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Vrede dairy farm decision makers 'fraudsters' — Zondo

23 June 2022 - 00:02
In his report, chief justice Raymond Zondo decries the lack of accountability by senior government officials, including the suspended ANC secretary-general and former Free State premier Ace Magashule. File photo.
In his report, chief justice Raymond Zondo decries the lack of accountability by senior government officials, including the suspended ANC secretary-general and former Free State premier Ace Magashule. File photo.
Image: THULI DLAMINI

The official decision makers behind the Vrede dairy farm project debacle are “fraudsters”.

This was the finding of chief justice Raymond Zondo in his final report into the capture of the state.

Zondo was scathing of the project, calling the former head of the Free State agriculture department, Peter Thabethe, the “core perpetrator” of the fraud, which cost the provincial agricultural department hundreds of millions of rand.

A large portion of the money, which was earmarked for emerging black Free State dairy farmers who were in the end left destitute as a result of the looting, was channelled through multiple offshore companies linked to the Guptas, with a portion going towards the family’s lavish wedding at Sun City.

In his report, Zondo decried the lack of accountability by senior government officials including the suspended and corruption-accused ANC secretary-general Ace Magashule and disgraced Free State agriculture MEC Mosebenzi Zwane. At the time of the large-scale corruption, Magashule was the Free State premier.

Zondo said Estina, the company appointed to run the project, had “no experience whatsoever in farming, never mind dairy farming or the crucial milk processing” before its appointment.

“The core business of the company on the date of its appointment was still stated as ‘business consultant’. It was only later, after being awarded the contract, that it changed to ‘agriculture, farming and related activities'. There is an allegation that its business was in the field of IT before the appointment.”

Zondo said Estina had only one director, Kamal Vasram, when it was appointed implementing agent of the Vrede project. “Before assuming directorship of Estina, Vasram was the retail sales manager at Sahara Computers.  He had no farming or agricultural experience.

“The director is the only decision maker within the company. The decision to entrust such a big government project to the decision making power of a single person simply does not make sense.

“Evidence of at least one witness suggests that its representatives accompanied the senior representatives of DARD [department of agriculture and rural development] on a trip to India. However, the HOD [Thabethe] in his report makes no mention of representatives of the company having travelled or accompanied him.

“If Estina went on the trip with government, the question will still be, why was it selected for that purpose?”

Zondo accused those appointed to manage the  project of not knowing what they were doing.

“They seem to learn as they were doing, a method which cost the government a lot of money. This is about the only explanation one can give for the death of many dairy cows at the beginning of the project and the negligent and environmentally hazardous manner in which the carcasses were disposed of.”

He said the reason Estina was the sole provider for the services procured “is unsustainable in the light of the fact that there were and still are milk farmers in the Free State and in the vicinity of Vrede”.

Even in the case of Estina being a sole provider, he said the prescripts for procurement required certain procedures to be followed, which were not.

“The HOD [Thabethe] decided on appointing the company and instructed his juniors to prepare a submission for him to approve the deviation. The decision to deviate was clearly taken before reasons for doing so were identified.

“Estina was appointed without DARD having conducted any due diligence about it.”

Zondo said according to Thabethe, Estina was appointed by the CEO of the Indian-based company Paras to represent Paras in SA and in contracting with the department.

“He [Thabethe] says the company he actually wanted to contract with was Paras. He was therefore less concerned about the competence of Estina and believed that through it he secured the expertise in Paras.”

He said if Thabethe wanted to secure a contract with Paras, he should have sought legal advice.

“The process he followed is open to question, probably at more levels than one. Through desktop research he identifies one company in India, visits that company for one day and makes up his mind to appoint it. Nothing competitive, transparent, equitable and fair. No cost comparison, either. He went, saw and decided. His mind was closed from then onwards.”

Zondo said the absence of any monitoring of the utilisation of public funds once paid to Estina made matters even worse.

“The attitude of the [Estina] CEO is that a particular file with some invoices given to DARD by Estina constituted all the accounting by Estina. If that is not ridiculous, I do not know what is.

“He [Thabethe] maintained once the money has been paid over to a farmer beneficiary, then the government has discharged its obligation as the money belongs to the beneficiary.”

Zondo said the Estinia contract “was clearly a misnomer or part of a scheme to siphon public funds out of the government purse” to benefit the chosen private entities.

“The reasonable suspicion is that its director, and there was only one, had some close relationship with someone in government who had an influence on the decision to appoint the implementing agent.

“The company was given carte blanche with powers ... The shareholders of the company have not been identified. Could some in government have been sleeping shareholders? The company had only one director at all material times, but the DARD entrusted it with the power to manage a R500m project.

Absent fraud committed against the government, then all those involved collaborated and colluded in siphoning and channelling public coffers to an incompetent entity without a shred of accountability. The official decision makers became the fraudsters 
Chief justice Raymond Zondo

“DARD was prepared to pour public funds into the entity without exercising authority or monitoring how the funds were expended.”

Zondo said while it was unclear whether Zwane had approved the Estina agreement, “it is most likely that at the very least he was informed and had no difficulties [with it]”.

He said the agreement signed with the government committed it [government] to spending funds it had not budgeted for.

He said the proposal made to the department first, and which it subsequently put forward, was that Paras and not Estina would implement the project.

“Estina was mentioned only in one or two lines. If that proposal was the basis for the appointment, it constituted the biggest fraud committed against government because it induced the government to commit a project of half a billion rand and eventually made payment to an entity which did not at all qualify to be appointed.”

Zondo said while Thabethe claimed to have been the one to advise Paras to use an SA-registered company, “if he did not introduce Estina to Paras then he had a duty to ensure that the SA company was properly qualified.

“After all, expertise was core ... to the granting of the contract ... The contract should have had at its core the securing of investment.

“If fraud was committed against the government, then the HOD ... must have been the perpetrator or core perpetrator ... He visited Paras, met its CEO, became aware of its expertise, secured its commitment and represented to government that it was safe for it to approve.

“Absent fraud committed against the government, then all those involved collaborated and colluded in siphoning and channelling public coffers to an incompetent entity without a shred of accountability. The official decision makers became the fraudsters.”

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