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‘They Eat Money’: How Mandela’s Political Heirs Grow Rich Off Corruption

“We were happy,” Mr. Ncongwane said, adding, in hindsight, “although we were happy for a crook.”

In 2012, Mr. Zwane and agricultural department officials arrived in Vrede to promote the dairy farm project. Flanked by the council speaker, Roseline Zwane, known as Topsy — who happened to be his wife — and by his longtime ally, Mayor Tlokotsi John Motaung, Mr. Zwane told the crowd about a dairy farm that would empower black farmers and create 150 jobs.

Shortly afterward, his department signed the first of its two dairy farm agreements with a company called Estina.

This was a peculiar choice. Estina was to buy cows for local farmers and process milk at the farm. But the company was headed by a businessman from India who had a background in information technology — not in farming. Yet, importantly, he had long worked for the Guptas.

Despite the project’s sketchy details, Mr. Zwane signed off on it and asked the provincial treasury to start paying Estina, according to an investigation by the National Treasury. Initially, he was overruled by lawyers in Mr. Magashule’s office, who deemed the contract invalid because procurement rules, like a competitive bid, had not been followed.

But that was only a hiccup. The province signed another contract with Estina the following month — this time with the lawyers’ blessing. That agreement stated that Estina would invest just under $ 20 million in the project and the province would contribute about $ 30 million over three years. Local farmers, the so-called beneficiaries, would retain 51 percent of the shares.

There was “something fishy” from the start, said Doctor Radebe, who was a councilor for the opposition Democratic Alliance in Vrede. Mr. Zwane and the agricultural officials presented no business plan or budget for the project, but they and the mayor insisted on pressing ahead, Mr. Radebe said.

The local municipality quickly decided to hand over 3,400 hectares, or about 8,400 acres, of land for the dairy farm.

In fact, the municipality was so determined to get the project underway that it compensated four white commercial farmers, who had been leasing the land for about $ 80,000 a year, in order to prematurely break their leases. Later that year, just before Mr. Zwane and his local choir left for India, on a trip sponsored by a Gupta company, the province leased the farm to Estina — rent-free, for 99 years.

In an interview, Mayor Motaung said, “We had no doubt that the plan will work.”

But the mayor acknowledged that Mr. Zwane presented no detailed plan or document about the proposed dairy farm. Even basic details — like the criteria for selecting the beneficiaries — were missing, the mayor said, acknowledging that his role in the project was now under scrutiny.

The payments to Estina began months later. Court documents show that the province deposited just under $ 21 million in two Estina bank accounts over three years. Days after every payment, the company transferred the entire sum to other accounts. From there, prosecutors say, the money was withdrawn by individuals and other Gupta-linked companies that had little to do with the farm.

In fact, prosecutors say that only about 1 percent of the money invested by the province actually went into dairy farming. Beyond that, the National Treasury found no evidence that Estina ever invested its own money in the project, despite its obligation to do so.

Emails leaked from a Gupta company server indicate that some of the money was sent to the United Arab Emirates and put into accounts registered to the Guptas. The money then made its way back to South Africa through a maze of bank transfers, according to spreadsheets, logs and an invoice in the email trove.

The emails, amounting to thousands of exchanges, were leaked last year to South African news organizations and an anti-corruption group. It is not known who leaked them, though they soon fanned national outrage at the Gupta family and at Mr. Zuma. The Guptas denied the authenticity of the emails, but some A.N.C. officials included in the correspondence confirmed that they were real.

In one of the emails, Gupta companies paid one another for expenses at a relative’s lavish four-day wedding in 2013, including fireworks, dancers, chocolates and scarves.

In another exchange, KPMG, then an auditor of the Gupta companies, ignored a junior employee’s protest and allowed the Gupta family to write off some of the expenses at the wedding as business costs.

“I have never been to an event like that,” Moses Kgosana, a KPMG executive who attended the wedding, gushed to a Gupta brother in one of the emails, calling it “an event of the millennium.”

The accounting firm has since acknowledged that its actions “fell well short of the quality expected.”

Many of the problems surrounding the dairy farm could have been ignored had the province not tried to tap into a national fund for struggling farmers. The national government initially agreed to give about $ 4 million to the project on the condition that the province submit, among other things, a list of 100 poor farmers who would benefit from the farm.

When the government found no evidence that local farmers were involved, it sent National Treasury auditors to investigate in 2013. Though Mr. Zwane, sometimes accompanied by his wife, had held meetings to look for beneficiaries, no official list had been drawn.

Source: NYT > World

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