Investing in the Free State Development Corporation (FDC) is a bad idea for any investor looking for ethical returns or responsible stewardship of resources. Over the years, the FDC has become a symbol of financial mismanagement and deep-seated capture. Its inability to fulfil its mandate and the series of scandalous events surrounding its operations have not only crippled the Free State’s economic potential but also resulted in previous investors being short-changed. With an intellectually bankrupt leadership, an inept board, and the current and overaged CEO Kgotso Tau, the FDC is an institution that should be avoided by anyone considering investment. The Free State Development Corporation was established with the noble goal of promoting small, medium, and micro enterprises (SMMEs) and cooperatives, managing government properties, and facilitating economic growth within the province. However, from the outset, the corporation has failed in nearly every aspect of its mandate. Instead of fostering local businesses, it has repeatedly been at the centre of political and financial scandals that have crippled the province’s economic development. One of the most glaring examples of this failure is the Vrede Dairy Project, which the FDC took over from the Gupta-linked Estina company in 2014. The project, which was meant to uplift local farmers, instead saw millions of rands siphoned off to fund extravagant events, such as the Gupta wedding, while legitimate beneficiaries were sidelined. Recent reports have further exposed the FDC’s mismanagement. In February 2019, business tenants participating in the FDC’s “Rent-a-Desk” programme were abruptly given 28 working days to vacate the premises, breaking the terms of their contracts that stipulated 40 to 80 working days’ notice. This decision came amidst allegations that the FDC was in financial ruin and struggling to maintain its operations. It is clear that under the current leadership, the FDC is incapable of meeting the needs of the businesses it was supposed to support. Instead of empowering small businesses, the corporation has become an obstacle to economic development, alienating potential investors and failing to provide the services it promises. Furthermore, the FDC has been embroiled in various corruption scandals over the years. High-ranking political figures, including former Premier Ace Magashule, have been linked to questionable deals involving FDC properties. For example, Magashule’s daughter was allegedly given preferential treatment, enabling her to acquire FDC properties through a questionable deal with Shell, which resulted in millions of rands flowing into her pocket. These deals, involving large sums of public money, have further discredited the FDC and demonstrated its failure to act in the public’s best interest. Rather than supporting development, the FDC has been used as a tool for political enrichment. The FDC’s troubles with financial oversight go beyond misappropriated funds and unethical deals. The corporation’s handling of loans and financial management has been equally troubling. One of the most notable examples of this was when the FDC helped secure a R15 billion loan for South African Airways (SAA) in 2015, at the behest of Dudu Myeni. This loan was arranged through an entity called Grissag, which offered a lower interest rate, but it remains unclear how such a significant financial transaction was managed and whether it was in the best interest of the Free State. The lack of transparency and accountability in these dealings raises serious questions about the FDC’s competence and integrity. Despite these numerous scandals, the leadership of the FDC has largely avoided accountability. The board, which is supposed to oversee the corporation’s activities and ensure it functions within legal and ethical guidelines, has consistently failed to take responsibility for the organisation’s numerous failings. Instead of addressing the core issues, such as financial mismanagement and corruption, the board has shown little interest in making meaningful reforms or holding those responsible accountable. This lack of responsibility has resulted in a leadership vacuum within the FDC, further undermining its ability to contribute positively to the province’s development. At the heart of the FDC’s current dysfunction is the CEO, Kgotso Tau, whose tenure has been marked by a series of missteps. The institution is intellectually bankrupt, unable to confront its past and implement the necessary changes to move forward. The leadership’s failure to address these issues speaks volumes about the FDC’s long-term viability and its inability to deliver on its promises. Moreover, the land issue in the Free State is a critical part of the broader problem. The province has vast tracts of underutilised land, which could be used for agricultural and economic development. Yet, the FDC has done little to facilitate land reform or productive land use for local farmers. Instead of helping to empower rural communities and support local agriculture, the corporation has been involved in controversial land deals that have benefited politically connected individuals rather than the people who truly need assistance. By failing to address the land issue effectively, the FDC has missed a crucial opportunity to promote sustainable development and address the needs of the Free State’s most vulnerable populations. In light of these ongoing issues, it is clear that investing in the FDC is a risky and unwise decision. The organization has consistently failed in its core mandate, becoming embroiled in corruption and financial mismanagement instead of fostering economic growth. Its leadership is disjointed and intellectually bankrupt, incapable of addressing the deep-rooted problems that have plagued the FDC for years. Investors who have already poured money into the FDC have been short-changed, with funds misdirected toward political enrichment rather than the development of the Free State’s economy. For any potential investor, the risks of investing in the FDC are far too great. The organisation is in dire need of reform, but its leadership has shown no inclination to make the changes necessary to restore confidence. Until the FDC is held accountable and subjected to a complete overhaul, further investment into this institution should be avoided. Previous investors have already paid the price for placing their faith in an organisation that has failed them, and any future investments would likely suffer the same fate.
Themba HLOPHE is an activist and commentator. He is a DUT graduate.
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