How Estina’s bank account went from R16 to R30m in the blink of an eye

The influence of the Guptas was perhaps most powerfully felt in the Free State due to the extraordinary hold they had over provincial MECs.

Of all the many reports of corruption involving the Guptas, the Vrede Dairy Project in the Free State stands out as perhaps the most chilling because of the extensive web of corrupt connections needed to pull it off.

The story of this grand heist is laid out in the latest Judicial Commission of Inquiry into State Capture Report.

A project that was supposed to benefit local farmers ended up excluding them. When the supposed beneficiaries started asking questions, they received death threats and some were killed under mysterious circumstances. This was state capture enabled by oversight failure and absent law enforcement, says the report.

Estina, the little-known company chosen as the vehicle for this grand project, had R16 in its bank account the day before the Department of Agriculture and Rural Development (DARD) paid over the first R30 million on 9 July 2012. The next payment of R34.9 million was made in April 2013, and a week later, another R30 million was paid over to Estina.

For roughly a week up to 4 May 2013, the Guptas hosted a family wedding at Sun City, and during this week another R19 million was paid to Estina. And so it went on.

Ultimately, the Free State provincial government paid out R280 million to Estina, with just 1% of this going to the actual farming operation.

The Zondo Commission says evidence before it points, at the least, to a very serious level of incompetence on the part of Mr (Peter) Thabethe in regard to the role he played in the Vrede Dairy Project. Thabethe was at the time head of DARD in the Free State.

‘Gupta minister’

Mosebenzi Zwane, MEC for Agriculture and Rural Development in the Free State, also shoulders a lot of blame for failing to perform a proper oversight function.

“This was a project of the Guptas and Mr Zwane that has been shown and found to have been a Gupta associate and a Gupta Minister,” reads the report.

The Vrede project had been flagged by the Public Protector in 2014 for lack of oversight, and the Auditor-General in 2013 for misuse of funds.

The State Law Advisors also flagged the project for not following correct procurement procedures.

A project initially costed at R13 million in 2012 for a dairy parlour and processing facility soon ballooned to R570 million, with Estina supposedly coughing up R228 million of this.

When a team from National Treasury visited the site in 2013, they found water rights were not in place, the list of beneficiaries was not provided, no business plan and no feasibility study.

When the feasibility study was eventually received, the anticipated milk yields were deemed highly unrealistic, and there was no evidence to support the claim of helping small farmers. Treasury told Province to go back to the drawing board, come up with a more realistic feasibility plan, and to ensure water and other rights were in place.

Threats

After the story first appeared in the press in 2013, Treasury received a complaint about the irregular appointment of, and payments to, Estina. Former director of National Treasury Dumisani Cele appointed ENS Forensics to take a closer look at the matter.

This is where things took a sinister turn. When Cele visited Thabethe’s office for more information on the project, the CFO reportedly told him in Sesotho: “Dumisani, the Sotho people are going to kill you.” Thabethe insisted Cele had no powers to investigate and he would declare an inter-governmental dispute.

Cele returned home without the documents he had requested. He found that procurement policies had not been followed, nor had Treasury’s requirements for deviations from budget, and an unauthorised payment of R114 million had been made. He also found no evidence of any beneficiaries.

“The one area on which the Commission must continue to report on, as there is no evidence of pending processes that are being followed, is the aspect of threats to life,” reads the report.

This is not an isolated incident. “It is accumulated and if not curbed, will nurture and support the crippling of state institutions or the seizure of … control by criminals, as well as other unconstitutional activities.”

Fake farmers

A local farmer contracted by Estina reported that it was clear that the people running the project had no idea about cattle farming and feeding practices.

This lack of experience cost Estina dearly, with more than 100 dairy cows starved to death by January 2016.

From the evidence of the supposed beneficiaries, “one gets the impression that the locals were taken for a ride,” says the report. They were duped into selling their cattle on the basis that the government would donate dairy cows to them, but this never happened. “It was an Indian-run project on African soil – operated by people who did not speak English or any local language.”

Seen in this light, Estina “used the fairy tale Indian connection [Paras, an Indian milk producer] to milk more than R250 million from the government, which deliberately or with gross negligence blindly pumped money without asking questions or looking as to how it was spent”.

And all this was done while ruling party functionaries, at provincial and municipal levels, covered for each other to frustrate legitimate questions and investigations by opposition members.