The state’s case against the Guptas and co.
The head of the Free State agriculture department has emerged as accused number one in the Vrede dairy farm case, but provincial Premier Ace Magashule and former agriculture MEC Mosebenzi Zwane have not been charged.
Peter Thabethe, who is still the agriculture department head, has been charged with two counts of fraud and contravening the Public Finance Management Act (PFMA)for his role in allowing the dairy farm near Vrede to move ahead despite irregularities, according to the charge sheet that implicates 10 other people in the matter. He was arrested on Wednesday.
“During the period February 2012 to December 2012, [Thabethe] used his influence as an accounting officer of the FSDA [Free State department of agriculture] to unlawfully favour Estina/Paras,” the charge sheet reads.
Estina and Paras, an Indian dairy company, are partners in the Vrede farm.
The charge sheet alleges that it was Thabethe who allowed his department to sign a contract with Estina despite red flags raised at the inception of the project. He also identified Paras as a partner and would later accept a proposal on the project even though it recommended a deviation from supply chain management processes to appoint Estina and Paras.
Thabethe’s arrest followed the Hawks raid on the Gupta family compound in Saxonwold and other properties around Gauteng.
Reports suggested that Ajay Gupta, the elder Gupta brother, was among the initial five people who were arrested, but it was Varun Gupta, a nephew of brothers Ajay, Atul and Rajesh (Tony) Gupta, who appeared in the dock on Thursday morning as eight of the accused made their first appearance in the Bloemfontein regional court. Varun is a former chief executive of Oakbay.
Questions began circulating on Wednesday about whether the Hawks had also issued warrants of arrests for Zwane and Magashule, who is the ANC’s newly elected ANC secretary general. Although the charge sheet mentions little of Magashule’s role in the farm, it states that from the outset the farm was Zwane’s idea.
It was Zwane’s request in June 2012 that the MEC for finance make an “urgent payment” of R30-million to Estina and that the treasury in the province make the payment on the same day, even though treasury didn’t have the money, that sparked concerns, according to the charge sheet.
Thabethe had just signed the first contract with Estina.
“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 charge sheet reads.
The contract between Estina and the agriculture department was forwarded to Magashule’s office for legal advice, and it was found that “the procurement process was not followed and that therefore the contract may be invalid”.
On July 5 2012, a proposal was submitted to Thabethe from a general manager in his department, Takisi Masiteng. Thabethe approved the proposal despite it recommending that there should be a deviation from supply chain management processes to appoint Estina and Paras.
On that same day, a second agreement between the department and Estina was signed, where the department would pay R114-million a year for three years, says the charge sheet.
Between April 16 2013 and April 19 2016, seven payments were made from the department to Estina. The company had one Standard Bank and one First National Bank account, the charge sheet stated. The first five payments were transferred to the Standard Bank account and the final two were paid into the FNB account.
The two biggest payments were the final two: R60-million was transferred from the department to Estina on May 5 2015. On April 19 2016, R46-million was paid to Estina.
The total amount transferred from the department to Estina was R220-million, which matches the figure the Free State High Court ordered to be seized when it granted a preservation order earlier this year.
These payments were made under Thabethe’s watch. The money then moved from Estina to a bank account held at the Bank of Baroda, Gateway (a company in Dubai) and to Kamal Vasram, the sole shareholder in the dairy farm project.
The charge sheet states that of R220-million Estina received, most of the money was transferred to both Gateway and to the Bank of Baroda account.
Between February 2013 and July 2014, Vasram transferred R25-million into his accounts.
The charge sheet alleges that department officials, including Thabethe, “authorised” the payments to Estina that were “irregular” and violated the PFMA and the provincial procurement procedure legislation.
“The payments to Estina were unlawful as the purpose of the Vrede dairy farm project was to benefit previous disadvantaged persons, but the money was not used for the designated purpose,” the charge sheet reads.
The charge sheet also says that the money sent to Estina, and then transferred into the accounts of people and entities who are not in a “business relationship” with the project, is “stolen” money.
It’s not yet clear whether the charge sheet specifies where all the money went despite information in the public domain that R30-million was used to fund the extravagant Gupta wedding at Sun City in 2013.
Vasram also appeared in court on Thursday but he will have to return because his address has not yet been verified. In a dark suit, with a crisp shirt and thinning hair, Vasram stared down journalists after the magistrate delivered his judgment, which granted bail to all of the accused who appeared, but with different conditions.
