Mpande Property Fund Manager; Sibusiso Luthuli vs Business Maverick


Thu, Jul 2, 2020

Particulars

Complainants: Mr Sibusiso Luthuli, a chartered accountant, is a former CEO and principal officer of the Eskom Pension and Provident Fund (SPPF), and is currently the CEO of Mpande Property Fund Manager (Mpande); and

                          Mpande an asset management company that focuses on investments in unlisted property in South Africa

Complaint number: 7818

Lodged by: Bowmans Gilfillan Incorporated

Headline: Untangling a conflict of interest at the Eskom Pension and Provident Fund” (1 March 2020); and

                : Updated article, by the same headline (4 March 2020)

Author of article: Ruan Jooste

Respondent: Tim Cohen, editor

  1. Complaint                                            

1.1 In general, the complaint is about allegations of serious misconduct and of a conflict of interest arising during Mr Sibusiso Luthuli’s employment with Eskom Pension and Provident Fund (EPPF), or during a cooling-off period that was triggered by the termination of his employment.

1.2 In particular, Luthuli complains that the following statements, conclusions, and/or innuendos in the articles were unjustified:

  • “… Luthuli was doing business with the investment arm of the fund…”
  • “… a clear conflict of interest…”;
  • “… in contravention of the cooling-off period stipulated in the fund’s code of conduct”;
  • “… [Luthuli’s] contract was not renewed…”;
  •  “… vested interest…”;
  • “… CEO of Mpande Property Fund Manager since June 2018”;
  • “[Mpande] has only three directors…”;
  • “…Luthuli is a director at [TPE]…”;
  • “[Mpande] … is in the process of being deregistered”; and
  • “Luthuli did not respond to requests to be interviewed.”

1.3 He also complains that Business Maverick (BM):

  • refused to apologise for, and to remove the article; and
  • has caused huge damage to his and to Mpande’s reputation.

1.4 He asks this office to order BM to remove the article and to publish a full apology, in a form acceptable to him and to Mpande.

1.5 Sections of the Press Code complained about are:

1.1: “The media shall take care to report news truthfully, accurately and fairly”;

1.2: “The media shall present news in context and in a balanced manner, without any intentional or negligent departure from the facts whether by distortion, exaggeration or misrepresentation, material omissions, or summarization”;

1.3: “The media shall present only what may reasonably be true as fact; opinions, allegations, rumours or suppositions shall be presented clearly as such”;

1.8: “The media shall seek, if practicable, the views of the subject of critical reportage in advance of publication…”

1.10: “The media shall make amends for presenting inaccurate information or comment by publishing promptly and with appropriate prominence a retraction, correction, explanation or an apology on every platform where the original content was published, such as the member’s website, social media accounts or any other online platform; and ensure that every journalist or freelancer employed by them who shared content on their personal social media accounts also shares any retraction, correction, explanation or apology relating to that content on their personal social media accounts; and

3.3: “The media shall exercise care and consideration in matters involving dignity and reputation…”

  1. The texts

2.1 Jooste reported that Luthuli had been doing business with the investment arm of the EPPF and stated that that had constituted a clear conflict of interest. He wrote this rumour, which has been “flying for years”, was “no longer only a rumour”.

2.2 The updated version inter alia added that:

  • Trinitas Private Equity (TPE) confirmed that the EPPF’s investment into TPE was R50-million, and this investment was made on 1 March 2010 – a month before Luthuli joined the EPPF;
  • there was a link between TPE and Luthuli through a different company, Trinitas Property Partners (TPP) which shared a director with Mpande; and that Luthuli was the initial director of that company which was formed on 7 November 2018, shortly after he left the EPPF;
  • according to the Fund, Luthuli was not, nor ever had been, a director of TPE; and
  • there was no reprimand or recourse in retirement regulation – the cost of complacency, incompetence or collusion was carried by the members of the fund.

2.3 At the end, Jooste wrote, “An earlier version of this story incorrectly stated that Luthuli was a director of Trinitas Private Equity. Apologies for the error.”

