WESTERN CAPE DIVISION, CAPE TOWN Case Nr: 9675/2017 ... · PWC was informed by Ms Davidson that the...

IN THE HIGH COURT OF SOUTH AFRICA WESTERN CAPE DIVISION, CAPE TOWN

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Case Nr: 9675/2017

In the matter between:

THE MINISTER OF ENVIRONMENTAL AFFAIRS

and

RECYCLING AND ECONOMIC DEVELOPMENT INITIATIVE OF SOUTH AFRICA NPC (Registration number 2010/022733/08)

REPLYING AFFIDAVIT

I, the undersigned

BOMO EDITH EDNA MOLEWA

state the following under oath

Applicant

Respondent

1. I am the Applicant herein, acting in my official capacity as the Minister of

Environmental Affairs.

2. The facts stated in this affidavit are true and correct, and fall within my personal

knowledge unless the context indicates otherwise. Where I am forced to make

submissions of a legal nature, I do so in good faith on the advice of my legal

representatives and in the belief that their advice is correct

3. I have read the answering affidavit deposed to by Mr Erdmann on 19 June 2017,

allegedly on behalf of the directors of Redisa, but without providing the

Honourable Court with any resolution by the Board of the Respondent to that

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effect I therefore dispute Mr Erdmann's allegation that he has the necessary

authority and/or the mandate of the board of directors of Redisa to depose to the

said answering affidavit

4. Before I reply to Mr Erdmann's answering affidavit, I pause to inform the

Honourable Court of further evidence which supports the allegations in the

founding affidavit and that became available to the Department only after Mr

Erdmann's answering affidavit was served. I will therefore in this Replying

Affidavit first deal with the new substantiating evidence that became available to

the Department, and then reply to Mr Erdmann's answering affidavit in as far as

that may still be necessary.

5. Some of the recently discovered evidence was at all relevant times in the

possession of Mr Erdmann and/or in possession of the Respondent, yet Mr

Erdmann chose not to share the contents thereof with the Department or with

this Honourable Court, presumably because the majority of it undermines the

Respondent's case and provides support for the Applicant's case.

6. In his answering affidavit herein, Mr Erdmann conveniently makes no mention at

all of the "full PWC report" dated 13 March 2017, which in fact serves to reply to

(and refute) a large number of the allegations made by Mr Erdmann in the

answering affidavit I return to discuss the contents of the "full PWC report''

herein below.

7. Apart from the "full PWC report" and the executive summary thereto, a forensic

audit report as commissioned by the provisional liquidators, also became

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available. We have also now for the first time received copies of the

employment contract for Mr Erdmann, the actual management agreement

between the Respondent and Kusaga Taka Consulting (Pty) Ltd (in liquidation)

as well as two different amendments thereto, and the sub- lease agreement

between the Respondent and Kusaga Taka Consulting (in liquidation).

NEW SUBSTANTIATING EVIDENCE

8. On 22 June 2017, while I was travelling abroad for business purposes and it was

due to logistical challenges, impossible for me personally to address this issue,

the Director-General of the Department addressed a letter to Mr Adam Harris,

the legal representative of the provisional liquidators, a copy of which is attached

hereto as annexure 'BM 80', in terms of which the annual independent audit as

provided for in paragraph 2.1.5 of my letter of approval of the Redisa Plan

(annexure 'BM 4'), was requested from the provisional liquidators, due to the fact

that the responsibility to report to the Department now falls on the provisional

liquidators

9. When I reached the next city of my official travel where the logistics allowed me

to send and receive emails, I also addressed a letter to Mr Harris, a copy of which

is attached hereto as annexure 'BM 81', in which I informed Mr Harris that in the

exercise of my right as reserved in paragraph 2.1.2 of my letter of approval of the

Redisa Plan (annexure 'BM 4'), as well as to fulfil my duties and obligations in

the public interest and to enforce the statutory controls under the applicable

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environmental legislation which I as the relevant Minister have the authority and

the duty to enforce, I altered the reporting frequency and that I demand

immediate delivery from the provisional liquidators, within 48 hours from receipt

of my letter, of (1) the information and documents as contemplated in paragraph

2.1.3 of my letter of approval of the Redisa Plan, insofar as that information and

documents may be in the possession of the provisional liquidators and/or under

their control, and (2) of the independent audit commissioned as contemplated in

paragraph 2.1.4 of my letter of approval, inclusive of the detail I required in

paragraph 2.1.5 of the said letter of approval, including any provisional report of

the forensic audit commissioned by the provisional liquidators and any other

available information and/or documents that would enable an assessment of the

current performance and compliance levels of the Redisa Plan. For the sake of

clarity I have also attached to this letter copies of the letter from the Director

General referred to above (annexure 'BM 80'), a copy of my letter of approval

(annexure 'BM 4'), as well as a copy of my notice to Mr Erdmann as the CEO of

the Respondent dated 30 May 2017 (annexure 'BM 76'), in terms of which I

informed Mr Erdmann of my intention to consider the withdrawal of the approval

of the Redisa Plan.

10. Mr Harris responded by email on 24 June 2017 on behalf of his clients, the

provisional liquidators, a copy of which email is attached hereto as annexure 'BM

82', in which email Mr Harris confirmed his clients' intention to cooperate fully.

within the bounds of what is achievable within the timeframes set out, and the

limitations placed upon his clients being in office for only some three weeks.

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later on 24 June 2017, the Department received another email from the attorney

of record for the provisional liquidators, a copy of which email is attached hereto

as annexure 'BM 83', under cover of which the Department received the following

documents

10.1 PWC Redisa Final report 13 March 2017;

10.2 PWC Executive Summary (final}; and

10.3 A@L initial report to the liquidators updated to 23 June 2017.

11. These documents made for some interesting reading, the relevant details of

which I briefly summarise herein below.

12. The PWC Redisa Final report

On 13 March 2017 PWC addressed a final report to Mr Erdmann personally as

the CEO of the Respondent, which report Mr Erdmann conveniently omits to

inform this Honourable Court of, under the title "Review of the operational

compliance of Redisa to the Integrated Industry Waste Tyre Management Plan

and consideration of matters relevant to the Plan', a copy of which is attached

hereto as annexure 'BM 84'.

Insofar as the contents of this report, and especially the information that PWC

relied upon (as provided to them by the Respondent} does not accord to my

founding affidavit and the annexures thereto, I deny the contents of this report.

However, the following information provided in the PWC final report is of

relevance:

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12.1 This report once again, like the other PWC report (annexure 'BM 7'),

contains certain qualifications and/or limitations, namely

12.1.1

12.1.2

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The report and findings therein, are for the exclusive use of the

Respondent and its appointed legal representatives and no other

party, whether referred to therein or not is entitled to rely on the

views expressed in the report without the prior written consent of

PWC (on page 1 thereof). Whether or not PWC have given

consent for the disclosure of the contents thereof, PWC will not

accept liability or responsibility to any other party you may gain

access to this report (paragraph 2 07 on page 9 thereof)

The Respondent did not ask PWC to compare their findings to

that of iSolveit and PWC did not endeavour to do so (paragraph

1.19 on page 8 thereof). Mr Erdmann's continuous reliance

thereon that the PWC report/s refuted the findings of the iSolveit

team, is therefore completely baseless.

PWC's work was based only on the information, interviews and

documentation provided by the Respondent (paragraph 2 02 on

page 8 thereof) PWC has therefore not verified any of the

information that the Respondent provided to them - should any

of the documents and/or information provided by the

Respondent be incorrect, the findings of PWC, based on that

12.1.4

12.1.5

12.1.6

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incorrect information, would likewise be incorrect

The information supplied to PWC was taken at face value and

PWC cannot confirm the completeness or authenticity of

information used in performing their work nor can they confirm

that they had sight of all relevant documentation (paragraph 2.04

on page 8 thereof).

PWC was not required to, nor did they undertake an audit in

terms of the International Standards on Auditing (paragraph 2.05

on page 8 thereof). PWC was further not mandated by the

Respondent to perform any of the following procedures

a) Audit or other assurance procedures of the operating

efficiency of the National Centralised Computer System

("NCCS") and its associated support systems; and

b) Audit or other assurance procedures over any of the

Information Technology General Controls ("ITGC'S") or

application controls associated with any of these

applications.

Mr Erdmann's continuous reliance on the external 'audit' by

PWC is therefore also false.

PWC was not mandated to comment on the independence of the

Board and they have not endeavoured to do so (page 125

12.1.7

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thereof).

PWC was informed by Ms Davidson that the Respondent, after

receipt of the PWC report dated 5 April2016 (annexure 'BM 7')

performed "a follow-up calculation" in order to assess what the

position of the Respondent would be if no more levies were

collected or earned from 1 September 2016. PWC was then

informed that the Respondent would only be able to operate for

an additional 2.5 months before becoming insolvent during mid

November 2016 (paragraph 4.89 on page 127 thereof). Ms

Conceivious then informed PWC that the decrease in the length

of time that the Respondent would be able to operate from 8.38

months to more or less 2.5 months, is due to "increased monthly

costs, increased committed costs for the product testing institute

(referring to the unauthorised establishment of another non-profit

company and the unlawful move of public funds thereto, namely

the Product Testing Institute NPC - also now in provisional

liquidation) and onerous contract liabilities" (paragraph 4.89 on

page 127) PWC specifically states that they have not

evaluated the calculation performed by the Respondent and that

they have not performed any work relating to the comments

made by Ms Davidson or Ms Conceivious (paragraph 4.90

thereof).

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12.2 In terms of the Redisa Plan the NCCS had to provide the primary audit trail,

from which the Respondent had to provide detailed annual reports to the

Department, inclusive of tonnage of waste tyres received and processed,

material composition breakdown, and Funds collected and expended

(paragraph 14 page 19 thereof) The NCCS also had to, amongst other

functionality, manage the flow of tyres to meet the required supply levels

and avoid over-supply. The Respondent had to keep records on the

NCCS of the tonnage delivered to and/or received by each depot and the

payments to the transporters for tonnage delivered to and/or received by

each depot, while the depot had to indicate by kilograms the mass of waste

tyres received and disposed of. Auditing then had to be done via the

NCCS, which will provide information for the Management Company

(referring to Kusaga Taka Consulting- in provisional liquidation) to audit at

any time, and which had to keep accurate records on logistics, support, and

accounting of all waste tyre movement throughout the process (paragraph

24 page 23 thereof). In respect of the NCCS, PWC however finds (in

paragraph 14 on page 34 thereof) that-

12.2.1 the NCCS (after the Respondent paid R 76 million for the

system, and after about 4.5 years into the five-year period of

approval of the Redisa Plan) "is still in the process of being

developed by Redisa. From discussions with various

individuals it was noted that the final version of the system

12.2.2

12.2.3

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should be in place by March 2017' (while the Redisa Plan would

in any event expire by 30 November 2017);

"Through the external audit testing performed under section 26

of the Plan it was noted that the NCCS has not been audited bv

an external auditor to date."; and

There are instances, either where the reports are not working

properly or where information is not captured on the NCCS (such

as tonnage processed by recyclers) and the NCCS also does not

identify anomalies and variances that trigger investigations as

and when needed. With this knowledge the Management

Company (Kusaga Taka Consulting) however uses the reports

generated by the NCCS for monthly reporting purposes to the

Department

12.3 PWC confirms that financial audits have been performed by KPMG on an

annual basis for all financial years since 2013 up to date, but that the

reguired annual performance audit in terms of paragraph 2.1.5 of my letter

of approval (annexure 'BM 4') has never been performed. While KPMG's

draft report in respect of the ongoing performance audit showed no

workings or findings related to the requirements of paragraph 2.1.5 of my

letter of approval, KPMG is allegedly since November 2015 in the process

of performing a performance audit for the period of March 2014 to

November 2015 (which was in March 2017, some two years later, not yet

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completed) (paragraph 24 page 37 thereof)

12.4 PWC found (on page 44 thereof) that the adjudication committee of the

Respondent did not function as provided for in the Redisa Plan, in that-

12.4.1

12.4.2

12.4.3

12.4.4

12.4.5

only one member of the Redisa Board was present at a meeting.

while two members are required to be present at such meetings;

the adjudication committee did not discuss the necessary factors

for any of the contactors allegedly adjudicated, namely the

BBBEE status of a contractor, its financial proposal, its ability to

execute, its competencies, its size and its area of operation;

no evidence could be obtained that adjudication decisions were

reached through a two-thirds majority;

4 out of the 15 adjudicated processors selected for the

investigation by PWC, were in fact not processors but they

utilised waste lyres for their own purposes; and

in some instances no adjudication scorecard could be supplied

and in other instances no supplier agreement or supporting

documentation for on-boarding and validation could be supplied

12.5 In respect of payments to processors. PWC found that the Respondent

made payments to alleged processors while no contract was in place, and

some of the sample payments they investigated, could not be agreed to the

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contract as no amount was stipulated in the contract (paragraph 4< 17 on

page 49 thereof)<

12<6 Several compliance issues were found with the registration of transporters<

The Respondent made payments to transporters without valid contracts<

some payments were more than the amount stipulated in the contract, and

some payments could not be agreed to the contract as the amounts were

not stipulated in the contract (paragraph 4<23 on page 54 thereof)< The

Respondent could not supply PWC with the transporter contracts that were

in force at the time that these payments were made (page 136 thereof)<

12<7 Micro collectors were paid only R 2<00 per lyre prior to March 2016 when

the Respondent increased their rate to R 4< 00 per tyre thereafter (paragraph

4<27 on page 55 thereof)< While the Redisa Plan afforded the Respondent

some discretion in respect of a quota for micro collectors, such discretionary

quota was quantity based and not weight based< The rate unilaterally

determined by the Respondent is thus far less than the rate per kilogram

as determined in the Redisa Plan< All of the micro collectors have thus

been paid less than what they were entitled to and they may have a claim

against the Respondent for their short payment

12<8 In respect of the depots, PWC found amongst other compliance issues, that

some depots did not have a signed contract in place, that no evidence of

job creation projections could be supplied to them, no evidence that the

depot committed to ongoing training and skills development could be

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supplied, no evidence of a sustainable business plan for the depot could be

supplied and more importantly, in some instances no evidence that

consideration was given to whether the depot even has a weighbridge could

be supplied to them and they could not determine whether this was

considered during on-boarding of the depot (paragraph 4.30 on page 56 -

63 thereof).

12.9 The Respondent made payments to certain depots without a valid contract

in place, or where the payment was less than the amount stipulated in the

contract or in some instances the amount paid could not be agreed to the

contract as no rates are for the items invoiced with stipulated in the contract

(paragraph 4.33 on page 64 thereof).

12.10 PWC tested whether the NCCS was recording information as required

by the Redisa Plan and documented several instances where the

information reported to the Department could not be traced back to the

NCCS or to any other supporting documentation (paragraph 4.35 on

page 64 thereof), with specific reference to the tons of lyres the

Respondent reported as put into the market, the tons of tyres collected

and the tons of lyres processed, the expenses the Respondent allegedly

incurred on training, and the expenses it incurred on research and

development On a proper interpretation of these findings by PWC,

none of the figures reported by the Respondent to the Department can

be trusted as those figures cannot be traced back to any supporting

documentation and/or the figures were hugely inflated. This report

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further serves to substantiate my concerns that the Respondent in fact

did not reach any of its targets.

12.11 In respect of the number of jobs reported to the Department, PWC found

several instances where the number of jobs allegedly created by the

Respondent were inaccurately reported to the Department due to the

continuous duplication of employees. In some instances a copy of the

ID of some of the employees could not be provided and PWC could not

verify this individual as an employee of the Respondent No doubt on

the instruction of the Respondent, PWC in contrast with the provisions of

the Redisa Plan, accepts the inclusion of micro collectors as the creation

of new jobs. Should the micro collectors be disregarded from the

number of jobs allegedly created, the actual number of jobs created by

the Respondent would even be far less. PWC in fact finds that the

number of jobs actually created did not align with the Redisa Plan


12.12 While expending millions of Rand for "training" purposes. PWC found

that no training has been provided by the Respondent to either the

processors or the tyre dealers to date and no full-time training committee

has been constituted and no formal mentorship program was in place


12.13 PWC could not establish whether 1% of all of the monies collected was

allocated to training and/or whether 2% of all funds collected was

allocated to marketing and advertising, as is required by the Redisa Plan,

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as these expenses were not referenced in sufficient detail in the

Respondent's general ledgers for the 2013 or 2014 financial year. For

the 2015 financial year, PWC found that the Respondent underspent on

training and overspent on marketing while the Respondent for the 2016

financial year overspent on training and marketing (paragraph 4.56 on

page 71 thereof) The Department has despite several requests never

received the details of these expenses from the Respondent PWC

could furthermore not identify the expense incurred for training in any of

the audited financial statements provided for the 2013. 2014 and 2015

financial years and the expense for research and development could

only be identified in the financial statements for the 2015 financial year

(page 112 thereof).

12.14 The instances of non-compliance with the reporting and auditing

requirements of the Redisa Plan are listed by PWC (in paragraph 4.59

on page 72 thereof).

