Why an Indian company was chosen for Estina dairy farm project

It was state capture-implicated former Free State agriculture head Peter Thabethe's own research that led the department to go with a foreign company in the establishment of the controversial Vrede dairy farm project.

Thabethe on Thursday explained to the state capture inquiry why the department chose an Indian company, Paras, as a partner in the project. He said the choice of Paras came from his own desktop research into countries excelling at milk production and processing.

Paras partnered Gupta-linked entity Estina to run the project, which cost the Free State government hundreds of millions of rands - most of which was siphoned off into the pockets of the Gupta family.

"I had done research to look at countries that were doing very well in milk production ... the countries that came out were Switzerland, Germany and India. We then compared the systems and models that they use for dairy production and processing. The model we felt came very close to what we were doing was the model in India which was done by Paras," Thabethe said.

"I did the desktop research... It was the type of model they have been using. They have been collecting milk from small producers, Paras will send a tanker to collect the milk and bring it into their facilities for processing.

"That model is the one we envisaged given the situation that we wanted to develop small holding farmers. That is the model that led us to Paras versus other companies."

Last year, Thabethe was arrested with seven others for fraud and contravening the Public Finance Management Act (PFMA). But the charges were withdrawn by the National Prosecuting Authority.

The charge sheet alleged that it was Thabethe who allowed his department to sign a contract with Estina and Paras despite red flags being raised at the inception of the project.

Thabethe's testimony is expected to continue on Friday.