2.4 The following statements were inter alia removed in the updated version:

  • That Luthuli was a director at TPE; and
  • Records from the EPPF investment committee show that they rejected three proposals Luthuli tried to push through during his tenure, namely investments in the Waterberg Coal Project, the Regiments Property Development fund and the Harith Pan African Infrastructure Fund.
  1. The arguments

3.1 Doing business

3.1.1 The introductory paragraph, also called a blurb, to both articles read, “Rumours have been flying for years that … Luthuli was doing business with the investment arm of the fund… It is no longer only a rumour.”

3.1.2 Affirming that he breached no law and no ethical standards “at any time or in any manner”, Luthuli denies that he ever did business with his employer whilst employed, or for 18 months thereafter. He adds that all of his business interests were at all times fully disclosed in writing to the EPPF during his employment, and submits that the article did not provide any evidence that he was guilty of anything.

3.1.3 He says the original article purported to provide confirmation of those rumours via links to TPE. He says that such confirmations were removed from the updated article after TPE made some representations. “No further confirmation remains but the defamation was repeated in the updated article,” he submits.

3.1.4 He says the Fund, in the exercise of its investment discretion and in accordance with its investment mandate, has, as of November 2019, invested in TPE, a property holding company focusing mainly on retail and residential investments, with an extensive existing property portfolio. As is customary in the private equity industry, the investment was coupled with the right to a seat on the board of directors of TPP – and he has taken up this directorship. He denies that TPP has any investment or other economic interest in TPE.

3.1.5 Cohen says nobody disputes the fact that Luthuli is doing business with the EPPF. “How can this be ‘false?” he asks.

3.1.6 The editor notes that Luthuli’s company does not have an FSCA licence. “He can, of course, get one within two years, but really should the EPPF be bending over backwards in this way to provide an investment mandate to someone without a licence? The EPPF claims that it was aware of the possible conflict (inadvertently affirming our whole thesis) and consequently that a special process was undertaken before deciding on this mandate, but refuses to provide the documentation. Is it really inappropriate in this context to be suspicious about this transaction?” he asks.

3.1.7 Luthuli replies the issue is not if he was doing business with EPPF – the issue is the (false) allegation that he was doing so whilst employed by EPPF, or during a formal cooling-off period.

3.1.8 He submits that EPPF typically recruits from within the financial services industry and competes with the industry for skills. “Similarly executives and professionals who work for EPPF are likely to join or establish service providers in the sector when they leave EPPF. Given the enormous size of EPPF, it does business with most of the asset managers and service providers in the sector. Mr Cohen seems to be suggesting that when EPPF employees leave EPPF they are precluded from working for new employers who do business with EPPF,” he remarks.

3.1.9 He adds that EPPF is but one of a number of investors that have backed Mpande, and states that all of the steps taken by EPPF were prudent, reasonable and in line with what could be expected of a responsible corporate citizen addressing a situation where a commercial conflict of interest existed or could be perceived. The concept of a juristic representative is both normal and contemplated by statute, he adds.

Analysis

3.1.10 Firstly, the issue in dispute is not if Luthuli did business with EPPF, but when it happened.

3.1.11 Jooste wrote that the “rumours have been flying for years” (my emphasis). If that be the case, it must have overlapped with Luthuli’s tenure as CEO at the EPPF – he had left the latter’s employ in March 2018. My reading of the article(s) is that that was exactly Jooste’s intention.

3.1.12 This interpretation is supported by the statement that this business was “in contravention of the cooling-off period”. However, if Luthuli is to be believed, he has not done business with the EPPF before September 2019.

3.1.13 They cannot both be right.

3.1.14 If BM disputes the article said or implied Luthuli’s business activities with the EPPF took place while he was CEO, or during the cooling-off period, then it needs to explain why these business activities were “suspicious”.

3.1.15 Secondly, in the blurb Jooste wrote, “It is no longer only a rumour.” Near the end of his article, Jooste concluded, “So, it is no longer only a rumour.” The rumour, according to the reporter, became fact – it was true that Luthuli did business with the EPPF while in its employ, or at least during the cooling-off period. But how did Jooste justify that conclusion?

