Ruling by the Press Ombud
18 September 2018
Particulars
Complainants: Brimstone Investment Corp. Ltd; Messrs Takula Tapela and Iqbal Khan, Ms Tiloshani Moodley (who all form part of the executive management and / or Brimstone’s Board).
Lodged by: Cliffe Dekker Hofmeyr Inc.
Date of article: 17 June 2018
Headline: Top executives set to score in BEE front companies – Brimstone trio in line for fishing rights worth millions
Page: 10
Online: Yes
Author of article: Caiphus Kgosana
Respondent: Susan Smuts, internal ombud
Complaint
The gist of Brimstone’s complaint is that the article falsely / misleadingly / unfairly / without substantiation stated as fact that the:
It adds that the:
Brimstone asks for a finding that the reportage amounted to a Tier 3, or at the very least a Tier 2, offence. It says a prominent apology, retraction and corrections, are needed in both publications.
The text
The story said that top executives of Brimstone Investments, a JSE-listed company, had been doubling up as directors of black empowerment front companies used to score fishing rights potentially worth billions.
Kgosana reported that managing executive Takula Tapela, COO Iqbal Khan, and company secretary Tiloshani Moodley of Brimstone were also directors of a consortium that had partnered with Sea Harvest – a Brimstone-owned company and one of the largest empowered companies in its sector – to secure fishing rights from the Viking Fishing Group.
The National Certificated Fishing and Allied Workers Union (NCFAWU) reportedly opposed the deal, which had received the green light by the Department of Agriculture, Forestry and Fisheries (DAFF).
The arguments
Not in dispute
The following statements seem not to be in dispute:
It therefore seems safe to say that Brimstone had interests in at least three of the four consortium members.
It is also trite that complaints were lodged with the DAFF and the Competition Commission regarding the acquiring of fishing rights from Viking, who both dismissed it, and that a complaint about the same matter before the Competition Tribunal was pending.
Fronting
BRIMSTONE complains that the article accused it of having contravened the BBBEE Act 53 of 2003, which criminalises “fronting practice”, and is punishable by a hefty fine and / or imprisonment of up to ten years.
The company devotes umpteen pages to explaining why it cannot rightly be accused of fronting. The gist of its argument is that it cannot be fronting if one BBBEE entity supplies governance to another company that is also BBBEE compliant.
Going into more detail Brimstone says “fronting” was a complex issue, and an honestly held view of this matter should involve a factual enquiry of a variety of facts – which the article failed to present.
The company says the problem seems to have originated with the newspaper’s source. While it is prepared to accept that NCFAWU’s lawyer, Mr Richard Brown (whom the article quoted), and other representatives opined that there was fronting (and anti-competitive behaviour), the newspaper appears to have adopted this view as fact, instead of treating this matter with circumspection.
It concludes, “The reasonable reader would conclude that [Tapela, Khan and Moodley] are lending their names and BEE credentials (and the name and BEE credentials of Brimstone) to front for white interests in SAFEC.”
SMUTS replies that Brimstone has misconstrued the meaning of the article.
She says in terms of the Act, “fronting practice” means an arrangement or conduct that undermines the objectives of economic transformation by, for example, appointing black people as a front for a white-owned business in order to secure business. She argues that this boils down to deceitful conduct by white businessmen, misrepresenting the ownership of the business in order to gain from deals they would otherwise be excluded from.
The internal ombud submits that the article did not make a case that Brimstone or its associated companies were in fact white-owned, while fraudulently claiming to be black-empowered. “The story has nothing to do with race and nothing to do with a ‘fronting practise’ as defined in the BBBEE Act. The interpretation advanced by the complainants is irrational and untrue,” she asserts.
Instead, she says, the fronting allegation raised in the article was intended, and understood by reasonable readers, to mean that Brimstone was using other entities as a front, in order to benefit from a deal meant to benefit others.
Smuts also emphasises that the story quoted the union’s lawyer in this regard, and adds that Brimstone’s denial was also reported at length.
BRIMSTONE replies that reasonable readers know what the term “fronting” means in the present South African social and economic context. It is the misuse by corporations of individuals to act as token BEE representatives for companies run by other persons. Such an accusation has serious consequences for those so accused.
The company also maintains that reasonable readers would have understood that the trio were guilty of deriving substantial economic benefits to which they were not entitled.
