NO MORE HOLY COWS

Court action places mining minister and Gupta crony Mosebenzi Zwane at the heart of the Estina dairy looting scheme. Though he has yet to be charged, sources sayhe’s not in the clear

On February 14 eight suspects shuffled into the dock at the Bloemfontein magistrate’s court. They stand accused of concocting an elaborate looting scheme to divert R220m in government grants from a farming project in the Free State to the Gupta family.

There were one or two familiar faces among them. Nazeem Howa, the jowly, bespectacled former CEO of Gupta-owned Oakbay Investments, was there. Howa has regularly appeared on Gupta-funded TV channel ANN7 to defend the Guptas against accusations that they extorted inflated coal contracts and prepayments from Eskom, and to extol the virtues of Hlaudi Motsoeneng’s censorship policies at the SABC. Squeezed onto the same bench were Oakbay CEO Ronica Ragavan and Varun Gupta, nephew of the Gupta brothers and the former CEO of Oakbay Resources. They were interspersed with a few officials from the Free State agriculture department. Notable by his absence was their former political boss, Mosebenzi Zwane, the man who got the ball rolling in the first place.

Zwane gained notoriety when he brokered the sale of Glencore’s Optimum coal mine to the Guptas at a secretive meeting with Ivan Glasenberg at Zurich’s Dolder Grand Hotel in December 2015. Zwane had been appointed mineral resources minister three months earlier, shortly after his CV was sent to Rajesh “Tony” Gupta.

Now court filings allege that Zwane — who did not respond to the Financial Mail’s request for an interview — was the mastermind behind the Vrede dairy looting scheme all along.

In 2012 Zwane, as MEC for agriculture in the Free State, launched the province’s “Zero Hunger” strategy. The idea was to integrate a number of government programmes. These included reforms to redress historical racial imbalances in land holdings, repair farm infrastructure, provide better logistics and access to markets for black farmers, ramp up technical training for black smallholders, and boost food-processing businesses. The strategy was supposed to lead to increased food production, and more jobs and income in economically depressed rural areas. Instead, it became a licence to loot.

Investigators found that Zwane’s officials had concocted a feasibility study to get the funds released. The national department later found the dairy stood no chance of becoming commercially viable. Projected milk production was “highly unrealistic”; the likely economic effect was inflated through “double counting”; there was no evidence of technical support provided or inclusion of smallholder farmers; and no account was taken of local climate conditions, and the availability of water, cows or fodder. In fact, dairy sector research showed the farm should have been established on the coast.

At the time of Zwane’s meeting with the Guptas, Estina’s bank account held just R9,690. Less than a fortnight later his department deposited R35m into the account What it means: Zwane’s fingerprints are all over the Estina dairy matter, but he has yet to be charged for his role in the R220m ‘scam’

Zwane’s head of department, Peter Thabethe, who has also been charged, initially suggested the dairy should be built near Sasolburg, giving it the advantage of proximity to several urban centres. Instead

Zwane opted for the remote reaches of Vrede, “specifically chosen in order to avoid detection”, according to an affidavit deposed by Samson John Schalkwyk, a senior investigator at the National Prosecuting Authority’s Asset Forfeiture Unit.

The sums involved are staggering. The provincial department was expected to contribute R342m to the project, though only R220m was disbursed — almost all of it funnelled to Gupta-linked companies via Estina. This company was located in Sandton and run by Kamal Vasram, an IT salesman at the Guptas’ Sahara Computers who’d never spent a day on a farm.

On June 5 2012 Thabethe signed a contract with Estina without it ever going out to tender. Ten days later, Zwane contacted the finance MEC with an urgent request to release the first R30m tranche to Estina and “expedite the payment on the same day”, even though no funds were available.

Provincial treasury deputy director-general Anna Fourie had to rush back to the office from a staff function to receive the Estina contract and R30m payment request. However, a legal opinion she obtained first said procurement processes hadn’t been followed and the contract could be invalid. The “scam” had ground to a halt — for the moment.

But the Guptas didn’t stop there. Zwane’s department obtained a R53m grant from the national agriculture department after submitting a feasibility study and a list of 100 black dairy producers. When national officials paid the project a visit, they discovered there were no beneficiaries and the plan was wildly unrealistic. The R53m grant was withdrawn.

In the end, Zwane’s officials simply reallocated their own departmental and provincial treasury funds to the project. The taps starting to flow shortly after they visited the Guptas in Saxonwold.

The Times last year reported that the Microsoft Outlook calendar of Sahara CEO Ashu Chawla shows that Zwane, Thabethe and Free State finance MEC Elzabe Rockman were scheduled to meet the Guptas on April 6 2013. At that point Estina’s bank account held just R9,690. Less than a fortnight later, on April 18, Zwane’s department deposited R35m into the account.

By the time the scheme was shut down 29 months later, R220.2m had been paid to Estina. Only R2.4m of this was actually spent on the dairy. The rest flowed to a constellation of Gupta entities. Investigators found that Estina diverted R169.5m to Gateway, a Gupta front company in the United Arab Emirates that had “no business dealings or relationships” with the dairy project. Some of it was used to pay for the Sun City wedding of the Guptas’ niece. And R10m went into Atul Gupta’s personal bank account.

Though Zwane’s fingerprints are all over this alleged looting machine, at the time of going to print he hadn’t yet been charged.

But sources close to the investigation say he won’t be let off the hook.