Land Bank vs. Bulletin

Wed, Feb 29, 2012

Ruling by the Deputy Press Ombudsman and two members of the Press Appeals Panel

March 25, 2011

This ruling is based on the written submissions of Mr Musawenkosi Mchunu, Head of Marketing and Communications of Land Bank, and the Bulletin newspaper, as well as on a hearing that was held on March 22, 2011 in Johannesburg. Mchunu represented the Land Bank; the Bulletin (based in Tzaneen) was represented by Mr Francois Aucamp, Managing Editor. The two members of the Press Appeals Panel who assisted me were Susan Smuts (press representative) and Brian Gibson (public representative).

Complaint

Land Bank (LB) complains about a story in the Bulletin, published on July 30, 2010, and headlined Land Bank scandals revealed in ‘secret’ report.

The complaint is that:

LB was not asked for comment prior to publication; and
The headline does not reflect the content of the story.

The following sentences are also said to be factually incorrect:

The current CEO’s “reluctance to act against corrupt officials, political intervention, and fraudulent practices such as the forging of signatures in the Polokwane and Tzaneen branches of the bank, caused the public and especially potential clients to lose faith in him.”
“Close ties with a faction in the ANC seem to be the only criteria for appointment…”
“The Bank’s main focus is currently to persecute a few Mafisa farmers and this is seen as an attempt to shift the focus from ‘their rotten underbelly’.”
“…more that R3 billion…that the bank cannot account for.”

Analysis

The story is about a report (the Ncame Report) following an “independent investigation” regarding problems at the LB. This report was “kept secret”, but the newspaper announces that it is lifting the lid “of a can of worms”.

The article says that agriculture minister Lulu Xingwala fired LB chief financial officer Xolile Ncame because he forwarded a dossier compiled by him to the bank’s external auditors, Ernst & Young. The LB’s board members then reportedly decided to address the allegations and chairperson Themba Langa was said to appoint audit firm Pricewaterhouse-Coopers to investigate. Xingwala then reportedly immediately fired Langa as well.

We shall now consider the merits of the complaint:

Land Bank not asked for comment

To the LB’s complaint that it was not asked for comment prior to publication, the Bulletin says:

that it was not necessary to do that as the story was based on a “forensic report” – “especially since the matters addressed in our report have, by Land Bank’s own admission…been extensively covered in the media.”
the fact that forensic report regarding this matter had been handed over to investigating authorities made this case sub judice. LB, the newspaper argues, most likely could not or would not have stated its side of the story prior to publication.
that it had scrutinized approximately 30 articles and news clips and had looked at video material of sessions of the Parliamentary Portfolio Committee, including SCOPA, on the matter “where Land Bank acknowledged massive losses due to fraud and corruption”.

We shall consider each of these three arguments:

Firstly, Art. 1.5 of the Press Code states that the subject of critical reportage should “usually” be asked for comment. However, when a newspaper reports on e.g. a judge’s finding, it usually does not ask the parties for comment – the views of the parties are already contained in the finding.

Upon close scrutiny, it however becomes clear that a large part of the story is not based on the leaked report, but provides background information as well as comment. For example: “His (the LB’s) reluctance to act against corrupt officials…caused…potential clients to lose faith in him.” And: “Close ties with a faction in the ANC seem to be the only criteria for appointment…” And: “The bank’s main focus is currently to persecute a few Mafisa farmers…”

I asked the newspaper for clarification on this issue. My question was if, in light of the above-mentioned examples, it still insists that it was not necessary to ask the bank for comment. Surely, at least as far as these examples are concerned, the bank’s response should have been sought.

The newspaper’s explanation was not satisfactory.

The newspaper’s sub judice argument now refers. The LB asks: “If the submission of the forensic report to the investigating authorities renders the issues contained therein ‘sub judice’ how did the Bulletin publish the contents thereof?”

To this, the newspaper responds: “…if it is sub judice for the LB it is not necessarily sub judice for the media.”

But: It was not for the newspaper to decide that the matter was sub judice and whether or not the LB would comment – it was up to the bank to make that decision.

The Bulletin’s third argument is irrelevant and, in fact, misleading – it seems to pre-suppose that the more information a newspaper gets, the less obligation it has to ask the subject of reportage for comment.

