The Organisation Undoing Tax Abuse (Outa) on Tuesday welcomed Environmental Affairs Minister Edna Molewa’s decision to have the Recycling and Economic Development Initiative of South Africa (Redisa) placed under liquidation, but raised some questions about the move.

Last week, Molewa lodged an urgent application for the liquidation at the Cape Town High Court, after becoming aware of Redisa’s intention to cease the collection of waste tyres.

In an emailed response to questions asked by Engineering News Online, Outa water and environment portfolio director Julius Kleynhans questioned why “it took her five years” to see what several players in the industry warned against.

“As early as 2012, the South African Tyre Manufacturing Conference (SATMC), the Retail Motor Industry Organisation (RMI) and the Tyre Dealers Association brought court applications to have the Redisa plan set aside,” Kleynhans said.
 
Outa said it has investigated the programme extensively and said it was highly suspicious that a sustainable tyre recycling plan, formulated by the Tyre Dealers Association, which was supposed to be managed by the RMI, was taken over by Redisa CEO Hermann Erdmann.

“Not only was Redisa appointed as the service provider in the absence of a competitive bidding process, but all subsequent wheelings and dealings reeked of a lack of transparency and abuse of taxpayers’ money,” said Kleynhans.

Further, he pointed out that a consulting company partially owned by Erdmann, was allegedly appointed in the absence of competitive bidding processes as the management company responsible for implementing the plan at a fee of about R100-million a year.

“Soon after, again without a bid, the South African National Civic Organisation (Sanco) was appointed as a subcontractor to serve as a go-between for Redisa and tyre pickers, coming at an alleged initial cost of almost R3-million,” Kleynhans said, adding that “a host of individuals, allegedly with political ties”, received tyre recycling equipment valued at between R17-million and R30-million free of charge to start up their own tyre recycling businesses. 
 
“Our warnings that Redisa was nothing other than a get-rich-quick scheme for a small group of individuals, unfortunately turned out to be true,” said Kleynhans.

Outa called on Molewa to hold the directors of Redisa and all others who benefited unlawfully from Redisa to account. “She must lay criminal charges and take all steps to retrieve the money that was wasted.”
 
The organisation was also concerned that the Minister would now raise environmental recycling taxes merely to replace Redisa, without implementing fundamental changes in the recycling of tyres and other industry products.

“You cannot just replace one inefficient tax with another. Further, Outa believes, this industry can and should be self-regulated, like the successful Collect-A-Can project run by recycling company Petco,” Kleynhans concluded.