Johannesburg - The judicial commission of inquiry into allegations of state capture, headed by Deputy Chief Justice Raymond Zondo, continues this morning.
On Tuesday Zondo has asked his staff to probe a dodgy pre-1994 deal of 4400hectares on which the Gupta family established the Estina dairy farm.
The Zondo Commission of Inquiry into state capture on Tuesday heard more explosive evidence that the farm, known as Krynaauwslust, valued at R30million, was run by a trust established in 1993 by the Free State town council of Vrede, and that to this day no audited financial statements exist.
Tekoetsile Moremi, who held the positions of the chief financial officer (CFO) and municipal manager at the Phumelela local municipality, said after his appointment as CFO in 2011 he requested audited financial statements for the farm from the trustees but none were forthcoming.
Moremi, now chief director responsible for municipal finance management in the Free State treasury, said when he arrived he found no records of any income from the farm.
The trustees had sold the cattle and dissolved the trust after Moremi asked for audited financial statements. There was also no deed of trustees.
After the auction of livestock and the farm’s assets, R8m was paid into the municipality’s bank account.
“The municipality did not even know the number of livestock on the farm. We were just given the money as proceeds of the auction,” he said.
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Moremi said none of the municipality’s officials was part of the auction. He said the auction was only advertised in an Afrikaans newspaper, which showed it had not been open for all potential buyers.
“It was bothering me that there was this particular asset of the municipality, and there were no records (of it),” Moremi testified.
Justice Zondo interjected, and asked the commission staff to take steps to see whether there was any corruption in the deal, which saw the farm being run for 18 years without any audited financial statements.
Moremi said only the farm valued at R30m was left and that none of the livestock and implements sold during the auction had been received.
The commission also heard that the Guptas wanted to use the land for what Justice Zondo then described as “basically for free for 99 years”.
After meeting Moremi and Phumelela mayor Tlokotsi Motaung at the time, Gupta associate Ashok Narayan is said to have set stringent conditions for the deal with the municipality.
The municipality, Narayan told Moremi via email dated July 2012, would receive ordinary shares, and not preference shares. Preference shares entitle holders to a fixed dividend, and their payment takes priority over ordinary shareholders.
He said Phumelela’s 4% shareholding would not be based on commercial value, but were in lieu of rentals and rates and taxes. And, instead, Estina would lease the farm rent-free for 99 years, and the municipality would only receive dividends once the farm began making a profit.
Moremi said after the deal between the municipality, the Guptas and the Indian dairy company Paras collapsed the provincial agriculture and rural development department, under then MEC Mosebenzi Zwane.