3.1.16 Only, the reporter did not justify it – there is no direct reference to Luthuli’s business activities while he was in EPPF’s employ. If the reference to Luthuli’s activities in TPE did (indirectly) refer to his tenure at EPPF, it was no longer the case in the updated version.

3.1.17 Also, there is no indication of when the cooling-off period actually ended. (Besides, in his response to the Fund’s “stipulation” of the cooling-off period in its code of conduct, Cohen admits BM was at fault – see below.)

3.1.18 Having stated that the rumour has become fact, the onus was on Jooste and BM to prove that Luthuli had been involved in business activities with the EPPF during his tenure as CEO, or during the cooling-off period. Such proof is important, as the allegation is serious and damning. However, no such proof was forthcoming – neither in either of the articles, nor in Cohen’s response to the complaint lodged with this office.

3.1.19 My response to Cohen’s question if it is “really inappropriate in this context to be suspicious about this transaction” is simple: Of course it is not inappropriate. But that is not the point. The problem is that the investment transaction was juxtaposed onto Luthuli’s past as the CEO of the EPPF.

3.1.20 In conclusion, then, the statement that Luthuli was doing business with the EPPF is accurate. That is not in dispute. However, when interpreted in context, as it should be, it became unfair because it suggested that he had been doing business with EPPF while he was the Fund’s CEO or during the cooling-off period – without putting any proof on the table to justify the impression that something untoward was happening at the time.

3.2 Conflict of interest

3.2.1 The story said, “Rumours have been flying for years that … Luthuli was doing business with the investment arm of the fund, despite it being a clear conflict of interest … It is no longer only a rumour.” A photograph of Luthuli was published in-between this statement and the headline.

3.2.2 Luthuli says that TPE, “the subject of the alleged conflict of interest” in the article, has raised:

  • no capital from EPPF during his tenure as CEO, or subsequent to his departure; and
  • capital from EPPF prior to his appointment, and prior to him having any involvement with the Fund.  

3.2.3 He argues that, for there to be a conflict of interest there have to be, by definition, competing interests. The conflicts alleged in the article are a conflict between his duties and his personal business interests. “Once [my] employment ceased and a suitable sterilisation period had passed, [I] no longer had any duty to EPPF that could be in conflict with [my] own business interests and by definition there can be no conflict of interest as alleged,” he submits.

3.2.4 He concludes that, factually, no conflict of interest “could therefore possibly exist”.

3.2.5 Luthuli says the publication of his picture created the impression that he had been engaged in unethical or illegal behaviour, in conflict with his duties to his employer – while eighteen months had elapsed before EPPF invested in the Fund. Moreover, he adds, it did so not only after complying with its standard investment processes, but also after additional precautions were taken as highlighted in the Eskom press release.

3.2.6 “Well, talk about a narrow construction!” Cohen remarks. “The conflict is that beneficiaries of the fund want their money to be handled by any of the literally hundreds of professional property managers out there, not by someone who is part of the fund’s buddy network. This is not to cast aspersions on Mr Luthuli’s business or investment acumen, but to make the claim that there was nobody better to handle this property portfolio other than the former CEO is just patently absurd,” he argues.

3.2.7 He asks if Luthuli is seriously arguing that it was not a “conflict of interest” that a former CEO got a huge wodge of cash to invest by his former employer. He argues, “Even if it’s not ‘a conflict of interest’ it’s distinctly unethical, whatever the ‘cooling off’ period was or is or should be.”

3.2.8 He says from the enormous number of responses he got from the beneficiaries of the fund, they did not think this was an arms-length transaction. He asks it if was legitimate for a former CEO, out of a field of dozens of other property fund managers, to get a R350-million cash infusion a mere 18 months after he departs his post after working there for a decade.

