of the SEC's requirements. The Commission has previously stated that its reporting rules require disclosure of "any additional material information, beyond that for which disclosure is required by specific Commission rule, necessar to make required statements not misleading. In the context of environmental releases, the Commission has interpreted these rules as requiring disclosure of 'all other environmental information of which the average prudent investor might reasonably be informed. ",98 Greif s disclosures, or lack thereof, violate numerous provisions of federal securities laws, including the antifraud provisions of the 1934 Act and Regulation S-K's Items 101 and 301. 95 !d. § 9603. 96 Id. § 9609. 97 Id. § 9607(c)(l)(D) (emphasis added). 98 In re Occidental Petroleum Corp., Exchange Act Release No. 16,950, 1980 SEC LEXIS 1158 (July 2,1980) (citing other SEC releases). Page 37 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle i. General Antifraud Provisions, Section 10(b), Rule 10b-5, and Section 13 The general antifraud provisions of Section 10(b) and Rule IOb_599 prohibit the issuer of a security from making materially false statements or omitting material facts in communications with investors. The antifraud provision covers statements accessible to investors, including earings conference calls with investment analysts. During a Q3 20 i 0 earings conference call, Mike Gasser, the Chairman and CEO of Greif, fielded a question from a Deutsche Bank analyst about the environmental risks involved in dealing with reconditioned containers. Gasser responded as follows: "That's why we been studying the reconditioning business for two years. Those risks were very reaL. We identifed the two partners that we're very comfortable, have by far the best processes from a risk mitigation standpoint. We know that - we're very comfortable that we've mitigated those risks through contractual arrangements, and also through the process they have. So--nd we believe very strongly that there is going to be a movement to make sure that anyone who is in this business has a meaningful process that doesn't have environmental risk. And so we're going to help lead that through these two companies we bought, and they (don't) today, we think we wil help lead that in the industry. So we're pretty excited about that. ,,100 In a Q3 20 Ii earings conference call, the company again emphasized the importnce of the new reconditioning business: "Our second great platform... is EarthMinded Life Cycle Services, which is principally engaged in the reconditioning of Rigid Packaging. We entered this market in the US last year by acquiring a leading steel drum reconditioner and a leading plastic and lBC reconditioner based upon their established technical capabilities. Last month we acquired pack2pack, one of the world's largest and the European leader in reconditoning, 9917 C.F.R. § 240.lOb-5 (2015). 100 Greif, Inc. Earnings Conference Call (Q3 2010) (emphasis added). Page 38 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP recycling and distribution of steel drums and other industrial packaging products. Their achievements and market knowledge wil enable us to scale this business and profitably grow it. Now that we have established a solid base in North America and Europe we wil be accelerating global implementation of our strategy of EarthMinded Life Cycle Services. Beyond the complementary fit with Rigid Industrial Packaging, reconditioning represents a strategic opportunity for Greif to establish a global leadership in this area and, most importantly, align more closely with our customers as they develop and then implement strategies to reduce their carbon and energy footprint at part of their overall sustainability goals. We believe that we can leverage our manufacturing and logistics capabilities to achieve superior returns in this business. ,,101 In its 2011 annual report, Greif once again stated that it sought to use its reconditioning business in an environmentally-responsible maner: "One key objective of EarthMinded LCS is to invent and deploy new technologies that wil redefine the reconditioning industry. We are committed to meeting and exceeding customers' needs for quantifable, increasingly responsible environmental practices.,,102 Companies have previously faced legal action under Section lO(b) of the Exchange Act and Rule i Ob- 5 promulgated thereunder for misleading public statements about general compliance with environmental regulations. In In re AES Corporate Securities Litigation, 103 AES was held responsible under Rule i Ob-5 for public statements that it "has been a leader in environmental matters associated with independent power production" and that its facilities "have recorded emissions at levels considerably below those allowable under environmental permits, and havc had a safety record better than the average for the electricity generating !OI Greif, Inc. Earnings Conference Call (Q3 2011) (emphasis added). 102 Greif, Inc. 2011 10-K Report (2012). 