Sizing up Estina Dairy: Money stolen by Guptas could have funded 5440 students

JOHANNESBURG — In a previous article for BizNews, accountant Kali Khama did an excellent job of unpicking and unpacking the dirty accountancy at retailer Steinhoff. Following on from that popular article, Khama has now moved on to look deeper into the Estina Dairy farm mess. What Khama reveals here through a series of calculations will blow you away. He calls out the Guptas and the Free State government’s behaviour for being nothing short of fundamentally criminal. It’s also an eye-opener into how easy the Guptas had it in terms of fleecing you and me as taxpayers. It’s a shocking read about how corruption operates in South Africa. – Gareth van Zyl

By Kali Khama*


Kali Khama

All that follows relies on publicly available information, specifically:

  1. Report of the Public protector on the project;
  2. Article:
  3. Article:
  4. Affidavit of NPA investigator Mr. Nkosiphendule Mradla

I must also stress that I am presenting this as informational based on my own attempt at understanding the facts. It does not extend to a presentation endorsed by any party affiliated with me and specifically does not represent endorsement by my employer.

For interest sake: “Mohoma Mobung” means “Garden Hoe in the Sand”.

Now let’s get to it;


Unfortunately it’s not as elaborate as you might imagine and this I think is classical in a political setting where there is so much influence among the crooked; they don’t need to come up with genius ways to get things done. The same way that the Guptas strengthened their influence with JZ, i.e. by doing really favourable things for his family, they did very favourable things for the kids of Ace Magashule (Premier of the Free State). #GuptaLeaks emails show that they were given cash, jobs, and vacations which all became future favours when the Guptas saw an opportunity to fund their lavish lives with our taxes. Those emails also show the CV of Mosebenzi Zwane being sent to Duduzane Zuma by Tony Gupta on 1 August 2015. And literally a month later, in September 2015, M Zwane was appointed the Mining Minister.

Estina Dairy Project. More of Zapiro’s brilliant cartoon work available at

Also, the #GuptaLeaks emails also showed us that the Guptas tried to keep their hands clean by operating through people that had a surname other than ‘Gupta’ and one such person is the former Director of Estina, Kamal Vasram. He was the director of Estina since its inception.

Sure, one may conclude that all this is not conclusive evidence of showing that there is undue influence by private parties over public servants and thus the country’s purse, but that is often the case in politics. Nothing is ever explicit, nothing is ever direct, and the true perpetrators of corruption don’t ‘touch the merchandise’. These things happen through so and so, who knows so and so, who works with so and so, and is the brother of so and so. This is probably the reason why today the Judge ruled in favour of Atul Gupta to keep his stolen R10m, because there is not enough evidence for a court of law to rule in the contrary. Further, this is also probably the reason why after the countless fraud scandals (both in the private and public sector) that have happened in RSA, there has been little no convictions and asset recoveries.

Nevertheless, what we can at least conclude though, is that the Guptas are not innocent. They are sitting on some middle ground where there is no certainty as to whether corruption has occurred or whether they unlawfully benefitted. That place has a name and it is called Dubai and is miraculously giving a fighting chance to the Guptas. Unfortunately for ‘some’, a ticket to such a place was not provided (last time I checked JZ was in Durban talking at the NAFUPA (National Funeral Parlour Association) gala dinner.


It’s a cold day in 2012, a farmer sits on a worn-out chair outside her small house in the agricultural town of Vrede, and her hands are dirty with soil from the morning’s ploughing of the fields. She’s always tired from always working but what choice does she have? Her 5 cows and small plot of land are all she has to make some kind of living. If only there was some kind BBBEE scheme that could be implanted that would lift black formers from the starvation from lack of funding and industrialise their business so they too can supply Pick n Pay, Shoprite, and Checkers. This is what she thinks of on a daily basis.

It’s an ordinary day to her and she is clueless about the fact that a grand scheme of corruption is about to get into full swing. The life of the town is about to change forever. A car is driving around town and the speaker is employing the convincing method of speech that politicians use to gain party votes. There is an important town meeting to be attended by those interested in farming.

File Photo: Mosebenzi Joseph Zwane being sworn in as Minister of Mineral Resources on 23 September 2015.

The meeting is addressed by Mr. M Zwane and he presents the fruitful outcomes that are going to come from the envisioned project. There will be new roads, a clinic, and bursaries for students, and the masterpiece of it all will be the dairy farm that will revolutionise the economy of the town. The beneficiaries would become owners of a company called Mohoma Mobung Dairy Project through a government investment; a perfect application of BBBEE.

