19 March 2012

Musa Capital vs Sunday World

2012 (Rulings), All Rulings, Ombud Rulings

This ruling is based on the written submissions of Mr Will Jimerson, director of Musa Capital (MC), and the Sunday World newspaper.

Complaint

Mr Will Jimerson complains about a story on page 7 in the Sunday World, published on 25 September 2011 and headlined DAMNING REPORT – Bakubung were ripped off.

MC complains that the:

headline erroneously portrays an allegation as fact and does not represent the content of the Dlamini report; and
caption to the picture is incorrect.

Regarding the story itself, Jimerson complains about the incorrect/misleading/defamatory references to:

a “final report”;
“accomplices”;
the Dlamini report;
MC and the Traditional Council (TC) seeking to avoid disclosure for nefarious reasons;
claims of criminal action on a grand scale; and
59% of the investment structure being in the community’s possession.

Jimerson also complains that the journalist:

did not attempt to ask MC to verify the information or to get comment from the firm on the Dlamini Report; and
disingenuously contacted a member of the Bakubung tribe, less than 24 hours before going to print.

In conclusion, MC complains that, if everything above is seen in context, the whole story

is deliberately tarnishing its image and in breach of the Press Code.

Analysis

The story, written by Andile April, says that North West premier Thandi Modise is “finally taking action” against those who are accused of plundering the resources of the Bakubung tribe. This reportedly came after a “damning final report” compiled by court administrator Abel Dlamini was released, “which recommends that legal action be taken” against MC and some members of the TC. April then records some statements and allegations against MC and Jimerson, amongst which is that he – together with the TC – “allegedly swindled the 30 000-strong community out of R700m in mining shares”.

I shall now look at the merits of the complaint:

The headline

The headline reads: DAMNING REPORT – Bakubung were ripped off.

MC complains that:

this erroneously states an allegation as a fact – despite the fact that the report on which the story is based has not been officially tabled (let alone approved or sanctioned) and that the community itself has not yet submitted an official response to the report; and
nowhere does Dlamini state that the Bakubung were ripped off. He argues: “To draw such an inference and associate it with Musa’s work for the community is misleading and purposefully inaccurate.”

The newspaper says it is a fact that the Dlamini report is “very much damning” – for instance, it uses words/phrases like “malpractices”, “fighting against disclosure”, non-accountability”, “monies invested without appropriated authority”, “recovery of excessive charges”, “recovery of monies spent by individuals”, “excessive cash awards” to individuals, “property theft” and “dispossessed community”.

The editor also:

agrees that the Dlamini Report does not use the term “ripped off”, but argues that this is rather an understatement as the report also says that the community was “dispossessed” of its primary investment asset – a much harsher term than “ripped off”; and
argues the fact that the report was compiled for government (the Premier), “means it is official”.

Firstly, considering the word “damning”: I note that, in his response to the newspaper’s reply to his claim Jimerson himself says: “Yes, the Dlamini report is damning.” (He then goes on to make the point that the report was not “final”).

Based on that, as well as on the editor’s arguments (above), the use of the word in question seems to be fair and reasonable.

The words in the headline “Bakubung were ripped off” now refer. I believe that, although it is presented as a statement and not an opinion, the context (read: “Report”) makes it clear that it is the report that comes to this conclusion (even if he word itself was not used).

The caption

The caption in dispute (that goes with a picture of Premier Thandi Modise) reads: ENDING INACTION. North West Premier Thandi Modise is taking action against the council. The intro states: “North West Premier Thandi Modise is finally taking action against the people accused of plundering the resources of the Bakubung-Ba-Ratheo tribe.”

Jimerson complains that this is not true. He says he has no information from the TC or any other officially recognized organ of the community that action has been taken.

The editor replies that the Premier’s office confirmed that action had in fact been taken (by the Premier), and adds that that was reflected in the story.

I then asked the newspaper if there was any kind of documentation to back up its claim. The editor responded that confirmation of this was obtained telephonically from the Premier’s office.

