South Africa: Free State Department Leased Entire Vrede Area to Estina, Commission Hears

Public Protector, Busisiwe Mkhwebane (file photo).

The former municipal manager of the Phumelela Municipality, Moses Moremi, has detailed how the Free State Department of Agriculture entered into an agreement that not only leased a large portion of land, but the entire area of Vrede (including suburbs) to the Estina dairy project for a period of 99 years.

Moremi was testifying at the Zondo commission into state capture on Tuesday.

He gave a breakdown of an extremely rushed process to bring the municipality on board.

Beginning on June 12, 2012, Moremi said the department, led by head Peter Thabethe, paid an unannounced visit to the municipality during a pre-planned council meeting.

They were accompanied by business people and local farmers, he said, adding the group had asked the council if it could show it a presentation on the dairy project.

Moremi said they also requested the municipality to avail farmland for the project.

He added the presentation was not on the council meeting's agenda and no one had pre-empted the presentation, except possibly the executive mayor of Vrede, John Motaung.

After the presentation, Moremi explained the council had unanimously decided to draw up a resolution that would support the project. The resolution was adopted by all 14 councillors in attendance.

Commission chairperson Deputy Chief Justice Raymond Zondo said this saga was strange because the council was too quick in making its resolutions shortly after the presentation without any documents, background or being able to ask questions about the financial impact on the municipality or the viability of the project.

Zondo questioned the rushed nature of the entire process, which he said was also evident in previous testimony.

A month after this, Moremi said he had received a call from the director general (DG) in the Office of the Premier who wanted him to attend a meeting with delegates from India who were interested in investing in Vrede.

He was told Motaung would also attend.

Moremi said the DG had told him if he needed legal advice, he should go through his office.

At the meeting, Ashok Narayan, representing the investors, was in attendance with lawyer Johan Schalkwyk. Previous evidence at the commission alleged that Nayaran was an adviser to former Free State premier Ace Magashule.

However, Moremi said he had not known this.

He added he was presented with an agreement between Estina and the agriculture department that he had to sign then and there, which the mayor would then take to the council.

However, after reading the agreement, Moremi said it was clear he could not sign it.

He explained that it mentioned 4% ordinary shares for the municipality that would only come into effect after three years. It also indicated the municipality should agree to a rent free 99-year lease, with the municipality being responsible for rates and taxes.

The agreement also mentioned 4 400 hectares of land, which encompassed much more than the farm.

The land was already being leased to farmers and there was an existing contract between them and the municipality, Moremi added.

Before signing the document, he said he had sought an opinion from the National Treasury and state law advisers who asked Narayan to justify the agreement.

They subsequently advised Moremi not to sign.

Despite this, he said, pressure from the mayor as well as Thabethe had mounted.

Moremi claimed they told him that if he did not sign the investors would pull out. He then signed off on the agreement.


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