State capture: Agriculture department was 'excited' about Estina dairy farm ... until Treasury pulled the plug
The agriculture department withheld a R53m grant to the Free State for the controversial Estina dairy project because it could not provide a feasibility study, business plan or water-use licence.
But the national department was initially sold on the idea, and was excited that it would benefit 100 farmers in the Vrede area. It approved the funding on this basis but withdrew it after National Treasury informed them that the project was dodgy.
This is according to Elder Mtshiza, the agriculture, land reform and rural development programme management co-ordinator. He was speaking at the state capture inquiry on Tuesday.
Mtshiza said that the representatives of the Free State agriculture department approached them in 2013 for funds from the Comprehensive Agricultural Support Programme (Casp) grant.
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"When the plan was presented by the province and a project of this magnitude was presented, the panel was quite excited about it. We had already received a presentation saying the work had already started in terms of construction. The panel just wanted to check all the technical issues … We were also quite excited that the project would benefit 100 beneficiaries," Mtshiza said.
She said although the department could not at that stage provide a thorough business plan or a list of the project's beneficiaries, it was awarded R53m from the grant's coffers.
The farming project, which was signed off in 2012, was promoted as a tool by the provincial government to benefit small-scale Free State farmers, using their services to produce and sell milk on a large scale.
However, of the R220m transferred out of state coffers to Estina - a Gupta-linked company contracted by the Free State's agricultural department to run the project - only 1% was spent on actual farming. Most of the remaining money went to individuals and entities associated with the Guptas.
Mtshiza said that in July 2013 her department received a letter from Treasury highlighting concerns that the project was a public-private partnership and the province did not follow due process in entering into the agreement and, as such, were in violation of various regulations.
"Any continued expenditure on this project would equal to unlawful expenditure, as a result, they requested that we withhold the conditional grants.
"When we received the instruction from Treasury, the first thing you do is abide by their request. Because we were sold on the project and we really wanted to see this anchor within the Free State, we then sent a letter of intention to withhold the funds," she said.
"We then received a response from the province which then outlined all the approvals of executive authorities. We initiated a letter back to the province requesting that to resolve this dispute … and we now need to meet as parties to resolve this. Before that meeting we then decided to go on a site visit to confirm our technical facts.
"When we approved there were a number of questions the panel asked. One of them was a feasibility study. It was also not issued to us on site, the business plan presentation was also not made. They could also not provide us evidence of their application for water rights."
She said the department then instructed that the funding be diverted to other projects in the province.