How a Gupta company with R16 in its bank account scored R280m
By Michel Call
A computer scientist with no experience in dairy farming was the face of a Gupta company – Estina – which had less than R20 in its account when it received its first prepayment of R30 million from Free State coffers.
Estina – through its leader Kamal Vasram – a guy who worked in retail for the Guptas’ Sahara Computers, was paid R280 million in eight installments between July 2012 and May 2016 to operate a dairy farm in the town of Vrede in the eastern Free State.
Intended recipients sold a lie
The project had noble intentions – on paper anyway. Bring together a hundred beneficiaries from the local community. Give them 10 dairy cows each. Make them 51% shareholders in the project and let it thrive as a milk processing hub.
When the Executive Committee of the Free State Government met on 29 February 2012 to discuss the idea of a dairy and processing plant in Vrede, the expected cost of the project was R13 million .
The quantum of the project soared to an astonishing R572m once the politicians and the Guptas got their hands on it.
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Estina couldn’t rub two hundred together
It was supposed to be a public/private partnership that would see over half a billion rand injected into the business, with 228 million rand supposed to come from Estina as implementing agent itself, and the rest of the government. It is important to note that there was never a feasibility study on the project, no business plan, no environmental impact assessment, no water rights, no review process. call for tenders followed and the company was not budgeted.
When a feasibility study was finally completed, sidekick Gupta Iqbal Sharma – through his company Nulane Investments – was paid R25 million to do it. Sharma subcontracted to Deloitte for R1.5 million and funneled the rest of the money to a host of Gupta-linked companies, including Islandsite Investments. It was in connection with this fraud and money laundering case that Atul and Rajesh Gupta were recently arrested in Dubai.
The “irregular” agreement
On June 7, 2012, Free State (HOD) Agriculture Department Chief Peter Thabethe signed an agreement with Estina. This was very short-lived, as state legal advisers were quick to point out that these were irregular and flouted procurement processes.
On July 5, 2012, a second deal with Estina was signed. Just four days later, on July 9, a prepayment of R30 million landed in Estina’s bank account. Without lifting a finger, the Guptas had begun their plunder of provincial resources using poor black farmers as the face of their systematic plunder.
What caused the project to fail was how poorly it was managed, which began to attract attention. Vasram had no idea what he was doing on the farm. He ran the dairy so badly, in fact, that cows were dying at an alarming rate and being thrown into a nearby ravine with potentially catastrophic environmental consequences. Estina barely spent any of her newfound wealth on running the farm, let alone buying feed for the animals.
Gupta Money Laundering Machine
Worse still, the intended beneficiaries have been completely ostracized and chained down by the authorities for years. Their poverty was used as a front for the project while the money was siphoned off the back. In total, Estina had a flow of R891.8 million into his bank account destined for the Gupta’s offshore washing machine which laundered the funds.
No contract? no problem
After unwanted media scrutiny, the Estina deal was canceled on August 13, 2014, just over two years after the project began.
Logically, one would think that turned off the money taps on the project, but you’d be wrong. State Capture Inquiry Chairman Raymond Zondo’s report notes that “Estina continued to receive payments from the Department of Agriculture and Rural Development (DARD) through 2016. [a further two years] based on an unsubstantiated assertion by DARD CEO Mr. Thabethe that Estina had met key contract deliverables. No evidence to this effect could be provided.
Reticle on Zwane
The then Free State Agriculture MEC, Mosebenzi Zwane, argues that what happened in Vrede was an empowerment project.
The report finds that he only empowered his friends the Guptas. Of course, there was something for him. In return, he got a fully-funded trip to India – meant to be a training excursion for the intended beneficiaries – but Zwane, instead, oddly took the Umsingizane choir (you read that right) with him and not farmers. . Testimony from one of the beneficiaries targeted by the survey – Ephraim Dhlamini – recounted Zwane’s short-lived trip to the sub-continent when the delegation was said to have “tummy runny” from the spicy food and rushed home.
Zwane would later be parachuted from obscurity into the prominent post of Minister of Mineral Resources. It was in this capacity that he would travel to Switzerland to help the Guptas secure Glencore’s Optimum coal mine.
Zondo’s report paints Zwane as one of the main architects of this whole sordid affair.
The ‘dismal failure’ of Ace’s surveillance
Another prominent name singled out is none other than former Free State Prime Minister Ace Magashule. He is currently the suspended general secretary of the ANC. He was forced to resign from the post because he faces corruption charges in connection with another multi-million rand bidding scandal in his home province – known as theft asbestos audit.
“The Prime Minister should have exercised his watchdog function over the MEC, Mr Zwane and the HOD [Thabethe] but failed miserably […] Mr. Ace Magashule also failed miserably in supervising his MECs and now we are seeing the same failure when it comes to the Vrede Dairy Project. There have to be consequences for people who don’t do their job.
“Otherwise, this corruption and acts of state capture will continue forever to the detriment of the country and all peoples,” Zondo says.
The Commission recommends that Zwane and Magashule be investigated by law enforcement to determine their criminality, if any, and also consider taking legal action to recover the R280 million directly with the couple. The commission concludes that Zwane and Magashule – despite holding public office – were doing nothing but “pursuing the Guptas’ agenda”.
Going forward, Zondo recommends that lifestyle audits be implemented for all senior executives involved in supply chain management, as well as executive authorities…i.e. politicians .
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