3.2.9 Luthuli replies Cohen does not put forward any evidence to suggest that EPPF invested only in Mpande or that “dozens” of other managers tried and failed to solicit an investment. He also denies that a “wodge of cash” was transferred. “Rather, a commitment was made and will be drawn down by the Fund to pay expenses and make investments, as and when needed. Until then, the funds committed remain firmly in the EPPF bank account.”

3.2.10 He argues that, even if there was a commercial conflict of interest, this was not unlawful and it happens often in business. “What is key is how the conflict is managed, and it was up to EPPF and not [me] to do so,” he submits.

3.2.11 He says EPPF ensured that the investment in Mpande was subjected to enhanced corporate governance and that the valuations underlying the EPPF investment were the subject of independent third party confirmation. He adds that attorneys were appointed to look after its interests in negotiating the fund agreements.

3.2.12 Luthuli says Cohen’s allegation that a “buddy network” exists is unsubstantiated, and the statement that he was part of such a network and obtained business as a result thereof is “extremely offensive”.

3.2.13 “The investment was certainly not handed out as a favour. It is to be noted, though, that given the lack of transformation in the asset management industry, retirement and pension funds like EPPF have transformation policies in place to support new and emerging credible Black asset managers like Mpande. This is socially and economically desirable as a way to address past injustice and to build an inclusive economy,” he concludes.

Analysis

3.2.14 Cohen’s argument is about the legality or the morality of EPPF’s investment in Mpande. Surely, that should not be in dispute – the media have the right, and in fact the duty, to ask such questions. But again, that is not the issue.

3.2.15 As stated above, Jooste’s mistake was to link this transaction with “rumours (that) have been flying for years”. That created the impression that there indeed was a conflict of interest – while there is no evidence of any untoward business while Luthuli was the CEO or during the cooling-off period, and while the transaction in question took place 18 months after Luthuli had severed his links with the EPPF.

3.2.16 But the reporter went further. Consider this statement, “…despite it being a clear conflict of interest”. This, again, is a statement of fact, not an allegation – in which case the reportage (being hard news) needs proper justification. Why, the reasonable reader would wonder, would it be true that the business Luthuli was doing with the EPPF constituted a conflict of interest? Where is the proof?

3.2.17 The headline also depicted a “conflict of interest” as a fact.

3.2.18 I also note that Cohen does not dispute Luthuli’s statement that TPE has raised no capital from EPPF during his tenure as CEO, or subsequent to his departure, and also no capital from EPPF prior to his appointment, and prior to him having any involvement with the Fund.

3.2.19 This strengthens my belief that BM has indeed not presented any proof that Luthuli had been doing business with EPPF while being its CEO, or during the cooling-off period.  

3.2.20 Luthuli is also correct in arguing the mere fact that he was involved in EPPF should not prevent him from doing business with the Fund in future. Let the media ask as many questions as they like in this regard – but let them operate within the ethical boundaries as set out in the Press Code.

3.2.21 Given these scenarios, I have no option other than to decide the opinion, stated as fact, that Luthuli had been involved in a “clear conflict of interest” was untruthful, inaccurate, unfair and unsubstantiated.

3.3 Cooling-off period

3.3.1 Jooste reported Luthuli’s business activities with the EPPF’s investment arm was “… in contravention of the cooling-off period stipulated in the fund’s code of conduct.”

3.3.2 Luthuli says the EPPF’s code of conduct does not contain a “cooling-off” period. “In practice a cooling off period of six months is applied, but this is not legislated or contracted,” he says.

3.3.3 Cohen concedes that “there is actually no formal cooling-off period at all, but a kind of informal one”. He adds, “It strikes me that the article could and should be corrected to explain this issue more clearly. We remain happy to do so if we can get specific clarity on the current situation and the history of this clause.”

Analysis

3.3.4 Cohen has admitted that the EPPF’s code of conduct has no formal cooling-off stipulation, as stated in the story. In other words, thereportage on this issue was inaccurate.

3.4 Contract not renewed

3.4.1 The articles stated Luthuli had been the CEO of Mpande “… just after his contract was not renewed with the … EPPF…”

3.4.2 Luthuli says the reason why his contract was not renewed was because he elected not to do so. He adds that “no negative inference can be drawn from the non-renewal, as is implied by the Article”.