12.15 PWC found absolute non-compliance with the external performance

audit as required in section 26 of the Redisa Plan, as no external

regulatory audits were performed prior to 2015, and such an audit by

KPMG was allegedly in progress since November 2015 to March 2017

(paragraph 4.62 on page 72 thereof) but PWC could find no evidence

from either the engagement letter of KPMG or their draft management

report, that testing would be performed in respect of the procedures

listed in section 26 of the Redisa Plan. It can thus be accepted that the

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Respondent has for the duration of the five years of approval of the

Redisa Plan, never submitted the required performance audit

12.16 Some tyre dealers were also found to be transporters, in contravention

of the Redisa Plan (paragraph 4. 72 on page 75 thereof).

12.17 Apparently the infamous Management Agreement between the

Respondent and Kusaga Taka Consulting (in provisional liquidation) has

been amended, the first amendment of which was signed on 15 October

2013, to provide for the continuance of the Management Agreement

between the Respondent and Kusaga Taka Consulting for an indefinite

period, which is contrary to the provision for a five-year contract as

required by the Redisa Plan (paragraph 4.75 on page 80 thereof). The

Management Agreement between the Respondent and Kusaga Taka

Consulting (in liquidation) and the alleged amendments thereto, all

remained elusive to the Department until these agreements were

attached as annexure CC3 to Mr Erdmann's answering affidavit in the

liquidation application of Kusaga Taka Consulting.

12.18 In their analysis of the Memorandum of Incorporation of the Respondent,

PWC stated that "Behaviour of anti-competitive nature by Redisa

directors will lead to non-compliance with the Act (presumably referring

to the Companies Act 71 of 2008) and thus could lead to persona/liability

for directors due to non-compliance with Section 22 of the Act and their

fiduciary duties in terms of Section 76" (page 126 thereof) - Mr Erdmann

and his associates in disregard of this provision in the Respondent's

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Memorandum of Incorporation, acted in an anti-competitive nature.

12.19 PWC records that despite the alleged proposed amendments to the

Redisa Plan, these amendments were never formally accepted and that

no formal changes were made to the Redisa Plan to date of their report

(paragraph 5.02 on page 146 thereof). I confirm that, since the approval

of the Redisa Plan on 29 November 2012 (annexure 'BM 4'), I have not

approved any amendments to the Redisa Plan.

12.20 The Respondent is ironically advised by PWC of several "fraud

prevention controf' activities that should be implemented (page 148

thereof).

12.21 PWC provides a long list of outstanding information that the Respondent

did not provide to them (page 149 - 150 thereof)

13. The "full PWC report" (annexure 'BM 84') however does not address the

Respondent's deviations from the Redisa Plan in respect of the unauthorised

export of waste lyres, the unauthorised establishment of the Product Testing

Institute (now in provisional liquidation) and the transfer of public funds thereto,

the fact that no Board resolutions are available, and more importantly, the

complete lack of evidence of the recusal of the directors of the Respondent in

respect of decisions relating to the ever involved management company. Kusaga

Taka Consulting (in provisional liquidation)

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14. The PWC Executive Summary

While Mr Erdmann received the Executive Summary already on 13 March 2017

from PWC, a copy of which is attached hereto as annexure 'BM 85', he did not

share the contents thereof with this Honourable Court in his answering affidavit

deposed to on 19 June 2017. Insofar as these aspects have not been

addressed in my discussion of the "full PWC report" (annexure 'BM 84') herein

above, I respectfully point out to the Honourable Court the following relevant

aspects of the Executive Summary:

14.1 This Executive Summary contains the same qualifications as the "full PWC

report" (annexure 'BM 84') as set out in paragraph 12.1.1 to 12.1.6 above.

14.2 The explanation provided by PWC (in their discussion of Section 14 of the

Redisa Plan on page 9 of the summary) for the Respondent's inaccurate

reporting of waste lyre processing to the Department over a considerable

period of time, does not account for the lack of supporting information for

the reported processed waste lyres. The only logical inference is that the

reported processed waste lyres were based on a mere thumb suck estimate

by the Respondent

14.3 I have noted with interest that PWC stated herein that the over-recovery on

training and marketing spend, will be accumulated as provisions to be used

to fund establishment and set-up costs and that portions of what has been

spent on training and marketing since inception of the Redisa Plan to date,

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can be classified as establishment and set-up costs. Dr Crozier further

informed PWC that the cost allocation in Section 17 of the Redisa Plan was

estimated at the outset of the Plan. it was never intended to be onerous

requirements and that Management (presumably again referring to the

Management Company Kusaga Taka Consulting- in provisional liquidation)

thus deemed these costs to be reasonable and in line with the Plan (page

10 of the summary) - this statement is in direct contrast to the provisions of

the approved Redisa Plan.

14.4 PWC again confirms in their discussion of Section 24 of the Redisa Plan

that they could not identify the expenses incurred for training in any of the

annual financial statements provided to them and that the expense incurred

for research and development could only be identified in the financial

statements for the 2015 financial year (page 11 of the summary).

14.5 In summary (on page 20 of the summary) PWC found the Respondent to

be-

14.5.1

14.5.2

14.5.3

14.5.4

60% non-compliant with the on-boarding of transporters as set

out in section 9 of the Redisa Plan.

6% non-compliant with transporters payments,

20% non-compliant with the on-boarding of depots, and

100% non-compliant in respect of the 4 reports to the

Department that PWC subjected to its testing, in that 100% of

the information as required by the Redisa Plan was not reported

to the Department

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14.6 PWC however does not calculate the percentage of the Respondent's non

compliance in respect of payments to micro-collectors. while it is common

cause that the Redisa Plan required payment to micro-collectors of a rate

per kilogram of waste lyres collected by them, and the Respondent paid

micro-collectors only R 2.00 per waste tyre up until2016 and thereafter only

R 4.00 per waste tyre, in complete disregard of the weight of each specific

waste tyre.

15. The preliminary report by Accountants @ Law

The provisional liquidators appointed Accountants @ Law (Pty) Ltd ("A@L") to

conduct a forensic accounting investigation into the trade, dealings and affairs of

the Respondent and that of Kusaga Taka Consulting (in liquidation). A@L

submitted their preliminary report to the provisional liquidators on 28 June 2017,

a copy of which is attached hereto as annexure 'BM 86', in which the relevant

revelations of the forensic investigation are recorded as follows

15.1 The affairs and operations of the Respondent and that of Kusaga Taka

Consulting (in liquidation) are inextricably intertwined - they share a

premises, accounting and information systems, many staff functions

straddle both businesses. there are numerous agreements between them

and the related entities of Mr Erdmann and certain other executives of both

entities, and the entire day-to-day _management of the business of the

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Respondent has been subcontracted to Kusaga Taka Consulting (in

liquidation) in terms of a management agreement (paragraph 6 on page 2

of the report)_ This is in direct contradiction of Mr Erdmann's averments of

the separation of operations, powers and roles_

15_2 It is the preliminary and cursory opinion of the forensic investigators that the

executives of the Respondent (who were entrusted with the obligation to

manage waste tyres on a national scale, a massive undertaking involving

large sums of money which required proper management and corporate

governance) have abused their fiduciary duties (paragraph 13 on page 3 of

the report)_

15_ 3 It was never disclosed in the Redisa Plan that there would be a relationship

between the executives of the Respondent and the management entity

Kusaga Taka Consulting (in liquidation), which would create any conflict of

interest (paragraph 21 on page 4 of the report)_

15.4 With regard to Mr Erdmann's contract of employment with the Respondent

(of which the Department has despite numerous requests not received a

copy)-

15.4.1 Mr Erdmann warrants !hal he is free of any conflict of interest

between the duties he owes the Respondent and his private

interests (paragraph 29 on page 5 of the report) - in respect of

which significant conflicts of interest were found;

15.4.2

15.4.3

15.4.4

15.4.5

15.4.6

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He shall be responsible for the management of the business of

the Respondent and bear ultimate responsibility for all

management functions, foster and lead a corporate culture that

promotes ethical practices, encourages individual integrity,

ensuring that the company complies with all laws and corporate

governance principles and requirements (paragraph 30 on page

5 of the report);

The preliminary findings are that there may be material breaches

of the Companies' Act, the Income Tax Act and the Prevention

and Combatting of Corrupt Activities Act (paragraph 31 on page

5 of the report);

He undertakes to devote the whole of his time and full benefit of

his knowledge, expertise and skills in the proper performance of

his duties under the employment contract, carrying out his duties

in good faith in a proper, loyal and efficient manner (paragraph

32 on page 5 of the report):

It is required of Mr Erdmann to disclose any conflict of interest in

any trade, business or occupation, whether that business is for

his personal benefit or that of his family, including his wife

(paragraph 33 on page 5 of the report) - I am not aware of any

such disclosure made by Mr Erdmann;

Mr Erdmann's remuneration would be R 140 000 per month, to

15.4. 7

15.4.8

15.4.9

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be reviewed annually by the Board of directors in February of

each consecutive year. In January 2013 the cost to company

of his salary was R 171 805 per month, which cost to company

has increased in May 2017 toR 347 070 per month. This is an

increase of 102% and some 246% more than CPI over the same

period (paragraph 34 of the report);

He is permitted to be reimbursed for out of pocket expenses

necessary to fulfil his duties, provided that those expenses are

supported by proper vouchers. As far as we are aware, none

of these expenses are supported by the necessary vouchers;

It is recorded that Mr Erdmann has no rights whatsoever in any

confidential information of the Respondent and he is prohibited

from using this confidential information for any other purpose

than fulfilling his duties as the CEO and not to use this

confidential information to obtain a commercial, trading, financial

or other advantage over the Respondent (paragraph 38 on page

6 of the report);

It is recorded that the intellectual property (" IP') of th~

Respondent shall belong to and be the absolute property of the

Respondent and that Mr Erdmann assigns all intellectual

property during his employment to the Respondent and no

consideration is payable to Mr Erdmann for such assigned

intellectual property;

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15.4.1 0 Any benefit, gift, service, accommodation more than R 2 000

may be regarded as a conflict of interest and should be disclosed

and approved in writing by the Board of directors (paragraph 43

on page 7 of the report) - I am not aware of any such disclosure

to or approval by the Board of directors.

15.5 Between November 2014 and December 2016, the Respondent made

payments to Westfalen Management Services (Pty) Ltd, of which the wife

and son of Mr Erdmann are the directors, in the total amount of R 495 900,

purportedly for reimbursement of expenses - without any supporting

documents, which constitutes a breach of Mr Erdmann's employment

contract (paragraph 44 on page 7 of the report).

15.6 On 2 February 2013, a director of the Respondent signed a resolution in

terms of which the Respondent entered into a lease agreement for 24

months in respect of residential accommodation for Mr Erdmann, and the

Respondent paid a deposit of R 160 000 to the owner of the residential

property. The Respondent further paid a monthly rental of R 65 000 over

24 months for the residential accommodation of Mr Erdmann (paragraph

45 and 46 on page 7 of the report). The Respondent also made other

payments in respect of residential accommodation (paragraph 48 on page

8 of the report).

15.7 The Respondent paid some R 270 880 for a security upgrade at a private

residence which seems to be the property of HE & ME Family Trust, the

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sole beneficiary of which appears to be Alex Erdmann and the trustees are

Mr Erdmann, his wife, his son and a certain Mr Botha (paragraph 49 - 50

on page 8 of the report).

15.8 The Respondent has been paying for private full time day and night security

at the residences of two of the directors of the Respondent namely Mr

Erdmann and Stacey Davidson, which payments in respect of Ms Davidson

continued even when Ms Davidson no longer resided at the specific

address (paragraph 51 -53 on page 8 of the report). No employee fringe

benefit tax has been deducted in respect of these payments. The total cost

expended by the Respondent in this regard amounts to the staggering

amount of R 2182 579.42 (paragraph 61 on page 10 of the report).

15.9 The IP of Kusaga Taka Consulting (in liquidation), which can only be

sourced from fulfilling its management functions for the Respondent, was

transferred at no value to another private profit company namely Nine Years

Investments (Pty) Ltd ("NY!"), which is controlled by Mr Erdmann. Ms

Tania Conceivious as the CFO both for Kusaga Taka Consulting (in

liquidation) and for the Respondent confirmed to the investigator that Mr

Erdmann holds 80% of the shares in Nine Years Investments, while 10% of

the shares thereof is owned by Charline Kirk and the remaining 10% of the

shares are owned by Christopher Crozier (paragraph 63 on page 10 of the

report).

15.10 Nine Years Investments allegedly owns 90% of the shares in Kusaga

-26-

Taka Consulting (in liquidation) while the remaining 10% of the shares are

owned by Avranet (Pty) Ltd, in which Stacey Davidson holds 100% of the

shares (paragraph 64 on page 10 of the report).

15.11 Nine Years Investments receives 2.5% of the 18% administration cost

revenue that the Respondent previously collected from all lyre

producers, as a royalty (paragraph 65 of the report).

15.12 While the Respondent paid R 76,748 million for the cost of the NCCS to

implement the Redisa Plan (paragraph 68 of the report), and reimbursed

Kusaga Taka Consulting (in liquidation) for setup costs and expenses,

including the IT costs, which inclusive of the R 76 million amounted to

about R 97 million, Kusaga Taka Consulting (in liquidation) now claims

ownership of the IT and finance systems and the right to the IP, which

should properly vest in the Respondent (paragraph 70 on page 11 of the

report). Kusaga Taka Consulting (in liquidation) thus not only gave

away the IP belonging to the Respondent, but also agreed to pay to

another private profit company, Nine Years Investments (in which Mr

Erdmann holds the controlling share). royalties for the use of this same

IP (paragraph 72-73 on page 12 of the report).

15.13 Kusaga Taka Consulting (in liquidation) received the staggering amount

of R 662,281 million of the total amount of R 2,256 billion of public funds

the Respondent collected in terms of the Redisa Plan (paragraph 7 4 on

page 12 of the report).

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15.14 Kusaga Taka Consulting (in liquidation) apparently entered into yet

another agreement with Nine Years Investments in terms of which

Kusaga Taka Consulting (in liquidation) recorded that it required

additional management services for which "additional management

services" Nine Years Investments would be paid a monthly management

fee of R 650 000, escalating at 7.5% per annum. which in 2017

amounted toR 868 055 excluding VAT per month (paragraph 76 on page

12 of the report) This extravagant further expense on the public funds

previously collected by the Respondent, was paid to Nine Years

Investments in addition to the royalties that Kusaga Taka Consulting (in

liquidation) agreed to pay to Nine Years Investments -and Mr Erdmann

and his associates benefited all-round.

15.15 In terms of the agreement between Kusaga Taka Consulting (in

liquidation) and Nine Years Investments, both Samuel Robertson and

Christopher Crozier were identified as "key-critical" for the purposes of

the Respondent's management agreement Despite the fact that

Samuel Robertson allegedly resigned as a director of Nine Years

Investments in April 2011 and as a director of Kusaga Taka Consulting

(in liquidation) in February 2016, there was no reduction in the alleged

"management fee" due to Nine Years Investments in terms of this

agreement

15.16 Kusaga Taka Consulting (in liquidation) paid dividends to its

shareholders, inclusive of Mr Erdmann and the other executive directors

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of the Respondent, in the amount of R 84 million over the past 4 years

and Nine Years Investments has received the staggering amount of R

121.6 million in dividends, management fees and royalties (paragraph

79- 80 on page 13 of the report).

15.17 In the event that Mr Erdmann owns 70% of the shares of Nine Years

Investments. he would have benefitted in dividends in the amount to

some R 85 million, but if he owns 80% of the shares of Nine Years

Investments, he would have benefitted in dividends in the amount to

some R 97 million (paragraph 81 on page 13 of the report).

15.18 The very expensive Oracle-based accounting, human resource payroll,

subscriber and tyre management system was hopelessly dysfunctional

and had to be replaced with Phinda - a program developed in house by

a new team at Kusaga Taka Consulting (in liquidation), the costs of which

amounted to another R 5 million (paragraph 84 on page 14 of the report)

15.19 The capitalised IT costs of R76 million are wholly attributable to the

initial Oracle IT costs as part of the NCCS, which were overpriced, failed

to meet the business needs and were dysfunctional (paragraph 88 on

page 14 of the report) - this constitutes fruitless, wasteful and reckless

expenditure of public funds.

15.20 The Respondent paid for all these IT costs. which are part of the I P which

was given away by Kusaga Taka Consulting (in liquidation) to Nine Years

Investments and for which Kusaga Taka Consulting (in liquidation) has

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paid to Nine Years Investments some R 11 million to date (paragraph

86 on page 14 of the report).

15.21 One of the Lindner machines purchased by the Respondent for R 7.8

million has never been used and is mothballed (paragraph 89 on page

16 of the report). This is a huge waste of public funds. The purchase

price of the equipment purchased by the Respondent seems to be

excessive (paragraph 90 on page 16 of the report) and the import

transactions in respect of some equipment warrants further investigation

(paragraph 93-94 on page 17 of the report).

15.22 The Respondent has spent some R 23 million on a residential property

in Bryanston purportedly for free accommodation for the staff of the

Respondent (paragraph 95 on page 17 of the report) which is not

authorised in the Redisa Plan.

