Estina dairy project flagged for irregularities
Zondo Commission of Inquiry hears of shoddy study and proposals to secure state funding
THE Zondo Commission of Inquiry has heard of the vast complexities that surrounded the controversial 2012 Estina dairy project and how shoddy project proposals, business plans and a feasibility study were used to milk the Free State government of millions of rand.
Yesterday agricultural economist David Maree, who was tasked with researching the financial soundness of the business, said the Department of Agriculture should have rejected the proposal initially made.
The dairy farm, in Vrede, is at the centre of a corruption scandal involving the Gupta family, in which they are accused of stealing R200 million with the assistance of top politicians and government officials.
The Free State government had described the project, which would be 49% owned by Gupta-linked Estina, as an initiative aimed at uplifting emerging farmers, who would share the remaining 51% among themselves.
Taking the stand to give testimony, former provincial treasury official Anna Sussana Fourie detailed how Estina was appointed without procurement processes, with the Agriculture Department putting pressure for it to be given a R30m prepayment within the same month.
Maree said both project proposals by Estina, which claimed the project would be commercial and funded by the company, did not make sense as the government was expected to fund both projects.
“According to the two project proposals, in the one, it was R500m over five years and in the second one, it was R228m over three years. While the government, in the first one, was expected to pay an equal amount of R500m, in the second proposal, government’s contribution was R342m in grants,” Maree said.
Maree said Estina told the government it would take about 12 to 14 months for the dairy to become operational.
“It does not make sense that if a project is commercially viable without grants and is profitable in year one, it would be necessary to get grants from government,” he said.
He said he found both the proposals and the feasibility study to be sloppy work, which was primarily aimed at securing funds from the Agriculture Department.
“I got the impression that it was a desktop feasibility study and proposals were being drafted just to get funding. If you look at the feasibility study, it’s a very academic piece of work and doesn’t entail everything that needs to be included,” he said.
Maree also told the Commission how prices for milk cows and dairy equipment were inflated, with some not being specified – despite costing millions.
“The dairy cattle had been budgeted for at R25 000 per cow. Given the amount, it was very high at that time in 2012/2013, as commercial dairy cows at that time were valued at about R15 000.
“Apart from R5m that was budgeted for a milking parlour, a further R15m was budgeted under the heading ‘other dairy equipment’. Unfortunately, there’s no detail around this equipment,” he said.
Maree said the project’s business plan was so inconsistent that in one page it talked about 500 cows and in the very next page referred to 1 000 cows for the project.
“Many of the initial assumptions are also unrealistic and it would be very difficult to attain those numbers, specifically referring to obtaining of 45 litres per cow, per day,” he said.