3.4.3 Cohen does not respond to this part of the complaint.

Analysis

3.4.4 The statement in dispute is factual, and there is no automatic negative inference to be drawn from it, as suggested by Luthuli.

3.5 Vested interest

3.5.1 Jooste reported, “But why this vested interest (in TPE) is yet to be disclosed … is not yet clear.”

3.5.2 Luthuli denies any “vested interest” in TPE. He says he has never been a shareholder or director of TPE, and has never had any economic interest in that company. For the avoidance of doubt, he adds, the company registration number referred to in the article, 2008/012189/07, is that of TPE.

3.5.3 Cohen does not respond to this part of the complaint.

Analysis

3.5.4 Given that Cohen does not dispute this statement, I have no grounds to believe that the reportage on this issue was accurate.

3.6 Since June 2018

3.6.1 The article said, “…Luthuli’s LinkedIn profile shows he has been the CEO of Mpande … since June 2018.”

3.6.2 Luthuli says after his departure from the EPPF, he established Mpande in November 2018, not in June 2018.

3.6.3 DM does not respond to this part of the complaint.

Analysis

3.6.4 Given that Cohen does not dispute this statement, I have no grounds to believe that the reportage on this issue was accurate.

3.7 Three directors

3.7.1 Jooste wrote that, according to CIPC records, Mpande “… has only three directors, of which Luthuli is one…

3.7.2 Luthuli says the company has two, and not three, directors.

3.7.3 DM does not respond to this part of the complaint.

Analysis

3.7.4 Given that Cohen does not dispute this statement, I have no grounds to believe that the reportage on this issue was accurate.

3.8 Director at TPE

3.8.1 The original article said, “Other databases confirm that Luthuli is a director at [TPE]…”

Analysis

3.8.2 I note with appreciation that BM did not include this statement in its updated story, and that it has in fact corrected and apologised for it.

3.9 Process of deregistration

3.9.1 The reporter wrote that, according to CIPC records, Mpande “… is in the process of being deregistered”.

3.9.2 Luthuli denies this statement. Instead, he says, Mpande is in the process of obtaining its own license – for which it has a period of two years to do so. In the meantime, it operates under the supervision of a key individual of TPE.

3.9.3 DM does not respond to this part of the complaint.

Analysis

3.9.4 Given that Cohen does not dispute this statement, I have no grounds to believe that the reportage on this issue was accurate.

3.10 Not responding to requests to be interviewed

3.10.1 Both articles said, “Luthuli did not respond to requests to be interviewed.”

3.10.2 Luthuli questions this. He says Jooste sent him the following WhatsApp message on or about 3 February 2020, requesting him to comment on an article that was subsequently published by BM on 6 February 2020: “Hi Mr Luthuli. Ruan Jooste from Business Maverick here. Are you perhaps available later today for a quick telephone conversation? I just [want to] confirm a few things re: your involvement at Eppf and structure of the business.

3.10.3 He says he did not respond to this WhatsApp as he was about to depart for Europe. He adds that BM did not make available a copy of this article to him for his comment, and that it also made no further attempt to contact him.

3.10.4 Luthuli says it appears that the editor considered an approach four weeks prior to the publication of the article, in relation to a different article, to be sufficient to discharge BM’s obligation to obtain comment from him. He adds that, although he is under no obligation to correct false or incorrect reporting, he in fact did so via the Bowmans letter of 9 March 2020.

3.10.5 “Their failure to do so led to incorrect facts being published and to incorrect assumptions being made,” he concludes.

3.10.6 Cohen says Luthuli ignored BM. “But … we felt we had sufficient evidence to publish a piece, despite Mr Luthuli decision to refuse to take any notice of us – quite deliberately I would aver, because both his actions and the fund’s reticence suggested they might be embarrassed by the sequence of events,” he submits.