103825 F. Supp. 578 (S.D.N.Y. 1993). Page 39 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle 104 The plaintiffs alleged that these public statements were materially false and industr." misleading; additionally, the plaintiffs alleged that the company's failure to disclose intentionally falsified wastewater discharge reports in an attempt to hide noncompliance with federal I . . i .. 105 regu ations was a matena omission. Even though no substatial enforcement actions have been taken against Greif for the actions detailed in this disclosure statement, the company is still in violation of Section i O(b) and 106 In Allied Chern., the SEC brought Rule i Ob-5 for failing to disclose said activities to investors. an enforcement action against the Alled Chemical Corporation for violating the antifraud provisions of Sections 10(b) and Rule IOb-5. The Commission found that Allied Chemical had liabilities that could result from the failed to disclose to its investors the potential environmental company illegally discharging toxic chemicals into the environment. 107 Allied Chemical had been aware that the chemicals it was releasing had been proven harmful to animals and marine life; therefore, the company was "exposed to material potential financial liabilities from companiesLJ individuals, and state and local governments exposed to significant amounts of (the chemicaIJ.,,108 Because it did not report these potential liabilities in public announcements or 104 ¡d. at 558-59. 105 ¡d. 106 See SEC v. Allied Chern. Corp., Litigation Release No. 7811, 1977 SEC LEXIS 2280 (Mar. 4, 1977). 107 ¡d. 108 ¡d. Page 40 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP SEC filings, the SEC found that Allied Chemical had violated disclosure rules, even though no enforcement actions had been taken or were even being contemplated at the time. 109 Like Allied Chemical, Greif is fully aware that it is releasing dangerous and potentially deadly toxic chemicals into the air, water, and land. Additionally, CLCM employees are placed in harm's way on a daily basis, as they face constant exposure any number of corrosives, flamables, and other extremely dangerous substances. Even though Greif management is unaware of any pending enforcement action, or even contemplated enforcement action, it still has a duty to inform its investors of the potentially massive environmental liabilities that could result from its ilegal practices. Greils CLCM sites have largely been operating in the same reckless maner since long before being acquired by Greif. This recklessness has previously resulted in the death of an employee in at least one facility. 110 Charles Duggan, a worker at the Mid-America Steel Drum Oak Creek, WI facility, was kiled in an accident on February 2, 1984. Duggan and another employee were capping a steel drum full of waste chemicals when the drum suddenly, and 1 ii Authorities later determined that the mixing of without waring, blew up in Duggan's face hydrochloric acid and sodium hypochlorite (undiluted industrial bleach) inside the drum created a violent chemical reaction that released chlorine gas and ripped the drum in half.112 Duggan was blown off the ground by the force of the explosion. 109 ¡d. 110 See, e.g., James Gribble, "Deadly work: Doing their jobs killed Charles Duggan, others", Milwaukee Journal, July 20, 1986, at IA. iii !d. III ¡d. Page 41 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle The aricle also mentions a high employee tuover rate, citing as an example a 21-yearold employee who left after five days on the job because the chemicals in the plant caused a rash to develop on the exposed parts of his body.113 According to a Milwaukee Journal Sentinel aricle, ".. .DNRI14 got involved in the Duggan case because the accident was evidence that the company was storing and disposing of hazrdous wastes without a license...It led the DNR to conclude that Mid-America was generating and receiving hazdous wastes. (DNR inspector) Trcka told (Mid-America's president) that Mid-America had to turn away any barel that contained a pourable residue of hazardous wastes. Those instructions were later made formal in a notice by Arthur H. Glor, chief of DNR's waste management section for southeastern Wisconsin.. . Michael Zillmer, the DNR investigator now assigned to Mid-America, said some of the wastes being collected and incinerated by the company at the time of Duggan's accident met the legal definition of 'hazardous' and required special handling.. . Zillmer said the right thing for the company to do would have been to ship the hazardous wastes to a licensed disposal facility, although that would have been expensive." The situation described in the 1986 newspaper aricle accurately describes the illegal activity that is still ongoing at this particular facility. Despite the facility's deplorable safety record, management has refused to clean up its act. In fact, one of the managers mentioned in the Milwaukee Journal Sentinel's aricle was a manager at the facility and paricipated in safety audits until his recent retirement. However, because