About this case study: This narrative explains the nature of corrupt activities relating to high-profile cases, and is produced in the public interest. It relies on the final reports from the Judicial Commission of Inquiry into Allegations of State Capture, Corruption, and Fraud in the Public Sector, including Organs of State (the Zondo Commission), court documents, books, investigative journalism reporting, and other media articles, all in the public domain. The ISS has made all reasonable attempts to report the details accurately. Details for the cases in the Zondo Commission reports are provided up to December 2023. Further updates are in the ‘Recent Case Updates’ section below.
Story summary
The Vrede Dairy Project was a public-private partnership between the Guptas’ company Estina and the Free State government, which earned the Guptas R280m in government funds. The project was meant to empower local black farmers, but they did not see any of the benefits.
Mosebenzi Zwane, Peter Thabethe and Ace Magashule allegedly helped the Guptas realise a mega dairy project in Vrede in the Free State by bypassing procurement and supply chain management procedures. Local black farmers, who were meant to benefit from the project, ultimately received nothing. The mismanagement of the farm led to a public outcry, and those who challenged the project were reportedly murdered, attacked or received death threats, while over 100 cows died. Through a complex money laundering scheme, the Guptas allegedly funnelled R280m of public funds into their private accounts, some of which paid for a lavish wedding at the Sun City Resort in South Africa.
InsightISS Analysis
Our key insights on this case
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This account reflects a public-private partnership characterised by state capture, resulting in extreme economic and social harm.
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Lessons for prevention and early intervention.
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Story 01Vrede Dairy Farm Project
It is alleged that Mosebenzi Zwane, Ace Magashule and Peter Thabethe irregularly awarded the Gupta enterprise’s company, Estina, a contract with the Free State government for the mega Vrede Dairy Project. The project was designed to uplift local black farmers and the economy. Estina received a total of R280m from the government and invested only a fraction into the project, leading to the death of more than 100 cows and the demise of the farm. Land was taken from the local farmers, who saw none of the potential profits. Farmers, investigators and individuals in government who spoke out against the project were reportedly killed, assaulted or had their lives threatened.
2008 |
Estina was registered as a company, with its main business recorded as ‘commercial industrial services, sales and support’. |
2010 |
Kamal Vasram, a Gupta associate, was appointed director of Estina. |
2011 |
Zwane, then Member of the Executive Council (MEC) for Agriculture in the Free State, convened a meeting with stakeholders to discuss using flatlands in the Free State for agricultural purposes, in particular cattle. He termed the project the Mohoma Mobung Strategy, meaning ‘plough the soil’ in Sesotho. The plan was to turn parts of the province into ‘agri-centric hubs’ to bolster the local economy. Thabethe was appointed head of the Free State Department of Agriculture (hereafter, the Department). |
2012 |
February: Talks of establishing a dairy project as part of the Mohoma Mobung Strategy began, estimated at a cost of R13m. Thabethe requested a trip to India to conduct research for the project. Magashule authorised this as premier of the Free State, and Zwane requested that Ashok Narayan, an associate of the Guptas, accompany Thabethe. The Department paid for Thabethe and Narayan’s travels despite Narayan not being a government official. March: Narayan was appointed special advisor to Magashule. April: Estina signed a Memorandum of Understanding with VRS Foods Limited Paras Dairy, an Indian dairy company. Estina agreed to act as an agent for one year to look for avenues for Paras participate in dairy projects in South Africa. May: Thabethe met with Rajesh ‘Tony’ Gupta at the Gupta residence in Saxonwold. On the same day, Estina made a formal offer to work with the Department on a dairy project. Estina had remained an obscure company since its inception in 2008, with no experience in the agricultural sector. It only had R16 in its bank account at the time of its proposal. June: The Department nominated Estina as its partner on a mega-project to create a dairy farm and processing unit in an area of the Free State called Vrede, hence the name ‘Vrede Dairy Project’. No budget or business plan had been drawn up, nor had a feasibility study been conducted. Magashule approved the agreement. The 4 400 hectares envisioned for the project was owned by Phumelela Municipality and leased by a group of local farmers for around R1m per year. Zwane, Thabethe, Seipati Dhlamini (Department Chief Financial Officer) and John Motaung, mayor of the municipality, told the farmers that they would be paid off and the new lease would remain at the market rate of R1m per year. One of the farmers, Ephraim Dhlamini, reported that the farmers were instructed to sell their existing cattle, which would be replaced with 10 cows housed at the Vrede