Analysis
The newspaper’s defence rests on the argument that the article did not accuse Brimstone of “fronting” as described in the Act, and neither would reasonable readers have understood it in that way.
As that was not the publication’s intention, the crux of the matter becomes the question how reasonable readers would have understood the use of the term “fronting” in the article.
Firstly, I am focusing on the use of the word “front” or “fronting” in the article, before evaluating the story in its context:
The first quotation, which was the introductory sentence to the article, stated as fact that Brimstone’s executives were directors of “black empowerment front companies”. When read in conjunction with the headline, where the words “BEE front companies” were also used, the reasonable reader could have understood this to mean that fronting, in the sense of the Act mentioned above, was the issue.
At that stage, the intelligent reader might have wondered what kind of fronting was at stake – the one mentioned in the Act, or merely the use of other entities as a front for the transaction. I somehow doubt if the average reader would have pondered the same issue.
Then came Brown’s accusation that Brimstone was “really just fronting”. It is important, as far as context is concerned, at what stage in the story this comment was published – as indeed, the perception that fronting was the issue (and not merely the use of other companies in that process) could have been strengthened by this specific quotation. The question, therefore, was: Would the reasonable reader have understood this accusation in the former, or in the latter context?
I keep in mind that the newspaper’s intention is one thing, while a perception or an understanding of its reportage might be quite another.
So then, this is how the article unfolded, after the introductory statement:
Then Brown’s accusation was published.
I do not believe there was enough evidence in sentences 2 to 7 to obliterate the impression created by the headline as well as the introductory statement to convince reasonable readers that the issue was not fronting, as prohibited in the Act.
Moreover, the reporting of Moodley’s denial, later down in the story, that Brimstone was using any individual “to front as black empowerment components in respect of the transaction with Viking” merely served to strengthen the reasonable impression that the issue was indeed “fronting”, in the sense of the Act. Why report such a denial in the first place, if it was not the issue?
I can also understand Smuts’s argument – the case before the Tribunal clearly was not about fronting (read: race), but about competition. To quote Brown again, as one example: “This is going to create a monster, it’s going to be too big. If what we understand is correct, they will control upwards of 40% of the hake market, let alone other species. We are just putting too many eggs in that one basket.”
But these issues were reported low down in the story, and I do not expect reasonable readers to have changed their mind about fronting at this particular stage.
In the end, then, when weighing up both sides of this matter, I believe that reasonable readers would have had enough reason to believe that “fronting” was the issue – even though that might not have been the newspaper’s intention. Perceptions are realities, and unfortunately the way in which the story was written and presented, the newspaper’s reportage was likely to be misunderstood.
Personal enrichment: ‘billions’
The introductory sentence to the story read: “Top executives of a JSE-listed company are doubling up as directors of black empowerment front companies used to score fishing rights potentially worth billions.” The sub-headline also referred to “billions”.
BRIMSTONE complains that the accusation of personal enrichment (to the tune of “billions”) was false, misleading, unfair and without substance, saying there was nothing in the article that supported it.
The company says the “top executives” who were set to “score” billions were natural persons (unlike a consortium, that is not a juristic person and does not have directors). This means that “the reasonable reader would understand this to mean that these top executives would make money.”
SMUTS says it was factually accurate that Brimstone’s top executives were “doubling up” as directors of the empowerment partners who had been set to score fishing rights.
She submits: “[However], this does not mean and would not be understood to mean that the directors themselves would secure the rights (and personally would hold shares in the companies of which they were directors). In the context of the story, the meaning is clear: Brimstone, through the appointment of its executives to empowerment partners, allegedly stands to benefit from the fishing rights.”
The internal ombud adds: “To remove any doubt whatsoever, Moodley’s uncontradicted comment that she and Khan were directors of Sea Vuna only because of Brimstone’s indirect shareholding in Sea Vuna, dispels any notion that they personally stand to benefit from the company. So too does Moodley’s explanation about Tapela and Kahn’s directorship in SAFEC,” she says.
Regarding the headline, Smuts argues it is trite that reasonable readers do not read headlines in isolation (as has been confirmed by the South African Supreme Court of Appeal). “Having read the article itself, readers would not be under the impression that Moodley, Khan and Tapela stand to personally benefit from the deal,” she asserts.
BRIMSTONE replies it is difficult to understand how a reasonable reader could interpret the sub-headline and the wording of the opening paragraph to mean anything other than what it contends. It says the meaning that the newspaper attempts to put on these words is “simply unsustainable as a matter of plain English”.
