Ruling by the Press Ombud and a Panel of Adjudicators
9 June 2017
This ruling is based on the written submissions of Mr Frans Basson, on behalf of himself as well as Mr Kuben Moodley and LornaVision (Pty) Ltd, and those of Rob Rose, editor of the Financial Mail magazine, as well as on a hearing that was held on 31 May 2017 in Johannesburg. Present at the hearing were Basson and Moodley; Rose and Stephan Hofstatter represented the Financial Mail.
The members of the Panel of Adjudicators who assisted the Ombud were Mahmood Sanglay (media representative) and Peter Mann (public representative).
Basson and Moodley complain about the following articles in the Financial Mail:
· 2 – 8 March 2017, headlined On Report: Parliamentary committee’s findings on mismanagement at the public broadcaster turn the screws on the communications minister and SABC top brass; and
· 9 – 15 March 2017, headlined:
o Double Vision: Among findings of a probe into the SABC’s dire financial state that Parliament is about to act on, are dubious contracts – including one to collect R1.7bn/year in unpaid licence fees awarded to a company with a distinctly convoluted mode of operating;
o Links in the Gupta chain; and
o Good for the collectors (a graph comparing SABC revenue and collection costs of TV licences).
They are also complaining about Links in the Gupta chain, mentioned above, in businesslive.
Complaint
The gist of the complaint is that the:
· articles contained untrue allegations which impelled readers inexorably to the false conclusion that Basson and Moodley, using LornaVision as a vehicle, must have been involved in corruption at the SABC due to:
o their links with the Guptas;
o the absence of a tender process in the contract between the SABC and LornaVision; and
· journalist did not contact the relevant parties for comment.
Regarding the second article, they also complain about a potpourri of issues, including:
· several statements (details below); and
· the sub-headline, the graph, and the publication of a picture of Basson.
The complaints have as common themes the:
· allegation that Hofstatter was in contempt of this office for publishing material then under consideration (involving the same complainants, also with this office – implying that the subject was sub judice); and
· reportage presenting the “opinions” expressed in the State of Capture report by the previous Public Protector as fact.
The reportage, Basson et al say, has caused baseless harm to their reputations, and has led to a significant reduction in income collections.
The Texts
All the texts were penned by Stephan Hofstatter.
The first article analysed the Parliamentary ad hoc committee’s report on the fitness of the SABC board, dated 24 February 2017.
The journalist wrote that Mr James Aguma, then acting CEO of the SABC, had “put in a valiant effort to rebut damning findings made by this committee”.
After saying that the committee found Aguma had signed off on many of the questionable contracts and board resolutions, Hofstatter continued, “These included audit services … that witnesses said should have gone out to tender but didn’t, and a dubious debt collection deal with LornaVision, a firm whose co-director, Kuben Moodley, [had] according to former public protector Thuli Madonsela … business links to Gupta entities.”
The second article continued with this analysis, the bulk of which was devoted to debt collection. According to conservative estimates only a third of South Africans who own a TV set pay licence fees – which reportedly amounted to R1.7-billion in uncollected income per year. Hofstatter stated the SABC spends approximately R1-billion a year to collect R1-billion – “[clearly], there is a dire need to increase licence fee revenue while decreasing collection costs,” the reporter wrote.
However, he continued, LornaVision (who was hired to spearhead the SABC’s new collections initiative), was red-flagged in the ad hoc committee’s reports. He mentioned Basson’s and Moodley’s names in this regard, and stated that the latter had been linked to the Guptas in the State of Capture report by the former Public Protector, Ms Thuli Madonsela.
The journalist added that industry players “cried foul” because LornaVision’s contract had never been put out to tender. Basson was quoted as saying that this was justified as no other company offered the same product.
The sidebar (headlined, Links in the Gupta chain) was about Moodley and his “links” to the “Gupta chain”. The article detailed several such “links”, such as those to Minister Mosebenzi Zwane, the Optimum mine, the Eskom Board, etc.
Correspondence prior to the hearing
The complaint in more detail
Financial Mail
Involved in corruption
Gupta links
Basson says the journalist’s modus operandi was to weave – out of untrue, unbalanced and/or distorted allegations – an argument that the contract between LornaVision and the SABC had been borne out of corruption due to the alleged links to Gupta (whose name has, rightly or wrongly, become synonymous with corruption in the popular media).
However, nowhere did the articles demonstrate that Moodley had ever met or interacted with the Gupta family, let alone that he had business links with the Gupta entities. Hofstatter was fully aware that this was heavily disputed in the matter mentioned above. It was therefore unfair to mention that Moodley had business links with the Gupta family – there is no proof whatsoever to that effect.
Given that, in South Africa, the Gupta name had become synonymous with corruption, this assumed dishonesty immediately created bias in readers’ minds that Moodley was in all likelihood himself a corrupt businessman, Basson says.
He argues, “This is unfair reporting that is devised to influence readers to accept more readily that the sting of the article is true and to be less critical than they might otherwise be as to the remainder of the allegations in it. This is reporting that takes facts out of context. It baselessly seeks to create the impression that LornaVision is possibly – nay, probably – involved in corruption.”