Greif has now acquired the companies and assumed responsibility for their environmental liabilities, Greif has a duty to disclose those potential liabilities to investors, III ¡d. 114 Wisconsin Department of Natural Resources. Page 42 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle and has so far failed to meet that obligation.lls In Occidental, the Commission brought an enforcement action against the company for failing to disclose potential liabilities of its wholly- owned subsidiar, Hooker ChemicaL. i 16 The SEC determined that Occidental should have disclosed potential liabilities that Hooker was exposed to as of at least 1977 that stemmed from dumping of toxic materials at three sites as far back as J942.11 Despite the 35-year gap between Hooker's first known acts of dumping and the date at which the SEC determined that Hooker was exposed to liability, and despite Occidental's disclosure that it anticipated civil personal injury and propert damage lawsuits related to Hooker's dumping, the Commission found that Occidental had not done enough to adequately advise its investors of its potentially substantial environmental risk. i 18 In finding that Occidental had violated the general antifraud provisions of the Exchange Act, the SEC notes that general descriptions of possible future liability were insuffcient for the purose of satisfYing disclosure requirements1 19 Unlike Occidental, Greif has not even submitted any general descriptions of possible future liability to its investors. Greils financial disclosures dating back to when it entered the container reconditioning business are completely and totally dcvoid of any mention of its liabilities. subsidiaries' potential environmental liS See Occidental, supra note 93. 116 Jd. 117 Jd. 118 Jd. 119 Jd. Page 43 of 53 Confidential Whistleblower Disclosure Kohn, Kohn & Colapinto, LLP The Commission requires that companies with environmental policies reasonably likely to result in substatial penalties or other significant, material effects must disclose the likelihood of such penalties and effects in its disclosures. Actions have been commenced against companes who fail to disclose corporate policies that include noncompliance with laws and regulations. In In re United States Steel Corp.,120 the SEC found that environmental u.s. Steel had failed to disclose its environmental policy of "actively resisting environmental requirements which it maintained were unreasonable" by minimizing and delaying capital d. " i' 121 expen itures ior comp iance. The SEC determined that U.S. Steel's policy exposed it to "certain risks including the possibility of substatial civil and criminal penalties.,,12 In its anual report, U.S. Steel merely informed its investors that it "had pledged to resolve its environmental problems as effectively and effciently as technology, time(,J and money permit.,,123 Greits environmental policy mirrors u.S. Steel's in that, by its own corporate offcers' admissions, the company actively refuses to comply with many environmental laws and regulations designed to prevent the discharge of pollutats into the environment and/or the improper disposal and transporttion of hazardous wastes. As previously discussed in this disclosure statement, should Greits practices ever come under government scrutiny, the company would most likely face fines in the tens of millions of dollars, and its executives would 120 Exchange Act Release No. 16,223, Fed. Sec. L. Rep. (CCH) 82,319 at ~ 82,383 (Sept. 27, 1979). 121 Id. 122 Id. 123 Id. Page 44 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle be subject to criminal prosecution. This would force the company to seriously examine the way it conducts business. Any large-scale enforcement action would have a substatial, material impact on Greits bottom-line. Lastly, Greif has manipulated its environmental reserve, lowering the amount it keeps back for environmental contingencies each year despite its liability increasing with each year its reported creating companies continue to flout environmental regulations. In its 2011 10-K, Greif an environmental reserve of $4.2 million related to its acquisition of the CLCM reconditioning facilities124 In its 2013 10-K, Greif adjusted that environmental reserves downward from $4.2 million to $2.3 million. The company reported that its "exposure to adverse developments with respect to any individual site (was) not expected to be material.,,125 Environmental reserves were again decreased in the company's 2015 10-K, adjusted downward from $2.6 million to $2.0 126 million. Greif manipulated its environmental reserves on multiple occasions, yet offered no identifiable decrease in potential environmental liability as a justification. The SEC has previously brought administrative action against companies that manipulate cost estimates and reserves for environmental liability without any reasonable basis for doing SO.12 In In re Ashland, the Commission brought an action against Ashland Inc. for reducing, without justification, estimates on the costs for remediating environmental contamination at dozens of 124 Greif, Inc. 2011 10-K Report (2012). 