This leaves me with the story, and hopefully with some common sense.

The story does not specifically spell out what this “action” entails, but it does mention that Modise has referred the report to the police. That, as well as the implied action in the story that Dlamini was asked to investigate, must count for some “action” on the Premier’s part – even though the way that the story uses the word “taking action” is probably stronger than it should have been.

Dlamini Report being ‘final’

After stating that Modise is “finally” taking action (against MC and the TC), the sentence in dispute reads: “This follows a damning final report compiled by…Dlamini…” (emphasis added).

Jimerson complains that Dlamini’s report was not “final” (see the first paragraph under “Headline” above for his argument).

Sunday World says that the cover of Dlamini’s report states: “The Administrator’s Final Report”.

MC replies that the report is not final in terms of the procedure that must be followed by the Premier’s office and asserts that the newspaper should have checked on this before printing such a damning story.

Note that MC does not deny that Dlamini’s report indeed uses the word “final”.

Here are some considerations:

In general, it is widely understood that a “report” usually ends off with conclusions/findings and recommendations. Consider the word “report” itself – it presupposes that the person/institution who completed the report is communicating its findings to the person/institution who commissioned the work. In other words: “This is what has been found, so now it is over to you to do with it whatever you like”.
Therefore, it is commonly understood that while a “report” may be damning, the content of the report is not final yet.
There is no reason to believe that the Dlamini Report is any different – Dlamini came up with his conclusions and recommendations, and now it is over to the Premier to accept or reject the report (or part of it).

Therefore, while Jimerson is correct in that the report was not final in the sense that it has not been accepted yet, the newspaper is also correct in that Dlamini’s report was final in the sense that his work was completed.

‘Accomplices’

The word in dispute appears in the sentence that states that the Dlamini Report recommends that legal action be taken against MC “and the traditional council accomplices led by Disele Johannes Phologane…” (emphasis added).

MC complains that the word “accomplices” implies illegal activity by itself and the TC, adding that that word is stated as a fact. Jimerson argues: “Given that the Report on which this statement is based is not official and no legal bindings have been made in a court of law, supported by documentation, or corroborated by a credible source, the use of this word contravenes…the Press Code.”

The newspaper does not reply to this part of the complaint.

I then asked the editor if the word “accomplice” is used in the Dlamini Report (at that time I did not have a copy of that report), or if it was merely the journalist’s interpretation of the matter.

He explained that the latter was the case – “it is our interpretation that there were accomplices in the disappearance of community’s shares”.

I then asked MC for comment on the alleged “disappearance of community’s shares”.

This is the company’s reaction:

“There are – absolutely and categorically – no shares missing. The Bakubung Ba Ratheo originally had full ownership of 117 million Wesizwe shares. Through the monetisation process, they now have a controlling interest (60%) of 143 million Wesizwe shares.

“Through the usual (standard) audit and governance processes that are imposed by law, each and every share has been fully accounted for and the information is lodged with all the necessary statutory bodies. The information is also available to public scrutiny.

“During the monetisation process, some of the original shares were ‘swapped’ and some ceded in return for funds from the IDC and Deutsche Bank. All legally and above board, as you might imagine with Deutsche Bank and the IDC involved. And, in certain cases, because of the fall in Wesizwe’s share price, the community chose to let the shares go to the financial institutions instead of forking out cash to redeem what was, essentially, a declining asset.

“The net result of all the transactions, however, is that the Bakubung now actually control more shares than they had before. And are, as a consequence, Wesizwe’s biggest BEE shareholder.

“So, no shares are missing – or ever have been. And, in case the question arises, Musa has never had control of the community’s shares.” (End of response)

This leaves me with two issues:

The dispute whether or not shares have gone missing; and
The definition or interpretation of the word “accomplice”.

Firstly, I asked MC’s view on the shares only for the record – the “disappearance” (or not) of shares is of no real concern to me. What matters is that, to the best of my knowledge, neither MC nor the TC has been found guilty in a court of law regarding this specific matter.

