Estina paid R106m for inadequate processing plant at Vrede Dairy Farm project, commission hears

The commission of inquiry into state capture heard on Monday that Gupta-linked Estina was paid R106 million for a processing plant with inadequate equipment.

The plant was for the failed Vrede dairy farm project which Estina was meant to implement on behalf of the Free State department of agriculture and rural development.

The former head of the department, Peter Thabethe, was questioned by the evidence leader, advocate Leah Gcabashe, whether the department had sought to determine how Estina arrived at the R106 million when the agreement was terminated.

Thabethe said the amount included two items, one being the processing plant which the department would take over at the termination of the agreement.

Gcabashe read a report dated May 12, 2017, on the assessment of the processing plant which, among other issues, pointed out that the building had no ceiling; the drains were installed correctly and, being made of PVC, would perish over time when subjected to hot water; there were no extraction fans in the building; the building needed windows; the milk reception should have been constructed outside; the cooling room was too small; the process flow needed to be reconfigured; and that all pipes needed to be replaced.

The report highlighted the “inadequacies of the processing plant” and all that was wrong with it, Gcabashe said, and then asked Thabethe “what were you paying R106 million for”?

Thabethe said the report was meant as a reassessment tool in order to “reconfigure” the “incomplete project” since the department was taking it over and that the plant at that stage when the agreement with Estina was terminated had been half done.

The chairperson of the commission, Deputy Chief Justice Raymond Zondo, asked Thabethe whether he accepted that this report reflected what was found on the farm and asked the witness why then did the department pay R106 million.

Gcabashe further noted that the report cited “flaws on what had been installed” at the processing plant which the department paid R106 million for.

She further read other issues cited in the report which included that the boiler was a safety hazard and had not been in production for years and had to be replaced; tanks needed to be replaced; valves, taps and pumps were outdated and the department would face a challenge of getting spares; the pasteuriser was not suitable, appeared to be rebuilt, and had been poorly installed; and that the tanks were pitted and rusted on the inside.

“My conclusion is that you were taken for a ride,” Gcabashe said.

Thabethe said he did not dispute that, adding that what the department had to pay was for work that had been done up to that stage, which he said needed to be assessed for its monetary value.

Zondo said the report shows that what Estina had provided was inadequate, low quality, unacceptable, and should not have been provided. He added this corroborated the evidence of a previous witness who testified that when they got sight of the equipment which came from India, they realised it was rusted.

“Chair, I accept that, the only difficulty I have is to put a monetary value to it,” Thabethe said.

Zondo questioned Thabethe how the department allowed Estina “to do this and you did not pick it up yourself?”.

“This processing plant, it was their responsibility to build it,” he said, explaining that he was of the view, therefore, that Estina would not have “shortchanged themselves”.

Gcabashe, however, pointed out that the project was the department’s baby and it had been short-changed “by this substandard work, substandard material that is being brought to the project by Estina”.

Thabethe agreed with the evidence leader.

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