At the hearing, Aucamp said that the local branch of the LB was not authorized to give comment. He argued that he thought it was going to be a waste of time to approach the LB’s Head Office, based on its inability to respond to queries over the last three years or so. “I have given up,” he told the panel.

Mchunu denied any knowledge of such enquiries.

Be that as it may, the newspaper was under an obligation to ask the LB for comment – some serious allegations were made and it was unfair not to try and solicit the bank’s views.

Misleading headline

The complaint is that the headline creates an impression that new scandals were to be revealed in the text below, whereas the “scandals” were legacy issues of close to three years ago.

The box underneath the headline (Land Bank scandals revealed in ‘secret’ report) is also relevant. It reads: “Bulletin managed to obtain a copy of a sensitive report about problems at the LB. It has been kept secret, but today we can lift the lid of a can of worms and bring you this special report”.

The Bulletin says it did not create an impression that it is revealing something new – it says it did “rather the opposite”. The newspaper says it merely stated that it had an opportunity to look at a “secret” report that confirmed the allegations and speculation about fraud and corruption at the Bank. The newspaper also says that as the majority of its readers do not have access to national newspapers and magazines, the story in a sense therefore was “new news” to them.

Art. 5.1 of the Press Code says: “Headlines…shall give a reasonable reflection of the contents of the report…in question.”

The newspaper’s argument is sound: Nowhere does the headline or the text in the box say or imply that “new” scandals were to be revealed, only that (old) scandals in the report was going to be brought to the fore. When the story is read as a whole, the only reasonable conclusion is that the headline indeed reflects the content of the story.

At the hearing, Mchunu said that the story created an impression of a second report – which he says does not exist.

However, from a reader’s perspective the newspaper is correct – it merely stated that it was privy to a “secret” (Ncame) report regarding allegations about fraud and corruption at the LB which the newspaper had obtained. The question of how long this report was kept secret, and therefore how “new” the news was, is irrelevant. The point is that the content of the report was now first revealed.

Mchunu argues that the existence of the report has already been well publicized and it was therefore not “secret”. The use of quotation marks in the headline makes it clear that the newspaper has interpreted that the content of the report has been kept “secret”.

We now turn to the sentences that are alleged to be factually incorrect:

The current CEO’s “reluctance to act against corrupt officials, political intervention, and fraudulent practices such as the forging of signatures in the Polokwane and Tzaneen branches of the bank, caused the public and especially potential clients to lose faith in him.” (our underline)

This part of the complaint turns on the allegation that the CEO was “reluctant” to act against corrupt officials.

The LB denies this – on the contrary, it says the current CEO publicly indicated that the bank had worked closely with the police and the prosecuting authorities. The bank adds that the sentence does not contain any factual information, neither does it provide context to the alleged fraudulent activities and forged signatures in the two branches.

The Bulletin says the matter of the alleged forged signatures was established in an internal investigation, conducted by senior bank officials against two bank employees. The newspaper says that under cross examination Mr John Gallant, the bank’s sales manager in Polokwane, admitted that he and Ms Makosasana Hlengwa had falsified a police officer’s signature – this, it says, was confirmed by a police officer. During the same investigation it was revealed that an affidavit by Ms Karen Selzer, Head of Sales, “contained falsified signatures on pages 1 and 2”.

Bulletin concludes that the bank did not take any action against either of them.

To this, the LB says that Gallant admitted to signing an affidavit – but was unaware that Hlenga had later, on her own admission, forged a police officer’s signature on the affidavit. Hlengwa had later resigned and Gallant remained in the employ of the LB because he had done no wrong.

The panel is not in a position to decide whether or not the CEO indeed was reluctant to act.

However, at the hearing Aucamp did not convince the panel that it was reasonable to make the claim as a statement of fact.

The panel also finds the LB’s argument reasonable, namely that the CEO publicly indicated that the bank had worked closely with the police and the prosecuting authorities; and, indeed, a number of prosecutions had followed the “clean up” at the LB.

Also: Before making serious allegations such as the ones in question, the newspaper should have asked the CEO for his comment.