125 Greif, Inc. 2013 10-K Report (2014). 126 Greif, Inc. 2015 10-K Report (2016). 12 See In re Ashland Inc., Exchange Act Release No. 54830, 2006 SEC LEXIS 2738 (Nov. 29, 2006); see also SEC v. Safety-Kleen Corp., Litigation Release No. 17891, 2002 SEC LEXIS 3169 (Dec. 12, 2002). Page 45 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle sites.I28 This caused AsWand to materially understate its environmental reserve and overstate its income in its SEC fiings, which was a violation of several recordkeeping and internal control provisions of the Exchange Act.12 Specifically, the Commission determined that "AsWand's process for settling its environmental reserve did not establish adequate guidelines for, or require documentatlOn . .or review f d. 0 , a Justment h to.t e costs,,130 estimates. In Safety-Kleen, the Commission brought charges against the company for, inter alia, inflating its income by reducing several environmental reserve accounts. The Commission found that the company's reserve adjustments failed to comply with GAAP because they lacked justification and sufficient . 131 anaIysis. ii. Regulation S-K The Securities Act of 1933 requires specific disclosures related to environmental matters. Specifically, Regulation S-K Item i 0 i (c)(I )(xii) requires two types of disclosure. First, a company must disclose "the material effects that compliance with federal, state and local provisions which have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, may have upon the capital expenditures, earning and competitive position" of the company and its subsidiaries.13 Second, a company must also disclose "any material estimated capital expenditues for environmental control facilities for the remainder of (the company's J current fiscal year and its 128 !d. 129 ¡d. 130 ¡d. 131 SEC v. Safety-Kleen Corp. 1)217 C.F.R. § 229.101(c)(I)(xii) (2015). Page 46 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle succeeding fiscal year and for such furher periods as the (company J may deem material."l 33 In likelihood that a the context ofItem i 0 i, the SEC has defined "material" as having "a substantial reasonable investor would view the information as importt in making an investment decision." 134 In none of its filings with the SEC or public statements made since acquiring the CLCM facilities and entering the industrial plastic and metal container reconditioning business has Greif made any disclosures concerning the material effects of noncompliance with federal, state, or local provisions that regulate the discharge of materials into the environment. Audio recordings made by the whistle blower incontrovertibly prove that discussions have taken place at the highest level of Greif management concerning whether to comply with federal and state environmental and occupational health/safety regulations. The decision has been made to ignore provisions of the Clean Air Act, Clean Water Act, and other laws that regulate discharge of pollutants in order to save the company the headache and expense of complying with the laws. Greif has also violated Regulation S-K's Item 303, which requires companies to disclose "material events and uncertainties known to management that would cause reported financial information not to be necessarily indicative of future operating results or of future financial condition.,,135 Item 303 requires the registrant to disclose "prospective information," which is information "based on currently known trends, evcnts, and uncertainties that are reasonably 13 ¡d. 134 See 17 C.F.R. §§ 230.405, 240.12b-2 (2015). 135 17 C.F.R. § 229.303 (2015). Item 303 describes the disclosures required in the MD&A section of a company's public financial filings. Page 47 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle 136 Greils expected to have material effects" on the company's business, finances, or operations. management is well aware that, should its CLCM facilities come under any kind of governent scrutiny, that it would be subject to massive amounts of penalties that would make its reported financial information not indicative of futue operating results. Because none of Greils CLCM facilities operate in compliance with environmental laws, the company would be forced to look at the very real possibility of either being forced to shut down one or more of its facilities, spending tens of millions of dollars in order to bring the facilities into compliance, or modifying its operating procedures in order to make them compliant with federal regulations, which could result in massive expenditures previously un-contemplated. the Loom, Inc., In 1999, officers, directors, accountants and other management at Fruit of were sued for alleged violations of Regulation S-K. 137 The prospectus stated that "(tJhe Company and its subsidiaries are paries to certain legal proceedings and have retained certain liabilities with respect to the sale of certin discontinued operations, including 'Superfund' and other environmental liabilities. The Company believes that these matters will not have a material effect on its business or financial condition.,,138 The Cour denied defendants' motion for summar judgment, finding that the plaintiffs established that the defendants failed to disclose 139 that the company might be potentially responsible for $60 million in environmental liabilities. 