farm, as there was not enough space for the farmers’ cattle. He testified that he felt that this was an instruction, not a request. The project was meant to create 150 jobs and benefit 100 local black farmers who would be 51% stakeholders in the investment. It was projected to generate R100m per year. The Department agreed to fund R342m of the project in three equal parts over three years, and Estina-Paras agreed to contribute R228m, bringing the project value to R570m. Estina-Paras would be responsible for managing the operations of the project. The usual procurement procedures were bypassed on the basis that the company had ample experience, technical know-how and international recognition in the dairy business. Appropriate supply chain management procedures were also ignored. July: Provincial treasury made an initial payment of R30m to Estina. Zwane approved the fast-tracked payment. This money went towards the infamous May 2013 Sun City wedding of Vega, the Gupta brothers’ niece. October: Estina’s registration papers were amended to state that its main business was now ‘agriculture’. Zwane went on a trip to India, paid for by the government, allegedly to meet with agricultural ministries and to conduct due diligence on Paras, the Indian partner company. Once there, Zwane allegedly attended a lunch at Tony Gupta’s home (where Narayan was also present), followed by a tour around India paid for by the Guptas. December: The Department officially took the Vrede land belonging to Phumelela Municipality and gave it to Estina rent-free for an envisaged 99 years. This contradicted the MECs’ promise made in June, and the local farmers’ lease was immediately dissolved in favour of Estina’s lease. The municipality derived no benefits from the lease. |
2013 |
February: Moses Chake, who was auditing the Department at the time, was travelling to Vrede to investigate what was happening when he was kidnapped, tortured and killed. Before he was murdered, he had reportedly received threats to his life from someone called Thuto Kanye, who allegedly had connections to Zwane.
March: Elzabe Rockman was appointed MEC of Finance for the Free State. Willie Basson, a farmer working at Vrede, noticed that a shipment of equipment included stainless steel kettles and containers that were rusted and in poor condition. April: The Department merged with another department to become the Department of Agriculture and Rural Development (DARD). Rockman met with Tony Gupta, who requested that the next payment be made to Estina. Almost R35m was paid out about 10 days after this meeting, with another R30m paid out eight days later. May: The Guptas hosted Vega’s wedding at Sun City, which attracted media attention. June: National Treasury received a complaint about the irregular appointment of, and payments to, Estina. Dumisani Cele, Director of Specialised Audit Services in the National Treasury, began investigating the Vrede Dairy Project in partnership with ENS Forensics. August: After repeated attempts, Cele eventually secured a meeting with DARD. Seipati Dhlamini allegedly said to him, ‘Dumisani, the Sotho people are going to kill you’. December: Another R30m was paid to Estina. |
2014 |
By early 2014, the Vrede Dairy Project had attracted considerable media attention for its treatment of cattle. Albert Radebe, a farmer in Vrede, testified to finding 100 dead cattle dumped near a stream that Vrede used for drinking – a result of Estina-Paras reportedly knowing ‘nothing’ about farming dairy cows. Security guards were placed at the farm entrance to prevent people from accessing it. Radebe was allegedly denied access to a state veterinarian for speaking to the media, which led to 45 of his own cattle dying. Basson, another experienced farmer who worked at Vrede, was tasked with burying the dead cattle – he reported that, in his opinion, they had died from malnutrition and starvation. He buried dozens more cattle on two or three occasions after this. Basson testified that several Indian nationals, who were apparently family members of the Guptas and spoke limited English, were running the farm. February: Rockman met with Narayan and Tony Gupta to discuss the media attention focused on the dead cattle. April: It was decided that the Free State Development Corporation should take over the operation of the dairy farm from Estina-Paras. July: Another R30m was paid to Estina. August: The agreement between DARD and Estina was cancelled. |
2015 |
May: Even though the agreement with Estina had been cancelled in August 2014, another payment of R60m was made to Estina. Thabethe argued that Estina deserved this payment because it had met key deliverables. There was little evidence of this and the payments were later classified as irregular. Rockman stated that the money was needed to take care of the surviving cattle. |
2016 |
May: A final payment of more than R46m was made to Estina. In total, R280m in taxpayers’ money made its way from Estina via other companies into the Guptas’ pockets. Only a fraction had actually been invested into the Vrede Dairy Project. |