15.23 The total of the unauthorised "investment" by the Respondent in the

Product Testing Institute NPC (now in provisional liquidation) amounts to

some R 121 million, in respect of which "investment" some documents

refer to as an "equity contribution and investment" by the Respondent

and other documents refer to the contribution being a donation by the

Respondent (paragraph 97 on page 17 of the report). Further

investigation in this regard is required.

15.24 The leasehold equipment in the staggering amount of E:2.134 million is

currently on the water from Germany and due to be commissioned in or

-30-

about July 2017 (paragraph 99 on page 18 of the report).

15.25 The forensic investigators could find no comprehensive business plan

supported by a CAP EX motivation reflecting the expected returns, basis

of generating revenue streams or a proper business plan in respect of

the unauthorised transfer of these public funds (paragraph 103- 105 on

page 18 of the report).

15.26 The role of the directors in committing resources to a venture which is

not contemplated in the Redisa Plan, may constitute reckless conduct

which should with respect be investigated and confirmed at a section 417

and/or 418 enquiry in terms of the Companies Act 61 of 1973 (paragraph

107 on page 19 of the report)

15.27 The 7 executives employed by the Respondent received remuneration

since 2013 to date in the staggering total amount of R 7,883 million

(paragraph 108 on page 19 of the report). Certain executives are paid

as independent contractors and PAYE is not deducted. This is

potentially in contravention of the Income Tax Act Furthermore the

residential accommodation provided to Mr Erdmann and the private

security arranged for certain directors at their homes, is potentially a

component of remuneration to these executives, which if not declared for

income tax purposes would attract penalties (paragraph 110 on page 19

of the report).

15.28 The salaries of executives and personnel appear to be significantly

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above the market for Cape Town or South Africa (paragraph 111 on page

20 of the report). This requires further investigation.

15.29 The solvency and liquidity requirements of both the Respondent and

Kusaga Taka Consulting (In liquidation) as contemplated in section 4 of

the Companies Act 2008, will have to be considered (paragraph 116 on

page 20 of the report)

15.30 Nine Years Investments has a lease agreement for the head office of the

Respondent, who then sub- leases to Kusaga Taka Consulting (in

liquidation), who then further sub- leases to the Respondent, in terms of

which the Respondent until 28 February 2015 paid 30% of the cost and

thereafter 50% thereof. While the Respondent only employs 10 people

and Kusaga Taka Consulting (in liquidation) has more than 100 people

in its employment, the Respondent is overcharged to the tune of about

40%, which amounts to in excess of R 2.4 million per annum

(paragraph 120- 124 on page 21 - 22 of the report).

15.31 The Respondent made "investments" in excess of R 20 million in lmvelo

Rubber and Waste Beneficiation (two different private profit companies

in which Mr Erdmann has a direct interest), allegedly "subsidiaries" of the

Respondent, which needs further investigation (paragraph 125 on page

22 of the report).

15.32 The Respondent has spent in excess of R 16 million on costs

purportedly to be for other waste streams, the amount of which was

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initially misrepresented as far lower to the forensic investigators

(paragraph 132 on page 23 of the report), and the invoices for which

indicate no company number or director/executive or contact telephone

number or person (paragraph 134 - 137 on page 23 of the report)

15.33 Some R 9.8 million was paid by the Respondent to McKinsey for

research into other waste streams than those permitted in the Redisa

Plan (paragraph 145 on page 25 of the report).

15.34 The minutes of the Board meeting of the Respondent on 4 October 2011

record that Helen Kente Makgae (HKM), a director, was authorised to

sign the management agreement between the Respondent and Kusaga

Taka Consulting (in liquidation). There is no evidence that the executive

directors being Erdmann, Kirk, Davidson recused themselves from this

decision (paragraph 148 on page 25 of the report).

15.35 The minutes of a Board meeting held on 15 December 2011 recorded

that Nolwazi Cobbinah (later Tetyana - currently a special adviser to the

Waste Management Bureau) and Mamosa Afrika from the Department

were inter alia invitees and that the representatives of the Department in

their address to the Board of directors of the Respondent stated that the

Respondent must understand the role and responsibilities of the

Respondent and that of the Department Nolwazi Cobbinah (later

Tetyana) stated that the Department wanted to interrogate in detail what

the Respondent was doing as this involvement was written in the law and

the Department saw Redisa as an agency of the Department

-33-

implementing one of its many regulations which almost makes Redisa

employees of the Department. Mr Erdmann noted that Redisa is seen

as an organ of State. It is recorded that there is no confusion as to who

is in charge and the wishes of the Department will at all times be carried

out (paragraph 149 on page 25 of the report).

15.36 The Respondent entered into a R24 million letter of intent with Prodigy

Business Services (Pty) Ltd (Prodigy) - the forensic investigator was

unable to find any existing contract with the Respondent while the

Respondent has paid some R6,84 million to Prodigy to date. An

invoice dated 12 February 2016 addressed to Ms Davidson of the

Respondent records that 10 percent of the contract value was due for

the signing of the letter of intent in an amount of R2,4 million which

including VA Twas paid in March 2016 as R2.736 million (paragraph 161

on page 27 of the report).

15.37 The Respondent has paid to the South African National Civic

Organisation (SANCO) the amount of R9.8 million while there function in

respect of the Respondent could not be established by the forensic

investigator (paragraph 163 on page 28 of the report).

15.38 The Respondent paid for the rent of an apartment in Cape Town for the

non-executive director Xolani Qubeka. and for numerous travel

expenses incurred by Mr Erdmann (paragraph 164- 165 of the report).

15.39 Further detailed investigation is required and the Hawks are also

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conducting an investigation in liaison with the forensic investigators.

16. The Acting Director Internal Audit of the Department. Anthony Pillay, on 25 June

2017 sent an email to the attorney for the provisional liquidators of the

Respondent, a copy of which is attached hereto as annexure 'BM 87A', to

request copies of the annexures and/or documents referred to in the "full PWC

report" and in the preliminary forensic report from A@L, to enable the

Department to fully analyse the contents of both these reports. A list of the

documents required was attached to this email, a copy of which is attached

hereto as annexure 'BM 878'. A confirmatory affidavit by Anthony Pillay is

attached hereto as annexure 'BM 88'.

17. On 27 June 2017, the Department received an email from the attorney for the

provisional liquidators of the Respondent, a copy of which is attached hereto as

annexure 'BM 89', in which the Department was informed that on advice of their

counsel, the provisional liquidators of the Respondent "are unable to furnish you

with copies of the documents requested at items 6, 7, 8, 9, 13, 14, and 16 of your

/is/." These documents, although referred to in the "full PWC report" and/or in

the preliminary forensic report from A@L, mostly pertain to Kusaga Taka

Consulting (in liquidation)

18. In further separate emails on 27 June 2017, the Department received further

documents from the attorney for the provisional liquidators of the Respondent, of

which the following are relevant hereto:

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18.1 The employment contract of Mr Erdmann, a copy of which is attached

hereto as annexure 'BM 90', the contents of which seem to be correctly

quoted in the preliminary forensic investigation by A@L;

18.2 The management agreement between the Respondent and Kusaga Taka

Consulting (in liquidation) with the amendments thereto, a copy of which

was attached as annexure CC3 to Mr Erdmann's answering affidavit in

respect of the liquidation application for Kusaga Taka Consulting.

18.3 A report on the property of the Product Testing Institute (in liquidation), a

copy of which is attached hereto as annexure 'BM 91 ', which indicates the

value of the building (which was erected without any authorisation and with

the public funds that the Respondent was supposed to utilise solely for the

implementation of the Redisa Plan) as R 100 million; and

18.4 the sublease agreement between Kusaga Taka Consulting (in liquidation)

and the Respondent, a copy of which is attached hereto as annexure 'BM

92', the contents of which confirm the fact that the Respondent is paying

50% of the total rental payable for the lease of the entire 41h floor, of which

Kusaga Taka Consulting (in liquidation) occupies the largest area, and

several other private profit companies in which Mr Erdmann and his

associates have vested interests, have the same registered address

something which is now common cause.

19. The said Anthony Pillay then sent another email to the attorney for the provisional

liquidators of the Respondent, a copy of which is attached hereto as annexure

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'BM 93', in which it was pointed out that it is unclear why the provisional

liquidators of the Respondent are unable to provide the Department with the

items requested under Item 16 (Proof of subsidiaries and assets held in each),

as this item refers to the subsidiaries that were declared by the Respondent in

its 2016 Annual Financial Statements and as the Respondent has a reporting

obligation to the Minister, the Respondent's subsidiaries would fall within that

reporting obligation. To date of the signature hereof, the Department has not

received the information in respect of the alleged subsidiaries of the Respondent

and the assets held in each of them.

20. I now turn to reply to the remaining allegations in Mr Erdmann's answering

affidavit deposed to on 19 June 2017, only insofar as a reply is warranted. In

those instances where I do not reply to a specific paragraph, I have noted the

contents thereof and my omission to specifically reply thereto should with respect

be regarded as a denial of the contents thereof.

21. While complaining about the volume of the founding papers, Mr Erdmann in his

answering affidavit does not refer to the annexures already attached to my

founding affidavit- he instead duplicates and attaches the very same annexures

to his answering affidavit This unnecessary duplication of annexures

contributed substantially to the volume of the papers in the application, which

unnecessarily burdens the Honourable Court. Such conduct should with

respect be penalised with the appropriate cost order

-37-

REMAINING ALLEGATIONS IN ANSWERING AFFIDAVIT

22. Paragraph 2 and 9 thereof

I deny that Mr Erdmann is duly authorised to oppose this application and to

depose to the answering affidavit on behalf of the Board of Directors of the

Respondent, or to represent the Board of Directors of the Respondent for the

following reasons:

22.1 The Respondent's Memorandum of Incorporation (annexure 'BM 3') is

subject to the Redisa Plan (annexure 'BM 2') and subject to my letter of

approval thereof (annexure 'BM 4')

22.2 The Redisa Plan (in paragraph 2 on page 5 thereof) requires that the

Board of the Respondent should be independent and that the Board

should be made up of 10 directors, none of which may represent any

waste stream managed by the Respondent

22.3 The Memorandum of Incorporation of the Respondent (in paragraph 11.1

on page 11 thereof) confirms that "the composition of the Board must

otherwise reflect the requirements set out in the Waste Tyre

Management Plan (referring to the Redisa Plan) insofar as it does not

conflict with the requirements of the (Companies) Act."

22.4 According to the CIPC search for the Respondent (annexure 'BM 1 '),the

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Respondent has only 7 directors, several of which are involved in the

waste stream managed by the Respondent, as set out in my founding

affidavit

22.5 The Board of the Respondent is thus neither independent nor does it

conform to the requirements of the Redisa Plan as specifically confirmed

in the Memorandum of Incorporation

22.6 The Board of the Respondent is thus not properly constituted, which

possibly makes any alleged mandate and/or authority from the "Board"

of the Respondent invalid.

23. Paragraph 3 thereof

I deny that the contents of Mr Erdmann's answering affidavit are true and correct


Apart from the fact that Mr Erdmann acknowledges that the Respondent's head

off1ce is at the entire 4'h Floor of the Sunclare Building, the contents thereof are

in essence a mere duplication of paragraph 1 and 3 of my founding affidavit


I take note of the contents thereof.

-39-


I deny the contents thereof The provisional liquidation of the Respondent has

caused no harm whatsoever to the Respondent or the implementation of the

Redisa Plan. The provisional liquidators took immediate control of the business

of the Respondent as a going concern and they are conducting the business of

the Respondent There is with respect no urgency whatsoever to have the

provisional order discharged or to anticipate the return date of 25 July 2017.

The only "serious harm" that the provisional order may have inflicted, is in relation

to the loss of control over the expenditure of public funds that Mr Erdmann and

his associates may have experienced. Such "harm" is fully justifiable in the

circumstances and provides no basis for the urgent anticipation of the return

date.


My founding affidavit is based on facts and/or documents which are to the

knowledge of the Respondent, reports from investigations (that I had to have

done while the Respondent either refused to provide the Department with the

requested information and/or neglected its responsibility to submit the relevant

performance audits), correspondence and meetings with the Respondent Due

to the urgency in the application for the provisional liquidation of the Respondent,

I was not in a position to timeously obtain confirmatory affidavits from every

official in the Department mentioned in my founding affidavit Those

-40-

confirmatory affidavits will shortly hereafter be filed under cover of a separate

filing notice.


I deny the contents thereof as it was with respect not I who did not take the

Honourable Court into my confidence, but as set out in paragraph 12 and 14

above, Mr Erdmann in fact withheld crucial information from this Honourable

Court. All of the relevant facts that I had at my disposal at the time, were placed

before the Honourable Court in my founding affidavit and the annexures thereto.


29. 1 I deny the contents thereof.

29.2 I specifically deny that the Respondent is a "private NPC". As set out in

paragraph 14 of my founding affidavit, the Respondent is also an organ

of state, engaged in the administration and implementation of the Redisa

Plan, which Integrated Industry Waste Tyre Management Plan the

Supreme Court of Appeal found to be in the nature of subordinate

legislation. In paragraph 86 of his answering affidavit Mr Erdmann

refers to the Respondent as follows "RED/SA, in performing a

constitutional function undertake certain public law obligations" which in

fact confirms that it regards itself as an organ of state. More importantly,

-41-

Mr Erdmann himself described the Respondent as an organ of state. as

set out in paragraph 15.35 above.

29.3 I further specifically deny that I have done anything unlawful. I have in

fact acted, and still am acting, in the public interest as contemplated in

section 38 of the Constitution with a view to respect, protect, promote

and fulfil the fundamental right to the environment as provided for in

section 24 of the Constitution, to protect the public interest from the

substantive and procedurally unlawful acts of Mr Erdmann and his

associates.


30.1 I deny the contents thereof and respectfully refer the Honourable Court

to what I have set out in this respect in my founding affidavit

30.2 The responsibility to align the Redisa Plan to the changed funding model

has since 2014 rested squarely on the shoulders of the Respondent

30.3 The Respondent is not "expected to survive on its reserves until an

undetermined future date". The Redisa Plan in its present form expires

on 30 November 2017. Furthermore, the Respondent itself has

previously indicated that when the funding model would change, it had

cash and cash equivalents in the amount of R 276 million which the

Respondent estimated would last for approximately 7 months. The

-42-

February 2016 annual financial statements of the Respondent however

indicated that it had a reserve (of cash and assets) of R 665 million which,

together with the Redisa contributions to be collected from 1 March 2016

to the date of the implementation of the amended legislation, would with

respect be more than sufficient to ensure continued operations in terms

of the Redisa Plan until either 30 November 2017 (when the approval for

the Redisa Plan expires) or for the rest of the fiscal year. PWC in April

2016 reported that, without taking into account the further cash inflows

up to the change in the funding model, the Respondent would be able to

operate for 8,38 months, which would have enabled the Respondent to

carry on with its business as usual for the rest of the financial year and

in any event to 30 November 2017 (when the ministerial approval for the

Redisa Plan in its current format expires or lapses),

30.4 The untenable situation that prompted the urgent application for the

liquidation of the Respondent, was created when the Respondent on 23

May 2017 indicated (annexure 'BM 76') that their cash balance in May

2017 amounts to only R 150 million and, in the absence of allocated

funding via the Department from 1 June 2017, the Respondent would

commence industry wind-down to meet the directors' fiduciary

responsibilities,

30,5 The Department has always been willing to fund the Respondent,

provided that the Respondent complied with the amended legislation and

the requirements of the Public Finance Management Act, which the

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Respondent to date hereof neglected and/or refused to do.


I take note of the contents thereof.


I deny the contents thereof and respectfully refer the Honourable Court to the

contents of my founding affidavit


I have addressed the possibility of Mr Erdmann's "hearsay" argument in my

founding affidavit The correspondence and reports attached to my founding

affidavit all serve to substantiate the concerns I had with the implementation of

the Redisa Plan by the Respondent, as well as any conclusions in my founding

affidavit I take note of the rest of the contents of this paragraph.


34.1 As set out herein above, the confirmatory affidavit by the author of the

iSolveit report, together with other confirmatory affidavits, will be filed

under cover of a separate filing notice. Mr Erdmann is well aware of the

-44-

fact that the iSolveit report has been verified by Ernest & Young Advisory

Services, as a copy of their report was attached as Annexure "F" to my

notice to Mr Erdmann of my intention to consider the withdrawal of the

approval of the Redisa Plan (annexure 'BM 76'). The report was

previously omitted to avoid prolixity however it has now become

indispensable and it is attached hereto as annexure 'BM 94'.

34.2 Mr Erdmann conveniently omits the other recommendations in the

iSolveit report namely that investigations and criminal action in terms of

the governance issues should be undertaken

34.3 I have indeed initiated the process to call for other waste tyre

management plans.