Not put out to tender
Basson says the statement that the contract had been awarded without going to tender in fact implied that the contract was unlawful – he argues most people believe that contracts for services to state-owned companies must be put out to tender, and adds that the implied notion was being reinforced by the further statement that there had been a deviation “from the normal tender processes”.
The article described the contract explicitly as “dubious” – while the publication knew that the agreement was reached in line with a resolution adopted by the SABC Executive Committee (which was above board).
Basson says the mere statement that the contract did not go out on tender falsely created the impression that the contract was unlawfully and clandestinely awarded. This, in turn, led to suspicions of corruption (which, he says, would be the most obvious explanation for the conclusion of an unlawful contract).
He adds that the necessary context was absent because the story omitted to say that LornaVision’s debt-collecting service was unique and far more successful and efficient than those of all the incumbent debt collectors. (He says where a state-owned company wishes to conclude a contract for such a service, and no other entity is in a position to provide it, it is permitted in law to do so without putting the contract out to tender.)
Basson: “Without readers being told this in the article, they are bound to assume the contract was unlawfully concluded. This is clearly a material omission in the article. That is so since it directly impacts upon whether, in the circumstances, there was any likelihood of corruption. This is unbalanced reporting that lacks context and that unfairly creates the impression that the contract is unlawful and is [likely] the result of corruption.”
Regarding the second article in particular, Basson says inter alia that it failed to explain why the head of Legal Services signed the contract if something was indeed amiss.
In arguing that the contract between the SABC and LornaVision was lawful and beneficial to the broadcaster, Basson says:
· LornaVision was the proprietor of the relevant intellectual property rights and no other entity was in a position to provide the SABC with similar revenue-enhancement technologies and methodologies;
· LornaVision approached the SABC to pitch to it the notion of contracting LornaVision to provide the SABC with a service to collect its own debts in a positive and constructive manner during the early stages of debt collection in essence, and to demonstrate to the SABC that its CCS solution is the premier tool for collecting renewal debts;
· The executive committee of the SABC resolved to enter into a contract with LornaVision;
· This resolution provided that the contract did not need to be put out to tender for others to bid for it;
· State-owned companies, like the SABC, were generally obliged to put contracts out to tender before awarding them. However, one of the legally recognised exceptions to this obligation is that a tender process does not need be followed to award a contract where it is impractical to do so (for example, where only one entity is capable of providing the service or product in question);
· This exception applied to the contract in question, since LornaVision was the only entity in South Africa in a position to provide services using a solution as sophisticated as the one it uses; and
· It should therefore be no surprise that the SABC did not put the contract out to tender.
Views not sought; other relevant communication
The first article: Basson complains that FM did not seek his views, or those of Moodley and LornaVision, as it should have. He argues that the text constituted critical reportage, as the (false) impression was created that Moodley and LornaVision were involved in possible corruption. Had Hofstatter obtained their views, “[the] article would then not have been published”, he argues.
The second story: Basson says Hofstatter sent him (acting on behalf of Moodley) a number of questions prior to publication to seek his views, but adds that the journalist asked him the same questions which he had already answered “in absolute detail” on behalf of all the complainants – yet Hofstatter still reported that Moodley did not (materially) respond. He adds that Hofstatter also showed no respect for his privacy and religious freedom by sending him e-mails on a Sunday, expecting an answer.
He adds that Hofstatter never asked the complainants about information presented in the graph (details below) and says, “[E]ven a basic check on the SABC financials published [online] will confirm that it is … false and inaccurate…”
Potpourri in second article: two statements; sub-headline; graph
Basson also complains about:
· The statement that the SABC had paid R2.1-million to LornaVision “to develop a pilot platform for collecting 10 000 renewed licences a month” – he says this was not reasonably true. Instead, he says, that payment was not for a pilot platform, but rather remuneration for LornaVision constructing and implementing its debt-collecting operation platform and cleaning up the entire database at the SABC to comply with the Auditor-General’s requirements within the SABC using CCS. This much is “palpably clear” from the terms of the contract;
· The use of the word “captured” in the sentence stating, “Since its appointment in 2015 LornaVision has, in effect, captured the SABC collections markets, with other industry players crying foul because the contract was never put out to tender.” He argues that the word “captured” has created an association in the mind of the reader of “state capture”, a report to which the journalist referred to in the article;
· The statement in the sub-headline that LornaVision was “a company with a distinctly convoluted mode of operating” was unjustified and unfair in that it left the reader with the impression that LornaVision was a corrupt business;
· The graph showing the collections to be R986-million and collection costs R1.1-billion – which was “completely false”. In fact, in the contract between LornaVision (read together with annexure A) and the SABC, which was in the possession of the journalist, the actual arrears collections and costs are quite clear. “This is a deliberate attempt by the journalist to create a false impression that the collections are running at a loss and is simply not true,” he submits;
· The picture of Basson was published without his permission. FM published this picture in September 2003, headlined SA’s DR DEBT. He says this picture was used in an edited format to which he had agreed – but in the article under complaint the picture was inserted in the format he had objected to in 2003, as it depicted him as a greedy, corrupt person who fitted the narrative of the article under complaint. Basson advised the publication that he did not consent to a picture being taken or published. He says that, since the publication, both he and his family have come under attack with threats of violence; he had to employ security guards to protect him and his family. He adds that this reportage has caused considerable harm to his reputation.
