Analysis

Waste Tyre Industry Accuses Minister Mokonyane of Sneaking In Redisa Through The Back Door?

By Pinky Khoabane

ENVIRONMENTAL AFFAIRS Minister Nomvula Mokonyane is pushing ahead with a plan to continue outsourcing the development and implementation of South Africa’s Integrated Industry Waste Tyre Management Plan despite a resolution in a meeting with then Acting Environmental Minister Derek Hanekom taken last year, for the formulation of a government driven plan developed by an organ of state. This is the contention of industry players who are adamant that the resolution in a meeting with Hanekom last October was lawful and binding. 

Of great concern to industry players is also the inclusion of Redisa among the companies which have submitted revised plans for waste tyre management despite a litany of allegations of corruption, conflict of interest, the failure to perform, and serious lapses of governance – among other reasons – which prompted the late Minister Edna Molewa to withdraw the Redisa plan in 2017. She then filed for the liquidation of both Redisa and its management company Kusaga Taka (KT). In 2017 Judge Henney granted the final liquidation. He found there had been “an unlawful misappropriation of public funds” by Redisa directors. This led to a protracted legal battle between the Department of Environmental Affairs (DEA) and Redisa and Kusaga Taka which culminated in the Supreme Court of Appeal (SCA) which set aside both liquidation orders early this year.  There was however a minority judgement by Judge Mahube Molemela who disagreed with every point taken by her colleagues on the bench.

She said Redisa directors were ineligible to be appointed because of a “linked series of relationships and directorships in other companies involved in the tyre waste stream.

“There was an untenable conflict of interest. They flouted various principles of corporate governance. Three of the directors controlled KT and this was never disclosed”. She said while the salaries were benchmarked by PriceWaterhouseCoopers (PwC) she could not agree that a salary of the CEO at R4m per annum and perks including R548 000 for rental for his home, was not excessive.

Following the SCA ruling, Redisa approached the Western High Court to have the DEA review the withdrawal of the Redisa Plan, reinstate Redisa and the indefinite operation of the Redisa Plan. 

While the saga was raging through the courts, the Department of Environmental Affairs (DEA) had in the meantime called for submissions for a new waste tyre management plan in terms of Section 28 of the National Environmental Management: Waste Amendment Act 26 0f 2014. The plans submitted did not meet the technical and waste management requirements and the process was deemed to have failed. 

In October 2018, Hanekom held a meeting with industry stakeholders at which he allegedly informed them that neither plans were viable for the management of waste tyres and thus the Section 28 should be concluded and the Minister should therefore give effect to the provisions of Section 29, which effectively calls for the formation of a government driven plan developed by an organ of state instead of the current situation, where the plan is owned by a private company. 

The South African Tyres Manufacturers Conference (SATMC), which represents the South African subsidiaries of multi-nationals operating in South African, in a letter to Finance Minister Tito Mboweni which UnCensored has seen, said the resolution of that meeting was lawful and binding. 

Many stakeholders in the waste tyre management industry including the Waste Tyre Management Forum and SATMC have questioned the decision by the Minister not to appeal the SCA judgement. They say the fact that there was a minority judgement which was scathing of Redisa ought to have been motivation enough for the Minister to appeal, let alone the discrepancies that had arisen from the judgement and which have led to a number of ambiguous areas.

The BBBEE entrepreneurs in the industry for example, are concerned that their equipment which was funded through the Redisa plan as part of the mandate to develop SMMEs in the industry, could be taken back. Some say Redisa has already visited some depots with the intention of taking-back the equipment. There is uncertainty over who owns the assets which Redisa allegedly bought with tax payers money for the purpose of uplifting small businesses and creating jobs, but which are likely assets of the management company, Kusaga Taka, majority owned by Redisa directors. Redisa said it couldnt respond to these allegations because the Redisa Plan was sub judice. 

The tyre manufacturers are concerned about the fiscal and public finance implications of the SCA judgement. The suggestion by the SCA judgement for example, for Treasury to transfer funds accrued from the tyre levy to Redisa is a contravention of the Public Finance Management Act (PFMA) and laws which came into effect from 19 January 2017 prohibiting Redisa from collecting the tyre tax directly from manufacturers and legally obligating Sars to undertake this function. 

In the letter to Mboweni SATMC quiz the Minister of Finance on whether he had seen the draft Redisa plan, whether he was privy to the SCA judgement and whether he was aware of parts of the judgement that impacted treasury.  They went further and accuse Mokonyane of failing to act in the interests of the tyre manufacturing industry and implored Mboweni to consider opposing Redisa’s application in the Western High Court for the review, reinstatement and indefinite operation of the plan.

The Department’s spokesperson, Prince Mlimandlela Ndamase, said the Minister had received legal opinion advising her not to appeal given the prospect of success in the Constitutional Court and the fact that it could take up to two years to have the matter heard, in which time, the process to have a waste tyre managed plan would have been stalled. He cited the challenges faced by the Waste Management Bureau, which took over the implementation of the Redisa plan when it was withdrawn in 2017, as part of the reasons the Minister wanted the matter addressed urgently. 

“Not so”, said industry players who spoke on condition of anonymity. 

In a letter to Finance Minister Tito Mboweni, Mokonyane confirmed discussions with Redisa to “explore legal mechanisms by which a revised plan from Redisa may be considered for reinstatement”. In this regard, the DEA was given options by which the process could be undertaken. 

These discussions between Redisa and DEA have also been a bone of contention with industry stakeholders who accuse the department of lack of transparency in dealing with Redisa. Legal opinion which UnCensored has seen, clearly states that the Redisa plan came to an end in 2017 and that the DEA had no obligation to reinstate Redisa. 

Ndamase said the Minister was in discussions with Redisa to find a way forward without further litigation. He was emphatic that the Minister would not appeal the SCA judgement. 

An email from Stacey Jansen, Director of Redisa, shows she submitted a “revised Redisa plan” on 26 April 2019.  This week, an email circulating among members of DEA shows that the plan was received and being tabled for consideration:

Minister asked for us to meet with Redisa and to provide recommendations from both CWM and Waste Bureau on the options regarding REDISA. 3 Options were submitted by Redisa; namely 

  1. section 28 submission with a condonation request considering late submission,
  2. Service Level Agreement with a deviation for sole provider (National Treasury concurrence) and/or
  3. Re-instatement of the Redisa plan coupled with a declaratory order (affidavit deposed by Minister)

Any of the option would need to have an operational plan that can be put into effect as and when the Minister takes a decision. We were given to understand that Redisa will not be following a S28 process and that a court application was made by Redisa to reinstate their plan.”

Industry players, speaking on condition of anonymity, said the DEA was currently “subverting the system to accommodate Redisa”. They accused the Minister of pushing the process through in time for the end of this administration in case she didn’t return. 

Approached for comment and a response to allegations over concerns over equipment and the basis on which Redisa submitted the “revised plan” and the revisions that were made in the plan, Jansen said the Redisa plan was subjudice and was unable to comment any further. 

This is an ongoing story 

 

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