136 See "Certain Investment Company Disclosure," Securities Act Release No. 33-6835, Fed. Sec. 1. Rep. (CCH) ii 62,844 (May 18, 1989). 137 Endo v. Albertine, 863 F. Supp.708 (N.D. Il 1994), aird, Endo v. Arthur Andersen & Co., 163 F.3d 463 (7th Cir. 1999). 13 !d. at 714-15. 139 ¡d. at 720. The court wrote: "This court cannot find that the omission of information liability is not so obviously unimportnt to regarding over $60 million in potential environmental Page 48 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle Greif has far more than $60 milion in potential environmental liabilities. For several years its CLCM facilities have been ignoring environmental and occupational safety rules and regulations. Its facilities pollute the air and water on a daily basis, its employees are always seemingly one dru slipping away from being doused with a toxic chemical, and its practice of mixing remnants from different containers into taks is about as careless and dangerous a practice as can be contemplated. Greif corporate representatives have admitted that the only reason its practices have yet to result in more employee fatalities or major environmental crises in the surrounding communities is "luck." Additional Information in Response to TCR Question 9 Because of the whistleblower's line of work, he or she was uniquely positioned to uncover potential violations of environmental laws. There are several documents that incontrovertibly show that Greif blatatly disregards federal and state environmental and occupational safety laws and regulations. However, we are concerned that disclosure of these blower' s identity and we will want to discuss with the SEC documents will fingerprint the whistle and appropriate law enforcement investigators how to maintain the whistleblower's confidentiality. The whistleblower obtained copies of safety and health gap analyses conducted at various CLCM facilities in 2013 and 2015; copies of the e-mails discussing the results that were sent to the managers of those facilities; the results of employee safety perception surveys conducted during safety audits; assorted employee safcty incident reports; various Greif press an investor that reasonable minds cannot differ on the question of materiality. The court also finds that the information regarding Ve1sico1's potential environmental liabilities was not suffciently public to render defendants' omission immaterial as a matter of law. Contrary to defendants' suggestions, a rcasonable investor may have required further information about the estimated amounts of FOL's future expenditures for contingent environmental liabilities and the method of funding these liabilities." Page 49 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle releases and statements pertining to its industrial container reconditioning business; and newspaper and other press concernng accidents at Greif facilities. the safety audits as well as audio files Additionally, the whistleblower has full versions of of conversations between Greif managers that fully support the whistleblower's allegation that Greils primar goal of generating profit frequently results in managers knowingly taking steps to avoid having to comply with federal laws pertaining to emissions and the handling and disposal of hazardous wastes and materials. Furthermore, the whistleblower is still employed as an outside consultant for Greif, Inc., and continues to participate in conducting risk assessments for the company. Until his anticipated deparure in August 2016, the whistleblower will continue to have access to certain information that would likely aid the governent in any investigation it conducts into Greif and its CLCM facilities. Additional Information in Response to TCR Question 10 The Complainant obtained the information submitted with this TCR through his or her employment as an outside safety consultat. The whistleblower has access to safety and gap analysis reports, employee safety perception sureys, and CLCM employee incident reports through his or her normal course of business. The whistleblower retained copies of e-mails sent from his or her company to Greif CLCM managers discussing the results of various audits and surveys. Additional information-such as management statements to investment analysts-is publicly available and was obtained through basic research methods. Newspaper articles were obtained from the internet. Greif securities filings were obtained through various websites, including the SEC's. The audio recordings of conversations between plant managers, safety consultants, and Greif officials were recorded by the whistleblower. To the best of the Page 50 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle