The controversial Recycling and Economic Development Initiative of South Africa’s (Redisa), the only approved waste tyre plan for the country, has been placed in provisional liquidation, following an urgent High Court application by Water and Environmental Affairs Minister Edna Molewa.
The application was launched by Molewa after she became aware of Redisa’s intention to cease collecting waste tyres effective from last Thursday.
It also followed Molewa last week giving notice that she was considering the possible withdrawal of Redisa’s integrated industry waste tyre management plan for multiple reasons, including Redisa’s failure to achieve its objectives and the lack of proper governance and/or accountability.
Molewa said on Friday that the successful urgent liquidation court application to the Cape Town High Court was made “to safeguard the operations and assets” associated with the Redisa plan.
Darusha Moodliar from Sanek Trust Services has been appointed liquidator of Redisa.
Redisa’s decision to cease all waste tyre collections follows the implementation effective from February 1 this year of an environmental tyre levy through the Customs and Excise Act.
This resulted in the prescribed levy of R2.30 a kilogram excluding VAT being paid to the SA Revenue Service (Sars) instead of directly to Redisa.
Hermann Erdmann, the chief executive of Redisa, claimed last week Redisa had not been allocated any funds post February 1.
In terms of the court order, the provisional liquidator was directed to take immediate control of the business of Redisa, including the administration and implementation of the approved plan, the registered office of Redisa and “of all assets” found at its offices in Claremont in Cape Town.
This includes control over and “full and unrestricted access to the Oracle computer system and all bank accounts” held by or on behalf of Redisa.
The powers of the provisional liquidator included the power and authority to continue to conduct the business of Redisa as a going concern.
Molewa assured all stakeholders that her department was acting in the best interests of the waste tyre management industry, the workers, small, medium and micro enterprises and the public and would endeavour to manage the process in the best manner possible.
Redisa’s approval in 2012 by Molewa was marked by controversy, with both the SA Tyre Manufacturing Conference (SATMC) and Retail Motor Industry Organisation (RMI) and the Tyre Dealers Association both launching court applications to oppose this approval and for Molewa to consider approving more than one waste tyre plan for the country. The SATMC failed to respond to a Business Report request for comment.
Jakkie Olivier, the chief executive of the RMI, said it had from the outset viewed the Redisa plan with great scepticism for a number of reasons.
These included Redisa’s flagrant disregard to address the governance issues as revealed by the formal review of Redisa by an accredited audit firm and the unworkability and poor execution of the plan. He said the RMI had warned right up front “the intention was self enrichment” and had requested that waste tyre levies not be paid directly to Redisa but through Sars to ensure control of these funds by the Auditor-General and through the Public Finance Management Act.
Olivier said Molewa’s action came in the face of multiple and continued representations over an extended period to both Redisa and the environmental affairs department about the poor operational functionality of the Redisa plan.
“We’re pleased with the swift action (by the Minister) at the end, but it’s a sad moment, because it’s what we asked for from the beginning and over many years,” he said.
Olivier expressed concern about the huge inconvenience that would be caused to the tyre fitment industry by Redisa’s liquidation, because tyre dealer would now not have any method of removal or disposal of waste tyres and limited capacity to store waste tyres. He said the non collection of tyres also left waste tyre collectors “at a point of destitution”.