Much of the billions in irregular expenditure reflected in financial reports for the 2017 financial year had nothing to do with the Vrede dairy farm or Estina, according to former Free State Finance MEC Elzabe Rockman.
Rockman was testifying at the state capture commission of inquiry on Thursday about the Vrede dairy farm project.
“The possible irregular expenditure regarding implementing agents, the R815.966m, this has nothing to with Vrede dairy or the FDC (Free State Development Corporation).
“These are implementing agents used by the Department of Agriculture to implement agricultural projects on behalf of beneficiaries,” Rockman said.
Estina, in this case, was the department’s implementing agent and was later taken over by the FDC in a similar role.
Rockman, instead, attributed this massive loss to previous financial years that was under investigation by the auditor general when the Department of Agriculture started using implementing agents and realised there were problems.
However, evidence leader for the commission advocate Leah Gcabashe said there was about R311m in irregular expenditure that related to the project as well as Estina.
Rockman said she was unsure whether this amount was for the 2017 period alone or over some years.
She said Estina was budgeted as “transfer payments” which, once transferred, were no longer public money.
This means it fell outside the domain of the auditor general’s work.
“What the implementing agent did with the money, how they handled the money, how they procured and so forth, that is not Treasury’s role,” Rockman explained.
“In agriculture, that is how it was structured that the funding was transferred to them and they procured on behalf of beneficiaries. The argument was that they did not need to follow [supply chain management] procedures or procurement policies,” she added.
Deputy Justice Raymond Zondo asked if this was wrong.
“The impression I get from what I have been told about the implementing agents in the Vrede dairy context gives me the impression that this was just a way of circumventing procurement procedures,” he said.
Rockman said this process was not new and that they could not “follow the money” once transfers were made.
“We should be ensuring that there is value for money that gets transferred,” she said.
The commission previously heard evidence that Estina, when they signed the deal with the department, had R16 to their name but were required to contribute millions to the Vrede project.
In the end, millions meant for the project allegedly went to the Gupta family, leaving black farmers in the dark.
Zondo put it to Rockman that “any head of department ought to have done the necessary homework to make sure they did not appoint a company that had R16 in its bank account and was required to pay millions of rand into the project?”
“Chairperson, I would say that is reasonable,” Rockman replied.