“Close ties with a faction in the ANC seem to be the only criteria for appointment…”

This allegation is levelled against the Tzaneen manager of the LB, Mr Francis Khumalo.

LB complains that there is no substance to the above-mentioned allegation. The bank adds that this also goes for the allegation that the manager organized a mass stay-away against a bank-funded pilot project.

The bank adds that the newspaper must disclose who in the ANC influenced the bank regarding this appointment, as well as whom in the LB made this appointment. The LB stresses that it does not require the newspaper to disclose its sources – only the relevant players in this matter.

Bulletin says it bases the disputed allegation on an independent report (not the Ncame Report) that states that “never in the history of the Land Bank had such unbridled political interference occurred”. The newspaper mentions three other reports which it says all substantiate the allegation. On the stay-away, Bulletin says a number of farmers and farm workers will testify about the political nature of the stay-away. It adds that a video recording of stay-away confirms the presence of Khumalo.

The question is whether the newspaper had sufficient evidence to make such a claim.

At the hearing, Aucamp explained that claim was meant as comment or opinion, and that the phrase “seem to be” is evidence thereof.

The panel felt that Aucamp’s opinion was not supported or substantiated by facts. Even if the head of the local LB branch is involved with the ANC, it still does not logically follow that “close ties with a faction in the ANC” played any role in Khumalo’s appointment (which was some years before Aucamp arrived at the Bulletin); or that such a political affiliation is “the only criteria for appointment” (to the LB).

“The Bank’s main focus is currently to persecute a few Mafisa farmers and this is seen as an attempt to shift the focus from ‘their rotten underbelly’.”

LB says this statement is untrue, as the bank has repeatedly indicated publicly that the case had been referred to the investigating and prosecuting authorities who have taken the decision to prosecute.

Bulletin argues that this accusation has to be understood in the context of the story as a whole – certain investigations seem to have been shelved or are taking longer to uncover, while others seem to have been rushed. The newspaper says the quick arrest of the Mafisa “offenders” (nobody else has been arrested or charged at the time of the article) looked rather suspicious within the context of the investigation into the LB’s affairs as a whole.

The first part of the sentence in dispute is a statement of fact, while the second part of the sentence could be seen as comment or opinion.

Although the panel has accepted Aucamp’s word that he meant the entire sentence as a comment, the first part in question still was not “made on facts truly stated or fairly indicated and referred to” (Art. 4.2 of the Press Code).

“…more that R3 billion…that the bank cannot account for.”

The complaint is that this allegation is completely untrue.

Bulletin says that when the then Finance Minister Trevor Manuel took over the task of overseeing the LB’s affairs, the bank’s CEO Alan Mukoki was accused of granting loans worth R1.1 billion to organizations (that had nothing to do with agriculture). The newspaper says the bank then sought R2 billion from the Government to keep it afloat. Later Manuel’s successor Pravin Gordhan agreed to underwrite R3.5 billion in loans to the bank.

The newspaper continues: In addition to this loan, there were several other issues (a loan to Guilder Investment 10; and the announcement by Cabinet spokesman Themba Maseko that more than R2 billion had been siphoned off by LB officials) that resulted “in an overall acceptance of the fact that the Bank could not account for R3 billion”.

It adds that Ministry of Agriculture and Land Affairs spokesman Godfrey Mdhluli said in a statement that reports in the Sunday Times and Mail & Guardian referring to R2 billion and R3 billion respectively were inaccurate but that he did not reveal the precise amount.

Bulletin’s argument is flimsy – it is not clear how the newspaper came to a figure of R3 billion “unaccounted for”. Bulletin itself says that Mdhluli denied that the Bank could not account for R3 billion. At the very least that denial should have been published; also the reasoning that led the newspaper to come to that conclusion.

This is aggravated by the following words and exclamation mark between brackets in the last sentence of the story: “…more than R3 billion (yes, three billion rand!) that the bank cannot account for.”

At the hearing, Aucamp referred the panel to the fact that Gordhan “agreed to underwrite R3,5 billion in loans to keep the Bank running”.

The panel is of the view that Bulletin has confused the amount allowed by Treasury to recapitalize the LB with money allegedly misappropriated.

The panel therefore felt that the phrase in dispute is speculative and unsubstantiated.