The company says the newspaper’s response conveniently glosses over the fact that the article, read in context of the headline, sub-headline and article, mentioned alleged beneficiaries by name.
Analysis
Let me take a closer look at the introductory sentence that read: “Top executives of a JSE-listed company are doubling up as directors of black empowerment front companies used to score fishing rights potentially worth billions.”
Of importance, is Smuts’s concession about the headline and sub-headline (see below), boiling down to her saying that the words “top executives” (who were “set to score in BEE front companies) should have been replaced with “Brimstone”.
That being the case, it follows that the opening sentence should also not have referred to “top executives” in the same breath as “potentially worth billions” – instead, the reference should have been to Brimstone.
As it stood, the focus of the sentence in question was the “top executives” (who were involved in a transaction potentially worth billions), and not Brimstone. If this was wrong in the headline, it was also wrong in the body of the article.
Anti-competitive behaviour
The article said NCFAWU had raised its opposition to the deal, based on the concern that it had been approved without consultation and competition. However, both the DAFF and the Competition Commission reportedly had approved the deal, while the matter was still pending at the Competition Tribunal. The story further stated that, if the latter approves the merger with Viking, the merged entity will control approximately 40% of South Africa’s hake market.
BRIMSTONE complains that the newspaper should not have published the union’s objections to the alleged anti-competitive nature of the deal, and submits that it has adopted the views of the source as fact (stating, or suggesting, this allegation as fact).
The company argues that anti-competitiveness is a complex matter. It says the wish to foster competitive business practices in South Africa gave rise to the promulgation of the Competition Act 89 of 1998 that inter alia potentially calls for enquiry into market power, restrictive business practices, and the abuse of market dominance.
In this case, the article “presented no underlying facts which indicate … anti-competitive behaviour”, it submits.
SMUTS says the story made it clear that the:
She also denies any conflation between fact and opinion and argues, “Readers understood that there is a dispute before the Tribunal about the alleged anti-competitive nature of the deal.”
She inter alia comments that the union was seemingly complaining that the deal would benefit a big player like Brimstone more than small fishing enterprises, and adds that the union has raised these concerns in several forums. She also argues that the newspaper was entitled to report on this matter, as it was in the public interest.
Analysis
The complaint that the newspaper should not have published the union’s objections to the alleged anti-competitive nature of the deal does not have any legs to stand on, even though that union might have represented only a small percentage of those concerned.
I also have no reason to believe that the journalist has adopted the views of the source as fact, as the text consistently ascribes the accusations as allegations.
Brimstone’s shareholding in Sea Harvest
BRIMSTONE complains the article inaccurately stated that it had an 85% interest in Sea Harvest.
SMUTS admits this was wrong, and accepts that that figure was 54.9%. However, she says nothing turns on this. “The point made in the article is that Brimstone holds the controlling share in one of the consortium members. That remains true. The mistake does not, as claimed by the complainants, mislead the reader in any material respect,” she argues.
BRIMSTONE replies it is not true that “nothing turns” on this error and argues that the error gave readers a skewed conception of the company. It admits that it was a majority shareholder, but argues that the newspaper’s exaggeration of this figure has lent greater credence to the allegation of fronting / anti-competitive behaviour.
The company also emphasises that such a basic error merely highlighted the fact that the journalist did not do enough to ensure that his article was accurate. This should have been easy, as the correct shareholding was available from its website.
Analysis
The statement that Brimstone had 85% interest in Sea Harvest, instead of 54.9%, was incorrect.
Headline, sub-headline
These read: Top executives set to score in BEE front companies – Brimstone trio in line for fishing rights worth millions.
I have already dealt with Brimstone’s complaint against these statements, as well as with Smuts’s defence.
In addition, though, SMUTS does concede that both the headline and the sub-headline did not reasonably reflect the content of the article. She says that, with the wisdom of hindsight, it might have been better for the headline to have read, “Brimstone set to score through BEE front companies”.
She tenders a correction and an apology for these matters.
BRIMSTONE replies that this response by the newspaper proves that its complaint is justified.
It says: “It is the headlines which capture the reader’s attention, and which guide the reader’s perceptions when reading the balance of the article. Many readers do not read more than this in glancing through a newspaper. Instead of reasonably reflecting the content of the story, the headline and sub-headline rather provided the reasonable reader with [the] publication’s view of the content of the article.”
