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Speedy Auto Glass cited for 'kickbacks'
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Speedy Auto Glass, the nation's largest auto glass repair company, is being accused of operating a kickback scheme and defrauding British Columbia's public auto insurer.
In court documents filed Wednesday, the Insurance Corp. of B.C. alleges that at least five top officials at Speedy -- including its B.C. general manager and regional manager -- conspired to defraud ICBC.
The documents say Speedy officials, and their Burnaby-based parent company TCG International, engaged in a scheme to falsify documents, create duplicate sets of account books and offer "kickbacks." The documents allege that in an effort to attract large clients such as car dealerships and autobody shops, Speedy officials would initially accept the appropriate deductibles from such clients, but quietly reimburse them later. The documents refer to this as "the kickback scheme."
No estimate on the size of the alleged fraud was available Wednesday but the court-filed writ says ICBC has paid Speedy $20 million since January 2002 in respect to glass claims.
As a result of the lawsuit, ICBC severed all ties with the 38 Speedy outlets in B.C. -- some of which have been operating for 58 years.
The damning allegations were the product of months of investigations and complaints.
An internal ICBC memo from chief operating officer Bill Goble, obtained Wednesday by The Vancouver Sun, says the lawsuit follows an investigation into Speedy's compliance with the Glass Express program. The controversial ICBC program is aimed at serving customers better by eliminating the need to go to an ICBC claims centre.
"As a result of this investigation ICBC has commenced legal action against Speedy Glass and ICBC will cease doing business with all Speedy Glass locations," says the internal memo from Goble sent to employees on Wednesday.
"Under no circumstances should ICBC staff make any comment to the media," says the memo.
Doug McClelland, spokesman for ICBC, acknowledged Goble's memo as legitimate but refused to comment on any aspect of the case.
Stephen Schober, president of parent company TCG International, said he was shocked by the allegations.
"We were surprised to learn of the situation this morning. We are extremely concerned with the allegations contained in the documents filed in court earlier today," said Schober, reading from a prepared statement Wednesday but refusing to answer questions.
"It is certainly our policy to comply with the policies and procedures of ICBC. We have a code of conduct that requires our employees to act in an ethical and legal manner in all of their business affairs," he said.
The court documents say Speedy officials were waiving insurance deductibles in an effort to build business. By waiving the deductibles B.C. drivers should be paying, Speedy built its business and thus the salaries and bonuses paid to senior managers were increased.
If subordinate employees refused "to engage in such wrongful conduct [they] would be transferred out of British Columbia or their services would be terminated," says the writ.
The employees named in the writ are Bill Nears, general manager for Speedy Glass Shops and Gordon Fraser, the company's regional manager. At least three other employees are referred to as either John Doe or Mary Doe.
ICBC is handling the alleged fraud as a civil issue and has not asked police to investigate.
John Preissl, spokesman for the Auto Glass Survival Coalition, an industry group that has been battling the Glass Express program for years, said the crackdown on Speedy is long overdue.
"This is the start of a big cleanup program," Preissl said in an interview Wednesday.
Preissl said the allegations, if proven, are indicative of the unfair and illegal business practices within the automotive industry.
"Hopefully this will clean up the industry and ensure everyone is treated fairly."
Speedy was the largest participant in Glass Express, the ICBC program that owners of automotive glass shops have for years been criticizing as unfair, punitive, wasteful and harmful to business.
Some shops have had to hire full-time employees just to keep up with the paperwork imposed by the ICBC program.
The program sets standards for glass shops ranging from washroom cleanliness and opening hours to technician skills and signage.
On Wednesday, business owners were hoping the end is near for Glass Express.
"This program should be halted and put under full investigation," Preissl said. "It has cost a lot of people their livelihoods."
The investigation into Speedy appears to have been sparked by Lawrence Grant, owner of Rapid Auto Glass in Coquitlam, who has written letters to ICBC, cabinet ministers and MLAs in a two-year effort aimed at correcting what he saw as an injustice.
"There was an unfair playing field between the big corporate stores and the independents," Grant said Wednesday.
Grant said his complaints about unfair business practices at Speedy were largely dismissed and ignored.
"Everybody in the industry knew it was happening," he said. And yet "certain issues were not being investigated . . . I feel ICBC has finally opened up their eyes. This is a step toward treating everyone fairly."
The allegations suggest Speedy was improperly waiving deductibles for customers in an effort to win more business.
Here is how the scheme, according to industry insiders, is believed to have worked:
A customer comes in to have a windshield replaced, typically a $700 job.
The customer should pay an insurance deductible of $200, with the glass shop submitting a bill of about $500 to ICBC.
But the allegations facing Speedy suggest certain customers had either all, or part of, the $200 deductible waived. A Speedy employee would pay the deductible -- on a personal Visa card -- and be reimbursed later.
ICBC would be told the transaction was above-board and legitimate.
The Vancouver Sun has obtained a copy of a Visa statement, allegedly belonging to a Speedy Glass employee. The statement shows seven charges of either $100 or $200 were made from the Speedy Auto Glass outlet in Langley on the same day in September 2002.
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February 27th, 2004
Source: Canada.com |
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