Finding

Land Bank not asked for comment

The newspaper should have asked the LB for comment – the story made some serious allegations and it was unfair not to try and solicit the Bank’s views. This is in breach of Art. 1.5 of the Press Code that states: “A publication should usually seek the views of the subject of serious critical reportage in advance of publication…”

Misleading headline

The headline merely states that the newspaper was privy to a “secret” (internal) report regarding allegations about fraud and corruption at the LB which the newspaper had obtained. The question of how long this report was kept secret, and therefore how “new” the news was, is irrelevant. This part of the complaint is dismissed.

Aucamp did not convince the panel that it was reasonable to make the statement in dispute (which is stated as a fact, without verification); the panel instead found the LB’s argument reasonable, namely that the CEO publicly indicated that the bank had worked closely with the police and the prosecuting authorities.

Also: Before making serious allegations such as the ones in question, the newspaper should have asked the CEO for his comment.

This is in breach of the following articles of the Press Code:

Art. 1.1: “The press shall be obliged to report news…fairly”;
Art. 1.4: “Where there is reason to doubt the accuracy of a report and it is practicable to verify the accuracy thereof, it shall be verified. Where it has not been practicable to verify the accuracy of a report, this shall be mentioned in such report.”
Art. 1.5: “A publication should usually seek the views of the subject of serious critical reportage in advance of publication…”

“Close ties with a faction in the ANC seem to be the only criteria for appointment…”

The statement in question clearly was Aucamp’s opinion, but it was not supported or substantiated by facts. This is in breach of Art. 4.2 of the Press Code that states: “Comment by the press…shall be made on facts truly stated or fairly indicated and referred to.”

“The Bank’s main focus is currently to persecute a few Mafisa farmers and this is seen as an attempt to shift the focus from ‘their rotten underbelly’.”

Although the panel has accepted Aucamp’s word that the sentence is based on his interpretation of events, he has not offered it as such which is a breach of Art. 1.3 of the Press Code that states: “Where a report…is founded op opinions, allegations, rumour or suppositions, it shall be presented in such a manner as to indicate this clearly.”

It is also in breach of Art. 4.2 of the Code: “Comment…shall be presented in such a manner that it appears clearly that it is comment, and shall be made on facts truly stated or fairly indicated and referred to.”

The panel and Mchunu accepted Aucamp’s assurance that the phrase “rotten underbelly” did not refer to the LB’s new management, but to the bank’s legacy that still needed to be sorted out.

“…more that R3 billion…that the bank cannot account for.”

The reference to this amount probably should have referred to money set aside to recapitalize the LB, rather than to money that was “not accounted for”. This is in breach of Art. 1.1 of the Press Code: “The press shall be obliged to report news truthfully, accurately and fairly.”

General comment

The panel notes the concluding statement by Aucamp to the effect that he may well have based his article on an emotional interpretation of events at the LB over many years. He explained that it was an attempt to capture the frustration of his readership, mainly farmers, who felt that they had been let down by the LB. His willingness to make amends for any breaches of the Press Code is appreciated.

Sanction

Bulletin is directed to apologise to both the Land Bank and the then CEO for not asking for their comments prior to publication.

The newspaper is directed to retract the following statements, namely that:

close ties with a faction in the ANC seem to be the only criteria for appointment;
the LB’s main focus was to persecute a few Mafisa farmers; and
the LB could not account for more than R3 billion.

The newspaper is reprimanded for stating that the CEO was reluctant to act against corrupt officials without providing verification or evidence.

Bulletin is directed to prepare a summary of this finding for publication and to furnish the panel with the text prior to publication. This article should first mention the transgressions before mentioning the parts of the complaint that was dismissed. The last sentence should read: “Visit www.presscouncil.org.za (rulings 2011) for the full finding.”

Appeal

Please note that our Complaints Procedures lay down that within seven days of receipt of this decision, anyone of the parties may apply for leave to appeal to the Chairperson of the SA Press Appeals Panel, Judge Ralph Zulman, fully setting out the grounds of appeal. He can be reached at khanyim@ombudsman.org.za.

Johan Retief (Deputy Press Ombudsman)

Susan Smuts (Press Representative)

Brian Gibson (Public Representative)