Common themes
In contempt of this office
Basson says that Hofstatter was in contempt of the Ombud’s office for publishing similar material under consideration (involving a complaint against Sunday Times by the same complainants and with the same “sting” – read, “corruption” and “Gupta”) before the Ombud’s office could finalise its adjudication.
For example, he says Hofstatter attempted to build a case that the SABC contract might have been awarded unlawfully – while being fully aware that this was under dispute (in the Moodley vs. Sunday Times matter). He adds, “[As] if [Hofstatter] had no regard for the office of the Ombud he simply repeated a similar article to place LornaVision in a bad light … associating the company with corrupt activities.”
He adds that he requested Hofstatter not to publish any further articles until the matter in Moodley vs. Sunday Times had been finalised by this office – yet, the journalist nevertheless published four more articles.
State Of Capture report
Basson argues that the Public Protector’s report was an opinion – and to quote from it as if it was fact would create a false impression. He argues that Hofstatter should have mentioned that the report constituted merely an opinion.
In conclusion
Basson says, construed as a whole, the reportage constituted false, distorted, unbalanced and injurious gutter journalism, and impelled readers inexorably to the conclusion that Moodley and LornaVision must have been involved in corruption at the SABC.
He adds that this was exacerbated by the fact that Hofstatter was known to readers and was widely held out as an investigative reporter. Upon reading the article, the average reader would, therefore, have accepted that it was the product of the application of proper investigative techniques, including but not limited to testing the evidence underpinning allegations. Unfortunately, he remarks, the journalist’s investigative and journalistic techniques fell far short of what they ought to have been.
He concludes, “The sum [of the reportage] is far more than the sum of the various parts and [the complainants emerge] falsely accused, tried and sentenced.”
Businesslive: Gupta links
Basson mainly repeats the gist of his argument, as documented above.
He says the headline depicted Moodley as being associated with corruption, with a picture of him, and breached the Code in that it created the impression that the latter was personally associated with the Gupta family, or that such a conclusion was somehow related to the story under the headline.
“However, that is not what the article proceeds to say. Nowhere in the article is it demonstrated that Mr Moodley has ever met or interacted with the Gupta family, let alone that he is a link in the Gupta chain by being in business with them. It [also] … fails to link [him] with any dealing or business with the Gupta family.”
Basson says that the gist of the headline was not borne out by the contents of the article. “No case can be made that the headline is nevertheless correct. The contents of the article are clear. The fact that the headline fails accurately to summarise the contents is inexcusable and the journalist knew that the complainants placed all the allegations in this article under dispute in the matter Moodley v Sunday Times, and despite this, continued to publish this article,” he argues.
This creates a false and sensational bias in readers’ minds before they even begin to read the article, he adds.
Basson adds that the mention in passing of Moodley’s name in association with people who were associated with the Guptas was unfair. (The story stated, “Moodley and Pamensky were both directors of another company called BIT Technology.”) He argues that this did not prove “as it is plainly meant to”, that Moodley has ever associated with the Gupta family.
He says that, had the journalist done a proper check with the Companies and Intellectual Property Commission, it would have revealed that Moodley and Pamensky were not directors of BIT at the same time.
Basson also says the text created the impression that LornaVision did not respond to e-mailed questions (he represented that company and answered the questions regarding LornaVision on Moodley’s behalf). The questions the journalist asked in the e-mails were also answered in the matter between Moodley and the Sunday Times, yet the journalist proceeded to ask them again, he adds.
Basson concludes, “The article creates the impression that Mr Moodley and LornaVision are involved in possible corruption at the SABC and that Messrs Moodley and Basson are in business with the Gupta family. However, that impression is not true and a proper appraisal of the facts prior to publication of the article would have demonstrated this. The article would then not have been published.”
Financial Mail responds
The first article: March 2 - 8
‘Critical’, ‘questionable’, ‘dubious’
Rose says one of the statements complained of is that the ad hoc committee and its witnesses were “critical” of several “questionable contracts”, including a “dubious debt collection deal with Lorna Vision”.
The statement, he explains, was based on the report of the ad-hoc committee (available online at
https://pmg.org.za/page/https://pmg.org.za/tabled-committee-report/2898?via=homepage-feature-card), which contains the following summaries of witnesses’ evidence given to the committee, in public and under oath:
“7.2.1: Supply chain management-deviations were approved for transactions which did not warrant the use of an emergency clause e.g. the Lorna Vision contract which was sourced to collect TV license fees. This contract did not meet the requirements of a deviation: for a deviation to apply, it must be proven beyond reasonable doubt that it is a sole source situation or that it would have been impractical to source the goods through other means. Tests are done to verify impracticality or sole source situations. This did not apply to this contract.”