Mr Erdmann's reference to my annexure 'BM 76' is confusing as this annexure

is a copy of my notice to Mr Erdmann of my intention to consider the withdrawal

of the approval of the Redisa Plan and it is dated 30 May 2017. I have not relied

on this annexure as a ground for urgency. Mr Erdmann is presumably referring

to my annexure 'BM 76A' which is a copy of the presentation that the

Respondent made to the Department on 23 May 2017, as discussed in

paragraph 99 to 102 of my founding affidavit

-45-


My reliance on the presentation made by the Respondent on 23 May 2017 is

justified, especially viewed together with the notices that the Respondent

published on 31 May 2017 (annexure 'BM 78' and 'BM 79').


It is impossible to establish what it is that Mr Erdmann attempts to refer to and I

can therefore not comment thereon. Annexure 'BM 2' is a copy of the Redisa

Plan - something than can clearly not be scandalous.


I have never unilaterally effected any changes to the Redisa Plan. The

remainder of the contents of this paragraph is with respect nonsensical and I can

therefore not comment thereon.


I deny the contents thereof and I respectfully refer the Honourable Court to what

I have set out under the heading "legal framework" in paragraph 8 to 17 of my

founding affidavit

-46-


I deny the contents thereof and respectfully submit that the application was

extremely urgent and that the provisional liquidation order should with respect on

the return date thereof be confirmed.


I deny the contents thereof and respectfully refer the Honourable Court not only

to the contents of my founding affidavit, but also to the contents of the new

substantiating evidence that became available, as discussed in paragraph 9 to

19 above.


I confirm that I have the necessary locus standi but I am advised that this is a

matter for legal argument which will be addressed at the hearing hereof.


I deny the contents thereof and respectfully refer the Honourable Court to what I

have set out in my founding affidavit. The misappropriation of public funds has

indeed now been shown by the new substantiating evidence referred to herein

above, and especially in the forensic investigation report (annexure 'BM 86').

-47-


While I take note of the fact that Mr Erdmann states that the management team

of the Respondent and that of Kusaga Taka Consulting (in liquidation) will not

cooperate with the Department. it deserves to be mentioned that it would not be

me or the Department who will proceed with the Redisa Plan. The liquidators of

the Respondent will continue to conduct the business of the Respondent as a

going concern, until such time as the net value of the Respondent is transferred

to the Waste Management Bureau, or dealt with as directed by the Court.


45.1 I have indeed made a full disclosure of all the relevant information without

overburdening the Honourable Court with irrelevant information and

documents.

45.2 I respectfully submit that the judgement attached to Mr Erdmann's

answering affidavit is completely irrelevant to the matter at hand.

45.3 Neither of the pending applications in the Gauteng Division of the High

Court in Pretoria have any bearing on this application for the liquidation

of the Respondent Mr Erdmann's pre-judgment of the outcome of

these two pending applications is in keeping with his "above the law"

approach in implementing the Redisa Plan and appropriating public

funds.

-48-

45.4 If Mr Erdmann regarded any of the "core documents" to be of real

relevance to the matter at hand, those documents would have been

attached to his answering affidavit


46.1 I deny that the Redisa Plan was approved in terms of the provisions of

the Waste Act As indicated on page 1 of annexure 'BM 2' I have clearly

stated that I thereby gave notice of approval of the Integrated Industry

Waste Tyre Management Plan, received from the Respondent in terms

of Regulation 11 (4) of the Waste Tyre Regulations, 2009.

46.2 I deny that the Redisa Plan should be reviewed in accordance with the

provisions of the Waste Act as it is not the plan approved in terms of the

Waste Act

46.3 I deny that I have launched a "review' of any kind.


The Respondent made its presentation on 23 May 2017, after which presentation

the decision was taken to proceed with this urgent application

-49-

48. Paragraph 45 to 47 thereof

48.1 The Respondent should confine itself to my founding affidavit and the

annexures thereto, instead of speculating about possible reasons why I

took certain decisions. The Respondent is in any event confusing two

separate processes namely, on the one hand the administrative process

of considering the withdrawal of my approval of the Redisa Plan (based

on my numerous concerns with the implementation of the Redisa Plan

by the Respondent, as well as the Respondent's lack of co-operation and

of accountability) which decision must follow due process and cannot be

pre-empted, and on the other hand the urgent application for the

liquidation of the Respondent (based on everything I have set out in my

founding affidavit, substantiated by the new evidence I discussed herein

above).

48.2 When I signed the founding affidavit in Sao Paulo, I was not aware

thereof that the Respondent lodged yet another attempt at a business

plan, which on a proper evaluation thereof in any event does not differ

substantially from the presentation that the Respondent made on 23 May

2017.

48.3 The liquidation of the Respondent does not by necessity bring an end to

the pending proceedings in the Gauteng Division of the High Court in

Pretoria as the liquidators of the Respondent would have to decide

whether to proceed with those applications or not

-50-

484 As set out herein above I do not have to follow the provisions of the

Waste Act to amend the Redisa Plan and I respectfully refer the

Honourable Court to the provisions of the Waste Tyre Regulations, 2009.


49.1 I confirm that I made the public pronouncements that Mr Erdmann refers

to but I have to inform the Honourable Court that my misplaced praise

was based on the false information in respect of its performance

(especially in respect of the alleged jobs created}, repeatedly provided

by the Respondent to the Department and even to Parliament

49.2 In principle I am still of the view that the concept of the Redisa Plan and

the networks created thereby, is a great idea, but the implementation

thereof by the Respondent and Kusaga Taka Consulting (in liquidation)

has for a long time now been problematic. My concerns with the

implementation of the Redisa Plan and especially with the lack of proper

accountability in respect of public funds, have been addressed by the

Department in numerous meetings and correspondence, as referenced

in my founding affidavit These concerns are in respect of the

management, governance and finances of the Respondent, Kusaga

Taka Consulting (in liquidation), Mr Erdmann, his direct family and his

associates.

-51-



latest PWC report dated 13 March 2017, which report Mr Erdmann deliberately

withheld from the Honourable Court. My concerns are in any event validated by

the preliminary forensic investigation report referred to herein above.


51.1 Paragraph 7 of the order is in fact capable of being enforced by the

liquidators of the Respondent as they would be in a position to find the

missing cash and cash reserves that the Respondent had (which would

have enabled it to continue with its operations until the expiry of the

Redisa Plan on 30 November 2017), which cash and cash reserves

would be utilised by the liquidators of the Respondent to continue with

the business of the Respondent as a going concern up to the expiry of

the Redisa Plan on 30 November 2017.

51.2 I am advised that the liquidators of the Respondent would have the

power to employ willing and able employees to assist to conduct the

business of the Respondent and to terminate the contract of employment

of unwilling and uncooperative employees.

51.3 While the liquidators took control of the business of the Respondent as

a going concern, the possible amendment of the Redisa Plan, if any, is

-52-

now something may elect to address.


I deny any allegation by Mr Erdmann that this urgent application for the liquidation

of the Respondent "has parallels" to a previous finalised application against the

Respondent I respectfully submit that the application that Mr Erdmann refers

to, has no bearing to the application for the liquidation of the Respondent and in

any event the Interim Directive that Mr Erdmann refers to, has been withdrawn

when the change in the funding model came into operation on 1 February 2017

and the necessity therefore feli away.


53.1 I deny that the Department now collects the levy that was previously

collected by the Respondent (or as it now appears, by Kusaga Taka

Consulting (in liquidation)) in terms of the Redisa Plan. SARS in fact

collects the Environmental Levy that was introduced by the Customs and

Excise Act at the rate as set out therein.

53.2 The relevant Budget Speech makes no reference specifically to the

Respondent but in fact allocates an amount of R 210 million for the

2017/2018 fiscal year to the Waste Management Bureau. This

budgetary allocation thus does not constitute any promise by the State

to provide any funding to the Respondent to continue to operate until the

-53-

end of November 2017, as the Respondent has previously indicated that

directly to Parliament that it has enough surplus funds to continue with

its operations at least until the expiry of the Redisa Plan on 30 November

2017. Mr Erdmann and the Respondent is in any event fully aware of

the requirements they have to meet before even consideration would

have been given to the allocation of further funding to the Respondent

53.3 There can with respect be no "clear relationship" between the budgetary

allocation of funds to the Waste Management Bureau and the

Environmental Levy that SARS now collects.

53.4 It was with respect not the change in the funding model that removed the

ability from the Respondent to collect funds from the tyre industry, but

the amendments to the Waste Act and the Waste Tyre Regulations,

which required the Respondent to align the Redisa Plan to the current

legislation and to submit a proper and detailed budget and business plan.

substantiated with documentary evidence, to be allocated further

funding.

53.5 Neither Mr Erdmann, nor the Respondent have any mandate to act on

behalf of tyre producers.


I deny the contents thereof The Respondent, as well as PWC, has repeatedly

provided the Department with the assurance that they have ample cash and cash

-54-

equivalents available to continue with the implementation of the Redisa Plan

which would have lasted at least until the expiry thereof on 30 November 2017.

I have further noted with interest that while the Respondent complains about

having to reduce the rate of collection and remediation of waste tyres, it does not

indicate that the exorbitant "management fee" payable to Kusaga Taka

Consulting (in liquidation), or any of the directors fees, or any of the operational

expenses for that matter, will be reduced.


55.1 The Respondent itself on 31 May 2017 published a notice of its intention

to stop all collection of waste tyres from 1 June 2017, and then effectively

did so.

55.2 I am fully aware of the implications of stopping collection of waste tyres.

I was prompted by this knowledge, together with the presentation made

by the Respondent on 23 May 2017, as confirmed by the public

announcements by the Respondent on 31 May 2017, to launch this

urgent application for the liquidation of the Respondent


56.1 I deny the contents thereof.

56.2 The Respondent was not in any form of crisis as it had previously

-55-

presented both to the Department and to Parliament that they have

ample cash reserves which would have enabled them to continue with

the implementation of the Redisa Plan, at least to the expiry thereof on

30 November 2017. The Department was, as set out in more detail in

my founding affidavit, since 2014 engaged with the Respondent to obtain

the cooperation of the Respondent to align the Redisa Plan to the change

in the funding model, which the Respondent has to date hereof neglected

and/or refused to do. The so-called "crisis" that Mr Erdmann refers to,

is therefore a self-created crisis which could have been avoided if the

Respondent cooperated with the Department through the numerous

engagements from 2014, to align the Redisa Plan with the change in the

funding model.

56.3 The Department has not refused to provide the Respondent with further

funding. The Department in fact on numerous occasions requested the

Respondent to comply with the current legislation and the Public Finance

Management Act before further funding may be considered. The

Respondent however chose not to comply.


I deny the contents thereof. The Respondent in fact requested a meeting with

me and I responded by asking for an agenda and an estimate duration of such a

meeting to try and fit that into my schedule. Due to extensive international

travelling arrangements, I had not received the letter of 31 May 2017 that Mr

-56-

Erdmann refers to prior to me signing the founding affidavit


In so far as the contents thereof is a correct reflection of the legal framework and

current legal dispensation, I admit the contents thereof.


59.1 I admit that the Redisa Plan, based on the incorrect reports in respect of

the achievements by the Respondent, received some international

recognition

59.2 I deny that the Redisa Plan operates on an indefinite basis reviewable

every five years. In this regard I respectfully refer the Honourable Court

to my letter of approval (annexure 'BM 4') in which it is explicitly stated

that the Redisa Plan must be reviewed and re-submitted before the

expiry thereof.

59.3 To date hereof, the Respondent has not reviewed and re-submitted the

Redisa Plan for the further approval thereof, despite several requests

from the Department to align the Redisa Plan to the current legislation.

-57-


60. 1 I take note of the contents hereof.

60.2 With regard to the "bespoke computer data system designed to ensure

real-time monitoring and control of the transactions" I respectfully refer

the Honourable Court to the preliminary forensic investigation report

(Annexure 'BM 84') that confirmed that this very expensive computer

system was paid for by the Respondent, but belongs to Kusaga Taka

Consulting (in liquidation) while the IP was given away to Nine Years

Investments - another private profit company of which Mr Erdmann and

his family are the shareholders.

60.3 The Redisa Plan makes no mention of any contracts or the efficiency

thereof beyond the five year term thereof


61.1 While the Respondent now resists making the concession that it is an

organ of state, Mr Erdmann nevertheless accepts that the Respondent

is an organ of state when he states in the answering affidavit that the

Respondent is "performing a constitutional function that undertake

certain public law obligations". Mr Erdmann in effect admits (as he has

previously done during the Board meeting of 15 December 2011) that

the Respondent is an organ of state.

-58-

61.2 The Redisa Plan envisaged a lifespan of five years in which neither Mr

Erdmann nor the Respondent could ensure financial stability and public

accountability.


62.1 I deny that the so-called achievements under the Redisa Plan constitutes

a legislative or other measure as contemplated in section 24(b) of the

Constitution. The Redisa Plan itself was found to be in the form of

subordinate legislation but not the achievements in terms thereof.

62.2 I am advised that the obligations that Mr Erdmann alleges are

automatically attributable to the State, is a matter of legal argument.


Mr Erdmann and the directors of the Respondent in fact acted recklessly by

engaging in contracts beyond the five-year period of approval of the Redisa Plan.


64.1 I deny that the Redisa Plan was established to achieve "ambitious goals"

The Redisa Plan is in fact subordinate legislation with achievable targets.

none of which the Respondent in fact achieved.

-59-

64.2 The Redisa Plan was not established to promote a "circular economy"

as Mr Erdmann alleges.


In terms of the current legislation, the Respondent is from 1 February 2017 no

longer entitled to collect any fee from tyre producers and SARS now collects the

Environmental Levy.


I deny that the Redisa Plan is an ""EPR" scheme as the approved Redisa Plan

itself makes no mention of such a scheme.


I take note of the contents thereof and respectfully point out to the Honourable

Court that the Respondent has not complied with all of these provisions as set

out in my founding affidavit and substantiated by the various reports referred to

herein.


68.1 The Redisa Plan makes no mention at all of the allegation that the

-GO

Respondent "takes on the producers' responsibility for the collection and

remediation of waste, for a fee", or of a Redisa fee.

68.2 The success of the model as set out in the Redisa Plan is disputed,

considering the numerous concerns and issues highlighted in the notice

of my intention to consider the withdrawal of the approval of the plan

(annexure 'BM 76'). Furthermore, the model as set out in the Redisa

Plan was not implemented as envisaged while most of the waste tyres

collected in terms of the Redisa Plan were exported in clear deviation

from the provisions of the Redisa Plan.


69.1 No financial and performance figures were set out above in the

answering affidavit of Mr Erdmann and I therefore deny that they can be

accurate. I respectfully refer the Honourable Court to what I have set

out herein above in respect of the allegations by Mr Erdmann that any

performance figures were "independently audited by PWC", which PWC

themselves in their reports deny (annexure 'BM 84').

69.2 I specifically deny that the Respondent has complied with its obligations

in respect of reporting and auditing. Mr Erdmann provides no proof of

these allegations.

-61-


I confirm that I have not received any formal application from the Respondent to

amend the Redisa Plan and I have not approved any such amendments to the

Redisa Plan.


I deny the contents thereof. The funding model was amended by a decision

of Parliament I have no idea to what other unsuccessful legislative attacks Mr

Erdmann may refer, so I am unable to comment thereon.


The export of waste lyres is an unauthorised deviation from the Redisa Plan.

No amendment of the Redisa Plan is necessary to exclude these activities.


The "regular monthly reports submitted' by the Respondent to the Department

are unreliable as the forensic investigation report confirmed that no source

documents for the figures reported to the Department could be found.

-62-

7 4. Paragraph 124 thereof

The export of waste lyres is conveniently omitted by Mr Erdmann while the

February 2017 report that Mr Erdmann refers to, in fact indicates that 45% of

waste lyres were exported - meaning that the largest portion of the recycling

effort was shipped offshore instead of recycled.


The Respondent was responsible for creating and developing those markets that

it now complains were still under development. Instead of developing this

market, the Respondent made a concerted effort to rather benefit its directors

and their other business interests.


The Department has received numerous complaints from waste tyre processors

that the Respondent did not provide them with the waste lyres they required.


77.1 It is noteworthy that Mr Erdmann- while singing the praises of the very

expensive computer system that, no doubt with the assistance of Kusaga

Taka Consulting (in liquidation), allegedly can generate any report

-63-

immediately does not provide the actual number of processing plants

established or the actual number of cement producers who retrofitted

their kilns to accept waste lyres. Mr Erdmann also does not provide the

actual national waste tyre processing capacity but again confines himself

to vague and sweeping statements without any substantiating

documents.

77.2 While Mr Erdmann clearly has no idea how many processing plants the

Respondent allegedly established and/or how many cement producers

who retrofitted their kilns to accept waste tyres, he does not explain how

he can estimate the current market conditions or that "much of the

available capacity is currently standing idle".


78.1 The export of waste lyres is not included in the Waste Hierarchy

approved in the Redisa Plan, which specifies processes for recycling.

The question is with respect not whether the Redisa Plan is silent on the

export of waste lyres, but whether the Redisa Plan authorises the export

of waste lyres as opposed to the specified processes for recycling

thereof. The export of waste tyres remains a serious deviation from the

provisions of the Redisa Plan.

