Premier of the Free State Ace Magashule File picture: Ayanda Ndmane/ANA

Johannesburg - The Public Protector has found that head of Free State Agriculture department did not follow proper procurement processes prescribed in the Constitution and by the National Treasury. 
Busisiwe Mkhwebane released her report on Friday and found the department guilty of maladministration related to the project which was meant to uplift farmers. 

Read: Mkhwebane finds Free State Department guilty in #VredeDairy project

She found that proper processes were not followed in that the agreement between Estina, which leased the farm, and the department was invalid.

The project, which was allocated millions of rand meant to uplift black farmers, is believed to have been a scam to open up the doors for millions of rand to be looted by the controversial Gupta family. 

The farm was leased to a company called Estina which is linked to the Guptas. The Free State Department of Agriculture leased the farm to Estina under a 99 year lease. 

It was reported that the millions of rand for the farm went to fund a Gupta family wedding and most of the money was divided among Gupta family bank accounts for their businesses. 


One of the Gupta brothers, Atul, received R10 million into his personal account. 


But Mkhwebane’s report did not probe the involvement of the Gupta family and the reports of how the millions of rand for the project were spent. 

The report also fails to mention whether prices were inflated for the project. 

Mkhwebane found the following accounting irregularities: 

  • The Head of Department did not follow the normal procurement process, as prescribed by the Constitution, PFMA and the National Treasury.
  • That payments to Estina were also not in line with Treasury prescripts.
  • That the agreement between the Department and Estina seems to be invalid, due to non-compliance with the procurement processes.
  • That despite the Accountant General’s report, the department failed to comply with section  81 and 86 of the PFMA, which prescribed the process to be followed when there is allegations of financial misconduct.
  • The Accounting Officer of the department proceeded after the recommendation of the Accountant General to pay a further R143 950 million to Estina in respect of the project.
  • The allegation that the department failed to manage and monitor implementation of the terms of agreement is substantiated. 
  • The department failed to submit documents and policy measures about proper financial control and risk management.

Remedial action:
The Premier of the Free State Ace Magashule must:
* Initiate and institute disciplinary action against all implicated officials involved in the Vrede dairy farm project.
*Submit a report to the Public Protector after the conclusion of the disciplinary action process.
*Ensure that he submits an implementation plan within 30 days of issuing of this report. 

Political Bureau