“17.4.1: In his response Mr (Madoda) Shushu (the then head of procurement at the SABC) proposed a number of detailed additions relating to services the SABC had procured from SekelaXabiso, Vision View, Lezaf, Lorna Vision, PriceWaterhouseCoopers, Ms Ayanda Mkhize (a procurement consultant), Mott MacDonald, and Asante Sana. He also provides additional information related to the RFP Book for content acquisition process, and the SABC’s human capital recruitment services.”
“24.5: The Committee has noted information provided by Mr Shushu in his oral evidence and in his response to the Interim Report regarding other transactions that may also be of a questionable nature i.e. the SABC’s contracts with SekelaXabiso, Vison View, Lezaf, Lorna Vision, PriceWaterhouseCooper, Ms Ayanda Mkhize (Procurement Consultant), Mott MacDonald, Asante Sana, the RFP Book content acquisitions, Talent Africa, and Human Capital Recruitment.”
The editor says the journalist accurately quoted these extracts from the report, and argues that the reportage was “entirely substantiated and justified”. He points out that the word “questionable” comes directly from the report, and that the words “dubious debt collection deal” were clearly comment, based on that report.
Rose also notes that the courts have consistently emphasised that robust discussion on matters of public interest will not be curtailed, unless it amounts to one of the recognised limitations of the right to freedom of expression, such as hate speech. In this regard Cameron J observed that “[it] is good for democracy, good for social life and good for individuals to permit maximally open and vigorous discussion of public affairs”. The “questionable” award of a contract to collect revenue for the public broadcaster is clearly a public affair, and the comment at hand does not constitute hate speech, he argues.
Gupta links; status of Madonsela’s report
The editor submits the fact that Madonsela has found that Moodley had business links to Gupta entities was factually accurate and was properly attributed to her State of Capture report.
He calls the argument that this report merely presented opinions and that it was, by implication, unreliable “entirely misguided”.
In any event, he adds, the reports consistently said “according to” the Public Protector – so the public would be in no doubt that this was a finding by the Public Protector and not an objective fact. He adds that the Constitutional Court has found that reports by the Public Protector are binding and enforceable. “The complainants cannot muzzle the media because they disagree with the Public Protector. Instead of shooting the messenger they should take appropriate steps to challenge the report,” he states.
Contract; modus operandi
Rose says Basson’s submissions about the LornaVision contract, how it was awarded, and the company’s license-collection modus operandi are all irrelevant. “The article complained of dealt with the Ad Hoc committee’s report. The complainants are attempting the introduce issues into the complaint that are simply not there,” he argues.
Comment
The editor remarks that the article was an analytical piece that reported accurately and fairly on the parliamentary ad-hoc committee report on the SABC Board, and referred to LornaVision and Mr Moodley in passing only. Moreover, the information contained in the two paragraphs complained of are not new – both the Public Protector and ad hoc committee reports were freely available and have been widely commented on.
He says, “Under the circumstances the Financial Mail was not duty-bound to approach the complainant for comment in this instance. “
The second article: March 9 - 15
Main article
Rose replies it is true that the former Public Protector found that Moodley was linked to the Guptas in that his company Albatime had been involved in the purchase of the Optimum coal mine by the Guptas. “Unless set aside by review, the findings in this report are final and binding,” he remarks. He adds that Mr Moodley’s denial (in the Press Council hearing of his complaint against the Sunday Times that his company, Albatime, had helped fund the purchase of the Optimum mine by the Guptas) had occurred only after publication of the articles. It had, thus, not been known at the time of publication.
The story accurately referred to the final report by the Parliamentary Ad Hoc Committee and quoted from the final ad hoc committee report. It also fairly stated Basson’s response on the evidence given before the committee. The ad hoc committee report was dealt with in detail in an article written by Hofstatter and published the week before the article complained of here.
The story mentioned that other industry players cried foul because the contract with LornaVision was never put out to tender. Later in the story these sources (one named, one confidential) are quoted verbatim. Mr Basson’s response in this regard is clearly stated. The complainants again raise issues that were complained of and rejected in the Sunday Times matter.
Sub-heading
Rose says that the ad hoc committee’s report used the words “transactions … of a questionable nature”. He also notes that this office, in its Sunday Times ruling, found that labelling the contract “suspect” did not constitute a breach of the Code. “We submit that calling the LornaVision contract ‘dubious’ in light of the Ad Hoc Committee report is justified,” he states.
He adds the description of LornaVision’s mode of operation as “distinctly convoluted” was fair and justified in the context of the article and LornaVision’s operations – the word “convoluted” is generally understood to mean complex; complicated; elaborate or intricate, he says.