whistleblower's knowledge, none of the information was generated from any communication with an attorney or communication at which an attorney was present. AdditionallnXi.rmation in Response to TCR Qlle_sli0!LU The whistleblower's identity could potentially be revealed through several of the documents referred to herein. Most notably, should the content of the audio recordings be lose anonymity. According to the whistleblower, revealed to third parties, the whistleblower will there is no way to conceal the identity of the person who recorded the conversations. Additional Information il! Response to TCR Question 12 Greils cover-up of its environmental risk is material to Greils investors and shareholders. Additionally, Greils intentional manipulation of its environmental risk to lower its environmental financial reserves at a time when its risk of environmental violations has increased is material to investors' decisions and constitutes blatant accounting fraud because the company has diverted funds that should be placed in environmental financial reserves and instead misrepresented those funds as company profits. However, the increased risk of liability from Greils operations that have been concealed actually create dangerous conditions and increases the likelihood of large environmental and regulatory fines. Every day that employees go to work at one of Greils affiliates at CLCM, they face an unreasonable risk of being afficted with serious harm or worse. They are forced to work with hazardous chemicals the identities or dangers of which are unknown; they work on factory floors with poor ventilation; they are provided inadequate safety equipment and training; and they face unyielding pressure to wash and recondition the containers and get them out of the factory as quickly as possible. Countless Greif employees have sustained all maner of injuries directly related to exposure to dangerous chemicals. Employees have suffered respiratory Page 51 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle distress, bums across all pars of the body, and injuries to sensitive pars of the body, including the eyes. Those are just the short-term, readily-observable injures. Several of the chemicals with which the employees work on a daily basis are known carcinogens and cause environmental hazards. The number of Greif employees who have developed or will develop some maner of chronic illness, including any number of different types of cancers, because of exposure to dangerous industrial chemicals is unknown, but must be substantiaL. The constat stream of illness results in inflated workers' compensation costs and, in the future, is quite likely to result in costly personal injury lawsuits as Greif workers deal with the effects of years of working with dangerous chemicals with little to no protection. Greifs employees are not the only victims of Greifs bad practices. The people who live in the communities in which Greif operates are also at constant environmental risk of being exposed to any number of dangerous, hazardous, and/or toxic substances, some of which are known to cause cancer and birth defects. For example, the Milwaukee facility sits across the street from a very impoverished neighborhood. The Oak Creek facility is overlooked by an immediately-adjacent soccer field (Kickers Creek Park). The St. Francis facility is adjacent to a small neighborhood. The Indianapolis facility is in the middle of a neighborhood and is one-half block away from a large daycare center. With the danger inherent in working with hazardous substances, especially in a careless manner, it is only a matter of time until Greif is the subject of one (or multiple) personal injury, wrongful death, or other mass tort lawsuit. Greifs management might be willing to assume this risk, but it is unfair to ask its shareholders to assume said risk without the knowledge necessar to make an informed decision. As demonstrated by the facts laid out in this disclosure statement, Greif has actively engaged in a massive cover-up to conceal its egregious noncompliance with several federal and Page 52 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle state environmental laws. Taken together, Greirs potential exposure for its environmental liabilities can conservatively be estimated as being tens of millions dollars. Yet, despite knowing that its plastic and steel container reconditioning business is exposing it to potentially huge liabilities, Greif has slowly decreased its environmental reserves for the division, thereby arificially inflating its income and misleading its investors into believing that the reconditioning division is becoming more environmentally responsible, not less. Respectfully submitted, ~?~ David . Colapinto Stephen M. Kohn KOHN, KOHN & COLAPINTO, LLP 3233 P Street, N.W. Washington, D.C. 20007-2756 Phone: (202) 342-6980 Fax: (202) 342-6984 Email: dc(akkf.&om sk(akkc.com Attorneys for Whistleblower June 27, 2016 Page 53 of 53 blower Disclosure Kohn, Kohn & Colapinto, LLP Confidential Whistle