This leaves me with “accomplice” (which the story states as a fact).

The newspaper argues that the word “accomplice” means “abettor, ally, assistant, associate, coadjucator, collaborator, colleague, confederate, helper or partner”.

In other words, there is no negative or not necessarily a negative connotation to the word (according to the newspaper).

Here are my considerations regarding this matter:

I have looked at several definitions of what an “accomplice” is – in each and every one of them the first and foremost meaning is an association in wrongdoing or someone who helps somebody else to commit a crime;
The other meaning (The Chambers Dictionary) refers to an associate (which is not necessarily negative), but that is used only in Shakespearian language; and
Probably even more importantly, the question is how the ordinary reader would have interpreted the word – which, to my mind, would be in line with the main definitions that I have found.

I therefore accept that the word “accomplice” has a negative meaning, in the sense that some association in wrongdoing was in play.

Another important factor is the context within which the story uses this word, which is a recommendation of legal action. Surely, this also implies the possibility of wrongdoing – and yet, MC was innocent at the time of publication.

I conclude that the (negative) word in a (negative) context would have left the ordinary reader with little option but to interpret the word “accomplice” as being part of a crime or some sort of wrongdoing.

Because neither MC nor the TC has been found guilty (at least, at the time of the publication of the story) of stealing shares from the affected community, the use of the word “accomplice” was inaccurate and unfair.

Dlamini Report: Its content

Paragraphs 3 – 6 of the story quote from or at least draw on the Dlamini report. April writes (from this report) that:

the funds in question were under MC’s control;
MC started a private equity fund in partnership with the community, where the latter was a 79% contributor and the “sole cash contributor” into MC’s Kubu Fund; and
This fund invested R297m (56%) of the total of R527m in various start-up companies in different industries (with two such companies in Argentina and Zambia).

Jimerson complains that this information is inaccurate because the Dlamini Report itself is inaccurate and filled with lies.

Sunday World says that it was not for the newspaper to pronounce on the accuracy of the report. The editor adds that MC itself was interviewed before the findings were made, and argues that the company should direct its questioning to the relevant authorities and not to this office.

MC replies that Dlamini and his team spent more than four hours at its offices “and they were given access to all of our documentation relating to the Bakubung…”

These are my considerations:

The newspaper was indeed merely reporting on the Dlamini Report (which was its right to do) – it was indeed not its role to pronounce on the accuracy of the report;
The quality of the newspaper’s investigative reporting may not have been perfect in the sense that MC’s document(s) were neither obtained nor reported on; and
The failure to do so was unfortunate, but not “enough” to breach the Press Code.

I shall discuss the possibility of a follow-up story later.

Seeking to avoid disclosure

The story says Dlamini’s report shows that the TC acted without the necessary community resolutions when it appointed MC as its financial adviser. This has reportedly resulted in a “bitter struggle of disclosure” that led to expensive court battles (with some community members and royal family members “demanding disclosure”). Then, the sentence in dispute: “On the other side, Musa and the traditional council were fighting against such disclosure.”

Jimerson complains that the way in which the story portrays the matter of disclosure implies that MC and the TC were doing so to avoid disclosure “for nefarious reasons”. He states it is true that certain information could not be disclosed, but argues that this was because of “standard confidentiality agreements” between MC and various institutions that assisted in the monetization of the community’s Wesizwe shares. He adds that the issue in the courts was not about whether or not disclosure by the community’s leadership should occur, but rather about how much disclosure was required and to whom.

Sunday World says that it is a matter of public record and common knowledge that MC and the TC were taken to court to compel them to make a disclosure about the whereabouts of the Bakubung’s primary investments. The editor adds: “They opposed such applications and lost in court. Besides, they defied court rulings in this regard.”

Jimerson denies that this last statement is true and challenges the newspaper to produce any documents that prove this allegation.

Be that as it may, I’ll stick to the complaint that MC and the TC were seeking to avoid disclosure “for nefarious reasons”.