The editor says almost a third of the complaint is dedicated to explaining the operation of LornaVision, which the complainants themselves describe as “bespoke” and a “unique solution”. A myriad of interlinked entities are involved in this operation – from entities providing funeral cover and grocery vouchers to compliant customers to an entity described by Basson as the SABC’s “alter ego” where he is merely “standing in” as a director. In addition, technical explanations are given as to why the companies are not debt collectors.
“The complicated mode of operation described by the complainants can certainly, as a matter of opinion, be described as convoluted,” he concludes.
Capturing the SABC collections market
Rose says the statement that LornaVision has “captured the SABC collections market” was a description or view based on the facts set out in the story. These facts include the controversy around the contract not having been put out to tender, the exponential extension of the scope of LornaVision’s contract, and the negative impact this has had on other collection firms.
‘Links in the Gupta chain’
Rose replies that, for the sake of proper context, it must be mentioned that the text complained of was not published in isolation. He adds that, identifying and commenting on links between people doing business with the state and the Gupta family were of public interest. Based on the facts set out in the story, it was fair to include Moodley in a “Gupta chain”, he argues.
He says the sidebar detailed several facts which in the publication’s view constituted “links” between Moodley and the Gupta family – for example, with Minister of Mineral Resources Mosebenzi Zwane, the Optimum mine, the Eskom Board, and Mr Mark Pamensky, the former CEO of telecoms firm Blue Label.
Except for the Pamensky link, none of the remaining facts was in dispute, he adds – what seems to be disputed is whether these facts may fairly be interpreted as “links in the Gupta chain”.
Regarding Pamensky the text stated, “Moodley and Pamenski were both directors of another company called BIT Technology.” Rose says that while factually this was correct, Basson states that Moodley and Pamensky were not directors at the same time. The editor argues that this did not render the statement in question false – Moodley sold the company to Pamensky “and thus [he] had a business deal with [him]”.
In any event, Rose continues, the Public Protector’s report was final and binding until ordered otherwise by a court of law. In the interim fair and accurate reportage on the findings in the report, and the inferences one may draw from such findings cannot be suppressed merely because a person mentioned in the report claimed the findings were false. Note also that the Financial Mail did include Moodley’s denials in this regard, the editor adds.
Regarding the argument that the statement in the headline was not reflected in the article, Rose says the article mentioned Basson only in his capacity as the co-director of LornaVision. “The focus of this particular article was not the dealings between Lornavision and the SABC, but rather Mr Moodley’s position in the larger business network associated with the Guptas,” he asserts.
Nevertheless, Basson’s comments in respect of LornaVision’s apparent shared address with Blue Label were sought and accurately reflected in the article.
While the complainants feel that negative inferences may be drawn by linking them to the Guptas, the editor says the publication cannot be held liable for such negative inferences “as the facts reported are true”.
Regarding the complaint about comment-seeking, Rose says that on Thursday, 2 March 2017, (prior to publication) Hofstatter e-mailed Moodley a set of questions – one question related to his disputing of the findings in the Public Protector’s report. However, Moodley failed to respond to any of the questions and the story recorded this in the last paragraph, he says.
When Hofstatter had not received a response, he called Moodley, who then accused the journalist of harassing him and said he would not respond to the questions – in addition to subjecting him to a torrent of insults and verbal abuse, the editor adds.
Hofstatter’s phone battery died halfway through this tirade and as soon as it was recharged, he tried to call Moodley three times, but received no answer. An SMS exchange then followed, in which Moodley threatened the reporter with legal action for “harassment”.
Rose says that, despite Moodley’s unwillingness to engage in any meaningful way on the questions sent to him, his comment obtained on previous occasions relating to the Public Protector’s report was included in the article.
Analysis
Much of what was said at the hearing was already contained in documentation (which is reflected above in the form of a summary). Without endeavouring to echo all the sentiments and arguments uttered at the hearing, the panel now proceeds to put forward the gist of it while considering both the documentation (above) and the hearing (below).
Preliminary Discussion
Sub judice
Basson complained that the FM published articles about the same disputed content which was subject to adjudication by this office in another complaint, arguing that the magazine should have honoured the sub judice-“rule” in this regard (meaning that it should have refrained from reporting on the contested issues).
He argued that the State Of Capture Report by the previous Public Protector was sub judice as well, as the matter had been taken on review – which did not put the document out of bounds for the media, but indeed “raised the ethical bar” whenever a newspaper was reporting on that text.
Rose contested both these arguments.
The panel’s considerations
This office does not have any mandate to prevent the media from publishing content under adjudication. Besides, new developments may be in the public interest, which may necessitate the publication of follow-up articles. Any such attempt by this office would constitute a serious infringement of the right to of freedom of expression.
The panel also does not agree that the ethical bar is raised when reporting on a document under review – instead, the media should be as ethical as ever in such an instance.
Gupta Links
The text in question is in the form of a separate story headlined, Dealmakers: Links in the Gupta chain.
