Southern Palace Group vs Daily Maverick


Mon, Jan 4, 2021

Decision to Adjudicate

Southern Palace Group vs Daily Maverick

 

Complaint 8404b

Headline:  “IDC ‘suckered’ into making a R185m business loan allegedly diverted to pay off debts and buy a Bentley

Author: Dewald van Rensburg for amaBhungane

Publication date: 11/9/20

Particulars

Mr Ian Levitt of Ian Levitt Attorneys has complained on behalf of The Southern Palace Group about two articles in different publications. One was in City Press, headlinedTRANSNET SERVICE PROVIDER DONATED TO THE ENTITY’S CHAIR” authored by Setumo Stone and published on 4 October, 2020.

The other is the article in question in this decision published by the Daily Maverick headlinedIDC ‘suckered’ into making a R185m business loan allegedly diverted to pay off debts and buy a Bentley.”

I deal only with the Daily Maverick article in this decision.

Summary of text

The article’s intro reports that “..self-described ‘renowned industrialist’ Sello Mahlangu and his ‘powerhouse’ investment group, Southern Palace, stand accused of securing funding from the Industrial Development Corporation (IDC) under false pretences – and then misappropriating the money meant to recapitalise Genrec, a black-owned champion in the heavy engineering industry.”

The article is largely based on a summons from the IDC issued in the Johannesburg High Court in February 2020.

It concerns Southern Palace’s acquisition of Genrec from the construction company Murray&Roberts in May 2018. The IDC says it was “tricked into lending Genrec R185-million to recapitalize the business when Southern Palace took control.”

In dispute was whether Southern Palace had actually funded R20-million of its own money to Genrec first as per the agreement. The IDC disputes that it had.

According to the article, the IDC also alleged that the money it (the IDC) advanced was put to other uses that concerned Southern Palace, not Genrec.

The article goes into some background on Southern Palace and its founders and controlling shareholders, as well as detailing other alleged “abuses” of the IDC funding, including that, according to the summons, the money was not used for the stated purpose.

It reports that an IDC executive – who has since left the organisation – was alleged to have failed to declare a conflict of interests over the decision to fund Southern Palace, and that Genrec has been put into business rescue. It also references a “front” company for Southern Palace, Acutucel.

Mr Levitt, Southern Palace’s lawyer is quoted denying that Acutucel is connected to Southern Palace, and also denying some of the IDC’s allegations against the firm.

It also goes into some detail about the owner, Sello Mahlangu’s background in business and allegedly in the ANC.

Acting Public Advocate’s decision

This complaint was lodged simultaneously with another by the same complainant against City Press. The City Press story, although its focus is Southern Palace, largely deals with different subject matter.

The acting Public Advocate  pointed out to Mr Levitt that  the complaint against Daily Maverick was filed 34 working days after the article had been published on 11 September, “well beyond the 20 days allowed in accordance with the Press Council’s Complaints Procedures”.

He declined to accept the complaint on these grounds.

Arguments

In support of condonation for lateness, Mr Levitt argued that it was only after the City Press article had been published, about three weeks after the Daily Maverick article,, that “it became clear that a person or persons with an agenda of harming the reputation of Southern Palace had been able to garner the support of the journalists who authored the City Press article and the Daily Maverick article to write unbalanced and distorted articles to malign the reputation of Southern Palace.” It was in the light of this “disingenuous” campaign that it became “necessary to lodge a complaint against both articles.”

The acting Public Advocate notes that there was no further substantiation with regards to the alleged “disingenuous” campaign.

In his appeal to the Ombudsman to condone the lateness, Mr Levitt says the complaint was lodged on October 30, 2020 against both articles.

He argues that the publication of the City Press story, the second article in three weeks that reported critically on the Southern Palace group, was evidence of a “disingenuous campaign”, and this is why it was necessary to lodge a complaint about the first article.

He argues that the acting Public Advocate misses the point: there is a  “commonality to both articles (in that they are both unbalanced, distorted and designed to malign the reputation of Southern Palace) and that it is clear from both articles that an agenda is being driven by a person/s unknown..”

He says it is also “significant” that the City Press article references the Daily Maverick article.

Analysis

I find it somewhat puzzling that although there may have been an arguably legitimate basis for complaint against the Daily Maverick article – notably that not all the allegations were put to the company – that a complaint was not laid timeously within the stipulated deadline of 20 working days.

In its appeal for condonation, the company also points out that the Daily Maverick article is referenced in the second one by City Press.

However, in the City Press story only two paragraphs mention the Daily Maverick report: one references the allegation that the company “allegedly secured funding from the IDC under false pretences”  and notes the matter is before the Courts. The other quotes CEO Sello Mahlangu himself on the pending IDC case, saying “more defendants had since entered an appearance to defend and filed a plea in response to the summons, but that this had been ignored in media reports, as had the extensive responses sent by lawyers of Southern Palace.”  But the details of the allegations mentioned in the IDC summons and reported in the DM story are not repeated.

Apart from this reference, there is no “commonality” to the stories as Mr Levitt argues. There is also no evidence from these reports that someone with a sinister agenda is behind both stories.

Mr Levitt argues that as a matter of ”fairness and justice both articles ought to be looked at in conjunction to appreciate the common approach.”

But although both articles deal with Southern Palace, they focus on distinctly different topics. One deals with a summons issued by the IDC, the other (by City Press) reports that a public-private project involving the company and run by Transnet, has been referred to the Special Investigating Unit. That both are somewhat critical of the company is not sufficient to argue “commonality”.

To argue for condonation of lateness – some 34 days after the article was published – cannot be justified on the grounds that another supposedly critical article was published by another publication nearly one month later.

 

There is a precedent for being cautious about condonation of such late filings of complaints seen in the Appeal case of Spotlight vs Sadmon. In that case, condonation was granted by my predecessor and for this reason I adjudicated the complaint. However, on appeal, Judge Ngoepe found that: “To uphold this condonation would create a very bad precedent. The whole process aims to deal with the complaints as expeditiously as possible.”[1]

 

The reasons given in this case are simply not strong enough to countenance a condonation.

In this instance, I must agree with the acting Public Advocate and decline to adjudicate this complaint.

 

However, the complaint against City Press will be adjudicated.

Appeal

The Complaints Procedure stipulates 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.

 

Pippa Green

Press Ombudsman

January 4, 2021