These are the facts:

The story says that MC was “fighting” against disclosure – the word “fighting” may (or may not) have been a bit strong, but because there was a court case MC must have opposed some issues and I therefore do not blame the newspaper for using that word;
The story mentions a “bitter struggle” (of disclosure) – again, this phrase may or may not have been on the strong side, but in light of the “expensive court battles” (which were mentioned in the story and were not disputed by MC), I again think that it was reasonable for the newspaper to have used this phrase; and
More importantly, apart from these phrases, the story does not attribute any reasons or motivations on MC’s part to stop the disclosure of information – let alone nefarious ones.

Given the above, I suggest that the sentence in dispute is materially accurate and that the ordinary reader would not necessarily have attributed “nefarious reasons” to MC for not wanting to disclose certain information.

Claims of criminal action on a grand scale

The sentence in dispute reads: “Two Americans, Antoine Johnson and William Jimmerson (sic), together with the traditional council, allegedly swindled the 30 000-strong rural community out of R700m in mining shares.”

Jimerson complains that this statement implies criminal action on a grand scale and is defamatory. He adds that it would be both irresponsible and inflammatory to hide behind the word “allegedly”, as the story states.

The newspaper does not reply to this part of the complaint.

I therefore asked Sunday World for some response.

The editor replied that the R700 m was dealt with in a court case which its reporter (April) has covered. He says that MC could not or did not account for this amount during court proceedings. He adds: “A KPMG forensic report of 29 April 2010…shows that financial implications of share transactions entered into by Musa on behalf of the community should have amounted to R658 011 894. The latter report further reveals that the value of shares was R1.081 billion at the time of first sale transaction.”

In light of the above, it seems reasonable and fair to me for the newspaper to have reported that there were allegations about the alleged missing R700 million – for it seems to me to be a fact that there were indeed such allegations. (This is, of course, not to say that these allegations were true.)

I therefore do not agree that the sentence in dispute is defamatory. It also does not necessarily imply “criminal activity”, albeit that it does suggest some possible criminal activity.

59% of the investment structure in the community’s possession

The sentence in dispute reads: “In the report by Dlamini, Musa maintains the community has 59% of the (investment) structure, but this of course is on paper and it is anyone’s guess if it will ever materialize for the community.”

Jimerson complains that the story implies that MC has lied to Dlamini when it said that the community had 59% of the investment structure.

The newspaper replies that this part of the complaint is not relevant to this particular matter, adding that it was only meant to confuse the issues (because the story was based on the Dlamini Report).

I do not agree with MC – the first part of the statement seems to be accurate.

Although the last part of the sentence is also justified (as it does not state it as a fact that the investment structure will not materialize), I find this to be unnecessarily negative towards MC. I shall come back to this issue later.

No attempt to verify the information, to get comment

Jimerson complains that Sunday World made no attempt to contact MC for its comment, or to verify the information contained in the Dlamini Report, adding that the newspaper even ignored its documented response to that report – a response in which it has detailed the inaccuracies and lies contained in the Dlamini document. He argues that MC’s reply to Dlamini’s report contains third party information from institutions like CIPRO, Standard Bank, and the community’s auditors – data that “clearly contradict” Dlamini’s claims.

The result, he argues, is a one-sided and deliberately damaging story – one that contravenes several articles of the Press Code (I’ll come back to this as well).

The newspaper does not respond to this part of the complaint.

In later correspondence, Jimerson says that MC would have given the newspaper its report “had they made any attempt to review, verify or ascertain the accuracy of the Dlamini report”.

From this, it is clear that Sunday World was not in possession of this report.

I take the following into consideration: The story itself was on the Dlamini Report and not on MC’s response to that report; the newspaper was therefore justified in its reportage as far as this specific story is concerned. However, in the interest of fairness I would like to see that the newspaper does an in-depth article on MC’s response (if it has not done so already). Of course, this is merely a suggestion. I’ll come back to this point later.