This matter was discussed at the hearing, but not in depth as everyone knew what it was about – the complaint was that Hofstatter’s modus operandi was to weave an argument that the contract between LornaVision and the SABC had been borne of corruption due to the alleged links to Gupta, while the article did not demonstrate that Moodley had ever met or interacted with the Gupta family, let alone that he had business links with the Gupta entities.
The panel notes that the text in question did attribute the “links” to the State of Capture report. Even though it is theoretically possible that this alleged link may not exist, it is true that the Public Protector did make that connection in her report.
That is what the text said – nothing more, and nothing less.
Selective, Unfair, Unbalanced Reporting
The crux of Basson’s complaint is that the reportage was selective, unfair and unbalanced (that it had a “sting” to it, to use his word).
The panel has divided his arguments into two main components in this regard: The reportage on Shushu’s oral evidence (as recorded in the Final Report of the Ad Hoc Committee on the SABC Board Inquiry into the Fitness of the SABC Board, dated 24 February 2017), and the rest, under the sub-heading “Potpourri”.
Reporting on Shushu
Basson noted the following references to Shushu:
· His statement that LornaVision’s contract should have gone out on tender, as it had not been proven beyond reasonable doubt that a sole source situation existed, or that it would have been impractical to source the goods through other means – stating that the contract might also have been “of a questionable nature”;
· The statement by the Ad Hoc Committee that the evidence provided by witnesses was contradictory in many instances;
· The SABC argued that he did not resign, but was suspended for failure to action audit reports and payments to suppliers; and
· The statement that any witness who gave contradictory or misleading evidence must be investigated by Parliament for possible breaches of the Privileges Act, with the aim of criminal charges.
From this, Basson concluded that the reporting was selective, unfair and unbalanced.
Rose denied any suggestion of a “sting” to the articles, inter alia saying:
· Subsequent developments showed that Shushu had indeed been correct;
· Hofstatter quoted Shushu accurately;
· Shushu had left the SABC following a settlement (which was stated in the article); and
· The theme of the story was not positive (“it was not a sunshine story”).
The panel’s considerations
The panel recognises that all journalism on a report is, by its very purpose, selective. It is not the media’s role to repeat or summarise a report, but rather to highlight the newsworthy contents of such a document – which means “selection”.
The question, therefore, is not whether Hofstatter selected some issues (and left out others), but rather if he had done so in such a way that his reportage reflected only a part of the material content of the report, while omitting other material content (which could, of course, lead to a distorted picture – probably with a sting). In effect, the panel seeks to determine if the reportage is unbalanced in such respects, and therefore unfair.
Shushu had the right to his opinion, and the FM, similarly, had the right to quote him. We have no reason to believe that Hofstatter quoted him inaccurately. Therefore, the panel does not find anything wrong, journalistically speaking, with the FM reporting Shushu’s statement that LornaVision’s contract should have gone out on tender and that it might have been “of a questionable nature” – that was his opinion, to which he was entitled.
We say “journalistically speaking”, as – of course – it is not the publication’s role to establish whether Shushu was right or wrong. The FM correctly reported what the head of procurement at the SABC said.
Basson’s arguments about the ad hoc committee’s statement that the evidence provided by witnesses was contradictory in many instances and that witnesses who gave contradictory or misleading evidence should be investigated by Parliament, do not prove anything, as those were general statements which did not refer to Shushu in particular.
The issue of whether Shushu left following a settlement or a suspension is neither here nor there. As far as the panel is concerned, both may have been true – a suspension may easily lead to a settlement.
The panel will remark on the question of whether Hofstatter’s selection of parts of the ad doc committee’s report amounted to unfair and unbalanced reporting (with a sting) at the end of this finding, after consideration of all the other issues.
Potpourri
Basson also objected to some aspects in the main article which, when viewed together, he says again pointed to selective, unfair and unbalanced reporting. The panel concentrates on the more important / material ones:
· LornaVision’s contract was called “dubious” (while that word did not appear in the Ad Hoc Committee’s report, arguing that Hofstatter rather should have referred to contracts that “might” have been dubious – the report, he said, used the word “questionable” which, he argued, was not the same as “dubious”);
· LornaVision was a debt collection company (while it merely provided a platform for debt collection to take place);
· LornaVision was “red-flagged” in the Ad Hoc Commission’s report;
· Moodley declined to be interviewed for this article;
· LornaVision has “captured” the SABC collections market (since 2015);
· Rewards for paying TV licences were offered through the company Axon (while it should have read African Life);
· Aguma “overruled” objections to LornaVision’s contract (while the Exco took that decision);
· The board authorized Aguma to bypass normal procurement processes and award the contract to LornaVision a day after the company had been issued with a tax clearance certificate (while the board’s authorization came a week later, and not a day later);
· The SABC amended LornaVision’s contract to increase the number of licence renewal collections from 10 000 to 330 000 (while figures showed that the number never exceeded 170 999, and its average amounted to 74 590 per month over a period of 17 months and one week, from 31/10/2015 to 07/03/2017);
· Transaction Capital CEO David Hurwitz describing the amendment of LornaVision’s contract as the “start of a gold rush”; and
· The reference to LornaVision as a “convoluted collection scheme”.
