Zondo hears why implementing agents were used to manage projects

The Free State agriculture department used implementing agents to manage fruitless and wasteful expenditure, not its own officials.

The former chief financial officer (CFO) of the department, Seipati Dhlamini, told the Zondo commission on Wednesday morning that this was done to address challenges it faced in managing fruitless and wasteful expenditure.

But the chairperson of the inquiry, Deputy Chief Justice Raymond Zondo, raised some concerns about the implementing agents, saying that the department was supposed to implement and monitor projects.

The commission on Wednesday turned its focus to the Vrede dairy project after hearing Bosasa related testimony.

Estina, in this case, was the department’s implementing agent and was later taken over by the Free State Development Corporation in a similar role.

Zondo said, insofar as Estina’s role was the implementation, the work could have been done by department officials, even if Estina or Paras were going to invest in the project.

Dhlamini said the “magnitude of the project necessitated the skill”.

She claimed Estina and Paras had better skills than the department officials.

On Dhlamini’s comments that Estina would be “an investor”, evidence leader advocate Leah Gcabashe said that, just before the first R30 million went into its account, it only had R16 and some cents in the account.

Asked what justified the department to decide on bringing in the agents, Dhlamini said: “One of the reasons was the other problem that we were faced with was the issue about fruitless and wasteful expenditure. It was the issue about irregular expenditure.

“I remember at that particular year, when I arrived, district services would be the one who source the quotation when they buy these things; sometimes when it comes the time that the AG [Auditor-General] is going to audit, some of the goods and services would not be delivered.

“I remember there was one particular project, where it was said they bought some machines for the beneficiaries to do some salt project. They were [going to] manufacture salt. At the end of the day, they did not receive those.”

She said a decision was then taken to use implementing agents.

Dhlamini also told the deputy chief justice that when they started using implementing agents, the department had quality products.

“With our own officials, the monitoring was not good. The coming in of implementers, monitoring became better, but it didn’t do away 100% with the challenge,” she told the commission.

But Zondo said: “Management [is] supposed to implement and monitor the projects…they fall within your centre.

“This is a job that you can do as management and this is a job you are supposed to be able to do, to monitor and to implement, but you go and look for somebody else to come and do essentially your job as management of the department. Why?

“And you are paying more money and you are being paid to do essentially a job as management. Why are you doing that?”

Dhlamini responded and said: “I hear what you are saying, and I accept what you are asking.”

Zondo also said it seemed to him that the justification and motivation for using implementing agents with regard to the Vrede dairy project was not because the department did not have expertise or people who could implement the project.

It was simply because those within the department, who were supposed to implement the project, no longer had confidence that they could do the work properly.

He said the department thought it should bring in the implementing agents to do a job that it was being paid to do.

“Is that a fair proposition?” he asked.

Dhlamini said the proposition was fair with regards to other projects and “probably with Vrede dairy also”.

In October 2019, former Free State Finance MEC Elzabe Rockman told the commission that many of the billions in irregular expenditure reflected in the reports for the 2017 financial year had nothing to do with the Vrede dairy farm or Estina.

“The possible irregular expenditure regarding implementing agents, the R815.966 million, this has nothing to with Vrede dairy or the FDC.

“These are implementing agents used by the Department of Agriculture to implement agricultural projects on behalf of beneficiaries,” Rockman said at the time.

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