This must be a dream come true for our aforementioned farmer. The opportunity to industrialise has finally arrived with the birth of the Mohoma Mobung Dairy Project. All she needs to is to sign up as a beneficiary, submit some documents, and get rid of her current livestock because she would be benefitting from the Mohoma Mobung Dairy Project (and obviously must not be running a side business that essentially competes with the one she will be benefiting from, conflict of interest to be specific).


The interesting thing about this narrative is that it is most likely exactly the same as would be described by one of the actual Dairy Project beneficiaries. What’s not interesting, and often expected in our country, is that the promised outcomes will never see the light of day because of some irregularities that somehow will direct most of the allocated monies to the pockets of a very few unofficial beneficiaries (take the tender process in the country for example: where subpar jobs are done by companies of politically connected tender winners to cut costs and pocket a large profits).

Coat of arms of the Free State province

The project itself comes from an agreement on 5 July 2012 between the Free State Department of Agriculture (The Department) and Estina Pty (Ltd). The agreement was essentially that Estina would run the project (as an “implementing agent”) through Mohoma Mobung Dairy Project Pty (Ltd), which Estina was responsible for setting up. The only director that was appointed in Mohoma Mobung Dairy Project Pty (Ltd) was Kamal Vasram.

Some information about Estina:

Estina is company that was registered on 1 August to 2008 and it was registered as Commercial Industrial Business Sales and Support. Personally I have no idea what that means. What I do know is that “Commercial Industrial” doesn’t mean anything close to Agriculture. So it makes sense that Estina would try and associate itself with Paras which is supposedly a farming expert company (Paras spokesperson said in 2013 that Paras doesn’t know of any Mohoma Mobung Dairy Project that its part of – personally I think this should have been the issue that ended the whole project). Kamal Vasram, from registration of the company until his resignation, was the only director in the Estina (yes, only director of Mohoma Mobung and Estina). Vasram, per the affidavit mentioned above is an IT guy with no expertise or experience in the agriculture business. He resigned in 2015 and was replaced by Soo Young Jeon but by then the corruption was already in progress so this change in director doesn’t change much. On 19 October 2012 Estina went ahead and changed its business to agriculture. This is crazy because this makes us realise that actually Estina entered into the contract while it was not even an agriculture business and only changed to become one because it had already acquired the government contract and wanted to look legit.

Now back to the contract:

The project would need just more than half a billion rand to start and run so the agreement stipulated the following investments (Total R570m):

  1. The Free State Department of Agriculture – R342m;
  2. Estina and Supposedly Paras – R228m.

But the Department, at the time, had already spent R114m (money transferred to Estina for preliminary project expenses: R30m for project designs and R84m to buy machinery) so the total investment into the project by the Department was actually R456m (R342m + R114m) For those who did Management Accounting in university, please note that I have relaxed the capital budgeting rules you learnt, esp. those relating to Sunk Costs. So, the total cost of the project should not be R570m but actually be R684m.

The agreement also goes to state that the Department would own 51% and Estina would own 49% since they’re both investing money. Everything seems right, the ratios appear to make sense, and this is a classical setup where one party wants to ensure that they have control over a company. But since we’re a prudent people, we’ll calculate the expected ownerships based on investments just to verify what we see:

  1. 456/684*100 = 66.67%;
  2. 228/684*100 = 33.33%;

Hmm… something’s not right here. Last we checked the agreement said the Department gets 51% and Estina gets 49%. So actually 15.67% (66.67%-51%) has been given free to Estina, not the 9% the Public Protector calculated. That 15.67% of the projects comes up to R107m (R684m*15.67%). Where is the economic rationale for this? It’s not there! The project has not even commenced and already R107m has been given away for no reason or benefit. First year university fees cost about R40k. So essentially what the department has done right at the beginning is to deny 2695 (R107m/R40K) potential students an opportunity to go to university at least for 1 year. And the minister of education, minister of finance, and the president want to tell us there’s no money?

The agreement also has a weird provision in it that says that Estina will only invest its R228m ‘if it became necessary’ (the department made no effort to determine whether Estina would in fact be able to do this – and it was later found that Estina only had R9000 in its bank accounts when it entered into this agreement; no wonder they had this provision, because the Department knew Estina doesn’t have money and was just a conduit pipe for the Guptas). Which means that in the interim of the project the Department will be picking up the bill, but Estina would still get its 40% and free 15.67% piece of the pie. Why? Again you will get no economic rationale from the department.