3.10.7 After publication, he says, Luthuli and the EPPF responded, after which the BM corrected errors and even publishing at one point the entire response of the EPPF verbatim.

3.10.8 The editor says BM’s request for an interview was not in relation to a “different article”. “Since Mr Luthuli ignored our request, we assumed he wasn’t interested in talking to us, which it turned out, was a correct assumption because not once has he offered to respond, either in writing or verbally, to any of the many articles we have written about the EPPF. It’s worth noting that the code does not require us to get a comment at all, since if it did, then the subject of newspaper articles could delay publication forever simply by declining to comment. It certainly does not require us to submit our articles for prior vetting, as the applicant implies,” he concludes.

3.10.9 Luthuli replies, “To … suggest that this failure to engage a month before publication of the Article constituted a refusal to engage on a whole series of articles is cynical in the extreme and seeks to reduce the ethical obligation of a journalist to seek comment to a ‘tick box’ exercise necessitating nothing but the most minimal effort.”

3.10.10 He submits Jooste’s message to him gave no indication:

  • of the serious nature of the allegations against him and Mpande;
  • of the specific issues which the journalist sought to canvass;
  • that a response was urgent; and
  • that a series of articles was contemplated or that these would be published over a lengthy period.

3.10.11 This, he argues, stands in contrast with the communications between BM and EPPF.

3.10.12 He mentions that Trinitas and Mpande have jointly responded to questions submitted by Jooste, even though Mpande was not copied on the mail.

Analysis

3.10.13 There is nothing wrong with the statement, “Luthuli did not respond to requests to be interviewed” – except, of course, that the use of the plural was incorrect. As far as my information goes, BM only tried once to contact him.

3.10.14 Be that as it may, the real question is if BM should have tried again to contact Luthuli. No doubt it should have. The fact that Luthuli ignored its first request did not relieve BM from its duty to try to get comment. He was the subject of some serious critical reporting, and the publication had no excuse not to try again.

3.10.15 Cohen’s argument that the Press Code did not require from BM to get a comment does not hold any water. (He argues the subject of newspaper articles could delay publication forever simply by declining to comment). I need to point out to the editor that Section 1.8 of the Press Code does make provision for such circumstances. It reads, “If the media are unable to obtain such comment, this shall be reported.”

3.10.16 Cohen is correct, though, in stating that BM is not required to submit articles for vetting prior to publication.

3.11 Refusing to apologise

3.11.1 Luthuli says a letter from Bowmans set out in detail the reasons why the articles were factually incorrect, and called for their withdrawal and for the publication of an apology. He says the editor has refused to do so; instead, he merely offered to include his response “within normal editorial parameters”.

3.11.2 He submits that such an option would not remedy the damage suffered by him and Mpande, arguing that it would merely allow a further repetition of the defamation without affording any real relief.

Analysis

3.11.3 I have decided not to document all the correspondence regarding this issue, mainly because matters became personal as both parties took offence at each other’s statements – which took the complaint on a tangent.

3.11.4 Let me cut to the chase: I cannot expect a publication to apologise for something that it does not believe to be false or unfair.

3.12 Reputation tarnished

3.12.1 Luthuli complains the reportages is “highly defamatory” of him, alleging serious misconduct and conflicts of interest by him, and by implication by Mpande, where he is employed as the manager and in which he is indirectly a substantial shareholder.

3.12.2 He says Mpande is still in the process of raising capital and “that false and defamatory allegations, particularly relating to issues of trust and ethics against its fund manager and key executive have the potential to seriously impair the fund-raising process”.

3.12.3 He adds, “It is highly defamatory to allege that a person in a senior capacity at a significant financial institution abused that position for personal gain or to advance personal business interests.”

3.12.4 BM denies its reportage was defamatory. Cohen says the matter comes down to a simple question: Is it defamatory to critique a former CEO for being granted a huge investment mandate by his former employer?

3.12.5 The editor argues that not only is it not defamatory, but it is also his duty and function to report and question this and situations like it. He admits it is possible that some of the details in the process of a difficult newsgathering process, in which BM was met with an attitude of imperviousness and obstruction, might have been misstated. “But the overwhelming, core question remains as described above. In this case, the facts of what happened are not in fundamental dispute,” he argues.

