Estina's Indian partner found through 'desktop research', state capture inquiry told

16 August 2019 - 06:30 By Amil Umraw
Farmers in Vrede were promised jobs and skills through the R200m Estina project but got nothing.
Farmers in Vrede were promised jobs and skills through the R200m Estina project but got nothing.
Image: Alon Skuy

Despite India not being in the top ten of global commercial milk producers, it was a company from the country that caught the attention of the Free State agriculture department.

Ultimately, it was this company, Paras, that would partner with the Guptas to run the controversial Vrede diary farm project, which fell under the department's ambit.

It was through his own "desktop research" that state capture implicated former Free State agriculture head Peter Thabethe found Paras, he told the state capture commission.

At the time, in 2012, India wasn't in the top ten of global milk producers. Moreover, Paras was not even the largest dairy producer or processor in India.

But according to his testimony on Thursday, Paras was the only company that suited the department's agenda of developing small-scale dairy farmers.

Paras eventually went on to partner with Gupta-linked entity Estina to run the project, which cost the Free State government hundreds of millions - most of which was siphoned off into the pockets of the Gupta family.

"I had done research to look at countries that are doing very well in milk production. We then compared the systems and models that they use for dairy production and processing. The model we felt came very close to what we were doing was the model in India, which was done by Paras," he told the commission.

"I did the desktop research... It was the type of model they (Paras) have been using. They have been collecting milk from small producers, Paras will send a tanker to collect the milk and bring it into their facilities for processing.

"That model is the one we envisaged given the situation that we wanted to develop small holder farmers. That is the model that led us to Paras versus other companies."

Last year, Thabethe was arrested along with seven others for fraud and contravening the Public Finance Management Act (PFMA). But the charges were withdrawn by the National Prosecuting Authority.

The charge sheet alleged that it was Thabethe who allowed his department to sign a contract with Paras and Estina despite red flags being raised at the inception of the project.

Asked to explain why the project was needed in the first place, Thabethe said small-scale dairy suppliers in the Free State were closing down.

"The small suppliers were closing down. In the Free State, there was no processing facility for the milk produced in there which might mean that job opportunities of the processing would be created somewhere else," he said.

"The black smallholder farmers had not fully entered the industry of dairy production, we wanted to bring them on board. The majority of them had participated in beef production but not in the dairy industry."

But it was then pointed out that there were three milk processing facilities in the Free State. In response, Thabethe said those companies did not want to comply with government.

"What we looked at was that [Paras] had a facility where they collect the milk, they bring it to the facility for processing. You needed to have a facility whereby when you collect the milk then you are able to increase the volumes of processing and support the small farmers," he said.

"The commercial ventures they are doing there would be different from what we wanted to do. There they are doing large dairies and big turnovers doing agro-processing. We wanted to assist small holders and those models wouldn’t be applicable to us."

Thabethe then traveled, along with Gupta ally Ashok Narayan, to India to visit the Paras facility - his trip approved by then Free State premier Ace Magashule.

His testimony is expected to continue on Friday. 

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