78.2 Mr Erdmann does not inform the Honourable Court why the Respondent

allegedly had any excess supply of waste lyres over demand in

-54-

circumstances where he cannot even provide the national waste lyre

processing capacity and where the Department received numerous

complaints from processors that they did not receive the required

tonnage of waste lyres from the Respondent.

78.3 The Respondent also places nothing whatsoever before the Honourable

Court to substantiate the allegation that a 'due diligence process' was

conducted on any foreign plants again Mr Erdmann expects the

Department and this Honourable Court to accept his word only.

784 The letter referred to by Mr Erdmann as an example of the so-called inter

use disposition confirmation, with respect does not prove any due

diligence process on the part of the Respondent.

78.5 The Respondent started reporting on exports in June 2016 when the

Department became aware thereof and questioned this practice. Mr

Erdmann however does not inform the Honourable Court about all the

waste lyres that were exported before the Department caught on to the

un-authorised export of waste tyres I specifically deny that the

Department had no concerns in respect of the export of waste tyres

These concerns were addressed with Mr Erdmann and the Respondent

from as early as 2014 when the Respondent was instructed by the

Department to reduce and ultimately eliminate all exports

78.6 The jobs allegedly created in the export of waste lyres were specifically

created by the Respondent to implement an unauthorised deviation from

-65-

the Redisa Plan which can hardly now be used as a motivation to

continue with the same deviation from the Redisa Plan.

78.7 It is with respect irrelevant whether the export of waste lyres makes a

contribution to the economy of South Africa or not, as the export of waste

lyres is an unauthorised deviation from the Redisa Plan and is directly

contrary to the waste management hierarchy as set out in my founding

affidavit. In any event it was never the idea that South Africa will export

these waste tyres, either to benefit the green economy of another country

or to dump our waste products on the shores of a foreign country.


Even on Mr Erdmann's own version, the Respondent started reporting on the

export of waste lyres only in June 2016 when the Department caught on to such

export practice. At that stage I was not aware of the full extent of the

maladministration, poor governance and poorer performance in the

implementation of the Redisa Plan as I had to rely on the false and

unsubstantiated reports the Respondent submitted to the Department

Furthermore, I have always maintained that the objectives and mechanisms in

the Redisa Plan are sound - the problem arose with the Respondent's

implementation of the Redisa Plan.

-66-


The Respondent has in fact not achieved any of the targets set out in the Redisa

Plan.



81.2 The "full PWC report" dated 13 March 2017 (annexure 'BM 82') referred

to herein above, confirmed that the Respondent did not even know

whether the depots had the necessary weighbridges. Once again Mr

Erdmann does not explain to the Honourable Court how he calculated

these alleged tons of waste lyres and he does not provide the

Honourable Court or the Department with the necessary substantiating

documentation to validate these thumb suck tonnages allegedly collected

and delivered to processors locally and internationally.

81.3 The December 2016 report to the Department, at the end of the 2016

calendar year, indicates that 56% of waste lyres were exported. The

question now arises which of 35% or 56% are a correct reflection of the

actual export of tyres, if any weight can be attached to the allegations by

Mr Erdmann.

81.4 Once again Mr Erdmann confines himself to vague and sweeping

-57-

statements about the creation of "substantial jobs in South Africa in the

pre-processing, packing and transporting of waste lyres" without

providing either the Department or the Honourable Court with any exact

figures or substantiating documents in that regard.

81.5 The export of waste tyres in effect amounts to the movement of South

African waste to another country, which then has to take over the

responsibility for the recycling of those waste tyres. In addition the

potential benefit that would be derived from recycling those tyres locally

is lost as local processors are denied the right to those waste tyres

once again refer the Honourable Court to the fact that the Department

has received numerous complaints from processors who did not receive

the required amount of waste tyres from the Respondent


Once again Mr Erdmann is making these vague and sweeping statements

without any substantiating documents, and he does not inform the Honourable

Court where the alleged historical data originated from


83.1 As set out herein above, the directive application is irrelevant to this

application for the liquidation of the Respondent

-68-

83.2 In any event I deny that Mr Erdmann in the Directive application dealt in

any detail with the Respondenrs alleged performance in terms of the

Redisa Plan. Mr Erdmann therein also confined himself to vague and

sweeping statements of alleged performance without any substantiating

documents presented to the Honourable Court

83.3 In that particular application, I have not dealt with the merits at all. The

Department merely applied for an extension of time in which to address

the merits of that urgent application, but before I could depose to an

affidavit in respect of the merits of the application, the new funding model

came into operation and the necessity for the directive fell away.

subsequently withdrew that directive.

834 Mr Erdmann had the opportunity to attach the alleged substantiating

documents that were attached to his letter of 30 November 2016

(annexure 'BM 66') to this answering affidavit, but he instead again only

attached the letter as his annexure "AA 9" - an unnecessary duplication

of the same annexure.


84.1 I have in fact responded to Mr Erdmann's letter of 30 November 2016.

Mr Erdmann conveniently forgets about my notice of intention to consider

the withdrawal of my approval of the Redisa Plan which was dated 30

May 2017 (annexure 'BM 76'), and which he received by email on 1 June

-69-

2017

84.2 I deny that any new allegations were introduced in my notice to Mr

Erdmann to consider the withdrawal of my approval of the Redisa Plan

as that letter merely stated all of the numerous concerns I had with the

implementation of the Redisa Plan as well as with the management, lack

of co-operation and lack of accountability of the Respondent Mr

Erdmann again confines himself to a vague and sweeping statement of

new allegations being introduced while he does not specify even one new

allegation it allegedly so introduced.

84.3 The final iSolveit report was attached as annexure "E" to my notice to Mr

Erdmann of my intention to consider the withdrawal of my approval of the

Redisa Plan.

84.4 The iSolveit report, which is supported by a confirmatory affidavit which

will be filed under cover of a separate filing notice, is not the sole basis

for this application. The Respondent had ample time to comment on the

provisional report and to provide the necessary substantiating

documents to the Department, but chose to rely on vague and sweeping

statements and incomplete documents. Both the latest PWC report

dated 13 March 2017 and the preliminary report by the forensic

investigators indicate why Mr Erdmann never bothered to provide

comprehensive comment on the interim iSolveit report or to provide the

necessary substantiating documents to the Department

-70-

84.5 The iSolveit team. consisting of adequately qualified academics. doctors

and a registered auditor, did not perform a financial audit in terms of the

auditing standards but were mandated to perform the necessary

performance audit on the implementation of the Redisa Plan (which

performance audit the Respondent had to submit to the Department on

a yearly basis, but no such performance audit report has ever been

submitted by the Respondent to the Department).

85. Paragraph 158 to 17 5 thereof

85.1 The Respondent's repeated failure to comply with its mandatory

obligation to submit to the Department an annual performance audit

report, as well as the intended change in the funding system prompted

the performance review of the Respondent's implementation of the

Redisa Plan by the Department The iSolveit team was appointed to

conduct this review.

85.2 I deny that the Respondent had nothing to hide and I specifically deny

that the Respondent cooperated fully with the iSolveit team. The

Respondent has to date hereof not provided all of the information and

documents as requested by either the Department or by the iSolveit

team.

85.3 The purpose of the performance review was clearly set out in the scope

of the work that iSolveit were mandated by the Department to perform.

-71-

namely "The purpose of the performance review was to assess the

efficacy of REO/SA from inception to mid-term of the REO/SA program.

The review examined the gaps, the successes and the failures of

REO/SA to meet the obligations as set out in the Plan, the NEMWAA

(2014), the MOl and the LOA, and its readiness to align all of its activities

to the new amendments and regulations listed above." The review

focused on REDISA'S existing operations, records, progress on the

implementation of the Plan as approved in 2012, financial risks, liabilities

and any other commitments that may exist as it aligns itself with the

legislative amendments and accompanying regulations.

85.4 Mr Erdmann once again duplicates the annexures of the minute of the

meeting, the correspondence from iSolveit to the Respondent, the

Respondent's reply dated 27 June 2016 to the provisional report from

iSolveit, which were already attached to my founding affidavit

85.5 As set out in my founding affidavit, the iSolveit report dated 11 June 2016

was erroneously labelled as a final report while the actual final report was

only delivered to the Department on 3 February 2017.

85.6 I deny that the Respondent has ever provided the Department with full

information in respect of the conflict of interest at Board level between

the Respondent and Kusaga Taka Consulting (in liquidation). The

Department has never received proof of any recusal of the directors of

the Respondent when issues concerning Kusaga Taka Consulting (in

liquidation) were discussed by the Board. The true extent of the conflict

-72-

of interest at Board level was only revealed in the preliminary forensic

investigation report referred to herein above.

85.7 The conclusion reached in the preliminary report by the iSolveit team

later proved to be fully rational, especially if regard is to be had to-

85. 7.1 the final iSolveit report dated 3 February 2017,

85.7.2 the latest PWC report dated 13 March 2017, and

85.7.3 the preliminary forensic investigation report referred to herein

above.


86.1 Mr Erdmann once again duplicates the annexures of the proposed

agenda of the meeting, the "action list", the correspondence and

documentation, which were already attached to my founding affidavit

86.2 I deny that the Respondent provided all of the information and/or the

documents as requested in the "action list" to the Department

86.3 I have never heard of the hearsay allegation by Mr Erdmann that Anshu

Padayachee might have told Mr Erdmann not to submit the further

documentation as alleged, and I cannot comment thereon as I was not

present at that meeting. This allegation should with respect be struck

from the answering affidavit

-73-

86.4 The iSolveit report dated 12 August 2016 was entitled "Key Findings

Report" due to the fact that the Respondent failed to provide the

complete information and/or documents to the iSolveit team that would

have enabled them to compile a final report.


87.1 Mr Erdmann agreed to the deadline when he signed the minutes and the

action list.

87.2 It is incomprehensible how Mr Erdmann can allege that the Respondent

could not provide the "voluminous documentation required by the

Department within such a short period of time" while he in the same

breath alleges that the Respondent had indeed provided all of the

information and documents to the Department and that they have

cooperated fully with the performance review It would with respect then

only have required a mere duplication of the documents already

provided.

87.3 It is respectfully pointed out to the Honourable Court that Mr Erdmann.

with reference to the outstanding documents referred to in the agenda

and minutes of the meeting, herein changes his allegations from

reference to (1) "previously provided the requested documentation as per

the correspondence", to (2) "REO/SA elected not to dispute the minutes

and to provide the new information requested'. It with respect begs the

-74-

question which version, if any, should be believed.


I deny that the Key Findings Report retracted any of the findings and

recommendations contained in the previous iSolveit report. Mr Erdmann also

provides no further details to the Honourable Court of which specific findings and

recommendations contained in the previous report were allegedly retracted in

this report.


89.1 Mr Erdmann once again duplicates the copy of the letter from the

Director-General dated 17 October 2016, which was already attached to

my founding affidavit

89.2 I deny that the Respondent has cooperated fully and in good faith and I

specifically deny that the Respondent provided the requested

documentation to the fullest extent possible. As examples of the lack of

co-operation experienced from the Respondent, the documents provided

by the Respondent only included pages 4 and 21 of the requested

employment contracts and the elusive "Management agreement"

between the Respondent and Kusaga Taka Consulting (in liquidation)

was not included (which we have now learnt has been amended at least

three times)

-75-


90.1 Mr Erdmann once again duplicates his letter of 23 October 2016. which

letter was already attached to my founding affidavit

90.2 After repeated requests to the Respondent for information and the

subsequent non-cooperation the Department and the iSolveit team

experienced from the Respondent, iSolveit was forced to finalise its

findings based on whatever information the Respondent made available

to it

90.3 Other findings than those of iSolveit were set out in my notice to Mr

Erdmann of my intention to consider the withdrawal of my approval of the

Redisa Plan.


91 .1 Mr Erdmann once again duplicates the annexures that are already

attached to my founding affidavit.

91.2 I once again deny that the Respondent co-operated with iSolveit or with

the Department, or that all requested documentation was provided. The

Respondent's employment contracts and the elusive "management

agreement" between the Respondent and Kusaga Taka Consulting (in

liquidation) remained outstanding.

-76-

91.3 iSolveit on 14 November 2016 in fact indicated that they were finalising

the audit and/or performance review, not that it was still ongoing.


92.1 Mr Erdmann is repeating the irrelevant reference to the withdrawn

directive as if it would become relevant the more it is repeated.

92.2 I have informed Mr Erdmann that the Respondent should provide me with

reasons why I should not consider the withdrawal of my approval of the

Redisa Plan. On receipt of Mr Erdmann's letter of 30 November 2016,

I considered the reasons provided by Mr Erdmann therein, which did not

warrant a further response from my side.

92.3 I have no idea to which "constant efforts to engage with the Departmenf'

Mr Erdmann may be referring and I can therefore not comment thereon.

Mr Erdmann himself does not provide any details of these "constant

efforts" to the Honourable Court.


93.1 I have already discussed the Respondent's letter of 30 November 2016

in my founding affidavit Insofar as Mr Erdmann's allegations herein

differ from what I have set out in my founding affidavit, I deny the contents

-77-

hereof.

93.2 I presume that Mr Erdmann is referring to the "full PWC report" dated 13

March 2017, a copy of which the Department only recently received from

the provisional liquidators of the Respondent, which apparently took

PWC from October 2016 to March 2017 to complete.

93.3 I deny that PWC had access to all source documentation and respectfully

refer the Honourable Court to the PWC report itself (annexure 'BM 84')

which explicitly states the contrary.

93.4 I deny that the PWC report was furnished to the Department The first

tirne that the Department saw this report, which is conveniently not

attached to Mr Erdmann's answering affidavit, was when the Department

received the said PWC report from the provisional liquidators, as

discussed in more detail in paragraph 12 above.

93.5 I confirm that the Respondent has been reluctant to engage with the

Department and that Mr Erdmann in fact withheld the PWC from the

Honourable Court


94.1 There is in fact an improper relationship between the Respondent and

Kusaga Taka Consulting (in liquidation) as confirmed by the preliminary

forensic investigation report referred to in paragraph 15 above.

-78-

94.2 The Redisa Plan envisaged a truly non-profit company engaged in the

implementation of the objectives of the Redisa Plan while it refers to the

appointment of an external management company, but the Redisa Plan

also requires an independent board of directors. The Respondent did

not comply with this provision of the Redisa Plan. The Redisa Plan did

not envisage the lucrative and luxurious return on investment for Mr

Erdmann and his associates it turned out to be.

94.3 The Department was aware of the fact that a management company-,

independent of the board of directors of the Respondent - would be

appointed, but the Department was definitely not aware thereof that the

shareholders of the appointed management company would also be the

executive directors of the Respondent The Department was also not

aware thereof that the appointed management company would be

Kusaga Taka Consulting (in liquidation). Despite several requests for

the procurement process in terms of which the management company

was appointed, Mr Erdmann has to date hereof not provided either the

Department or this Honourable Court with any such procurement

documents.

94.4 Mr Erdmann does not attach a single shred of evidence to substantiate

his allegations that the Department was aware of the identity of the

management company and/or of its shareholders. The Department for

the first time discovered the identity of the shareholders as related parties

to the Respondent in the 2015 financial statements and, having regard

-79-

to the forensic investigation report, even that was not correctly conveyed

to the Department The truth of the matter is that the Redisa Plan was

approved while the Respondent withheld this conflict of interest in the

key relationship between the Respondent and the management

company, from the Department

94,5 From the forensic investigation report, it now seems that the Respondent

has not fully dealt with the conflict of interest relationship in its dealings

with iSolveit

94,6 Mr Erdmann's allegation that the management company should be the

"receiver" of the valuable commercial information that the Respondent is

the actual custodian of, is false and completely unsubstantiated, The

management company Kusaga Taka Consulting (in liquidation) in fact

had no track record and developed the so-called management expertise

at the cost of the tyre industry of South Africa,

94,7 I have dealt with the repeated claims by Mr Erdmann that the Redisa

Plan has received international recognition and praise herein above,

which was based on the false and inaccurate reporting the Respondent

presented to the Department

94,8 Despite all of the concerns by the Department about the independence

of the Board of directors of the Respondent, Mr Erdmann still does not

provide the Honourable Court with a shred of evidence of the

independence of the Respondent in the decision making process

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therefore deny that the directors of the Respondent complied with their

obligations in terms of the Companies Act as they always had a personal

interest in the outcome of decisions taken by the Respondent

94.9 I deny that KPMG provided any confirmation that the shareholders of the

management company recused themselves from the Respondent's

decision making process Mr Erdmann and the other directors of the

Respondent in fact participate in and influence decisions about the

management company as the Respondent in fact handed over the

implementation and administration of the Redisa Plan to the

management company. Even KPMG, as set out in the disclaimer in

their audit report included in the annual financial statements, were not

provided with minutes of board meetings to verify this unsubstantiated

allegation.

94.10 Despite several requests over the period of approval of the Redisa Plan

for proof of such compliance, Mr Erdmann has never provided the

Department with any proof of compliance with the requirements of

corporate governance. Furthermore, the forensic report referred to

herein above indicates that no evidence of the recusal of the directors

could be found (paragraph 148 of the report- annexure 'BM 86').

