Business

Probe into how R1.1bn in tyre levies was spent

2015-12-20 15:00

Two years ago, government launched a revolutionary tyre-recycling programme. But this week, the department of environmental affairs confirmed it had launched an investigation into how more than R1 billion in tyre levies has been spent.

The plan, gazetted in 2012, established a mandatory levy of R2.30/kg on any new tyre sold.

The levy went to a not-for-profit company called the Recycling and Economic Development Initiative of SA (Redisa) with the mandate to collect and recycle millions of waste tyres littering the country. Redisa’s pitch to the department was that it could turn “waste into worth”, and create 10 000 new jobs by 2018.

But now the department wants to know how Redisa has spent the R1.1 billion in revenue it has received, and whether it misled government about job creation.

Departmental spokesperson Albi Modise said on Tuesday: “The result of the investigation the department is undertaking on Redisa’s operations and financial matters would enable the department to have an opinion on whether any misleading information has been provided by Redisa relating to job creation.

“The department is also undertaking an investigation that would enable it to comment on whether the levies collected to date have been spent prudently,” said Modise.

The department said its investigation would be concluded by March.

Its announcement followed an exposé on the TV programme Carte Blanche last month, which questioned, among other things, why Redisa had spent R18 million on a luxury property in Morningside, Johannesburg, while its informal waste collectors were being paid just R2 a tyre.

On Thursday, Redisa director Stacey Davidson said they had not received official notice of the investigation, but added that they had no objection.

“Redisa has always been transparent in its operations and, as such, reports to the department on a monthly basis.”

Redisa boasted that it had created 3 023 jobs by the end of September.

A closer look at internal records shows that, of the 3 023 jobs, 1 948 were made up of informal waste collectors, or “waste pickers” – and of the 1 948 waste collectors on its books, just 54 were working and earning an income.

A former senior employee told City Press: “They register these guys and they report those registered figures to the minister. Guys will bring their documents, and they will register as waste pickers. Redisa will now take those figures – everyone who has a [Redisa] card – and refer to them as active waste pickers … It’s a smokescreen, to say to the minister: ‘Look, we’ve got an ID, we’ve got a job created.’”

Modise confirmed that Redisa told the department it had created 907 waste picker jobs by January 2015. But internal figures show only 37 people were actively working.

These internal figures were not disclosed to the department, said Modise.

Davidson concedes that “job opportunities” would be a more accurate description, but insists the department was not misled.

“It’s an income-earning opportunity,” she said. “It depends on how you’re going to define a job … Our internal desire is to have everyone on the system earning. So although we’re reporting everyone who has access to earning, our vision internally is to make sure everyone is earning.”

Another department spokesperson, Roopa Singh, said: “Redisa has not specifically explained [the distinction between job opportunities and actual jobs] to the [department] as it was considered general knowledge based on the understanding of the sector.”

Currently, waste collectors are paid R2 for each tyre they find, but they’re limited to a quota of 750 tyres a month, earning them a maximum of R1 500 a month. Members of cooperatives can earn an extra 15% in commission.

“It’s a system that doesn’t work,” said the former employee. “They can’t expect these people to pick up tyres at R2 a tyre and earn a living.”

A second Redisa employee said: “The biggest thing is the price per tyre they are being paid. People think it’s just too much effort for nothing. And [they’re] actually realising they are being used for reporting purposes. So it’s not being viewed as a genuine social upliftment project.”

Davidson said Redisa was planning to increase the price to R3 a tyre next year, but would drop the quota to 500 tyres a month – thus keeping the maximum income for a picker at R1 500.

“What [people] are currently doing [without Redisa’s programme] is burning tyres [to extract the metal] … for that, they get between 80c and R1.20 per tyre – and this is why [Redisa] looked at R2 a tyre to start off with,” said Davidson.

Despite making up 64% of Redisa’s claimed job statistics, informal waste collectors only received a 0.17% slice of the R328 million Redisa received from tyre-industry levies between March and September this year.

“The numbers make them look good with the minister, but they are right at the bottom of the ladder in terms of the reward that is given to them,” said the second Redisa employee.

One entity that is benefiting is the for-profit management company Kusaga Taka, which earns a set fee of 18% of Redisa’s revenue – about R206.5 million since 2013. Both Davidson and Redisa CEO Hermann Erdmann are shareholders of Kusaga Taka, but said this had been disclosed to all the relevant parties, including the department.

September 23 2018