Rose defended the use of the word “dubious”, saying that it was FM’s assessment and adding that the difference, if any, between “dubious” and “questionable” was merely semantic.
The editor also questioned Basson’s denial that LornaVision was a debt collection company – it received commission on debts paid, which made it difficult to understand why it should not be called a debt collection company.
He added:
· Basson, in the hearing, admitted that LornaVision had been “red-flagged”;
· Hofstatter did try to contact Moodley, who would not answer his phone after the reporter’s cut out;
· Figures showed that LornaVision had indeed “captured” the SABC collections market;
· Even if Axon did not offer rewards directly, African Life did and was part of the Axon group;
· According to FM’s sources Aguma did “overrule” objections to LornaVision’s contract – which led to Exco taking the decision;
· The statement that the board authorized Aguma to bypass normal procurement processes and award the contract to LornaVision a day after the company had been issued with a tax clearance certificate was wrong;
· The amended contract stated that SABC increased LornaVision’s number of licence renewal collections from 10 000 to 330 000 – even though figures might show that the company did not reach its target;
· The statement that the amendment of LornaVision’s contract was the “start of a gold rush” was attributed to Transaction Capital CEO David Hurwitz; and
· The reference to LornaVision as a “convoluted collection scheme” was justified – if anything, it was convoluted; Hofstatter justified his use of the word “scheme” and emphasised that he did not use the word “scam”.
The panel’s considerations
The panel will comment on each of the bullets above, in the same order.
Dubious: The panel would impede on FM’s freedom of expression if we were to prohibit the magazine from interpreting the news. The use of the word “dubious” is a case in point. What we need to do, is establish whether FM was in breach of the SA Code of Ethics and Conduct as far as this interpretation goes.
Because it is comment, Section 7 of the Code, headlined Protected Comment, becomes relevant. It reads in full:
|
7.1. The media shall be entitled to comment upon or criticise any actions or events of public interest. 7.2. Comment or criticism is protected even if extreme, unjust, unbalanced, exaggerated and prejudiced, as long as it: 7.2.1. expresses an honestly-held opinion, 7.2.2. is without malice, 7.2.3. is on a matter of public interest; 7.2.4. has taken fair account of all material facts that are substantially true; and 7.2.5. is presented in such manner that it appears clearly to be comment. |
The panel takes note of the fact that Basson disagrees with FM’s interpretation – which is his right to do; we also note how close the words “dubious” and “questionable” are in meaning – there may be instances where they are even synonymous.
We also believe that FM has not transgressed any of the five provisions in Section 7.2, as documented above. This means that, even had the magazine’s interpretation been extreme, unjust, unbalanced, exaggerated and prejudiced, the panel has no justification for finding against FM on this issue.
Basson complained about FM reporting that the “dubious” contract had been awarded without going to tender, concluding that this in fact implied that the contract was unlawful – this may or may not be true, depending on the reader. The point is, though, that it is a fact that the contract did not go out on tender. FM cannot be held responsible for negative inferences drawn by the public from a statement which is factually correct (as confirmed by the Press Appeals Panel on more than one occasion).
Debt collecting company: It does not matter how many times Basson denies that LornaVision is a debt collection company, the fact remains that it receives commission on debts collected. To us, this seems to be a mere semantic matter.
Red-flagged: Basson himself stated in the hearing that LornaVision was “red-flagged” in the Ad Hoc Commission’s report. The panel, therefore, has no justification to find for him on this issue.
Declining an interview: By Moodley’s own admission, he called Hofstatter a racist when he phoned him the first time, on the specific occasion relevant here. The journalist’s phone then cut out – and when he called back, Moodley indeed did not answer his phone. The fact that this call was during an inconvenient time for him is irrelevant – in that case, he should have answered his phone and requested the reporter to call at another time.
Capturing SABC’s debt collections market: The panel notes that Basson went out of his way to persuade everybody how unique – and successful – LornaVision was. Given that fact, as well as the job losses in other collecting companies, the statement in question seems fair to the panel.
Axon: The panel accepts that Hofstatter should have referred to African Life instead, but, because the latter was part of the Axon group (a statement by Hofstatter which Basson did not deny), we submit that nothing much turns on this issue.
Aguma overruling objections: The panel has no way of knowing whether this statement is true or false. However, FM did not report it as fact, but as an allegation by sources. The nature of this allegation was such that it was in the public interest to report it – as an allegation.
Awarding the contract a day after LornaVision was issued a tax clearance certificate: This statement was factually incorrect, as the contract was awarded a week later.
Amending contract from 10 000 to 330 000: It does not matter how many licence renewal collections LornaVision has achieved – the text merely referred to the content of the amended contract. In a document, dated 27 May 2016, a division of the SABC resolved that Clause 4 of the LornaVision agreement be amended to increase the number of renewals collected by that company “from 10 000 accounts per month … to approximately 330 000 accounts per month”.
