Safety-Kleen settles two lawsuits

COLUMBIA - A hazardous-waste company has agreed to settle two lawsuits filed by angry investors who claimed questionable accounting practices allowed directors to hide the company's financial performance.

The investors are expected to receive $30 million under the agreement with Safety-Kleen and Laidlaw Environmental Services.

The settlement Wednesday came about a week before jury selection was to begin in Columbia, where Safety-Kleen was based until 2003, when it moved to Texas.

The settlement must be approved by a judge.

"The parties have reached an agreement to submit to the court that both sides believe will be approved," said Daniel S. Haltiwanger, a Barnwell attorney acting as local counsel for three of the four investor classes.

The trial was expected to last a month and detail the financial unraveling of the company. The lawsuits said a range of questionable accounting practices let the company's directors cook the books while outside accountants at PriceWaterhouse Coopers turned a blind eye.

Several former Safety-Kleen executives were reprimanded by the U.S. Securities and Exchange Commission, and PriceWaterhouse Coopers settled with two investor classes for $24.5 million.

Investors thought they were buying a stake in a sound company that earned millions each year disposing of hazardous waste that few companies could handle.

In April 1998, Laidlaw Environmental Services acquired the much larger Safety-Kleen and $1.8 billion debt to pull off the deal.

The lawsuits claim problems started before the deal closed.

Laidlaw officials are accused of employing questionable accounting practices that essentially overstated the company's revenue and income information used to secure the money to buy Safety-Kleen.

After the acquisition, some of the questionable practices used by Safety-Kleen's management gave the impression to investors that the company's revenues and income were hundreds of millions of dollars more than it actually was.

The suits claimed Safety-Kleen management double billed and made fictitious transactions.

Safety-Kleen suspended its top three officials in March 2000 and brought in outside investigators to look into the financial troubles.

Immediately, the company's stock price plummeted, and Safety-Kleen was in U.S. Bankruptcy Court three months later.

In July 2001, the company restated earnings to show a $1.46 billion loss instead of profits between 1998 and 2001. Creditors have filed $1.6 billion in claims against the company, nearly the amount Laidlaw paid to buy Safety-Kleen in 1998.