Johannesburg - Massive inflation of prices, shoddy proposals and feasibility work were flagged in the Free State Estina dairy project at the Zondo Commission on Monday.
Agricultural economist David Maree, who was tasked with researching the financial soundness of the business, said the agriculture department should have rejected the proposal by the Gupta-linked Estina.
He said he found the proposals and feasibility study to be sloppy work.
“I got the impression that it was a desktop feasibility study and proposals were being drafted just to get funding. If you look at the feasibility study, it is a very academic piece of work and doesn’t entail everything that needs to be included,” he said.
The dairy farm, near Vrede, is at the centre of a corruption scandal involving the Gupta family in which they are accused of stealing R200 million with the assistance of top politicians and government officials.
The department had described the project, which would be 49% owned by Estina, as an initiative aimed at uplifting emerging farmers, who would share the remaining 51%.
Earlier on Monday, former provincial treasury official Anna Susanna Fourie detailed how Estina was appointed without procurement processes, with the agriculture department applying pressure for it to be given a R30 million prepayment within the same month.
Maree said the two project proposals by Estina, which claimed the project would be commercial and funded by the company, did not make sense as government was expected to fund both projects.
“According to the two project proposals, in the one it was R500 million over five years and in the second one it was R228 million over three years.
“While the government, in the first one, was expected to pay an equal amount of R500 million, in the second proposal, government’s contribution was R342 million in grants,” Maree said.
Maree said Estina had said it would take about 12 to 14 months for the dairy to become operational.
“It does not make sense that, if a project is commercially viable without grants and profitable in year one, it would be necessary to get grants from government,” he said.
He said the project’s business plan was so inconsistent that, in one page it talked about 500 cows and in the very next page referred to 1 000 cows for the project. Maree also told the commission how prices for milk cows were inflated by R10 000 per cow, with some items not being specified – despite costing millions.
“Apart from R5 million budgeted for a milking parlour, a further R15 million was budgeted under the heading ‘other dairy equipment’ but there is no detail around this equipment,” he said.