95. ParagraPh 231 to 234 thereof

95.1 The iSolveit report makes no mention of "all of RED/SA's company

secretarial documentation, including board and committee meeting

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minutes" being handed to them" If this was so, Mr Erdmann had ample

opportunity in his answering affidavit to take the Honourable Court into

his confidence by attaching those minutes to his answering affidavit but

he chose not to do so" iSolveit could only deal with minutes they actually

received"

95"2 The structure of the implementation of the Redisa Plan and the

appointment of a management company does not in itself create a

conflict of interest The conflict of interest is created by the fact that the

executive directors of the Respondent are the shareholders in the

management company and that this fact was deliberately withheld from

the Department until very late into the period of approval of the Redisa

Plan"

95"3 As set out in my founding affidavit, the Mr Erdmann and his associates

are also not independent of the tyre industry and actually entered the

arena by setting up competing private profit companies"

95A I deny that any of the Respondent's auditors has ever confirmed and/or

actually verified the alleged independence of the board of directors of the

Respondent or the independence of the Respondent from the tyre

industry - and Mr Erdmann provides no actual proof thereof to this

Honourable Court"

96" Paragraph 235 to 241 thereof

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96.1 I confirm that the fee for an undisclosed management company is set out

in the Redisa Plan but it was never envisaged that the Redisa Plan would

be utilised as a return on investment by the Directors of the Respondent

96.2 I deny that the Respondent's audited financial statements indicate that

the only financial relationship it has with the management company, is

payment of the agreed monthly fee. My concerns of huge amounts of

public funds being siphoned off to the management company, Kusaga

Taka Consulting (in liquidation) were validated by the forensic

investigation report referred to herein above

96.3 I deny that Kusaga Taka Consulting (in liquidation) has ever accounted

to the Department - it has constantly refused to provide the Department

with any information on the basis thereof that it is a private profit company

with no obligation to account to the Department The level of information

recorded in the monthly reports provided by the Respondent to the

Department only rose to an acceptable level from October 2016 on the

insistence of the Department

96.4 I have not confused the management company's obligation to report on

and account for its management activities for the Respondent and how it

spent the public funds previously collected by the Respondent, with that

of the management company itself. While the Respondent has for all

practical purposes completely handed over the implementation and

administration of the Redisa Plan to the management company (and not

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only the key administrative activities as Mr Erdmann alleges), this

obligation also fell on the management company, of which the

Department has never received any audit reports, Mr Erdmann once

again does not attach any of the alleged unqualified audit reports for the

management company Kusaga Taka Consulting (in liquidation),

97, Paragraph 244 to 247 thereof

97,1 Neither the Department nor iSolveit received the initial management

contract between Kusaga Taka Consulting (in liquidation) as fully set out

in my founding affidavit The Respondent's idea of compliance with this

request was to provide a management contract referring to an existing

management contract without providing such existing management

contract to the Department

97,2 I deny Mr Erdmann's allegation that the Respondent does not own any

assets with Kusaga Taka Consulting (in liquidation) as he does not

provide any proof thereof to the Honourable Court, From the forensic

investigation report referred to above, it however became clear that while

the Respondent paid for example millions of Rand for the very expensive

computer system, it now all of a sudden allegedly belongs to Kusaga

Taka Consulting (in liquidation) and Kusaga Taka Consulting (in

liquidation) has given away the IP thereon without any value, to Nine

Years Investments- another private profit company in which Mr Erdmann

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and his family have a direct interest.

97.3 I deny the allegation that the Respondent and the management company

do not share office space and respectfully refer the Honourable Court to

the sub-lease agreement between the Respondent and Kusaga Taka

Consulting (in liquidation) (annexure 'BM 92') that clearly indicates that

the Respondent is paying for the whole of the 4'h floor which includes the

office space of Kusaga Taka Consulting (in liquidation).

974 The improper relationship between the Respondent and Kusaga Taka

Consulting (in liquidation) has in fact been validated by the forensic

investigation report referred to above.


98.1 I confirm my concern that the management structure of the Respondent

is top-heavy, too expensive and that its role is blurred with that of Kusaga

Taka Consulting (in liquidation), as was confirmed by the forensic

investigation report.

98.2 I deny that the Respondent retained any "overall oversight role for the

implementation of the Plan" as the Respondent effectively handed over

all control to the management company, who refuses to account to the

Department

98.3 Irrespective of the allegation that Mr Erdmann and the other executive

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directors of the Respondent "conceptualised, developed and

implemented the Plan" at "considerable initial personal risk", these

individuals are not entitled to the exorbitant salaries the forensic

investigation report confirmed they earn, as well as the dividends derived

from Kusaga Taka Consulting (in liquidation), from the public funds they

previously collected for the implementation of the Redisa Plan.

98.4 While alleging that the chief financial officer of the Respondent

supervised the overall financial management of the Redisa Plan, Mr

Erdmann conveniently omits to inform the Honourable Court that Ms

Tania Conceivious was appointed as the chief financial officer both for

Kusaga Taka Consulting (in liquidation) and for the Respondent and is

acting as such simultaneously. This is yet another conflict of interest

between the Respondent and its management company.


I accept that the Respondent doesn't retain responsibility for supervising training,

communications and stakeholder engagement, but Mr Erdmann does not explain

why these costs are duplicated between the Respondent and Kusaga Taka

Consulting (in liquidation)


100.1 I deny that the remuneration of the executives and directors of the

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Respondent are in line with acceptable standards and respectfully refer

the Honourable Court to the forensic investigation report referred to

herein above which found the remuneration paid to the executives and

directors of the Respondent to be exorbitant. Mr Erdmann once again

does not take the Honourable Court into his confidence by providing the

full details of the exact remuneration packages of the executives and

directors of the Respondent, as well as the dividends they receive from

Kusaga Taka Consulting (in liquidation), to the Honourable Court.

100.2 I deny that the remuneration of the executive team is determined in line

with proper corporate governance and Mr Erdmann once again provides

no proof whatsoever of the alleged proper corporate governance

procedures.


101,1 The transfer of public funds intended for the tyre waste stream and the

establishment of yet another non-profit company of which Mr Erdmann

is a director, remains unauthorised by the Redisa Plan. The Redisa

Plan also makes no provision for the acquisition of fixed property or the

development of product testing institutes.

101.2 I deny that Mr Erdmann communicated to the Department that neither

the SANEDI nor the CSIR had the capacity for the specific product

testing Mr Erdmann wanted to venture into. Once again Mr Erdmann

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does not provide proof of the alleged communication to the Department

101.3 The Department has raised numerous concerns in respect of the

expenditure of public funds intended for waste lyres on the research of

new lyres, as set out in my founding affidavit Mr Erdmann and the

Respondent in any event brought the Department under the impression

that these expenses are merely intended for research within the confines

of the provisions of the Redisa Plan. It was only much later discovered

that Mr Erdmann in fact established another non-profit company and

acquired fixed property with the public funds the Respondent previously

collected, in such other non-profit company.

101.4 Mr Erdmann alleges that the establishment of this testing facility is in line

with the approved objective of the Redisa Plan but once again does not

refer the Honourable Court to the specific clause or provision in the

Redisa Plan where the establishment of such a testing facility in another

non-profit company is authorised by the Redisa Plan.

101.5 Paragraph 25.12 of the Redisa Plan does provide for research and

development for the purpose of developing recycling technologies, but

that does not provide the Respondent with a blank cheque to establish

other non-profit or private profit companies to which the public funds the

Respondent previously collected, could be (and in fact was) siphoned off

to. The Respondent was only supposed to coordinate efforts of

developing recycling technologies while Mr Erdmann has now assumed

the regulatory function of assessing and rating lyres for recycling

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purposes.

101.6 Despite numerous requests for substantiating documents in respect of

the alleged collaboration between the Respondent and NMMU, no such

documents were provided to the Department and Mr Erdmann also does

not utilise this opportunity to attach those documents to his answering

affidavit

101.7 Since the Product Testing Institute is also now under provisional

liquidation, those provisional liquidators will be in a position to establish

whether this was yet another vehicle for the personal enrichment of Mr

Erdmann and his associates. Mr Erdmann and/or the Respondent has,

despite numerous requests, not provided the Department with full

accountability in respect of this unauthorised establishment of another

non-profit company.


I deny the contents thereof and respectfully refer the Honourable Court to what I

have set out in my founding affidavit as well as herein above. Mr Erdmann and

the Respondent had ample time to respond to all of my concerns. Mr Erdmann

does not even utilise the opportunity in filing his answering affidavit in this

application to provide the Honourable Court with the substantiating documents

that the Department has been requesting for years now.

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I deny the contents thereof. I have duly applied for extended standing and the

Honourable Court has afforded me such extended standing. I am advised that

this is in any event a legal argument which will be addressed at the hearing

hereof.


I deny the contents thereof and respectfully refer the Honourable Court to all of

the attempts by the Department to engage constructively with the Respondent.

as well as the Respondent's lack of co-operation in this process. Mr Erdmann

does not even utilise the opportunity in filing his answering affidavit in this

application, to take the Honourable Court into his full confidence by providing all

of the documents and information that the Department had been requesting for

years now. Mr Erdmann in fact deliberately withheld documents and information

from this Honourable Court.


105.1 The meetings that the Department held with the Respondent on the

intended change in the funding model, the Pricing Strategy and the

required alignment of the Redisa Plan, were mostly irrelevant to this

specific application My answering affidavit in the review application by

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the Respondent against the amendment of the Waste Tyre Regulations,

comprise of some seven lever arch files, I have attempted to limit the

reference herein to those meetings with the Respondent which are

directly relevant to the repeated requests for proper public accountability,

information and documents directed at the Respondent Mr Erdmann

could have attached the minutes of other meetings if he deemed those

relevant to this specific application, but he apparently also deemed those

minutes of meetings as irrelevant to this specific application,

105,2 I deny that the Respondent has submitted a "detailed business plan" as

alleged, As set out herein above, I was not aware of the submission of

the business plan that Mr Erdmann refers to when I deposed to my

founding affidavit Despite all of the attempts made by the Department

since 2014 to get the Respondent to align the Redisa Plan to the then

intended change in the funding model and to submit a proper business

plan and budget, substantiated by the necessary documents, Mr

Erdmann waits to submit the alleged "detailed business plan" (without an

aligned Redisa Plan to compare it to) on the same day that he publishes

notices to the effect that the Respondent will effectively cease all

operations in terms of the Redisa Plan,

105,3 The predicament, if any, that the Respondent might find itself in, is with

respect self-created as set out in my founding affidavit as well as herein

above

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105.4 It has never been the intention to bring the Respondent "to its knees" but

it has always been the intention of the Department to ensure that the

implementation and administration of the Redisa Plan is within the

requirements of the Public Finance Management Act and that the Redisa

Plan must be aligned to the current legislation. The Respondent has

however always resisted these attempts by the Department, as it now

appears only to ensure that Mr Erdmann and his associates retain

control over the expenditure of the public funds that the Respondent

previously collected.


106.1 Mr Erdmann's submission to Parliament was not on 5 February 2017 but

in fact on 5 February 2016. We are not referring to inaccuracies in the

PWC report, but rather to the inaccuracies and inconsistencies between

Mr Erdmann's submission to Parliament and the actual figures as

validated by PWC, albeit with the limited information the Respondent

allowed PWC access to.

106.2 I deny that the management contract between the Respondent and

Kusaga Taka Consulting (in liquidation) was handed to either the

Department or to iSolveit

106.3 The forensic investigation report confirmed my concerns that much more

than the management fee was taken by Kusaga Taka Consulting (in

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liquidation) from the public funds that the Respondent previously

collected. Kusaga Taka Consulting (in liquidation) has constantly relied

on its alleged status as a private profit company and refused to provide

the Department with any financial or other documents in line with public

accountability.

1064 I confirm that I have no auditing qualifications. My concerns have

however been confirmed by the forensic investigation report referred to

herein above.


107.1 I deny that the meeting has been taken out of context and refer the

Honourable Court to what I have set out in paragraph 24 of my founding

affidavit.

1 07.2 I confirm that the Respondent tried its best efforts to persuade The

National Treasury not to change the funding model so that the

Respondent would be able to continue to collect the public funds from

the tyre industry it is so generously expended.

107.3 The discussion on the change in the funding model is directly related to

the required alignment of the Redisa Plan to the then intended change

in the funding model, which was subsequently effected on 1 February

2017.

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107.4 Mr Erdmann's assumption that the need for the change in the funding

model was "Treasury's need for additional revenue" is defamatory and

false. As set out in my answering affidavit in the regulations application.

the change in the funding model was necessary to bring waste tyre

measurements into the realm of the Public Finance Management Act.

107.5 I deny that the Respondent's funding was "cut off' on 1 April 2016 or at

any other date. Mr Erdmann was well aware of the fact that no provision

for funding to the Respondent could be made in the 2016/2017 Budget

while the Redisa Plan was not aligned to the current legislation and Mr

Erdmann and the Respondent refused to submit for ministerial approval

a reviewed, aligned and amended Redisa Plan together with a proper

budget and business plan, substantiated with supporting documents.

107.6 Mr Erdmann still labours under the wrong impression that he can only

submit a business plan (annexure 'BM 8') to be allocated funding from

the National Budget while the Department has informed him on

numerous occasions that the Redisa Plan needs to be reviewed and

aligned to the current legislation before a budget and business plan can

even be considered.

107.7 Irrespective of Mr Erdmann's unilateral opinion that the new funding

model may be unworkable, the funding model has in fact changed from

1 February 2017 and the Respondent has done nothing to align the

Redisa Plan to the current legislation now in operation.

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107.8 Mr Erdmann from time to time confuses a forecast of financials with a

proper business plan and budget, substantiated by supporting

documents, which has to be submitted for ministerial approval together

with the aligned Redisa Plan.


108.1 The forensic investigation report confirmed my concerns that Kusaga

Taka Consulting (in liquidation) has taken much more from the public

funds that the Respondent previously collected than it was entitled to in

terms of the Redisa Plan. Kusaga Taka Consulting (in liquidation) has

always hid behind the smokescreen of being a private profit cornpany

and has always refused to provide the Department with any financial

information, inclusive of the details of the alleged administration costs of

the Redisa Plan.

108.2 Once again Mr Erdmann does not provide the Honourable Court with any

supporting documentation to substantiate his allegation of the estimate

of the Respondent's head office costs. It is in any event

incomprehensible how Mr Erdmann can still only estimate the head office

costs of the Respondent after almost completing the five-year period of

approval of the Redisa Plan.

108.3 I deny that the Redisa Plan has been substantially successful and refer

the Honourable Court to the fact that the Respondent has failed to

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achieve any of the targets in the Redisa Plan as set out in my founding

affidavit

108.4 It is noteworthy that Mr Erdmann admits that the Redisa Plan was

implemented outside of the confines of the Public Finance Management

system, while the Respondent was engaged in the implementation of the

Redisa Plan, which is subordinate legislation, and which makes the

Respondent an organ of state. I however deny that it was a deliberate

or any other policy decision on the part of the State to exclude the Redisa

Plan from public finance accountability. The email from D Fisher does

not indicate that the Redisa Plan must operate outside of the confines of

the Public Finance Management system

108.5 I have previously denied and I again deny that the Redisa Plan was

drafted as a "self-regulating, self-funded EPRO" as alleged.


109.1 Irrespective of the decision at that time that the Respondent would collect

the fee in terms of the Redisa Plan, the current legislation requires the

Respondent to align the Redisa Plan to the new funding model and to

apply for further funding by the submission for ministerial approval of a

proper budget and business plan, substantiated with the necessary

supporting documents.

109.2 Mr Erdmann and the Respondent have been advised repeatedly how to

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apply for further funding through the National Budget.

109.3 I confirm that the Respondent has no guarantee for further funding as

the Redisa Plan is not aligned to the current legislation and the

Respondent has not applied for further funding by submitting a proper

business plan and budget, supported by the necessary substantiating

documents, for ministerial approvaL

109.4 As set out herein above, the R 210 million that Mr Erdmann keeps on

referring to, was allocated to the Waste Management Bureau and not

specifically to the Respondent as the Respondent's further funding is

dependent on ministerial approval of the aligned Redisa Plan, together

with a proper business plan and budget, supported by the necessary

substantiating documents.

109.5 The "budget" presented by the Respondent has only been revised to the

extent that the expenditure indicated therein has been increased.

109.6 I confirm that the estimation by the Respondent is optimistic, especially

with regard to the continuously increasing expenditure, a huge portion of

which goes directly into the pocket of Mr Erdmann and his associates.

11 0. Paragraph 295 thereof

Mr Erdmann's concern in this regard is with respect irrelevant to the application

for the liquidation of the Respondent

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111.1 I deny that the Respondent has disclosed precisely how the money

received from subscribers to the Redisa Plan was expended or that it

has been properly accounted for or that it has been properly audited or

that it is entirely transparent The forensic investigation report

contradicts this allegation.