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The GuptasAlleged misconduct: Used the Vrede Dairy Project to channel R280m in state funds into Gupta-owned companies through Estina – with some of the money used to host the Sun City wedding of Vega Gupta. Deployed several associates at Estina and other entities to manage the finances. Status of accountabilityIn June 2022, Rajesh and Atul Gupta were arrested in Dubai on criminal charges of money laundering and corruption filed against them in South Africa. In April 2023, the Dubai Appeal Court in the United Arab Emirates (UAE) rejected their extradition to face trial in Bloemfontein. The Minister of Justice and Correctional Services has since engaged with the UAE to appeal this ruling. |
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Mosebenzi ZwaneFree State MEC for Agriculture Alleged misconduct: The Mohoma Mobung Strategy that led to the Vrede Dairy Project was the brainchild of Zwane. Instructed Narayan to travel with Thabethe to India to conduct ‘research’ on a trip paid for by the government. Issued the instruction to make an advance payment of R30m to Estina. Status of accountabilityArrested in September 2022 on charges of fraud, corruption and money laundering related to the Vrede Dairy Project. The trial is set to begin in August 2024. In March 2023, Parliament’s Joint Committee on Ethics and Members’ Interests found him guilty of failing to declare trips paid for by the Guptas and being in breach of the ethics code for appointing Gupta associates as ministerial advisors. |
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Peter ThabetheDepartment of Agriculture Head Alleged misconduct: Failed to conduct due diligence on Estina, leading to its irregular appointment. Travelled to India for ‘research’, accompanied by Ashok Narayan, a Gupta associate. Served as Head of the Department of Agriculture throughout the irregular payments to Estina, including after the contract had been cancelled. Status of accountabilityArrested in June 2021 on charges of fraud, corruption and money laundering related to the Vrede Dairy Project. The trial is set to begin in August 2024. |
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Ace MagashuleFree State Premier Alleged misconduct: Supported the Vrede Dairy Project and approved the initial fast-tracked payment. Failed to hold Zwane and Thabethe accountable for the irregular appointment of Estina and the ensuing irregular payments. Status of accountabilityNo charges have been brought against him for his role in the Vrede Dairy Project. The Zondo Commission recommended he be investigated for this. |
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Ashok NarayanSpecial advisor to Ace Magashule and Gupta associate Alleged misconduct: Connected the Guptas with South African politicians, Zwane and Thabethe. Status of accountabilityNo charges have been brought against him for his role in the Vrede Dairy Project. The Zondo commission recommended he be investigated for this. |
Story 02Modus Operandi
Of the R280m the Guptas received from the Free State government, R34.6m was paid to the South African Revenue Service (SARS), R59.5m was paid to Vargafield (Pty) Ltd, a company registered in South Africa and controlled by the Guptas, and R205.7m was paid to Gateway Limited, a company registered in Dubai and controlled by the Guptas. Of the money paid to Gateway Limited, $3.3m was paid to Linkway Trading and $3.35m to Oakbay Investments, both of which are controlled by the Guptas.
In order to hide the flow of R280m, it was made to appear that Estina had other sources of income. Complex money laundering techniques were used to disperse the funds to on- and off-shore accounts and then return the payments to Estina’s accounts. The only income Estina received was R280m from the Free State government, plus around R7m in accrued interest. Yet its financial statements declared income totalling around R880m. The discrepancies were analysed by Shadow World Investigations (SWI) and Open Secrets, which compared the Guptas’ internal financial statements with Estina’s declared financial statements.
For the Vrede Dairy Project, local current accounts with Standard Bank (and later First National Bank), as well as more than 12 fixed deposit accounts and three loan accounts with the Bank of Baroda, were used as ‘parking places’ for funds received from the Free State government. The funds were then divided into smaller amounts and dispersed to several offshore companies. These companies – such as Accurate Investments, Aerohaven, Gateway Limited and Fidelity Enterprise – were shell companies with few or no employees created expressly to facilitate the Guptas’ money laundering schemes. They were located in places like the UAE and Singapore and registered under the names of Gupta associates, including Sanjay Grover and Ronica Ragavan. Ashu Chawla, Chief Operating Officer (COO) of Sahara Systems (a Gupta business), oversaw the finances. Kamal Vasram handled Estina’s accounts in South Africa. Achla Gupta, sister of the three Gupta brothers, was mentioned in the Guptas’ leaked ledgers as a recipient of funds flowing from Estina, as was Shivani Gupta, Ajay’s wife.
Once the offshore companies received the funds, they executed payments back to Estina from the same funds they had received, mixing these dirty funds with small amounts of legitimate funds to create the impression that Estina was being paid for services rendered to these companies. These are standard money laundering techniques called round-tripping and loan-backs. Approximately R584.3m was round-tripped by the Gupta enterprise. Around 96% of Estina’s total income came from the Free State government.