Read also: Maimane: Here’s evidence Zwane, Gupta family stole R200m from 80 ‘poor’ people

This agreement is fundamentally criminal because the very people it was meant to uplift are just called beneficiaries and don’t actually participate in the project; they don’t know what’s happening, I don’t think they even know the magnitude of monies moving around in their name. The 51% shares that we talked about above are held by one person who is acting as a custodian of the shares (Mr. Oupa Mokoena). It is alleged that in fact there really are no actual beneficiaries (other than the Guptas and a chosen few) because a list of people was produced long after the project had started which is insane because there should have been identifiable beneficiaries to even warrant the project in the first place. And that’s not even the end of it, the documents submitted to the Public Protector are basically just a list of names which is lacking in the formalities to make it official (it doesn’t even have a date on it!). 15 of the names on that list don’t have ID numbers and there is no ID copy for 16 people. In other words, that is literally a stupid list of random names but it was used to move R684m project forward. The cherry on top of the cake is the fact that only one beneficiary signed and they signed ‘on behalf of the others’, but there is no official document or anything that is evidence that the other beneficiaries agreed to this setup. So it means some random people must have been chosen to make up a list in exchange for small chump change.

Revealed! Taxpayers picked up tab for THAT big fat Gupta wedding – guided by KPMG. More magic available at

This is as far as my trust for the findings of the Public Protector go. I say this because key documents that were reviewed are documents that Estina and the Department submitted. How can you trust that they are credible? You can’t rely on information that is submitted by the very person you are investigating because they have such a huge incentive to lie to you. Professional scepticism was clearly lacking in conducting the investigation. The department allegedly submitted financial statements to the public protector but the actual invoices and bank statements that would corroborate such financial statements were not provided (the public protector says they couldn’t get them because they don’t have money). They must have been eaten by the cows on the farm, which would explain the death of 50-100 cows which Estina has no explanation for.

In the financial statements that were submitted to the Public Protector it appears that a total of R113m had been paid by Estina in operating the project after the department had already paid over a total of R174m. The only invoice that the Public Protector seems to have is one for the purchase of 629 cows for R8.7m. Upon recalculation it was found that the maximum that should have been based on market values of the cows was R3.3m. This essentially proves the allegations that there was inflation of costs that were quoted to the department so they would overpay (classic tactic in business deals entered into with government – the Guptas did the same thing at ESKOM), hence there is no trace of the invoices or any other commercial document of the sort (because they contain the real truth). This then must bring us to conclude that in fact there was money being misappropriated and was being hidden as the cost of equipment and such. What a poor job they did hiding all that though right? They should have hired one of the Steinhoff CAs (SA) so they could find a better way to get away with it, although it’s likely that they would have failed anyway.

Among other things, the Public Protector didn’t investigate how the money paid to Estina was used by Estina because the “Directorate of Priority Crime is dealing with the issue”. Sometimes I think that’s one the reasons our public institutions don’t work, there are so many committees, bodies, departments, and all else that no one knows what the big picture is. So to see what Estina did with the hundreds of millions it got from the Department we must rely on the investigation by Mr. Mradla which is much more useful because somehow he was able to get the bank statements of Estina.

The affidavit by Mr. Mradla says that there were 7 payments from government to Estina (on the bank statements) and not the 6 that the Public Protector was talking about. These totalled R220m (this is after there was an initial R114m paid to start the project as stated above; in other words these were payments to run the project after it had been established).

Those very same bank statements are missing something very important, money that Estina itself was investing into the project which it owns 49% of. They are missing that because Estina only had R9000 to begin with and the money they ever got after the project, came the Free State Department of Agriculture.

On those bank statements, the only money that was paid in operating the project, i.e. money paid for agricultural assets and expenses, amounted to R2.4m. Only R2.4m was used on agriculture but Estina was paid R220m to use! R217.6m was paid by Estina for something else completely. R217.6m could have paid the university fees of 5440 students. That is literally all the students that were enrolled at my Alma Mata! That money was actually paid to a number of businesses that are not agricultural but are investment companies and others, amongst them being Oakbay. Majority of those companies are the same companies that were listed as being in the Gupta network in the case brought against Oakbay for rehabilitation of a site their companies used to mine. So there is no doubt that essentially all the money that was meant to run the Dairy Project, was actually paid to the Guptas. In fact there is even a direct payment of R10m into a bank account owned by Atul Gupta (and he gets to keep it because there was not “enough evidence” to showing it comes from Estina, even though bank statements show this).

If you thought state capture is not real, think again.

  • Kali Khama is a budding CA (SA), and writer. He’s a firm believer in personal growth as a catalyst social change and uses his knowledge and skill to deliver complex information to the common man.