3.12.6 The editor says his central mission was to report extensively on why the fund was so badly underperforming.

3.12.7 Cohen says the publication discovered that Luthuli had been given a substantial investment mandate. “Both we, and the fund’s beneficiaries, not unreasonably, suspected that the fund’s underperformance and its lax ethical standards might be linked, and this seemed an apposite example.”

3.12.8 He says that, when BM approached the fund, they made very limited admissions, not reporting clearly the sequence involved, or the dates, or the corporate entities involved, or, accurately, the amounts involved – but they did acknowledge there was a mandate granted, and on that basis we approached Luthuli.

3.12.9 He says the latter ignored the BM. “But since the fund had acknowledged a mandate was granted, we felt we had sufficient evidence to publish a piece, despite Mr Luthuli decision to refuse to take any notice of us - quite deliberately I would aver, because both his actions and the fund’s reticence suggested they might be embarrassed by the sequence of events,” he says.

3.12.10 After publication, he says, Luthuli and the EPPF responded, after which the BM corrected errors and publishing at one point the entire response of the EPPF verbatim.

3.12.11 He notes that neither Luthuli, nor his lawyers, nor the fund, acknowledged just how big the mandate was that had been granted. “No matter. We eventually found out anyway: R350-million,” he remarks.

3.12.12 He says from the enormous number of responses he got from the beneficiaries of the fund, they did not think this was an arms-length transaction. Was it legitimate for a former CEO - out of a field of dozens of other property fund managers - to get a R350-million cash infusion a mere 18 months after he departs his post after working there for a decade?

3.12.13 Cohen says the standard, as the King IV Code stipulates, is that an organisation must be seen by the “outside world” to be a responsible, ethical corporate citizen, and not if Luthuli and the EPPF operated within the stipulations of the law.

3.12.14 Luthuli describes the allegation that the complaint can be reduced to a “simple question”, namely whether it is defamatory for a journalistic report to critique a former CEO who has been granted an investment mandate by a former employer, as a “massive red herring”.

3.12.15 He says this is not what the complaint, or the article, is about – yet Cohen “cynically and repeatedly attempts to contend that it is” and he “rambles on at length in relation to matters that are not in issue in the present proceedings”. The complaint, he asserts, is that the article falsely alleged that he had abused his position during his employment with EPPF and in respect of an alleged binding cooling off period, to advance his personal business interests unethically and unlawfully.

3.12.16 Luthuli also disputes Cohen’s statement that the facts are not in fundamental dispute, and that BM merely “misstated some of the details in the process of a difficult newsgathering process”.

3.12.17 He says Cohen neglects to mention that it was Mpande who gave him this information. “His statement that ‘nowhere … did Mr Luthuli or his lawyers… acknowledge just how big the mandate was’ is thus clearly false. When the question was asked for the first time, an answer was given,” he concludes.

Analysis

3.12.18 I have little doubt that the false, unfair and unsubstantiated impression created by the story that Luthuli had been doing business with EPPF while he was the Fund’s CEO, and the statement of fact that this had constituted a conflict of interest, could only have lowered his and Mpande’s reputation and affected the former’s dignity – and unnecessarily so.

  1. Finding

4.1 Doing business

The statement in question was accurate – but when interpreted within context it was not fair (as it linked a transaction eighteen months after Luthuli had left the EPPF’s employ with his tenure as CEO. This is in breach of the following sections of the Press Code:

  • 1.1: “The media shall take care to report news … fairly”; and
  • 1.2: “The media shall present news in context and in a balanced manner…”

4.2 Conflict of interest

The link in the article between Luthuli’s previous job as CEO and the transaction eighteen months after he had left the employ of EPPF, creating the impression that it constituted “a clear conflict of interest”, was in breach of the following sections of the Press Code:

  • 1.1: “The media shall take care to report news truthfully, accurately and fairly”;
  • 1.2: “The media shall present news in context and in a balanced manner…”; and
  • 1.3 “The media shall present only what may reasonably be true as fact; opinions, allegations, rumours or suppositions shall be presented clearly as such.”