111.2 Mr Erdmann conveniently omits to refer to the required annual

performance report that the Respondent was obliged to provide to the

Department and which has over the almost five-year period of approval

of the Redisa Plan. never been submitted to the Department

111.3 The PWC report of 13 March 2017 confirmed my concerns that no

substantiating documents could be found to validate the figures reported

in the monthly management reports that the Respondent presented to

the Department No reliance can thus be placed on the monthly

management reports that the Respondent presented to the Department


I confirm that the Respondent has no guarantee for further funding as the Redisa

Plan is not aligned to the current legislation and the Respondent has not applied

for further funding by submitting a proper business plan and budget, supported

by the necessary substantiating documents, for ministerial approval.

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I deny the contents thereof and respectfully refer the Honourable Court to all that

I have set out in my founding affidavit and in this replying affidavit herein above,

which was validated by the forensic investigation report referred to above.


I deny the contents thereof. Not only is Mr Erdmann an executive director and

the CEO of the Respondent, but he also derives dividends from the management

company Kusaga Taka Consulting (in liquidation) and from Nine Years

Investments - the other private profit company which benefits from the public

funds previously collected by the Respondent Mr Erdmann has never

disclosed his full relation to, and his benefits directly and/or indirectly obtained

from the Redisa Plan. Mr Erdmann has also never disclosed the benefit he

derives from all of the other private profit companies directly related to the

Respondent


I deny that the Respondent has been managed in accordance w·1th the Redisa

Plan and respectfully refer the Honourable Court to the validation of my concerns

in the forensic investigation report referred to herein above. Not even the audit

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reports that Mr Erdmann continuously refers to, substantiates this allegation.


I deny the contents thereof. Not only has the Respondent and PWC on its

behalf, contended that the Respondent has more than enough reserves to

continue with the operation and implementation of the Redisa Plan for at least

seven months from the change in the funding model, but Mr Erdmann is well

aware of the fact that future funding of the Respondent is dependent on

ministerial approval of a reviewed and aligned Redisa Plan, together with a

proper budget and business plan, substantiated with the necessary supporting

documents.


The composition of the Board of directors of the Respondent does still not comply

with the requirements of the Redisa Plan as confirmed by the Respondent's

Memorandum of Incorporation.


118.1 There is with respect nothing speculated about Mr Erdmann's

involvement in other private profit companies. Mr Erdmann has never

divulged this information out of his own accord to the Department

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118.2 When the businesses referred to were listed in the 2016 financial

statements of the Respondent, it was the first time that the Department

was informed of the existence thereof. The mere listing of these

businesses in the Respondent's financial statements does however not

provide the Department with the financial information of each of these

private profit companies or of the extent of the involvement of Mr

Erdmann and his associates therein.

118.3 As a director of Waste Beneficiation and of lmvelo Rubber, Mr Erdmann

has entered the arena to compete with those businesses the

Respondent had to establish in terms of the Redisa Plan, which is in

contravention of the provisions of the Redisa Plan. Mr Erdmann also

does not provide the Honourable Court with the financial statements

and/or asset registers of the alleged dormant companies.

118.4 Mr Erdmann provides no proof whatsoever to the Honourable Court that

the founding directors of the other private profit companies he

established, do not receive any income or other benefits from those

companies. It would also be interesting to know how much of the public

funds previously collected by the Respondent found its way to these

private profit companies

118.5 The Redisa Plan provided for an independent Board of directors and the

Respondent's own Memorandum of Incorporation prohibits directors of

the Respondent from being directors of other companies.

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119. Paragraph 307.1 thereof

The contents hereof is completely devoid of any truth. Mr Erdmann once again

does not attach copies of the alleged lease agreements to his answering affidavit

I respectfully refer the Honourable Court to the sub-lease agreement between

the Respondent and Kusaga Taka Consulting (in liquidation) (annexure 'BM 91')

and my discussion thereof in paragraph 19.4 above.

120. Paragraph 307.2 to 307.5 thereof

120.1 I deny that it was disclosed to the Department at the inception of the

Redisa Plan that the executive directors of the Respondent would also

be involved in any way in the management company that the

Respondent appointed.

120.2 The Redisa Plan was approved on 30 November 2012, which was the

first year of implementation of the Redisa Plan. The involvement of the

executive directors of the Respondent as shareholders in the

management company was for the first time made known to the

Department in the financial statements of the Respondent of 2014. The

full extent of the involvement of Mr Erdmann and his associates has

never been disclosed to the Department and the Department could thus

never have taken issue with Mr Erdmann and his associates on this

subject

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120.3 I deny any allegations of independence between the Respondent and

Kusaga Taka Consulting (in liquidation) and neither the Respondent nor

its management company has ever provided proof of the independence

of the board of directors of the Respondent to the Department


In view of all of the other non-disclosures by Mr Erdmann and the Respondent

how should the Department know whether Kusaga Taka International - yet

another private profit company established by Mr Erdmann and his associates -

have any financial interest in the Respondent and how much of the public funds

that the Respondent previously collected in terms of the Redisa Plan, found its

way to this private profit company. The liquidators of the Respondent would be

in the best position to ascertain how much of these public funds were siphoned

off to this private profit company.


122.1 I deny the contents thereof.

122.2 As set out herein above the Respondent is paying the rent for the whole

of the 41h floor which is occupied not only by the Respondent and by

Kusaga Taka Consulting (in liquidation), but also by the other long list of

private profit companies established by Mr Erdmann and his associates

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and in which they all have a vested interest

122.3 The Respondent and Kusaga Taka Consulting (in liquidation) even

shared the same chief financial officer.


123.1 Only the liquidators of the Respondent would be in a position to fully

investigate the extent of Mr Erdmann's involvement in these companies.

as well as the extent of the public funds previously collected by the

Respondent that was siphoned off to these private profit companies

established by Mr Erdmann and his associates

123.2 The Redisa Plan does not authorise the Respondent to become a

shareholder in a private profit company. The Redisa Plan especially

does not authorise the transfer of the public funds derived from the

Redisa Plan to a private profit company and out from under my control

and the obligation of public accountability. Mr Erdmann and/or his

associates remain the directors in lmvelo Rubber and in Waste

Beneficiation, which contravenes the requirement in the Redisa Plan that

the Board of directors should be independent

123.3 Neither the Respondent nor Mr Erdmann has provided the respective

Memorandum of Incorporation of each of these companies, or audited

financial statements for these separate private profit companies to

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substantiate his allegation that the directors of the Respondent received

no personal income or benefit from these private profit companies.

123.4 I deny Mr Erdmann's allegations in respect of the lease of the business

premises by the Respondent and respectfully refer the Honourable Court

to my discussion of the sub- lease agreement as confirmed by the

forensic investigation report herein above.

123.5 It with respect does not make sense that Redisa SPV Holding Company

is the holding company of the other dormant companies while Mr

Erdmann alleged that those private profit companies are subsidiaries of

the Respondent.

123.6 I deny that all of these issues were disclosed to the Department as

alleged. The first time during the period of approval of the Redisa Plan

that the Department was informed of some of these private profit

companies, was when they were listed in the 2016 financial statements.

123.7 The lack of independence of the board of the Respondent indeed

evidences some sinister scheme to divert assets and/or the public funds

that the Respondent previously collected to other private profit

companies from which Mr Erdmann and his associates stand to benefit

123.8 Mr Erdmann does not explain to what good governance principles he is

referring to when alleging that it may be "appropriate for governance

reasons that the directors of the Respondent should also be directors of

dormant or other companies where the Respondent has an interesr.

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definitely am not aware of such a good governance principle.


Mr Erdmann himself in paragraph 86 of his answering affidavit. describes the

Respondent as follows: "RED/SA, in performing a constitutional function

undertake certain public law obligations" which in fact confirms that the

Respondent regards itself as an organ of state.


I deny the contents thereof and respectfully refer the Honourable Court to all that

I have set out in my founding affidavit and in this replying affidavit, which is

substantiated by the forensic investigation report.


126.1 The minutes of the respective meetings indicate the discussions held with

the Respondent at those meetings.

126.2 The Respondent is an organ of state engaged in the implementation and

administration of subordinate legislation and therefore subject to my

instructions as to how to implement and administer the Redisa Plan, as

confirmed in my letter of approval of the Redisa Plan (annexure 'BM 4').

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126.3 The minutes of the meetings correctly reflected the discussions held at

those specific meetings and more importantly. some of these minutes

were compiled by the Respondent and not by the Department After the

minutes of a specific meeting were circulated, the respondent never

objected to the content thereof.


The Respondent in fact did not provide the necessary information.


128.1 I deny that the Department has ever requested the Respondent to

contravene the provisions of the Redisa Plan by reducing the number of

directors. Mr Erdmann conveniently does not attach any document to

substantiate this allegation and in any event any amendment to the

Redisa Plan may only be approved by me. I am also not aware of any

alleged recommendations by KPMG on the reduction of the number of

directors of the board of the Respondent

128.2 I attach hereto as annexure 'BM 95' an affidavit by Nolwazi Tetyana in

reply to the allegations made by Mr Erdmann in respect of these

meetings.

128.3 The proof of delivery of the correct management agreement between the

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Respondent and the management company is not attached to Mr

Erdmann's answering affidavit. I have already dealt with the fact that the

Respondent did not provide the first management contract in respect of

waste tyres but instead provided a management contract in respect of

other waste streams.

128.4 It is with respect incomprehensible how Mr Erdmann can argue that the

Department was not entitled to this information. Mr Erdmann is largely

repeating himself and I have addressed these allegations herein above.

128.5 I deny, as I have done repeatedly herein above, that the Respondent has

ever complied with its disclosure obligations. The Department has

never during the almost five-year period of approval of the Redisa Plan

received any performance audit that the Respondent was obliged to

provide annually to the Department The Respondent also provides only

vague and sweeping statements of expenditure without providing the

source documents or any other substantiating documents to the

Department or even to its own auditors.

128.6 Mr Erdmann once again does not provide the Honourable Court with the

minutes of the Board meeting where it was resolved that the Respondent

would, in contravention of the Redisa Plan, utilise the public funds it

previously collected in terms of the Redisa Plan to acquire fixed property

for commercial and residential purposes. The alleged cost benefit

analysis, the minutes of the audit committee and the recommendation by

the audit committee to the Board of directors of the Respondent are also

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not attached to Mr Erdmann's answering affidavit.

128.7 Mr Erdmann also does not provide the Honourable Court with any more

detail on the vehicles acquired by the Respondent in contravention of the

Redisa Plan but merely makes a vague and sweeping statements of

vehicles needed for operational purposes.


I respectfully refer the Honourable Court to what I have set out in my founding

affidavit, in this replying affidavit and the validated facts of continuous setup costs

as reported in the iSolveit report, and the forensic investigation report referred to

herein above. The Respondent was in fact paying for all of the other companies

in which Mr Erdmann and his associates have interests.


The liquidators of the Respondent would be in a better position to investigate the

alleged liability due to Kusaga Taka Consulting (in liquidation)


My letter of approval of the Redisa Plan explicitly states that the plan terminates

after five years unless it is reviewed, amended and resubmitted for my approval

before such expiry. Even the executive summary by PWC in September 2016

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acknowledged the expiry of the Redisa Plan after five years from the date of the

approval thereof. I am under no obligation whatsoever to extend the Redisa

Plan in its present form as it is not aligned to the current legislation.


I deny the contents hereof and respectfully refer the Honourable Court to the

forensic investigation report referred to herein above as well as the fact that

despite numerous requests, the Department has never received copies of the

complete employment contracts of all of the employees of the Respondent.



forensic investigation report referred to herein above.


I stand by the contents of my founding affidavit


I deny the contents hereof and respectfully refer the Honourable Court to what I

have set out in my founding affidavit, in this replying affidavit and to the forensic

~··

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have set out in my founding affidavit, in this replying affidavit and to the forensic



137.1 The Redisa Plan in fact requires an annual performance audit report to

be submitted to the Department, which performance audit the

Respondent has never during the almost 5 years of the period of approval

of the Redisa Plan submitted to the Department

137.2 As set out herein above, the monthly Management reports that the

Respondent submitted to the Department cannot be relied upon due to

the fact that PWC could not find any source documents to substantiate

the figures reported by the Respondent

137.3 Mr Erdmann with respect repeats his allegations in respect of the

meetings the Department held with the Respondent The minutes of

each of those meetings correctly reflected discussions held at respective

meeting.

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137.4 I deny that the McKinsey report was delivered with Mr Erdmann's letter

of 30 November 2016. The list of annexures attached to Mr Erdmann's

letter makes no reference to this report.


Mr Erdmann once again does not attach the minutes of the meeting he refers to

and I can therefore not comment thereon.


Mr Erdmann may disagree with the findings in the iSolveit report but he does not

utilise the opportunity when filing his answering affidavit, to place the substantive

evidence before the Honourable Court to contradict or disprove those findings.


140.1 As set out herein above, while I was considering the reasons provided by

Mr Erdmann not to consider the withdrawal of my approval of the Redisa

Plan, I was under no obligation to respond to the reasons he provided

After I have considered the reasons provided by Mr Erdmann, I notified

Mr Erdmann of my intention to consider the withdrawal of my approval of

the Redisa Plan (annexure 'BM 76').

140.2 I deny that Mr Erdmann and the Respondent had no opportunity to deal

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with my notice of intention to consider the withdrawal of my approval of

the Redisa Plan (annexure 'BM 76'). The time period allowed for such

response has in any event passed without the Respondent even

attempting to address this notice.

140.3 The Respondent's obligation to report and account to the Department

has been elevated fully herein above as well as in my founding affidavit


I deny that the PWC report referred to by Mr Erdmann was in any sense a

performance review.


I have comprehensively dealt with all of these allegations by Mr Erdmann in my

founding affidavit as well as in this replying affidavit


143.1 Apart from the fact that I have comprehensively dealt with the

unauthorised export of waste tyres, I deny that the South African waste

tyre processing industry does not have the ability to absorb all waste lyres

generated and collected. The numerous complaints the Department

received from processors who did not receive the required tonnage of

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waste lyres from the Respondent is evident thereof.

143.2 Mr Erdmann once again provides no proof whatsoever of who the alleged

exporters are or what the relationship of those exporters to the

Respondent may be, whether contractual or otherwise.

143.3 It has always been the responsibility of the Respondent to set up waste

tyre processors

143.4 Mr Erdmann does not provide any proof of accreditation of the alleged

foreign waste tyre processors within their own jurisdictions.

143.5 The Department has never accepted the unauthorised export of waste

tyres as is evident from the minutes of the various meetings with the

Respondent



144.2 The Respondent's Memorandum of Incorporation specifically states that

all funds collected by the Respondent are to be applied to the

achievement of the respondent's objectives. which are set out in the

Redisa Plan. The Redisa Plan makes no mention whatsoever of any

other waste stream. The public funds derived from the tyre industry

should therefore only be utilised for the waste stream of waste tyres. No

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other waste stream may be benefited at the expense of the tyre industry.

144.3 Mr Erdmann on the one hand relies on surplus funds to the needs of the

Redisa Plan while the Respondent is not achieving any of its targets and

Mr Erdmann is complaining of not having surplus funds available to

implement and administer the Redisa Plan until the expiry thereof on 30

November 2017.

144.4 I confirm that the Respondent made certain proposals in respect of

investigations into other waste streams. but there is no indication

whatsoever of any encouragement from me or from the Department to

utilise the public funds derived from the tyre industry to benefit other

waste streams.

144.5 Mr Erdmann conveniently does not inform the Honourable Court from

what date and after how much money was spent did the Respondent

refrain from further spending on other waste streams.


145.1 The Redisa Plan (on page 6 thereof) under the heading "Need for

Informal Participation" specifically indicates that the informal sector deals

with a large proportion of scrap tyres. estimated to be at least 75% of the

total.

145.2 While Mr Erdmann and the Respondent acknowledged the contribution

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from the informal sector in the Redisa Plan, the Respondent unilaterally

reduced the fee they paid to the micro collectors to an amount far below

the amount they are entitled to in terms of the Redisa Plan.


146.1 I deny that the litigation against me and the Department was either

justified or that the Respondent made all efforts to avoid such litigation

146.2 I specifically deny Mr Erdmann's allegation that "a// litigation to date with

the Applicant, and with others, has been successful." Mr Erdmann once

again does not provide any proof to the Honourable Court to substantiate

this far-fetched allegation. The directive application went nowhere as it

was postponed without addressing the merits of the application, and I

have subsequently withdrawn the interim directive which formed the

causa of the application. Both the review applications the Respondent

launched against the Department in respect of the Pricing Strategy and

the amendment of the Waste Tyre Regulations, are still pending. I am

not aware of any other litigation with the Respondent that can by any

stretch of the imagination be described to be successful


My notice of intention to consider the withdrawal of my approval for the Redisa

Plan (annexure 'BM 76') followed upon Mr Erdmann's letter of 30 November

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2016.


I deny the contents thereof as I have dealt extensively with the Respondent's

lack of co-operation in providing the requested necessary information about the

Redisa Plan to the Department Furthermore Mr Christopher Crozier has

claimed the confidentiality of the documents of Kusaga Taka Consulting (in

liquidation) as a reason to refuse to provide such documents and/or information

to either iSolveit or the Department


I deny this unsubstantiated allegation by Mr Erdmann and respectfully point out

to the Honourable Court that once again, Mr Erdmann does not attach any

substantiating documents to prove this allegation.