Former Oakbay chief executive Nazeem Howa and former Oakbay acting chief executive Ronica Ragavan also appeared in the dock.
The Hawks said after the court appearance of the eight that they were searching for Ajay Gupta, who they regard as a fugitive.
Although Thabethe and his co-accused have been blamed for much of the looting of the dairy farm, the Hawks have yet to say whether charges will be laid against Magashule and Zwane.
Long-delayed day of reckoning arrives
It has taken five years for a Gupta brother to be arrested despite a mountain of information in the public domain that could have set the Hawks circling the family a lot sooner.
Estina, near the agricultural town of Vrede in the Free State, was meant to be a dairy farm in which black farmers would have a 51% share. Instead, about R220-million was stolen from the project to enrich the Gupta family and their business associates.
In 2013, the investigative journalism unit amaBhungane lifted the lid on the Estina scam. In February that year, in his state of the province address, Free State Premier Ace Magashule announced the Estina dairy project, a “state-of-the-art certified facility” that would be able to produce 100 000 litres of milk a day.
By May, the provincial agriculture department, under MEC Mosebenzi Zwane (now the mineral resources minister), had already reportedly spent R30-million on the project. The department’s full contribution was to be R342-million over three years.
The provincial agriculture department partnered with Estina, a private company, to develop the farm. A dairy company in India, called Paras, was also included in the partnership. The department, headed by Peter Thabethe, said Estina and Paras had jointly committed R200-million to the farm. But, responding to questions, a spokesperson for Paras said: “We don’t do any business in South Africa and we don’t have any Estina on our database.”
There’s little evidence to suggest Estina ever processed a drop of milk.
In 2014, the bodies of 30 cows were seen by the Mail & Guardian in a ditch on the farm.
By that time, the treasury, following media reports, launched an investigation of the farm and the role of the agriculture department and the province. The findings included that the department did not perform a due-diligence evaluation of Estina or Paras, and that it broke supply chain protocols when it agreed to partner with Estina to fund the project.
The province was found to have paid grants into Estina’s bank account but officials could not say how the money was spent. Magashule’s legal adviser had also drafted a contract that favoured Estina’s interests. No feasibility study was done before the contract was signed — it was done only afterwards.
All the while, the Gupta family’s involvement in the scheme was denied, except for a consulting subcontract of R138 000 to Linkway Trading, a Gupta shell company.
In 2017, the #GuptaLeaks emails showed the extent of the family’s involvement in the Estina deal despite denials by the Guptas, the provincial government and Kamal Vasram, the sole director and shareholder in the project, who was previously a salesperson for the Gupta-owned Sahara Computers.
The emails revealed how R30-million from the dairy farm was allegedly laundered to pay for the infamous Sun City wedding in 2013 of Aakash Jahajgarhia and Vega Gupta, a niece of one of the Gupta brothers.
From the emails, amaBhungane established how R144-million from the province was transferred to Estina and then to a company in Dubai linked to the Guptas, called Gateway. From Gateway, amaBhungane reported, the money was transferred into six other accounts, five of which belonged to Gupta-linked companies.
Linkway Trading was one of those companies and it reportedly received the R30-million that was used for the lavish wedding.
KPMG was responsible for auditing Linkway but it allegedly turned a blind eye to the transaction because the wedding expenses were filed as a “business expense”.
Still, law enforcement authorities did not investigate the reports.
Only in late January this year, did the Hawks raided the offices of the premier and the provincial department of agriculture.
Authorities approached the Free State High Court, was an order granted that allowed assets believed to be the proceeds of crime to be seized and preserved. The order states that the unlawful proceeds amount to R220-million.
The court said Atul Gupta had pocketed criminal proceeds of R10-million and ordered that his account be frozen.
For the first time, a Gupta family member was implicated in criminal wrongdoing. Vasram and three companies, Oakbay, Linkway Trading and VR Laser, were included in the list of 18 recipients that had unlawfully benefited from the project.
After the order was granted, it still took almost a month for the Hawks to swoop in on the Gupta empire. On Wednesday, the Gupta compound in Saxonwold was searched by Hawks officials and eight known arrests were made. Arrest warrants have been issued for 13 people in total.
Other sites around Gauteng that are linked to the Estina case, which reportedly included Gupta-owned properties and businesses, were also searched.
The Hawks have yet to say whether Zwane and Magashule will also face criminal charges or be taken in for questioning.