Public Protector goes for junior officials in the Vrede farm scandal

9 Feb 2018
A formal look of Busisewe Mkhwebane


Some Junior officials in the Free State Department of Agriculture could become sacrificial lambs, and their political principals will be untouched, if the Public Protector, Advovate Busisiwe Mkhwebane, has her way around the Gupta touched Vrede Integrated Dairy Project scandal.

The Public Protector released her findings on the Vrede scandal which has caused lots of political noise recently because it threatens to drag in big names like Free State Premier and ANC general secretary, Ace Magashule and the minister of mineral resources Mosebenzi Zwane. The latter served as the Free State MEC for agriculture and has been accused of masterminding the alleged money laundering that took place in Vrede.

In her fiding the Public Protector seems to absolve both Magashule and Zwane. She orders Magashule to “initiate and institute disciplinary proceedings against all implicated officials that were involved in the project and submit a report on the action he will take in this regard to the Public Protector upon the conclusion of disciplinary processes.”

Here follows the Public Protectors statement and a link to the full report:

Public Protector releases her findings on Vrede Integrated Dairy Project

Public Protector Adv. Busisiwe Mkhwebane has red-carded the Free State Department of Agriculture for its handling of the Vrede Integrated Dairy Project, concluding that the department failed to manage and monitor implementation of the terms of agreement with implementing agent, Estina (Pty) Ltd, in relation to budget evaluation, expenditure control and Estina’s performance.

Adv. Mkhwebane directed the Premier of the province to initiate and institute disciplinary proceedings against all implicated officials that were involved in the project and submit a report on the action he will take in this regard to the Public Protector upon the conclusion of disciplinary processes.

The investigation followed several complaints lodged by Democratic Alliance Member of the Free State Provincial Legislature, Mr. Roy Jankielsohn, on 12 September 2013, 28 March 2014 and 10 May 2016. In a nutshell, Mr. Jankielsohn wanted the Public Protector to look into allegations that, in implementing the project, the department had failed to adhere to treasury prescripts and to exercise financial control.

Adv. Mkhwebane found that the department could not provide documents, policies or measures to demonstrate that proper financial control and risk management of the project had been in place. She could find no evidence or indication that the Accounting Officer invoked the provisions of the agreement in respect of the control over the Project and this raised a serious concern.

“This concern was supported by the report of the Accountant General,” Adv. Mkhwebane said, adding that the lack of effective, efficient and transparent systems of financial and risk management as well as internal controls amounted to gross negligence and maladministration.

Adv. Mkhwebane found that this evidence pointed to gross irregularities in ensuring the effective and efficient performance of the agreement and resulted in maladministration. She added that this amounted to gross negligence and constituted improper conduct.

Adv. Mkhwebane could not determine if the prices for goods and services procured –specifically expenses in respect of construction, processing equipment, procurement of cattle and administration costs – had been inflated.

The reasons for this included that Estina had not followed public procurement processes when procuring service providers in the project and that resource constraints hampered efforts to conduct a comprehensive investigation to determine the fair market value for goods and services procured. Another reason was that the Public Protector was not provided with all the invoices and proofs of payment for goods and services Estina procured on behalf of the department.

Adv. Mkhwebane further found that the department did not enter into a Public Private Partnership agreement as alleged for the implementation of the project in the context of Treasury Regulation requirements.

She observed in concurrence with the Accountant General that the Head of Department (HOD) did not follow normal procurement processes; that the payments to Estina were not in line with Treasury prescripts; that the agreement between the department and Estina seemed invalid; and that the department failed to comply with provisions for the Public Finance Management Act which prescribes the process to be followed in cases of alleged financial misconduct.

In addition to disciplinary action against official involved in the project, the Public Protector directed the Premier to conduct a reconciliation of the number of cattle initially procured and found during April 2017 as per his undertaking in the comments to the draft findings. He must further submit to the Public Protector an implementation plan of the remedial action within 30 days of the issuing of the report.

Also as part of the remedial action, the HOD has been directed to ensure that officials in the Supply Chain Management Division and departmental management are trained on the prescripts of the National and Provincial Treasuries in respect of procurement and specifically in respect of deviations.

The HOD must further take corrective measures to prevent a recurrence of the failure in the management process referred to in the report, ensure that staff involved in the implementation and execution of projects are properly trained and capacitated. The HOD must also ensure the development and revision of current policies for the implementation of internal control measures in line with treasury prescripts and regulations.

There were, however, several issues that Adv. Mkhwebane could not investigate due to the capacity and financial constraints that her office continues to experience. They include the following matters:

  • The cause of the alleged deaths of cattle;
  • The complaint lodged in May 2016 as issues pertaining to the investigation had already been identified and the investigation was at an advanced stage;
  • The issue of value for money obtained by the government in terms of the agreement, which had already been investigation by the National Treasury’s Account General;
  • Recent newspaper articles on the emails relating to the Gupta family that surfaced around June 2017 (these were noted but did not form part of the scope of this investigation);
  • How the money transferred to Estina was spent by the company (the Directorate for Priority Crime Investigation is dealing with the issue); and
  • The issue relating to beneficiaries who were intended to benefit from the project due to lack of information.

The full report can be found here:

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