I have dealt with these allegations extensively in my founding affidavit as well as

in this replying affidavit The alleged performance review by PWC (presumably

the PWC report dated 13 March 2017 - annexure 'BM 84') was not attached to

Mr Erdmann's answering affidavit and it was not delivered by the Respondent to

the Department It only came to hand through the provisional liquidators of the

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Respondent, as set out herein above. Even on the version of PwC this was not

a full performance review as alleged by Mr Erdmann.


151 1 Mr Erdmann conveniently omits to inform the Honourable Court that the

export of waste tyres was never necessary because the demand for

waste tyres was never met by the Respondent

151.2 While complaining that these concerns are addressed for the first time in

my founding affidavit, Mr Erdmann does not use this opportunity to

provide proof to the Honourable Court of any kind to substantiate these

allegations. The waste tyre field report was in any event not

commissioned for the benefit of the Respondent, but as a means to verify

the claims by the Respondent that the demand for waste tyres was far

lower than the supply thereof.


I deny the contents thereof. The final report by iSolveit was attached to my

notice to Mr Erdmann of my intention to consider the withdrawal of my approval

of the Redisa Plan (annexure 'BM 76'). As set out herein above, the necessary

confirmatory affidavits will be filed under cover of a separate filing notice. I have

dealt extensively herein above and in my founding affidavit with the rest of the

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allegations contained in this paragraph_

153_ Paragraph 361 thereof

I deny that I had to rely on media reports to validate my already existing concerns

in respect of the implementation and administration of the Redisa Plan by the

Respondent. I have never seen any complaints filed by the Respondent in

response to the Carte Blanche programs and I cannot provide any comment in

respect of Mr Erdmann's allegations contained in the rest of this paragraph_


I take note of the contents hereof_


I deny that no other alignment of the Redisa Plan is possible_ Mr Erdmann and

the Respondent were advised at length and at numerous meetings with the

Department that the Redisa Plan needs to be reviewed, amended and aligned to

the current legislation to provide for an application for ministerial approval for

further funding, which application in each instance needs to be accompanied by

a proper budget and business plan, substantiated by the necessary documents_

The Respondent had ample time since 2014 to submit such a reviewed,

amended and aligned Redisa Plan_ The Respondent's present predicament, if

-119-

any, is self-created as the Respondent neglected and/or refused to align the

Redisa Plan to the current legislation and to apply for further funding as set out

herein above,

156, Paragraph 364 thereof

I have dealt extensively with these allegations in my founding affidavit as well as

in this replying affidavit


The present composition of the Board of directors of the Respondent does not

comply with the provisions of the Redisa Plan, as confirmed in the Respondent's

Memorandum of Incorporation,

158, Paragraph 366 to 370 thereof

I have extensively dealt with these allegations in my founding affidavit as well as

in this replying affidavit


159,1 Mr Erdmann once again does not provide a single shred of evidence of

the alleged approval process, the assessments by the Respondent of the

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viability and purpose of such asset acquisition, or the specific resolution

by the Board of the Respondent in respect of the acquisition of each such

asset

159.2 Mr Erdmann also does not provide the Honourable Court with the alleged

verification of income and expenditure incurred by Kusaga Taka

Consulting (in liquidation) allegedly for the Respondent None of this

information was disclosed or accounted for or audited and it was

definitely not presented to the Department


I deny the contents thereof In its financial statements for 2013, the Respondent

made a commitment to make R 57 million of the public funds it previously

collected, available for the acquisition of the Oracle computer system and

software that Kusaga Taka Consulting (in liquidation) now claims the ownership

of. Neither Mr Erdmann, nor the Respondent and also not Kusaga Taka

Consulting (in liquidation), provides the Honourable Court with any shred of

evidence to substantiate this allegation. It in any event transpired from the

forensic investigation report referred to herein above, that the management

company does not own the IP in respect of this very expensive computer system.

but that the IP was given away by Kusaga Taka Consulting (in liquidation) for no

value to Nine Years Investments (from which Mr Erdmann and his direct family

members stand to benefit) and that Kusaga Taka Consulting (in liquidation) pays

a "royalty" to Nine Years Investments for the use of this IP.

-121-



PWC report of 13 March 2017 (annexure ''BM 84') as discussed herein above.

No proof whatsoever has been provided to the Department and no reliance can

be placed on any of the Respondent's reports in respect of the alleged tonnage

of waste lyres. PWC even reported on the duplication of employees details in

the records of the Respondent


Mr Erdmann with respect confuses the Respondent's own reports on the alleged

establishment of small businesses as proof, which it is not



have set out in my founding affidavit as well as herein above.


The Respondent could have taken the representatives from the Department only

to those specific sites where the recycling equipment was deployed and was

-122-

operational Mr Erdmann does not provide the Honourable Court with the proof

thereof that all of the depots and processors allegedly established, are

operational and that the equipment deployed at such sites are in effect in use.


I deny that the Department has information on the amount of expenditure that

the Respondent incurred on each of the depots


I have dealt extensively with these allegations in my founding affidavit as well as

herein above.


167.1 The Respondent has over the almost five-year period of approval of the

Redisa Plan, never applied for the ministerial approval of any amendment

to the Redisa Plan. The fact remains that the Respondent has not

achieved any of the targets in the Redisa Plan.

167.2 I deny that the job numbers have been independently audited as alleged.

Mr Erdmann does not attach any such independent audit of any job

numbers. PWC in fact found a lot of the sample of employees they

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tested, to either be duplicated or non-existent or inaccurately reflected

PWC also did not even take into account that micro-collectors cannot be

regarded as employees in terms of the Redisa Plan.

167.3 Mr Erdmann's complaints about the request from the Department being

unreasonable to be supplied with employment contracts and identity of

employees, is incomprehensible, especially having regard to the hugely

expensive computer system that the Respondent paid for and which

allegedly can provide these reports at the press of a button.


Mr Erdmann does not explain to the Honourable Court how the collections by the

micro collectors are to be weighed as PWC reported on the fact that the

Respondent did not even have the knowledge with depots have the necessary

weighbridges. This might explain why the Respondent resorted to reduce

payments to the micro-collectors and pay them per tyre and not per weight as

indicated in the Redisa Plan.


I deny the contents thereof. The provisional liquidators have conducted the

business of the Respondent in terms of the provisional order and they have paid

the micro-collectors since they were appointed.

-124-


Once again Mr Erdmann does not provide any proof to this Honourable Court to

substantiate these allegations


I deny the contents thereof The Respondent received a follow-up letter from

the Department to request delivery of the documents that Mr Erdmann under

oath undertook to provide to the Department within the next few days, which

documents the Department never received. This request was included in the

notice to the Respondent of my withdrawal of the interim directive.


I have dealt extensively with these allegations in my founding affidavit and herein

above.


Once again Mr Erdmann and/or the Respondent does not take the Honourable

Court into the confidence by providing the necessary proof to substantiate these

allegations. The fact remains that the Respondent did not achieve any of its

targets while it accumulated hundreds of millions of Rand in reserves which the

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Respondent now claims it does not have any more. The Department has never

accepted any amendment of the targets as set in the Redisa Plan as no

ministerial approval for such amendment was ever granted.


The Respondent admits that the payment structure for micro-collectors and

transporters was not in line with the provisions of the Redisa Plan, however the

Respondent does not address the question of the short payment of the micro-

collectors and transporters until such improvement in the payment structures

took place It should further be noted that the payment structure for the micro -

collectors is still not as provided for in the Redisa Plan.


Mr Erdmann is not playing open cards with this Honourable Court to the extent

that he is attempting to mislead the Honourable Court. The long list of other

private profit companies and non-profit companies in which Mr Erdmann and his

associates hold directorships, with respect speaks for itself


I have extensively dealt with these allegations in my founding affidavit as well as

herein above

-126-


It is noteworthy that Mr Erdmann and/or the Respondent does not deny the

payments as reflected on the spreadsheet referred to in my founding papers and

by implication the accuracy of the information contained in the spreadsheet is

also admitted. I deny that all of the expenses reflected on this spreadsheet are

legitimate business expenses. Once again Mr Erdmann and/or the Respondent

does not provide to this Honourable Court any proof to substantiate these

allegations. The Respondent's Memorandum of Incorporation explicitly

provides that all of the income of the Respondent should be utilised to advance

the objects as set out in the Redisa Plan, which the Respondent clearly has not

done.


I take note of the allegations herein. Mr Erdmann however does not provide any

proof where these pieces of equipment allegedly are installed or who is the owner

thereof. It is with respect rather confusing because Mr Erdmann previously

stated that the equipment that the Department has seen in operation, belonged

to the Respondent while he now states that the equipment that he has shown to

the Department in fact belongs to another private profit company. The

liquidators of the Respondent would have to investigate how these public funds

were utilised and who stand to benefit therefrom.

-127-



forensic investigation report referred to herein above.


Once again Mr Erdmann does not provide any proof or any substantiating

documents to validate these allegations.



forensic investigation report referred to herein above, from which it is apparent

that the Respondent did not only pay R 15 000 per month for Mr Erdmann's

personal residence but in fact paid the deposit in respect of the lease agreement

as well as R 65 000 per month over a period of 24 months, and that Kusaga Taka

Consulting (in liquidation) in fact took much more than the management fee from

the contributions it collected on behalf of the Respondent in terms of the Redisa

Plan.


While providing the purchase and shipping documentation in respect of the

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acquisition of the machinery, Mr Erdmann does not take the Honourable Court

into his confidence by providing the details of the ownership of these assets.


The Department has despite numerous requests not received a copy of the

contract between the Respondent and the University of Stellenbosch and Mr

Erdmann also does not provide a copy thereof together with his answering

affidavit.


I deny the allegation that I have taken "unlawful actions" with the contempt it

deserves. The Respondent has despite requests not provided the Department

with any documentary proof substantiating the huge expenditure of the public

funds it previously collected on legal fees.


Mr Erdmann alleges that the identity of each of these suppliers are known, but

he does not inform the Honourable Court in his answering affidavit of the identity

of each of those alleged suppliers. These items therefore remain unaccounted

for as unexplained expenditure by the Respondent.

-129-


While admitting the content of the draft minute, Mr Erdmann does not use the

opportunity provided in filing the Respondent's answering affidavit to give context

to these discussions.


I deny the contents thereof. The Redisa Plan came into operation in December

2012 and not in June 2013 as Mr Erdmann alleges. Mr Erdmann once again

does not provide the Honourable Court with any proof of the alleged setup costs

incurred by Kusaga Taka Consulting (in liquidation) that the Respondent had to

pay for - especially since Mr Erdmann has all through his answering affidavit

maintained that Kusaga Taka Consulting (in liquidation) has not received more

from the Respondent than its agreed management fee.


I have dealt with these allegations in the founding affidavit as well as herein

above.

-130-


189.1 Mr Erdmann did not read the relevant paragraph correctly. I in fact

referred to the lowest monthly collection by the Respondent (and not the

total collected for the year) when I said that "According to the DEA report

submitted by the Respondent on 28 February 2017, the Respondent from

March 2016 to January 2017 never collected less than R 151,122 million

per month and it even fluctuated toR 184,561 million in June 2016."

189.2 The conclusion I reached was in fact based on the report that the

Department received from the Respondent itself.

189.3 Furthermore the conclusion that the reserve funds available to the

Respondent have shrunk, as well as my suspicion on the disappearance

of those public funds, are based on the presentation made by the

Respondent itself to the Department on 23 May 2017.

189.4 The correct facts and the correct version of the Respondent was

therefore placed before the Honourable Court when it granted the

provisional winding up order of the Respondent

189.5 Considering the Respondent's own version, as verified by its own

auditors PWC, that it had sufficient funds from the change in the funding

model to continue with the implementation and administration of the

Redisa Plan for at least 7 months, which would have taken the

Respondent at least to the expiry of the Redisa Plan on 30 November

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2017, the Respondent had no reason whatsoever to commence with the

winding down of the Redisa Plan on 1 June 2017,

189,6 Mr Erdmann and the other directors of the Respondent seem more

concerned about their alleged fiduciary responsibilities than they are

about the implementation and administration of the Redisa Plan,


There is with respect no reason whatsoever to strike out the contents of these

paragraphs,


I deny the contents thereof and stand by the contents of my founding affidavit


I deny the contents thereof The Respondent is well aware of the process it has

to follow to apply for ministerial approval of further funding for the Redisa Plan,

which is not in the hands of the Department and/or of the State, As set out

herein above, the predicament, if any, that the Respondent might find itself in is

fully self-created, I also deny that any funds were made available to the

provisional liquidators of the Respondent

-132-


The content of this paragraph is very confusing as the Department with respect

has no idea of how the Respondent intends to address the issue. The

Respondent's efforts were in fact directed at the safeguarding of their control

over the expenditure of the public funds the Respondent previously collected.


I deny the contents thereof and respectfully submit that I have dealt extensively

with these allegations in my founding affidavit as well as herein above.


I deny the contents thereof which I am advised will be dealt with in argument at

the hearing hereof.


As set out herein above, the relevant confirmatory affidavits to my founding

affidavit will be filed under cover of a separate filing notice. The final iSolveit

report was indeed provided to the Respondent I am advised that the rest of the

allegations herein will be addressed in argument at the hearing hereof.

-133-



validation of my concerns in the forensic investigation report referred to herein

above.


I have no knowledge of the contents thereof and cannot provide any comment

thereon.


I confirm that I have applied for and succeeded in obtaining provisional liquidation

orders both for Kusaga Taka Consulting and for the Product Testing Institute.

These three companies form the core of the scheme in terms of which the public

funds that the Respondent previously collected in terms of the Redisa Plan, was

siphoned off to other entities in which Mr Erdmann and his associates personally

stand to benefit I cannot comment on the allegations Mr Erdmann makes in

respect of what happened after the provisional liquidation orders in these two

companies were granted.

-134-


I am aware thereof that Nolwazi Tetyana assisted the provisional liquidators at

the premises of the Respondent, but I have no knowledge of any of the other

allegations made by Mr Erdmann and I can therefore not comment thereon.


201.1 I am aware thereof that the provisional liquidators are launching an

application for the extension of their powers to properly continue to

conduct the business of the Respondent, as was provided for in the

provisional liquidation order, and I confirm that I support the extension of

the powers of the provisional liquidators as the extended powers would

ensure the continued proper implementation and administration of the

Redisa Plan.

201.2 While I have no knowledge of what the provisional liquidators may or may

not have confirmed, it is noteworthy that the provisional liquidators,

according to Mr Erdmann, also confirmed the initial stance of the

Respondent itself, which was later validated by PWC, that once the

funding model change, the Respondent would have enough funds

available to be able to continue with the implementation and

administration of the Redisa Plan for several months - at least to the

expiry of the Redisa Plan on 30 November 2017.

-135-


I deny the contents thereof and respectfully submit that it would be just and

equitable for the Honourable Court to finally liquidate the Respondent

SUPPORT FOR THE LIQUIDATION

203. The Honourable Court was informed on 22 June 2017 (at the hearing of the

postponement application) that various transporters that form part of the Redisa

Plan network, support this application for the winding-up of the Respondent We

received supporting affidavits from these transporters, copies of which are

attached hereto as annexure 'BM 96', 'BM 97', 'BM 98' and 'BM 99'.

These supporting affidavits were informally handed up at the hearing of the

postponement application.

204. The Department also received a supporting affidavit from Douw Breed, a copy of

which is attached hereto as annexure 'BM 1 00', who is an attorney representing

the Retail Motor Industry Organisation and the South African Tyre Manufacturers

Conference - in effect the lyre industry This supporting affidavit was also

informally handed up at the hearing of the postponement application.

205. In effect some of the transporters in the Redisa network and the tyre industry are

in support of the final liquidation of the Respondent

-136-

WHEREFORE I respectfully request the Honourable Court to confirm the rule nisi as

set out in prayers 4.1, 4.2 and 4.3 of the Notice of Motion, in terms of which the

Respondent is finally liquidated, the costs thereof to be cost in the liquidation.

Signed and sworn before me at f~iQ~ . this .29~ay of JUNE 2017 after the Deponent declared that she is familiar with the contents of this statement and regards the prescribed oath as binding on her conscience and has no objection against taking said prescribed oath. There has been compliance with the requirements of the Regulations co3tai

1e.d in Gov.ernment Gazette R1258, dated 21

July 1972 (as amended). _[_. ,.., ~

COMMISSIONER OF OATHS - W0) FULL NAMES CAPACITY ADDRESS MONIQUE VAN STRAATEN

COMMISSIONER OF OATHS PRACTISING ATTORNEY R.S.A.

PARC NOUVEAU, 225 VEALE STREET BROOKLYN, PRETORIA

P.O. BOX 1522, GROENKLOOF, 0027

WESTERN CAPE DIVISION, CAPE TOWN Case Nr: 9675/2017 ... · PWC was informed by Ms Davidson that the...

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