Analysis
I accept Smuts’s offer for an apology in this regard, but for the reasons that I have spelled out above, and not for the one she proffers. I do not believe that the headline was faulty because it has not properly reflected the content of the story – on the contrary, I believe that the headline was faulty because it has properly reflected the text that was to follow.
If the body of a story creates a false and unfair implication, the headline would follow suit if it reflects that very same implication.
Insufficient time for comment; not properly reflected
The complaint is that the journalist did not:
Insufficient time
BRIMSTONE says Kgosana sent his email on June 15 at 11:07 to Moodley, requiring a response by 10:00 the following day.
The company submits:
SMUTS points out that the reporter sent ten questions to Brimstone and set a deadline for a response approximately 23 hours later. She argues the company did not claim that it was prejudiced by such a deadline at the time; it also responded in writing to all the questions before the deadline expired.
BRIMSTONE replies that it was obliged to provide answers on very short notice, or to face publication without its position being put forward at all. It adds that Smuts does not explain why it was necessary or appropriate to place it under such a time deadline, given that the allegations levelled against Brimstone had been in the public domain for some time.
Analysis
The newspaper gave Brimstone 23 hours to respond. Given the number and nature of questions, I do not believe that the timeframe was unfair – unless, of course, Moodley’s situation was such that she was not able to timely respond.
If that was not possible, she should have objected at the time. She did not do so, though – and, in fact, she did respond in time. For that reason, I cannot blame the newspaper for not waiting to publish the story in its next edition.
Material issues not asked
BRIMSTONE says Kgosana asked for comment on his conclusions, but not on the complex underlying facts.
One such question, for example, was the accusations that Brimstone was using the trio to front as black empowerment components of the deal, and that that was not legal. This shows, the company says, that the reporter merely put “the conclusion of fronting” to Moodley.
It says Moodley responded by giving a reasonably detailed response (given the time permitted), in which she denied the conclusions – and at least partially gave sufficient information which obliged the reporter to question, as a factual conclusion, whether there was indeed either fronting or anti-competitive behaviour.
Brimston also argues that the need for vigilance was heightened (and not abated) by the factual input from Moodley. It says she put up sufficient information – at least – to cause the journalist to doubt even further the accuracy of his information.
The company adds that the journalist did not raise the issue of personal enrichment in his queries, and neither did he ask about its background.
Analysis
I cannot agree with Brimstone’s general complaint that Kgosana only asked for comment on “his conclusions”, and not on the complex underlying facts – he asked about the union’s accusations, as was his right and duty. Nowhere in his list of questions did he make any substantial statement of fact.
It is also not true that the reporter did not ask about personal enrichment – he did so, quite explicitly, in his fifth question (in which asked how much shares “the trio” would gain from the consortium).
The journalist, in fact, had asked about every material issue that he reported on.
Comments not properly reflected
BRIMSTONE says that the newspaper was “obliged meaningfully to observe the principles of audi alterem (sic) partem” – and complains that the article was apparently unaltered by Moodley’s response. It submits: “The only reasonable explanation for this is that the article was written with a view to publishing it in the same tone it had been prepared, irrespective of any comment from Moodley on behalf of Brimstone.”
The company says that “audi” is a word form in the imperative, which means, “listen”. It does not mean to fire off a list of questions and then proceed to ignore the responses that did not suit the journalist. It also precludes the critical error of taking the unsubstantiated views of its source, adopting them as its own, and then (in conflict with the factual input that he had already received) present those as fact.
It argues that Kgosana’s inquiry was nothing more than a pretence of compliance with the Press Code, following its letter, but not its spirit.
Even worse, Brimstone says Moodley’s comment was manipulated in such a manner to cast aspersions on the company’s response.
Turning to details, the company says the article:
Brimstone says the reasonable reader would conclude that Moodley’s input did not satisfy the concerns about fronting, and that Brimstone and its trio of directors could not meaningfully rebut the allegations of fronting.
SMUTS replies that Brimstone’s comment was extensively covered in the story.
BRIMSTONE replies that Smuts has attempted to place a post-publication “spin” on the meaning of the article that no reasonable reader would have even considered when reading it.
While the article did mention “vehement denials” by the company, it failed to consider or accurately fully represent why denials were made as set out in the detailed response to the email dated 15 June 2018 provided by Moodley.
It denies that its response of Brimstone was “extensively” covered – the quoting of a few sentences from a thorough and detailed response does not render the comment “extensively covered”.
