OUTA commends DEA on action against REDISA

“We are excited to see the DEA taking action but concerned it took five years to acknowledge several industry players' warnings. We hope these transgressors will not only be liquidated but will be prosecuted and held accountable for their transgressions,” said Julius Kleynhans, Portfolio Director for Water and Environment at OUTA. “Those who abuse tax money for personal gain must be brought to book in South Africa,” Kleynhans added.

In 2012 the SA Tyre Manufacturing Conference (SATMC), Retail Motor Industry Organisation (RMI) and the Tyre Dealers Association were unsuccessful in a court application to have the REDISA plan set aside.

Investigations by the Organisation Undoing Tax Abuse (OUTA) and Carte Blanche exposed millions of rand being earned by consultants and board supporters, while hardly any tyre recycling was taking place. “We found it highly suspicious that a sustainable tyre recycling plan, formulated by the Tyre Dealers Association and to be managed by the RMI, was taken over by Hermann Erdmann and REDISA. 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 lack of transparency and abuse of taxpayers’ money,” Kleynhans explained.

Kuzaga Taka Consulting, a company partially owned by Erdmann, CEO of REDISA, was appointed as the management company responsible for implementing the plan at a fee of approximately 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 - at an alleged initial cost of almost R3 million. Soon after, a host of individuals, allegedly with political ties, received tyre recycling equipment totalling almost R100 million free of charge to start up their own tyre recycling businesses.

“Our warning that REDISA was nothing other than a get rich quick scheme for a small group of individuals turned out to be true. We now trust Minister Molewa will hold the directors of REDISA,  Kuzaga Taka Consulting and all others who benefitted unlawfully from REDISA, to account and take all steps to recover the money wasted,” says Kleynhans.

OUTA furthermore expresses concern that the minister will replace the REDISA levy with another inefficient environmental tax, without necessarily implementing fundamental changes to the recycling process. They cannot replace one inefficient tax with another and expect a different outcome. It is OUTA’s view that the minister must meaningfully engage with the various industries to find the solutions and benefits of recycling so no unnecessary taxes or levies are raised. Recycling of almost any product today, should be treated as a self-sustaining industry which does not rely on an overtaxed public to survive.