Analysis

The Battle For The R700m Capture of Tyre Recycling

The conudrum: Minister Molewa and the looters of tyre levy

IN a series of articles, we bring you the first of a story of how a small group of individuals used the R700m per annum waste tyre levy as a quick-rich scheme to enrich themselves and few of us even know about it. The Department of Environmental Affairs (DEA) called for submissions recently having applied for liquidation of Redisa and its management company that looted the tax payer close to R2billion at the time of liquidation. No lessons have been learnt….Two companies  are at the forefront of screwing the tax payer again…

Many South African citizens wont know that for every tyre they buy there’s a percentage taken off that goes towards creating an effective waste tyre recycling industry in South Africa.

After a legal spat in the courts, the Supreme Court of Appeal some years ago eventually approved The Recycling and Economic Development Initiative of South Africa’s (Redisa’s) as the waste tyre management plan for South Africa. It was managed by its company Kusaga Taka Consulting, placed in liquidation last year, and a court order granted to have all its assets placed under the Waste Management Bureau.

The total amount collected by the Department of Environmental Affairs (DEA) comes to around R700m per annum, the management of which was fraught with allegations of widespread corruption and misappropriation of the waste tyre management levy. There were also allegations of nepotism and plainly overlooking the new entrants in the tyre recycling business in favour of companies formed by Redisa. In effect, REDISA played the role of player and referee,the accusations went.

Judge Henney confirmed the corruption.

In his judgement last year, Judge Henney said there had been “an unlawful misappropriation of public funds” by the Redisa directors Herman Erdmann, Stacey-Inger Davidson and Charline Kirk through Kusaga Taka to Avranet and Nine Years Investments as well as by Kirk and Kusaga Taka chief executive Christopher Crozier through Nine Years Investments.

These unlawful payments were in direct contravention of the Companies Act, as well as Redisa’s memorandum of incorporation, he said.

Judge Henney said Erdmann had a substantial shareholding in Kusaga Taka through Nine Years Investments and Davidson through Avranet.

Davidson was the sole shareholder in Avranet.

Kusaga Taka, as a private entity, through its chief executive Crozier “had been implicit in using Kusaga Taka as a vehicle through which money had been misappropriated to Erdmann, Davidson and Kirk”, he said at the time.

Minister of Environmental Affairs Edna Molewa applied for the liquidation of Redisa and at the time of her application it was estimated that Redisa had collected around R2 billion.

And yet those at the helm meant to fashion a process of a new path for the management of the waste tyre levy have seemingly learnt nothing from the past rogues who ran it.

The two front runners who responded to the environmental ministry’s call for industry players to submit waste tyre management plans not only face allegations of links with the dysfunctional Redisa but they also want, much like their predecessor, to be manager of the plan and service provider at the same time – a clear case of playing player and referee. To make matters worse one of the shareholders allegedly faces criminal charges and left Redisa under a cloud of misconduct.

The two organisations which made submissions are The South African Tyre Reuse Company (SATRUCO) and Tyre Waste Abatement & Minimisation Initiative of South Africa (TWAMISA).

A quick perusal of the SATRUCO website’s executive team, at the helm of which is one Hugh Mtshali, shows no experience in waste management, let alone that of tyres, but there’s also no response to the telephone number listed on the website. The email listed returns a standard message that says the organisation acknowledges the senders email and that’s where it ends.

The other, TWAMISA, is owned by Suzana Heregova, who would not go into the details of the shareholding. In fact, she would not answer the detailed questions UnCensored put to her about her organisation and questions of conflict of interest. She would only say: “The comments you are referring to are part of an ongoing process of the Department of Environmental Affairs’ (DEA) evaluation of the industry waste tyre management plans submissions.  We will follow the prescribed process and respond to the comments received from the public to the DEA, once we have been requested to do so by the DEA”.

It is however alleged she’s the sole director of TWAMISA although her plan was submitted under another company she owns, Danubia. Attempts at getting through to TWAMISA came to naught. UnCensored finally got hold of her through the Danubia contact details. She, according to comments made at the public hearings which followed the call for submissions, conceded she had “no experience”. It is abundantly clear from looking at Redisa and it’s management company the danger in having sole directors and their ability to syphon funds from the tyre levy for personal gain without hinderance since they don’t have to account to other shareholders.

Conflict Of Interest – Vested Interest

Like their predecessors, the two companies vying to mange the R700m per annum tyre levy have vested interest in the value chain of the waste tyre management process.

SATRUCO’s Johann Lehmann’s LinkedIn profile shows he’s the managing director of Kabusha OTR.

  • A Mining Weekly feature on the 5th of February 2016, states that Lehmann is the Director of Kabusha OTR, and the article further states that Kabusha OTR joint venture will operate from Westonaria, Gauteng Province. The site in Westonaria is owned by Warren Diab
  • Lehmann is also the Chief Operating Officer of Nettworth Converters in Bronkhospruit
  • Hugh Mtshali, current CEO of SATRUCO is a former director of Nettworth.
  • According to submissions of comments made at the public hearings, Hegerova is in a commission arrangement with Diab’s company for the marketing of Diab’s mobi-shred equipment. Hegerova is the one who identified and recommended Diab’s site in Westonaria to Reisa for rental, which Redisa subsequently signed a lease agreement for as a Depot during the few months she was employed as a property acquisition consultant at Redisa.

Consultation with Current Waste Tyre Service Providers

One of the requirements of the brief from the Department of Environment Affairs (DEA) was for the proposed plans to consult with current suppliers. This didn’t happen and SATRUCO said it didn’t know there existed current players. When the company was confronted with evidence that its representative Lehman had known of current players from his consultancy work for Redisa, they (SATRUCO) conceded knowledge of these service providers

Fraud Charges Against SATRUCO Member

  • It emerged through the hearings that Johann Lehmann had not only consulted for REDISA but he had left his employment under a cloud having been suspended for misconduct. There’s also a case of fraud instituted against Lehmann in the Claremont SAPS.

The story continues….

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