Peter Thabethe has accused major dairy companies including Parmalat, Dairybelle and Clover of having a “problem” with developing small producers in the Free State. “Their main interest was to collect the milk, that’s what we picked up, and the development part was a problem,” claimed Thabethe.

Thabethe cited several dairy companies operating in South Africa, which he said were approached to help small producers in the Free State, before provincial government turned to an Indian dairy producer in late 2011. Engagements with companies in South Africa proved fruitless, suggested Thabethe, so he conducted “desktop research” that led him to India and the dairy company Paras.

“Your evidence is you tried, nobody showed interest?” asked Chairperson Deputy Chief Justice Raymond Zondo. Thabethe replied that that was so, adding it was not only the case in the local dairy industry, but in other agricultural sectors transformation and development were very difficult.

A day prior, Thabethe described how a businessman, Ashok Narayan, who had experience in Information Communication Technology (ICT) accompanied him on a fact-finding trip to India in 2012. The government-sponsored trip, approved by the then Free State Premier Ace Magashule, involved a day visit to the New Delhi office of Paras.

On 24 February 2012, Thabethe sent Magashule a letter asking for approval. Four days later, Magashule approved the trip. Thabethe and Narayan flew from South Africa to India a day later, on 29 February 2012. Narayan’s first official day of work as an adviser was the following day. His name features in relation to a number of suspect Gupta-linked ventures.

Evidence leader Avocate Leah Gcabashe SC asked Thabethe how he managed to arrange the India trip in such a short time. He replied the preparations were made in advance, and seats were reserved on the flights pending Magashule’s approval.

Months earlier, in late December 2011, Thabethe began communicating with Paras. He found the phone number on the Paras website, called the New Delhi office and was referred to Gajinder Kumar. When Thabethe and Narayan visited New Delhi in 2012, they met Kumar and toured a Paras factory.

“He was of very big assistance even when we were in the meeting,” said Thabethe of Narayan’s role during the brief trip to India. “He then assisted in translating from the local language into English.” Kumar of Paras would later visit South Africa and see the project site in the Free State.

Thabethe claims Paras was eager not only to provide a model for acquiring dairy from small producers, but also to invest in the Free State project. Thabethe reported that this is how the South African incorporated company Estina Proprietary Limited came to be involved in the project.

After discussions with Paras, he claimed, Estina contacted the Free State Department of Agriculture and Rural Development. In October 2012, with Kamal Vasram as a newly registered Estina director, the company changed its registered activities to include agriculture, farming and related activities.

Thabethe’s testimony revealed his mistaken use of a Memorandum of Understanding (MOU) from 2010 between the governments of South Africa and India. The MOU on agriculture was developed while Thabethe was a ministerial adviser in the Department of Agriculture, Forestry and Fisheries. Yet, he incorrectly described it as a bilateral agreement, both in submissions on the dairy project to the Free State Executive Committee (ExCo) and in a 2018 affidavit.

“Our reference to this document was for protection,” testified Thabethe but Gcabashe called him out on his choice of language. She accused him of “misleading” the ExCo. He replied: “Our reference to the document was to say, ‘There is already an established relationship. The two countries are talking to each other’.” An email from the Department of Agriculture, Forestry and Fisheries indicates to date the MOU is still not in force.

Thabethe’s evidence further exposed the bare bones of due diligence conducted on Estina because, said Thabethe, it was not a requirement. He indicated he was not so concerned with Estina, since he saw it as a conduit for Paras.

The chairperson pressed him on why Thabethe did not conduct more thorough checks on Estina. He replied: “We have not done it because we have never done it with any company that we have been dealing with it. We have never done research to that extent.”

On Estina, said Thabethe: “They were not my focus.” He testified that he only worried about Estina in terms of any potential litigation, since Paras was not registered in South Africa. Zondo responded: “But if you don’t check other than what they do other than that they are tax compliant […] you might litigate with an entity that you really shouldn’t be involved with.”

Zondo asked Thabethe if, in retrospect, he considered it a mistake to  not have scrutinised Estina more closely. Thabethe was stumped, and sat speechless for a while.

Proceedings adjourned for lunch. It seems unlikely Thabethe will conclude his evidence on Friday afternoon. DM

Update on 20 August, 2019: Jacques van Heerden, on behalf of Clover, replied to a query from Daily Maverick. He wrote, “Clover was approached by Estina in 2014.”

This clashes with Thabethe’s evidence, which suggested the Free State government approached South African producers before the project was launched.

Van Heerden continued, “After careful review and evaluation of the opportunity to purchase and collect milk from Estina, Clover concluded that it was not economically viable. This was due to the lack of quality controls and the high cost of transportation to deliver the raw milk to Clover’s nearest factory, which in this case was the Clayville factory in Midrand.”

Daily Maverick has also asked Parmalat for comment. Dairybelle is liquidated.