Chief Justice Raymond Zondo has recommended that law enforcement agencies investigate Ace Magashule and Mosebenzi Zwane to establish whether they contravened any law in the roles they played in the Vrede dairy project.
Magashule was the premier of Free State while Zwane was the province’s MEC of Agriculture and Rural Development when his department awarded a tender to Gupta-linked company Estina without following due processes.
In the final state capture report – which Zondo handed to President Cyril Ramaphosa on Wednesday – Zondo wrote:
“Consideration must be given to seeking legal advice about instituting legal proceedings against Mosebenzi Zwane and Ace Magashule to recover such monies as may be recovered from them that were lost by the department of agriculture and rural development in the Vrede Dairy Project as a result of their failure on their part to perform their legal obligations.”
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He said that through the Vrede dairy project, Zwane – who is parliament’s chairperson of the transport portfolio committee – knew that he was advancing a business interest of the Guptas. Zondo said he should “shoulder the blame” for how the project unfolded.
“The project was a complete disaster and the total disbursed to Estina was R280 million of taxpayers’ money by the time the agreement was cancelled,” reads the report.
Zondo further recommended that the department’s former head – Peter Thabethe – also be criminally charged for his involvement in the project, and that monies lost through the Vrede diary project should also be recovered from him.
“If he does not have the money, it is recommended that consideration be given to instituting sequestration proceedings against him so as to make it clear to all that there will be serious consequences for this type of conduct,” reads the report.
Last year, Thabethe was one of four people arrested and charged with money laundering amounting to R24 million related to Vrede dairy project. Another person that was arrested in relation to the project is Iqbal Sharma – a Gupta associate who was key in the facilitation of the project. Zondo said Thabethe and Zwane “played a pivotal role” in the establishment of the project.
He said the project failed in its first two years: “Because of the incompetence of Thabethe or because he was carrying out the agenda of the Guptas and cared less about the taxpayers’ money and the black farmers. Apart from anything else, Thabethe must be held both criminally and civilly liable for his role in causing the department to lose so many millions of rands of taxpayers’ money.”
The report also concluded that Thabethe and Zwane “deliberately and intentionally used the modality of implementing agents to distort the implementation of the regulatory framework that gives effect to section 217 of the constitution and the public finance management act (PFMA)”.
“In this way Zwane and Thabethe enabled and facilitated the disaster that was the Vrede Dairy Project which benefitted the Gupta family and its associates at the expense of the intended beneficiaries of the dairy project,” wrote Zondo.
The Vrede dairy project was meant to empower local black farmers, but according to the report only a few members of the community were employed as manual workers.
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“None of the local black dairy farmers were invited to bring their milk for processing at the dairy farm. None were trained in the methodologies that were applied by Paras in India,” reads the report, adding that consultancy work was done by companies outside the country who had association with the Gupta family.
The report says Estina had no experience in farming and that it was alleged that the core business of the company was information technology.
On the day the company was awarded the contract, it was a “business consultant” and its status changed to “agriculture, farming and related activities” after it was awarded the contract.
Estina, according to the report, only had R16 in its bank account on the day before the department paid it the first amount of R30 million. The report reads:
“It also happened because Mosebenzi Zwane as MEC was pursuing the agenda of the Guptas and did not do his job to perform oversight over Thabethe. It also happened because the premier of the province – Ace Magashule – would have also been pursuing the agenda of the Guptas.”
Zondo also recommends that the Gupta family, including Tony Gupta, be investigated by law enforcement agencies to establish if they are not guilty of any offence to allow for criminal charges to be laid against them or their associates, if any wrong is found against them.
Some of the monies that were paid in the Gupta-linked company paid for the lavish Gupta wedding that was hosted in Sun City in 2012.
Estina was paid more than R19 million on the day the family hosted the wedding.
Rajesh and Atul Gupta were arrested earlier this month in Dubai.
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Their arrest comes more than four months after Interpol issued a red notice for them in connection with fraud and money laundering charges in South Africa.
The brothers have been identified as the kingpins of state capture in South Africa.
They fled the country after the Zondo commission started investigating their involvement in corruption and fraud in 2018.
The National Prosecuting Authority has less than 50 days to formally charge them with state capture offences.