Some years ago - in 2015, 2016 and 2017 - we brought you stories about the Recycling and Development Initiative of South Africa, known as REDISA.
REDISA created and managed a national network for collecting waste tyres, storing them and delivering them to recyclers for processing. REDISA's plan was approved by the Minister of Environmental Affairs in 2012.
During our five-year investigation, we considered and reported on REDISA's use of government funds and whether it and its executives were fulfilling the mandate given to it under the applicable legislation.
REDISA sued Carte Blanche for defamation in November 2019. Carte Blanche and REDISA have resolved that litigation and have agreed that, while Carte Blanche at all times acted reasonably in our investigation, it is appropriate that viewers are made aware of material updates in relation to REDISA at this stage.
The Minister of Water and Environmental Affairs, then Ms Edna Molewa, approached the Western Cape High Court in June 2017 without notice to REDISA, for an order placing REDISA under provisional liquidation. An order for REDISA's final liquidation was granted in September 2017. REDISA successfully appealed that order to the Supreme Court of Appeal.
In a majority judgment handed down in 2019 the Court made the following findings:
- The Minister had made no allegation that the Plan was not a good one or that its proper implementation was not in the public interest.
- The REDISA plan did not draw on public taxpayer funds as it was self-funded.
- REDISA's executive directors: Hermann Erdmann, Charlene Kirk and Stacey Inger Davidson, had properly disclosed their shareholding in Kusaga Taka, the management company appointed to oversee the implementation of the REDISA plan.
- REDISA had reported regularly to the Minister on its finances and the extent of the independence of its board. REDISA’s audited financial statements were unqualified. The Minister had not pleaded in her papers that the REDISA scheme was developed to misappropriate public funds.
- The Minister was aware of the management contract between REDISA and Kusaga Taka.
- A calculation based on REDISA's financials showed that the management fee paid to Kusaga Taka was permissible under the REDISA plan, and that the management contract between REDISA and Kusaga Taka was bona fide.
- As their shareholding in Kusaga Taka was properly disclosed, the fact that the REDISA directors received dividends from Kusaga Taka did not amount to a misappropriation of funds.
- It could not be said that REDISA's directors had unlawfully channelled funds collected by REDISA for their personal benefit.
- REDISA’s business plan, in which certain funding issues were highlighted, did not reflect "a dissipation of cash" by REDISA. Rather, REDISA experienced funding shortfalls because of the Minister's attempts to cut off its funding source, namely a tyre levy.
- REDISA's executives' remuneration was set by an independent committee on which the executive directors did not serve. They were not excessively remunerated according to the PwC benchmarking reports of June 2013.
- The Minister had not disclosed material information to the court, without a satisfactory explanation for this failure.
- The Minister also obtained a liquidation order against REDISA's management company, Kusaga Taka, which the SCA overturned on similar grounds.
Read the full SCA judgment below.