News / South Africa / State Capture

Makhosandile Zulu
2 minute read
20 Aug 2019
1:22 pm

Estina did not have the R228m for Vrede Dairy Farm project, Zondo hears

Makhosandile Zulu

A day before a R30 million government grant was paid into the company's bank account, it had only R16.98 bank balance.

File image: Dairy cows on the Vrede dairy farm in the Free State. Picture: Neil McCartney

The commission of inquiry into state capture heard on Tuesday that the former head of the Free State department of agriculture, Peter Thabethe, did not check whether Gupta-linked Estina Pty Ltd had the agreed-upon capital it would inject into the failed Vrede Dairy Farm project.

An agreement was signed between the department and Estina which stipulated that the Gupta-linked company would inject R228 million into the project.

However, the commission heard that a day before the department paid R30 million to Estina – which was the government grant towards the project – the company had around R16.98 in its bank account. The agreement was signed on July 5, 2012.

Evidence leader at the commission advocate Leah Gcabashe noted that had Thabathe done his due diligence on Estina’s bank account, he would have known that the company did not have the funds to put towards the project.

Thabethe said at the time the department would advise implementing agents such as Estina to make use of separate bank accounts for government projects but he said he was not certain whether that was the case when looking at the company’s bank account statements.

Thabethe told the commission, however, that due diligence was not done on Estina’s bank account.

The chairperson of the commission, Deputy Chief Justice Raymond Zondo said Thabethe had an obligation as the head of the department to do due diligence on Estina before signing any agreements with the company.

Zondo asked Thabethe whether he agrees that by failing to do “homework”- a risk assessment – on Estina, he had placed the department at risk.

Thabethe had told the commission that Estina had been roped into the project because an Indian-based dairy farm called Paras, which he had approached to acquire its experience and expertise, could not enter into an agreement with the department.

Gcabashe noted that in the agreement there was no mention that Paras would provide the funding for the project.

However, Thabethe told the commission that he was of the understanding that the funding would come from Paras through Estina.

In a project proposal prepared by Estina and baring its logo and that of Paras, it is stated that the Gupta-linked company would require R100 million government grant annually for five years and that it would fund the entire project.

Thabethe reiterated that he was of the understanding that it was Paras’ responsibility to ensure the funds were available.

Zondo noted that the department had no recourse against Paras because it had signed an agreement stating that Estina would fund the project, though it had no money.

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