Start of a gold rush: This statement was duly attributed to a credible person, and not stated as fact. Again, the source (Hurwitz) was entitled to his opinion, as was FM to report it.
Convoluted scheme: “Convoluted” simply means “complex” or “complicated”. Given the fact that LornaVision receives commission on debt collection, but is not a debt collection company (according to Basson), the panel also believes the matter to be quite convoluted. The word “scheme” may or may not be interpreted in a negative light; if Hofstatter said it was a “scam”, it would have been a different matter.
Other Matters
SABC’s financials: story, graph
Basson questioned the section dealing with the SABC’s financials in the story “Double Vision”.
It read, “Another bugbear for MPs was television licence collection, a huge source of untapped revenue. By conservative estimates only a third of 10m South Africans who own a television set pay the annual R265 licence fee. That amounts to R1.7bn/year in uncollected income. It also represents a huge opportunity to debt collection agencies, which charge commission for arrears collected. Collection is costly and inefficient. The SABC spends about R1bn/year to collect R1bn in licence fees. Clearly there is a dire need to increase licence fee revenue while decreasing collection costs.”
He submitted that the income in licence fees was approximately R980 000, while collection costs amounted to R301 000.
Basson was also critical of the information presented in the graph, its heading and sub-heading (which read, Good for the Collectors – SABC revenue and collection costs of TV licences).
This graph contrasted the SABC’s revenue with the cost of collection for 2014, 2015 and 2016. The figures were (income first, then collection costs): R928-m vs. R927-m (2014), R913-m vs. R1-bn (2015) and R986-m vs.R1.1-bn (2016).
Basson argued that, if the income figures in the graph depicted:
· total income, then it should have shown approximately R7-billion, as the SABC’s revenue was composed of much more than just the collection of licence fees; and
· income of licence fees only, then it suggested that the collection agencies took nearly 100% in commission – which was exacerbated by the main headline, Good for collectors.
Rose countered that FM has sourced the figures from the SABC’s financials, adding that the graph did not contain a breakdown of revenue (including TV licence fees) or expenditure (including commission), but reflected an overall view.
The panel’s considerations
The panel finds the graphic potentially misleading. It contrasted the total cost of collections of all income (cost of sales) with revenue gained from the payment of TV licences only.
According to Basson, it should either have shown all revenue collected by the SABC (approximately R7-billion) and contrasted that with the collection costs – or it should have reflected the actual costs of collecting TV licence revenue only (according to Basson about R300-million) against the approximately R1-billion of TV licence revenue. Failure to do so left the impression that the SABC’s TV licence revenue was consumed by its TV licence expenditure – and that LornaVision (as the company which had “captured” the collections market) was mainly responsible.
While the panel hastens to assert that we are not auditors, we were persuaded by Basson’s argument that the graph was potentially misleading.
The picture
Basson reiterated his complaint about the publication of his picture (with a cigar in the one hand and money in the other), arguing that he did not give his consent to the FM to use that particular photograph.
The panel’s considerations
If the picture was taken in private, Basson might have had a case. However, he posed for it – and therefore FM did not need his consent to publish that particular image.
Selective, Unfair, Unbalanced Reporting
This issue probably forms the crux of the complaint.
Hofstatter’s reporting was selective, as it should have been – but the panel has found no evidence that his texts were unfair or unbalanced, and neither do we believe that he has omitted any material information relevant to his articles.
General Statement
The panel finds no evidence that Hofstatter has an agenda against the complainants.
FINDING
The graph, its headline (Good for the Collectors – SABC revenue and collection costs of TV licences) as well as the text claiming that the SABC spends about a billion rand a year to collect a billion rand in licence fees, are misleading and in breach of Section 1.1 of the Code of Ethics and Conduct which says, “The media shall take care to report news truthfully, accurately and fairly”.
The remainder of the complaint is dismissed. Such minor inaccuracies as we noted were not material.
Seriousness of breach
Under the headline Hierarchy of sanctions, Section 8 of the Complaints Procedures distinguishes between minor breaches (Tier 1), serious breaches (Tier 2) and serious misconduct (Tier 3).
The breach of the Code of Ethics and Conduct as indicated above is a Tier 2 offence.
Sanction
Financial Mail is directed to correct the information contained in the graph as outlined above, as well as the corresponding information in its headline and text.
The correction should:
· be published:
o on the same page as that used for the offending article;
o online as well, if the offending article was carried on its website;
The headlines should contain the words “correction”, “Moodley” and “Basson”.
Addressing on sanction
Section 5.5 of the Complaints Procedures reads, “At the conclusion of a hearing, and after a Panel has reached a decision, both parties shall be entitled to address the Panel, personally or in writing, on sanctions and, where appropriate, mitigation.”
This section should not be confused with an appeal – it merely gives each party an opportunity to address the panel on the sanction itself. The opportunity to appeal, either the finding or the sanction, remains open for the next seven workings days, as outlined below.
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.
Mahmood Sanglay (media representative)
Peter Mann (public representative).
Johan Retief (Press Ombud)