The indictment detailing the charges against the Gupta lieutenants who appeared in the Commercial Crimes Court in Bloemfontein today paints a damning picture of how they went about defrauding the Free State provincial government of just short of R150 million.
But although Mineral Resources Minister Mosebenzi Zwane – the province’s MEC for Agriculture at the time the dairy project was looted – looms large in the indictment, he is yet to be arrested for his role in the scandal.
In the dock today alongside former Free State agriculture department head Peter Thabethe, his former chief financial officer Seipati Dlamini, and agriculture official Takisi Masiteng were Gupta family lieutenants, including Nazeem Howa, Ronica Ragavan, and Ashu Chawla. The only Gupta in the dock was the Gupta brothers’ nephew, Varun Gupta.
Dlamini is currently employed in Mineral Resources Minister Mosebenzi Zwane’s office. In her bail application she said she was Zwane’s chief of staff.
Those who appeared were charged alongside three companies: including Estina, the company through which the dairy project was looted; Oakbay Investments, the Guptas holding company; and Aerohaven, another Gupta-owned company – all of which unlawfully received money from Estina.
They were charged with fraud, money laundering, and contravening the Public Finance Management Act and the Companies Act.
The indictment provides a glimpse into Zwane’s involvement in the project, as well as the involvement of Free State premier, and now ANC secretary-general, Ace Magashule.
“The idea [for] the [dairy] concept … was that of the MEC of the Free State at the time, Mr Mosebenzi Zwane,” the indictment states.
“On June 15 2012, the MEC for agriculture contacted the MEC for finance to request that an urgent payment of R30 million be made to Estina and that the provincial treasury expedite the payment on the same day. This payment of R30 million was made at the time when the provincial treasury did not have the required amount available and there were concerns about the signed contract.
“The contract between Estina and the Free State department of agriculture was referred to the legal services in the office of the premier in the Free State for advice and on June 19 2012 it was stated that the procurement process was not followed and that therefore the contract may be invalid.”
The project went ahead regardless.
The indictment lists 24 payments to Gupta-owned or linked companies from Estina’s bank accounts. However, the R10 million payment made into the personal bank account of Atul Gupta – which was included in the Asset Forfeiture Unit’s application to preserve R220 million of Gupta assets – is not included in the indictment.
The indictment also states that the accused in the case allegedly defrauded the agriculture department of R143.95 million. It also mentions that the failed project cost the department R250.2 million.
In addition, the indictment states that the Estina project received R53 million from the national department of agriculture, forestry and fisheries’ comprehensive agricultural support programme, a “conditional grant aimed at supporting beneficiaries of land reform and other producers who have accessed land privately and are involved in value adding enterprises”.
The grant was acquired, the indictment reads, after the provincial agriculture department convinced officials it had conducted a feasibility study and that Estina was partnering “with them in ensuring that 100 black diary producers around Vrede are owners of the dairy value chain”.
But when department officials came to visit, they withdrew the grant after finding that they had made wild and “unrealistic” promises, including that “there was no evidence to support the inclusion of smallholder farmers in the project”, the “professional technical support required to make the plan work were not involved”, and “figures mentioned for the economy wide impact is not conclusive, rather on the optimistic side, and some might be subject to double counting”.
Also, it was only when the agriculture department asked who the beneficiaries were that any was identified.
“Beneficiaries were identified for the project when community members in Vrede and Warden were called together by a loudspeaker, the project [was] explained to them and they were signed up as beneficiaries. They were not smallholding dairy farmers,” the indictment states.
“These beneficiaries who were signed up in addition did not benefit in any manner from the Vrede dairy project.”
The Vrede dairy project, the indictment states, was “not economically viable from the outset” because “proper consideration was not given to local weather and climactic conditions”, there were issues with the “availability of cows”, that “no proper consideration was given to the equipment required”, sufficient cattle feed had not been provisioned, and water availability and water rights had not been sufficiently considered.
The accused, the indictment states, knew that the dairy project would “not contribute to income generation” and “decent job creation”, and that “they would use the money for their own personal gain”.