Worn tyre recycling levy criticised

Now there are allegations of a murky conflict of interest behind the scenes.

To carry out the plan, a non-profit company called the Recycling and Economic Development Initiative South Africa (Redisa) has been set up to collect a tax of R2.30/kg of tyres sold each year by manufacturers.

Because the tyre-makers sell an estimated 275,000 tons each year, Business Times calculations show that R632.5m will land in Redisa's coffers each year.

The plan could potentially create 10,000 sustainable jobs, through setting up 150 depots to collect and process old tyres for recycling, which will in turn be fed by small transporters. Some 200 jobs will be created at Redisa's headquarters.

But the manufacturers are not happy with the plan and have responded with a series of lawsuits against Redisa and Water and Environmental Affairs Minister Edna Molewa and her department.

The Retail Motor Industry organisation (RMI) is currently appealing against January's High Court ruling that the plan should go ahead. One reason, critics say, that the RMI does not support the plan is because it includes educating consumers about extending tyre life - which could lead to consumers buying fewer tyres.

This would obviously hit the motor retail and associated industries hard.

Other plans are better says RMI

But RMI chief executive Jeff Osborne denies this. "Safe driving and car-care habits, like correct tyre pressure [and] wheel alignment, does indeed extend tyre life. We support this completely, so tyre life has nothing to do with our position in the Redisa matter.

"There are other plans that have been submitted for approval and we view some of those plans as being a much better approach than Redisa's plan," he said.

RMI's appeal will be heard in May, according to Redisa chief executive Hermann Erdmann.

Meanwhile, the plan is going ahead. The first returns from tyre importers and local manufacturers were filed in February. Redisa director Stacey Davidson said it sent out its first invoices last month and tyre manufacturers and importers now have 90 days to pay.

But there appear to be conflicts of interest at Redisa itself. The suggestion appears to be that directors of Redisa have appointed people close to them to do the work - which will ultimately be paid for by the tyre tax.

The plan, as gazetted by Molewa, calls for Redisa to have 10 independent board members to guard against "narrow sectoral influences or private enterprises taking over or high-jacking [sic] the aims of the organisation".

It also requires that this board outsource Redisa's operations to an external management company - which then reports directly to the board.

But Redisa currently only has five board members. Erdmann said more would be appointed this year.

Also, it appears that three of the directors - Erdmann, Davidson, and Charlie Kirk - are "controlling" shareholders in Kusaga Taka Consulting, the supposedly independent management company appointed by Redisa.

No tender was issued before Redisa appointed Kusaga Taka to do the work.

Erdmann maintains that no directors are involved in the management of Kusaga Taka, which has provided - through a credit facility guaranteed by the shareholders - a R70-million budget for Redisa's work prior to the collection of the tyre levy.

But Kusaga Taka's operations director is Sam Robertson - who founded a law firm, Robertson Teuteberg Kirk Inc, with Redisa's board member Kirk. Kirk became a director of the Redisa board in 2011 and, to make the matter even more complicated, the law firm then landed a contract with the RMI to train its members on how to comply with the Consumer Protection Act (CPA).

When quizzed about this, RMI boss Osborne denied there was any relationship between his organisation and the law firm.

But, when presented with the evidence, he said: "[The] question was, 'Do we have a relationship with Robertson Teuteberg Kirk Attorneys?', the answer remains no.

"They provided a CPA training service over a year ago, which was for a fixed term and duly terminated at the end of June last year. We have no current dealings with them in any shape or form," Osborne said.

But Erdmann said that Robertson and Kirk ended up doing so much work surrounding consumer issues for Redisa that they were incorporated into its operations.

Source: Business Times via I-Net Bridge