There seems to be some confusion regarding who is mandated to speak on MC’s behalf.

The editor said that MC was indeed given time to respond – April called MC’s media representative at Headlines and spoke to Ms Lindi Tshabangu.

The newspaper also said that the latter’s confirmation of the existence of MC’s report “was inadvertently removed from the story by a sub-editor because it was not adding any value to the story” (as it was merely a confirmation of the existence of the report which has been handed to the premier).

However, in later correspondence Jimerson says that Tshabangu has never worked on the Musa Capital account (she did, during 2010, assist the TC with PR matters). He says that the reporter “…has never made contact with Headlines or Lindi Tshabangu, and even if he had, Headlines has no mandate to speak to reporters on behalf of Musa. There is a Lindi Masilo who works within the community who he might be confusing with Lindi Tshabangu.”

Clearly, Tshabangu was the wrong person to contact for comment.

I accept that the newspaper tried to speak to MC, even if it did contact the wrong person. Having accepted that, I cannot find against the newspaper on this specific point.

However, this is a strange and awkward situation, as the person whom the newspaper contacted surely should have informed MC that she was the wrong person to speak to?

This seems to be an unprofessional mistake on the newspaper’s part – but also an unintentional one.

Contacting a member of the Bakubung tribe – but too late

Jimerson says that the newspaper contacted someone in the community for comment less than 24 hours before going to print. This late attempt, he complains, was “clearly disingenuous” – especially since the editor has already informed my office that he was going to publish stories about the “sorry saga”.

It is normal journalistic practice to contact someone less than 24 hours before going to print. There is nothing disingenuous in that.

In conclusion: The whole story deliberately breaches the Press Code

Jimerson argues that, when all of the above is seen together, it becomes clear that Sunday World made a determined effort to tarnish MC’s reputation by whatever means at its disposal.

He continues that:

the “whole article” deliberately contravenes the Press Code – and in that process flagrantly disregards the principles of ethical journalism entrenched in the Code;
Sunday World has conducted a “determined and lengthy campaign of vilification” against MC and its directors; and
another newspaper (the Sowetan), that allegedly conducted a similar “campaign”, did not publish any anti-MC stories since it got a new editor in December 2010.

Sunday World replies that the above is a “grandiose statement designed to illicit sympathy”, and intended to influence this office’s objectivity. The editor adds: “I believe Sowetan editors – both past and present – would not be happy about the insinuation made about them…”

When I try to put myself in Jimerson’s shoes, I can understand his contention about the “whole article” trying to tarnish MC’s reputation. For example, the story uses the word “accomplices” – a negative word in a negative context; and the journalist is unnecessarily critical if the 59% of the structure will ever materialise.

Also, MC did get some bad press lately (rightly or wrongly), and the editor has referred to the “sorry saga” which is MC’s involvement in the Bakubung community. This seems to suggest that the newspaper has already made up its mind that MC is bad news, even though the firm has not been convicted of a crime.

(Jimerson says that this expression is evidence of exactly the attitude of which MC is complaining. He argues: “The Sunday World has been intent on a one-sided vilification of Musa. It has shown no inclination to hear and reflect the other side of the story – that we can show it’s a ‘happy saga for the Bakubung’ who are many, many times wealthier as a result of Musa’s investment advice than they would have been holding on to Wesizwe shares.”)

Fortunately, the story does not use the expression “sorry saga”.

My sincere wish is that Sunday World will investigate MC from all sides (I am not hereby accusing the newspaper of biased reporting), and in doing so take the company’s response to the Dlamini Report into account. It would only be fair to balance a story on the Dlamini report with one on MC’s response to that report.

The result of a thorough investigation may be that MC actually turns out to be the “good guys”, which will then be a good news story; it may also turn out to be that the company is the “bad guys”, in which case it is necessary to expose the firm; or it can be a combination of these two options.

Note that I am not directing the newspaper to do such a follow-up story – I am merely expressing my wish in this regard.

Finding

The headline