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The GuptasAlleged misconduct: Some of the money laundered from state funds was used to pay for Vega Gupta’s Sun City wedding in 2013. Tony Gupta met with various Free State officials to discuss Estina and controlled the flow of funds to offshore accounts after receiving input from Chawla and Grover. Status of accountabilityIn June 2022, Rajesh and Atul Gupta were arrested in Dubai on criminal charges of money laundering and corruption filed against them in South Africa. In April 2023, the Dubai Appeal Court in the United Arab Emirates (UAE) rejected their extradition to face trial in Bloemfontein. The Minister of Justice and Correctional Services has since engaged with the UAE to appeal this ruling. |
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Kamal VasramEstina director and Gupta associate Alleged misconduct: Opened many bank accounts at the Bank of Baroda and Standard Bank to facilitate the Guptas’ money laundering scheme. Status of accountabilityArrested in February 2022 on charges of fraud and contraventions of the International Trade Administration Act and Exchange Control Act in connection with the Vrede-Dairy Project. The trial is set to begin in August 2024. |
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Ashok NarayanLinkway Trading director and Gupta associate Alleged misconduct: Managed the daily operations of the Vrede Dairy Project and Vargafield. Received large payments from Estina through Linkway Trading and was involved in the Sun City wedding. Status of accountabilityNo charges have been brought against him. |
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Ashu ChawlaSahara Systems COO and Gupta associate Alleged misconduct: Controlled the Gupta enterprise’s finances and facilitated money laundering schemes. Status of accountabilityArrested in February 2018 on multiple charges pertaining to his involvement in the Vrede Dairy Project. He fled South Africa in September 2018 while out on bail. |
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Sanjay GroverGupta accountant, sole director of several Gupta entities and Vargafield; Indian national based in Dubai Alleged misconduct: Facilitated money laundering schemes. Status of accountabilityNo charges have been brought against him. |
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Ronica RagavanAerohaven sole shareholder and Gupta associateAlleged misconduct: Allowed her name to be used in association with Aerohaven. Involved in the Gupta enterprise’s money laundering schemes. Status of accountabilityCharged with fraud, corruption and money laundering in relation to the Vrede Dairy Project. The trial is set to begin in August 2024. |
RecentCase Updates
Latest developments from news sources
- 15 November 2024: Proceedings against Gupta-linked accused Kamal Vasram and Saliesh Indurjeeth were postponed to 18 March 2025 in the Pretoria Regional Court. An investigation conducted by the NPA’s Investigating Directorate Against Corruption and SARS alleged fraudulent and inflated customs clearance values totalling approximately R37.7m. These values were allegedly submitted for a pasteurisation plant imported from India. The investigation further claimed that the plant was declared as new when it was allegedly second-hand. Gateway Limited, linked to the Guptas, allegedly invoiced Estina for importing a pasteurisation plant in the UAE. The accused are out on R10 000 bail each.
- 7 August 2024: The Vrede Dairy case was struck off the roll by Free State High Court due to unnecessary delays. The NPA confirmed that it intends to reinstate the case as soon as possible.
Public Impact
Zwane and Thabethe promised 100 local emerging black farmers that they were entitled to 51% shareholding in the Vrede Dairy Project and new cattle. These promises never materialised. The farmers were forced to sell their cattle and the land they had been leasing was taken from the local municipality by the provincial government and given to Estina rent-free for 99 years.
Philemon Ngwenya
(Photo: Alaister Russell/The Sunday Times)
Philemon Ngwenya, a local farmer, was murdered in October 2018 after allegedly receiving death threats from Thuto Kanye and a group working with him. He was a whistleblower in the Democratic Alliance’s application to the High Court to have Busisiwe Mkhwebane’s report on Vrede reviewed. Kanye reportedly has connections to Zwane.
Albert Radebe
(Photo: NSPCA)
Albert Radebe spoke out against the project and was assaulted and pepper sprayed by Thuto Kanye and others. After finding 100 dead cows at Vrede and reporting it to the media, Radebe was allegedly denied access to a state veterinarian, which led to the death of 45 of his own cattle.
Moses Chake
(Photo: www.r2k.org.za/)
Moses Chake, who was auditing the Department of Agriculture, was kidnapped, tortured and killed on his way to investigate the scandal. He had reportedly previously received death threats from Thuto Kanye.
Dumisani Cele
(Photo: Seipati Dhlamini by Mlungisi Louw)
Dumisani Cele reportedly received death threats from the Department’s CFO, Seipati Dhlamini, when he went to investigate Vrede on behalf of the National Treasury.