4.3 Cooling-off period

The reportage on this issue was in breach of Section 1.1 of the Press Code.

4.4 Contract not renewed

This part of the complaint is dismissed.

4.5 Vested interest

The reportage on this issue was in breach of Section 1.1 of the Press Code.

4.6 Since June 2018

The reportage on this issue was in breach of Section 1.1 of the Press Code.

4.7 Three directors

The reportage on this issue was in breach of Section 1.1 of the Press Code.

4.8 Director at TPE

The reportage on this issue was in breach of Section 1.1 of the Press Code.

4.9 Process of deregistration

The reportage was in breach of Section 1.1 of the Press Code.

4.10 Not responding to requests to be interviewed

4.10.1 BM did not do enough to obtain Luthuli’s comment prior to publication. This was in breach of Section 1.8 of the Press Code that states, “The media shall seek, if practicable, the views of the subject of critical reportage in advance of publication…”

4.10.2 The statement that Luthuli did not respond to “requests” (plural) to be interviewed was in breach of Section 1.1 of the Code that says, “The media shall take care to report news … accurately…”

4.11 Refusing to apologise

This part of the complaint is dismissed.

4.12 Reputation tarnished

The false, unfair and unsubstantiated impression created by the story that Luthuli had been doing business with EPPF while he was the Fund’s CEO, or during the cooling-off period, and the statement of fact that this had constituted a conflict of interest, were in breach of Section 3.3 of the Press Code that reads, “The media shall exercise care and consideration in matters involving dignity and reputation…”

  1. Seriousness of breaches                                              

5.1 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).

5.2 The breaches of the Press Code as indicated above are all Tier 2 offences, except for the inaccurate statement that Luthuli was Mpande’s CEO “since June 2018” instead of November 2018, and that Mpande had “three” directors, instead of two, which were Tier 1 offences.

  1. Sanction

6.1 Business Maverick is directed to unreservedly apologise to Luthuli and Mpande for:

  • creating the false, unfair and unsubstantiated impression that Luthuli had been doing business with EPPF while he was the Fund’s CEO, or during the cooling-off period;
  • stating as fact that this had constituted a conflict of interest;
  • stating that Mpande was in a process of deregistration;
  • not doing enough to obtain their comments prior to publication; and
  • unnecessarily tarnishing their reputation and dignity.

6.2 BM is also reprimanded for inaccurately stating that Luthuli:

  • contravened EPPF’s code of conduct regarding a “cooling-off” period;
  • had a vested interest in TPE;
  • was Mpande’s CEO since June 2018;
  • was one of three directors at Mpande; and
  • did not respond to requests (plural) to be interviewed.

6.3 Because BM already corrected the inaccurate statement that Luthuli was a director of TPE, and apologised for it, I am not asking the publication to (again) apologise and correct it. I am asking it for an explanation for this statement, though.

6.4 The newspaper is directed to publish the apology on the top of the page(s) that contain(s) the article, with a headline containing the words “apology” or “apologises”.

6.5 The text should:

  • sketch the context;
  • include the reprimands and the explanation;
  • be published at the earliest opportunity after the time for an application for leave to appeal has lapsed or, in the event of such an application, after that ruling;
  • refer to the complaint that was lodged with this office;
  • end with the sentence, “Visit www.presscouncil.org.za for the full finding”;
  • be published with the logo of the Press Council (attached); and
  • be prepared by the publication and be approved by me (after I have consulted Luthuli in this regard).

6.6 Because Luthuli was the main subject of critical reportage, and because of the huge damage this has potentially caused him and Mpande, I do not believe that an apology would be enough. I am therefore ordering Business Maverick to remove the article from its site, based on Section 1.12 of the Press Code that says, “The media shall not be obliged to remove any content which is not unlawfully defamatory.”

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

Acting Assistant Press Ombud