The company concludes that the article quoted NCFAWU and Brimstones’ representatives, but presented the latter in such a manner which would cause the reasonable reader to have gained a negative impression of the response. An example of this, it says, is the suggestion that Moodley was concealing the identity of the union’s shareholders for nefarious reasons.
Analysis
It is true that the article did not reflect all of Moodley’s responses. That, in itself, is normal journalistic practice – given the limitations of space, a newspaper usually reflects the gist of the response, and often leaves out information that is not material to the issue reported about.
The question, therefore, is not if Sunday Times has omitted some responses, but rather how material were such omissions.
Having compared Moodley’s responses with what Kgosana has published, I am satisfied that he did cover the more material issues, such as her responses about fronting and anti-competitive behaviour.
However, the journalist did not report that:
Having potentially created the misunderstanding that Brimstone was accused of fronting, in the sense that it was illegal, it was especially necessary to have reported that:
Regarding the accusation of personal gain, the journalist should also have reported that:
Dignity, reputation
BRIMSTONE says the reportage goes against the very core of its ethos, spanning 23 years, of transparent and effective transformation of the South African economy. It says it prides itself, and is known nationally and internationally, as one of the beacons of successful and responsible empowerment.
“Allegations such as these not only infringe on [our] dignity and reputation … but also are highly defamatory and may have wide reaching consequences for the [company], and [our] shareholders.”
SMUTS denies this, and asks this office to dismiss the complaint (with regards to the article).
Analysis
As reasonable readers would have had enough reason to believe that “fronting” was the issue, as well as that the trio stood to gain billions of rands, it follows there was a real possibility that both Brimstone’s and the trio’s reputation and dignity might have unnecessarily suffered due to the reportage.
Finding
Fronting
Reasonable readers would have had enough reason to believe that “fronting” was the issue. This impression, whether intended or not, was in breach of Section 1.1 of the Press Code that says: “The media shall take care to report news truthfully, accurately and fairly.”
Personal enrichment: ‘billions’
Reasonable readers would have had enough reason to believe that the “trio”, and not the company, were set “to score fishing rights worth billions”. This impression, whether intended or not, was in breach of Section 1.1 of the Press Code.
Anti-competitive behaviour
This part of the complaint is dismissed.
Brimstone’s shareholding in Sea Harvest
The statement that Brimstone had 85% interest in Sea Harvest, instead of 54.9%, was in breach of Section 1.1 of the Press Code.
Headline, sub-headline
The reference to “top executives” in the main headline, and to the Brimstone “trio” in the sub-headline, were in breach of Section 1.1 of the Code.
Insufficient time for comment; not properly reflected
Insufficient time
This part of the complaint is dismissed.
Material issues not asked
This part of the complaint is dismissed.
Comments not properly reflected
Given the real possibility that reasonable readers would have believed that fronting was the issue, the newspaper should have reported that:
Given the real possibility that reasonable readers would have believed that the trio stood to gain billions of rands, the newspaper should have reported that:
Dignity, reputation
The reportage about fronting and personal gain for the trio unnecessarily tarnished Brimstone’s and the trio’s reputation and dignity. This was in breach of Section 3.3 of the Press Code that states: “The media shall exercise care and consideration in matters involving dignity and reputation.”
Seriousness of breaches
Under the headline Hierarchy of sanctions, Section 8 of the Complaints Procedures distinguishes between minor breaches (Tier 1 – minor errors which do not change the thrust of the story), serious breaches (Tier 2), and serious misconduct (Tier 3).
The breaches of the Press Code as indicated above are all Tier 2 offences, save for Brimstone’s percentage shareholding in Sea Harvest, which is a Tier 1 offence.
Sanction
Sunday Times is directed to apologise to Brimstone and to the trio for:
The newspaper is reprimanded for getting Brimstone’s shareholding in Sea Harvest wrong.
Sunday Times is directed to include in the text Moodley’s statements in her response that:
The correct percentage of Brimstone’s shareholding in Sea Harvest should also be mentioned.
The newspaper is directed to publish the apology:
The text should:
Appeal
The Complaints Procedures lay down that within seven working days of receipt of this decision, either party may apply for leave to appeal to the Chairperson of the SA Press Appeals Panel, Judge Bernard Ngoepe, fully setting out the grounds of appeal. He can be contacted at Khanyim@ombudsman.org.za.
Johan Retief
Press Ombud