Millions paid to Estina despite cancellation of Vrede contract
The commission of inquiry into state capture has heard how the provincial government in the Free State paid a private company, Estina, R136 million despite the cancellation of the Vrede dairy farm project.
The Free State Department of Agriculture signed the controversial contract in 2012, which was meant to benefit 80 emerging farmers through the production of milk.
The commission began its probe into the project on Monday with the testimony of Roy Jankielsohn, a Democratic Alliance (DA) member of the Free State legislature.
The project was meant to cost R570 million with Estina agreeing to invest R228 million.
Following an investigation by Treasury, the contract was canceled in 2014 as it was found to be unlawful.
Jankielsohn probed the then MEC for Agriculture on the details of the project and was told there were no cancellation fees paid to Estina.
"The total paid to Estina after the cancelation of the project adds up to R136 million. It is interesting because there is a cancelation agreement between Estina and the Free State Department of Agriculture and Rural Development in which they indicate that R106 million will be paid by the provincial department to Estina based on monies that the department indicated they owed to Estina at the time."
He said there is a discrepancy between the cancelation fee and the actual amount paid to Estina.
"It is strange to me that the documents indicate that there had to be a cancelation of this agreement shortly before Estina was meant to implement their parts of the agreement, which was phase two, to ensure that the processing plant was functional and to invest an additional amount of R228 million.”
He said the Free State government's argument that it could not continue to fund the project is misleading as it is still paying R20 million despite its failures.
A new agreement was signed with the Free State Development Corporation.
Listen below: