Dipela vs. City Press

The complainant:

Mr Gary Pritchard, of Cox Yeats Attorneys

Mr Mpho Dipela

The respondent:

Mr Charl du Plessis, of Willem de Klerk Attorneys

Mr Rapule Tabane, Political Editor, City Press

The panel:

Prof Karthy Govender, public representative on the Adjudication Panel

Ms Heather Robertson, press representative on the Adjudication Panel

Johan Retief, acting Press Ombud

Particulars

Complaint number: 8385

Submitted by: Mr Gary Pritchard

Date of article: 4 October 2020

Headline: Money laundering allegations haunt Popcru – An irregular transaction of R18 million paid to one of Popcru’s subsidiaries has raised red flags among auditors about misappropriation of funds

Online: Yes

Author of article: Sizwe sama Yende

Respondent: Rhodé Marshall, managing editor

1. Complaint                                            

1.1 Mr Mpho Dipela’s complaint boils down to the following, namely that the newspaper:

1.1.1 has published statements in both the story and its headline that inter alia allege, expressly or impliedly, that he was involved in irregular transactions (theft and money laundering) concerning the Police and Prisons Civil Rights Union (Popcru) and its related companies;

1.1.2 omitted relevant information provided by him;

1.1.3 sought to link legitimate business transactions to Popcru leadership squabbles; and

1.1.4 defamed him and harmed his reputation.

1.2. He asks for a retraction and an apology in every medium in which the story in dispute was published, stating that:

1. 2.1 he had provided detailed information and documentation that were not fairly reflected in the article; and

1.2.2 it was inaccurate and wrong to state or imply that he was involved in wrongdoing in relation to Popcru and its affiliated entities.

2. Relevant sections of the Press Code

The media shall:

• strive for the truth and avoid unnecessary harm (preamble);
• 1.1: take care to report news truthfully, accurately and fairly;
• 1.2: 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: present only what may reasonably be true as fact; opinions, allegations, rumours or suppositions shall be presented clearly as such;
• 1.7: verify the accuracy of doubtful information, if practicable; if not, this shall be stated;
• 1.8: seek, if practicable, the views of the subject of critical reportage in advance of publication…; and
• 3.3 exercise care and consideration in matters involving dignity and reputation…;

10.1 Headlines … posters shall not mislead the public and shall give a reasonable reflection of the contents of the report … in question.

3. The text

3.1 The story said a suspicious transaction of R18-million paid to a subsidiary of Popcru had been reported to the Financial Intelligence Centre (FIC) for investigation.

3.2 Sizwe sama Yende wrote SNG Grant Thornton reported this matter because it could not find any “business rationale” for the deposit of the money from Royale Energy Group to Workerslife Direct (a subsidiary of Popcru) on 8 January 2019.

3.3 The money was reportedly deposited by Dipela, the then Popcru Group of Companies (PGC) chief financial officer, who was also a nonexecutive director at Royale Energy, as was Popcru president Zizamele Makhaza at the time.

3.4 (PGC Group is Popcru’s investment arm; and the Popcru Trust holds Popcru’s interest in PGC Group. Popcru Trust also holds 100% of the shares of Royale Energy Group.)

3.5 The following sentence contained the gist of the story: “The duo’s association has prompted their opponents in Popcru to accuse them of being part of irregular transactions at PGC.” (The “duo” referred to Dipela and Makhaza.)

3.6 The journalist also stated, “Popcru’s national executive committee (NEC) has been divided over allegations of theft, misappropriation of funds and money laundering in the [PGC]”, adding that Workerslife Direct (WLD) was a subsidiary of PGC.

4. Background

4.1 It is important, for context, to have a proper understanding of events that have led up to the lodging of this complaint with the office of the Press Ombud.

4.2 This is how Mr Gary Pritchard of Cox Yeats Attorneys sketched relevant events and came to some conclusions in this regard:

4.3 City Press journalist Msindisi Fengu sent an email to Dipela on 1 October 2020, seeking information apropos an action by E-Vehicle Mobility (Pty) Ltd against Legacy Auto (Pty) Ltd and two other companies in the Legacy Motor Group (LMG) Group. 4.4 He inter alia asked if there were any missing PGC funds used to invest in LMG or any other company including E-Vehicle Mobility by Dipela, and what the latter’s reaction was to perceptions that he was involved in the said missing funds. 4.5 These “missing funds” related to statements previously published by City Press that Dipela was involved in. They concerned: unlawfully “channelling” approximately R200-million in referral fees, implying that Dipela benefitted from this action; and an “irregular” transaction concerning R18-million that amounted to money laundering. 4.6 These statements allege, implicitly or impliedly, that Dipela “has been involved in the theft of large sums of money from Popcru and money laundering”. 4.7 The author of the article previously sent queries to Dipela a week or so prior to publication (on October 4). 4.8 After further queries followed, Dipela instituted an urgent application to the Gauteng Local Division of the High Court, seeking to interdict and restrain the newspaper from publishing another story (on October 7) on the same matter. 4.9 On October 8, the newspaper undertook the following: “[City Press] hereby undertake not to publish or cause to be published any statements that allege, expressly or impliedly, that [Dipela] was involved in any irregular transactions concerning [Popcru] and its related companies, pending the outcome of a complaint to be lodged with the Press Ombud against City Press by Dipela within 10 (ten) days of date hereof. Should [Dipela] fail to lodge his intended complaint against City Press within the aforesaid time, this undertaking shall lapse.” 4.10 This complaint should be seen against this background. 4.11 The statements about “reportable irregularities” appear to have originated in two letters issued by auditors SNG Grant Thornton (SNG) to the Irba during July 2019. 4.12 These irregularities are: referral fees to the amount of R100-million which SNG alleged were due to PGC, but instead have been paid to PGC Management Services (PGCMS), leading to possible contraventions relating to conflicts of interest and directors’ duties; and a deposit of R18-million, made by WLD on 18 January 2019, which had “no apparent business or lawful purpose”. 4.13 Pritchard submits: “SNG’s findings were incorrect and SNG arrived at them as a result of a failure to properly interrogate the transactions referred to despite being provided with sufficient information and an opportunity to do so.” 4.14 Prior to publication, Dipela responded to Yende’s queries through his PR, Madelain Roscher.  She provided explanations and documents relating to: the existence of an agreement between WLD and PGC; the structure of the PGC Group and the name changes of the entities involved; SNG’s letters and WLD’s responses; the referral fees and the R18-million transaction; and Dipela’s attorneys’ letter to SNG. 4.15 Despite the above-mentioned correspondence, the newspaper published an article in which Yende alleged that: there had been an irregular transaction of R18-million paid to a Popcru’s subsidiary “that raised questions about misappropriation of funds”; SNG had raised a “red flag” over this transaction; the money had been deposited by Dipela as a payment from PGCMS to WLD; Dipela’s and Cebekhulu’s (referred to him in the article by the surname of Makhaza) opponents had accused them of irregular transactions at PGC; and there had been misappropriation of funds in the PGC of approximately R200-million. 4.16 After Yende’s queries, but before publication, Fengu again sent questions to Dipela – this time relating to litigation between the LMG Group and EVM. (Seventy-five percent of the shares in the LMG companies are owned by Royale Energy, which is a wholly owned subsidiary of Royal Energy Group which, in turn, is owned by Popcru Trust.) 4.17 Despite the fact that the litigation between LMG and EVM had nothing to do with PGC or Popcru, Fengu nevertheless sought to link the two. His questions to Dipela implied that: there were “missing PGC funds”; those funds were used to invest in LMG or EVM; and Dipela was involved in the funds going missing. 4.18 On October 2, Roscher responded to Fengu’s email. She: attached the previous response addressed to Yende on September 25, including supporting documents; and provided some information relating to the EVM litigation. 4.19 City Press did not engage with Dipela with regard to these further queries – it simply went ahead to publish, without due regard to his responses (which are set out more fully below).

5. The arguments

1. 1 Damning allegations published

1.  The article

5.1.1.1 Dipela complains that, despite his detailed responses (see Sub-section 5.2, where this matter is dealt with), the article still falsely alleged that:

• there had been an irregular transaction of R18-million paid to one of Popcru’s subsidiaries that raised questions about misappropriation of funds;
• SNG had raised a “red flag” over the R18-million transaction;
• the money had been deposited by him as payment from REG (at the time PGCMS) to WLD;
• the complainants and Cebekhulu’s (Makhaza’s) opponents had accused them of irregular transactions at PGC; and
• there had been misappropriation of funds in PGC to an estimated total amount of R200 million.

5.1.1.2 He argues that any reasonable reader following the series of articles in City Press would conclude that the R200-million referred to in the previous article and the same amount mentioned in the article in dispute were “both misappropriated funds in the form of misdirected referral fees”. Despite this, he submits, City Press attempted to draw a distinction between the referral fee issue flagged in the SNG letter and the R200-million misappropriated funds (which the article left as an unresolved issue).

5.1.1.3 Dipela submits that, at the very least, this reflected a failure on the newspaper’s part to verify doubtful information, “but more likely demonstrates a distortion or misrepresentation of the facts…” Therefore, he argues, the reportage cannot be said to be truthful, fair and accurate.

5.1.1.4 In conclusion he says, “The information provided demonstrates that there is no substance to the insinuations that there was anything untoward about [his] involvement with, inter alia the:

• loan to PGCMS;
• referral fee arrangement; and
• R18-million transaction.”

5.1.1.5 Marshall points out that the article referred to the transaction as “suspicious”, while the sub-headline referred to it as “irregular”. 5.1.1.6 She submits it is a fact that SNG Thornton raised a red flag over this transaction and reported the matter to the Irba. 5.1.1.7 She also points out it was SNG Thornton’s letter that says Dipela deposited the money – not the newspaper. 5.1.1.8 The editor adds: It is a fact that a faction in Popcru accuses Dipela and Makhaza (Cebekhulu) of irregular transactions at PGC. “We do not say anywhere in the story that both Dipela and Makhaza performed irregular transactions or are guilty of such acts. We say they are accused”; and City Press reported the misappropriation of funds estimated to be totalling about R200 million as an allegation and not as a fact.

5.1.1.9 In his response to Marshall’s reply, Pritchard denies that the R18-million transaction was irregular – he says it was a “normal business transaction in the ordinary course of business between the two companies”. He refers in this regard to a letter of confirmation by Absa, dated 19 July 2019.

5.1.1.10 He says the allegation that Dipela was laundering money through his personal accounts was reckless, given the proof provided by Dipela. This, he argues, amounted to malicious reporting which was defamatory of him.

5.1.1.11 Regarding the alleged misappropriation of an estimated R200-million, he says he cannot respond as Dipela was not involved with PGC at the time.

5.1.1.12 Pritchard says the main headline and the sub-headline were meant to sensationalise and to attract attention to the article.

5.1.1.13 “Furthermore, to state that ‘City Press has seen a … letter…’ does not simply give [the newspaper] the right to publish everything that it sees without investigating the veracity of that which is stated in a written document.”

 

5.1.1.14 He also submits that the story never identified the “faction in Popcru” that allegedly accused Dipela and Makhaza (Cebekhulu) or irregular transactions at PGC. “One can only draw the conclusion that the journalist is prepared to print anything that is told to him by anyone, without demur, in order to create a story.”

Analysis

5.1.1.15 The panel has taken cognisance of two stories about the same matter published on 10 November 2019 and 16 February 2020 respectively (headlined, Hawks probe mars Popcru congress, and, Union leaders and the missing R200m).

5.1.1.16 This was necessary for the panel to understand the context of the article in question, but that was so far as we could go – those stories were not the subject of the complaint that we were dealing with.

5.1.1.17 So then: It is not in dispute that, at the time of publication, (a) audit firm NSG Grant Thornton had reported a suspicious transaction of R18-million to a subsidiary of Popcru and (b) the FIC’s investigation had still been underway.

5.1.1.18 The complaint is that the allegations were inaccurate. Therefore, the central question is whether City Press could reasonably have been expected to verify allegations made in the audit report.

5.1.1.19 The answer to this question has to be an unequivocal “no”. That was the FIC’s job and responsibility – not that of the newspaper.

5.1.1.20 This means that, even if the allegations in the audit report were false, the newspaper still was justified to publish them at a time when the FIC has not yet concluded its investigation. City Press was reporting on a report – and had every right to do so.

5.1.1.21 Also, there needs to be some understanding that the complainant’s denials of the allegations did not render the allegation per implication false – the denials merely represented the other side of the story, which was for the FIC to decide on. Therefore, it really does not matter how much “evidence” (which indeed was quite elaborate) was given to the newspaper to contradict the allegations in the audit report – City Press would have overstepped its boundaries if it even attempted to do so.

5.1.1.22 The same goes for this panel.

5.1.1.23 Given the above, the only other question before the panel is not if the allegations complained about were true or false, but rather whether City Press accurately reported the contents of the audit report.

5.1.1.24 The panel has no evidence to the contrary, and neither does Dipela complain that the newspaper has misrepresented the content of the audit report.

5.1.1.25 The only conclusion the panel is left with regarding this part of the complaint, is that the reportage at the time of publication was reasonable and fair.

5.1.1.26 The panel concludes that it was.

5.1.2 Damning allegations published: The headline

5.1.2.1 The headline read, Money laundering allegations haunt Popcru – An irregular transaction of R18 million paid to one of Popcru’s subsidiaries has raised red flags among auditors about misappropriation of funds.

5.1.2.2 Dipela complains that the headline either stated or implied that he had been involved in irregular transactions (theft and money laundering).

5.1.2.3 The newspaper contests this.

Analysis

5.1.2.4 The panel is satisfied that the main headline reasonably reflected the content of the story – there indeed were money laundering allegations, and it would have been odd if it did not “haunt” Popcru.

5.1.2.5 The same goes for the sub-headline – with the exception of the use of the word “irregular” (transaction). At the time of publication, it was still an allegation that the transaction was irregular. It was true that a “suspicious” transaction of R18-million had been reported to the FIC (as stated in the introductory sentence of the story) – but “suspicious” does not necessarily translate into fact. The FIC has not yet made any decision on this transaction.

5.1.2.6 What the use of the word “irregular” has done, is that it in fact turned a question mark (an allegation) into an exclamation mark (a fact).

5.1.2.7 Therefore, the use of the word “irregular” was not a fair and reasonable reflection of the content of the story (that correctly labelled the transaction “suspicious”). The use of the word “suspicious”, instead of “irregular”, or a “notice of an irregular transaction”, or something of the like, would have done the trick.

5.1.2.8 In conclusion, then, while we find the use of the word “irregular” problematic, the word “suspicious” did appear a few words later. The panel is satisfied that there was no unequivocal intent to misrepresent. However, our view is that more care ought to have been taken to more accurately reflect the essence – that the auditing company was concerned enough to report a suspicious transaction which was then referred to the FIC.

5.2 Comments ignored

5.2.1 Dipela complains that the newspaper omitted relevant information that was provided by him.

5.2.2 Marshall says Irba chief executive officer Jenitha John confirmed to City Press that it did receive the report or complaint from SNG Grant Thornton and that the Irba uploaded all supporting documentation from SNG to the Financial Intelligence Centre’s (FIC) portal for an investigation. 5.2.3 This transaction, she adds, took place against the backdrop of infighting within Popcru about allegations of misappropriation of funds concerning the PGC’s subsidiaries. 5.2.4 She says City Press extensively quoted Dipela’s response pertaining to the story, which is largely about the R18-million transaction. 5.2.5 The editor says City Press adequately carried Dipela’s response regarding the R18-million transaction. She refers to the following: “Dipela, however, said that the R18 million transaction was between PGC Management Services (PGCMS) and Workerslife Direct and did not involve Royale Energy”; “ ‘An advance payment was made by Workerslife Direct on 16 January 2018 to PGC Management Services of R18 million. The money was paid back three days later,’ Dipela said”; “ ‘The matter was investigated internally and no financial mismanagement was found. Royale Energy has never received any money from WorkersLife Direct, nor has Royale Energy paid out any money to WorkersLife Direct,’ said Dipela” “On September 23 2019, Dipela’s lawyer, Jap Sanchez, responded to Chetty and Louis Thom, the regulatory board’s lawyer, about the irregularities that SNG Grant Thornton had reported on July 10, July 16, August 8 and August 16”; “The July 10 reportable irregularity concerned R100 million in referral fees that had been paid to PGC Management Services, which was dormant and whose sole director was Dipela, instead of Popcru or PGC”; “John, however, said this irregularity had been withdrawn to be amended and re-submitted anew on July 16”; “Sanchez pointed out in his letter that Dipela was not a subject of the audit because he had resigned from PGC on March 1 2017, which SNG Grant Thornton auditors should have been aware of”; “Furthermore, in terms of the Auditing Profession Act and at law, you are required to express your opinions in utmost good faith and with the necessary competence and skill, Sanchez wrote. ‘It is in noted in this regard that the reports are fraught with factual errors and unsubstantiated assumptions and conclusions, and the negative aspersions directed against our client are broadly brushed, unfounded and factually incorrect,’ Sanchez said”; “Sanchez further said that it appeared that documentary evidence, presentations and submissions by Workerslife Direct Management to SNG Grant Thornton were ignored”; and “ ‘Your conclusions were negligently made and/or not considered with the due competence and skill required in the context of and detailed responses proffered by management of the entity to the matters raised in your first reportable irregularity reports,’ he wrote.”

5.2.6 Pritchard says that, while it is true that the reporter quoted certain responses from the document provided by Dipela’s PR agent PRWorx, he quoted selectively by omitting relevant information.

5.2.7 He especially refers to a:

• letter from Absa pertaining to the R18-million transaction that the journalist “simply disregarded”; and
• copy of a letter from Du Toit-Sanchez-Moodley Inc (Dipela’s attorneys at the time) to SNG, dated 23 September 2019.

Analysis

5.2.8 The complaint is that the newspaper omitted material information provided by the complainant.

5.2.9 At the hearing, the panel asked Pritchard to point out what material he was referring to, as he was unclear in his complaint about exactly what was omitted.

5.2.10 In the end, Pritchard came up with a response given to City Press in 2019.

5.2.11 After consultation with Dipela, he also pointed the panel to the complainant’s responses to Sama Yende, dated 25 September 2020. This document was much more relevant to the panel than the one given in 2019, given the time that has lapsed since then.

5.2.12 In order for the panel to be able to make a reasonable decision in this regard, we asked Pritchard to specify which response he referred to.

5.2.13 He then pointed out the following:

• Proof that an R18-million transaction between PGC Management Services and Workerslife Direct was valid (an Absa document); and
• The sentence, “Five of Royale’s seven board members are independent business executives and have no relationship with Popcru or any of its affiliates.”

5.2.14 Firstly, the story never stated that the R18-million transaction was not “valid”. A validation by a bank cannot by itself guarantee that a transaction was above board. Given that fact, the panel opines that this specific omission was not material.

5.2.15 The sentence quoted above can also not be seen as material, as the publication of that statement would not have changed the thrust of the article.

5.2.16 Based on the above, as well as on the quite lengthy reporting of Dipela’s response in Yende’s article, the panel has no reason to uphold this part of the complaint.

5.3 False link

5.3.1 Dipela complains that the newspaper sought to link legitimate business transactions to what appeared to be political squabbles among leadership of Popcru. “This is irresponsible reporting in light of the information provided and documents that were provided to City Press prior to publication,” he argues.

5.3.2 Marshall says Popcru’s political squabbles cannot be divorced from how the business arm was or is alleged to be run. “Therefore, the R18 million transaction, which City Press’ story is based on, is intertwined with the political squabbles that emanated from the differences in the manner the businesses were or are run.” 5.3.3 She adds that, if there was no complaint about the affairs of PGC, there probably would be no story for City Press to report. She therefore denies that it attempted to link unrelated matters.

5.3.4 Pritchard replies that Marshall neither divulges from where the allegations of political squabbles in Popcru came from, nor from where the allegations pertaining to the businesses of Popcru emanated – “other than the SNG complaint to IRBA and seeks to inextricably link the two unrelated matters”.

5.3.5 “It is correct that there would be no story for the City Press to report if the two matters were dealt with separately, as they should have been.”

Analysis

5.3.6 The question was if it was wrong to link a business transaction with political squabbles within Popcru.

5.3.7 The debate on this issue was peculiarly scant – and perhaps that was for a good reason, as it would be difficult to divorce politics from business.

5.3.8 Besides, the article merely stated that Popcru’s national executive committee had been divided on this matter. The panel accepts that this was quite possible. We also note that Dipela does not dispute that there was a division in this executive committee – he merely complains about the link that the article made between the transaction and “politics”.

5.3.9 The panel finds the reporting on this issue to be reasonable.

5.4 Defamatory, harmful

5.4.1 Dipela complains that the article attributed conduct of theft and money laundering to him and argues it is therefore defamatory. He says such allegations are particularly harmful to him as the reporting has had a “material impact on his business relations and his ability to conduct his business affairs”.

5.4.2 Marshall replies that the newspaper sought to report truthfully, accurately and fairly. She says it was reasonable to publish the allegations and denies that the reporting was malicious or defamatory of Dipela. “The statements we published are based on a complaint by IRBA to the FIC and matters in the public domain about the conflict within Popcru concerning its businesses,” she affirms. 5.4.3 She adds the: newspaper published Dipela’s response to the allegations regarding the R18-milllion transaction in six paragraphs; allegations were presented as such in the story, and not as facts; and the story did not state as fact that Dipela was guilty of theft and money laundering or performed such acts – it merely reported that such allegations existed as they had been raised by some in Popcru.

5.4.4 Pritchard rejects Marshall’s response. He submits, “[Dipela] provided all pertinent information to the City Press in order for the [newspaper] to carefully consider the matter prior to printing the article … and clearly did not take into account any of the factual information provided by [him]. It rather sought to rely on unsubstantiated allegations from others to create a story and thus defame [Dipela] in the process.”

5.4.5 He also notes that Marshall does not identify the “some in Popcru” and argues it is unfair to expect of Dipela to “merely accept that they are unidentified persons within Popcru that are making certain unsubstantiated allegations and to accept the repercussions flowing from the article without challenge.”

5.4.6 He emphasises that City Press relied on information allegedly provided by unidentified parties within Popcru – information which the journalist failed to verify prior to publication.

Analysis

5.4.7 Given the fact that the panel has dismissed the two main parts of the complaint, it follows that we have no ground to find for the complainant on this issue.

6. Finding

6.1 The complaint regarding the story as well as the main headline is dismissed.

6.2 The sub-headline was in breach of Section 10.1 of the Press Code that says, “Headlines … shall not mislead the public and shall give a reasonable reflection of the contents of the report or picture in question”.

7. Seriousness of breaches

7.1 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).

7.2 The breach of the Press Code as indicated above are all Tier 2 offence.

8. Sanction

8.1 While the panel found the article to be reasonable and fair,  we were of the view that the inaccurate use of the word “irregular” conveyed the impression that a finding had been made that there had been an irregular transaction. This was not so and the publication must apologise for this inaccuracy which could have been avoided if more care had been taken.

8.2 The newspaper is directed to publish the apology prominently on all its platforms where this sub-headline appeared (print and online), with a headline containing the words “apology” or “apologises”, and “Dipela”.

8.3 The text should:

• 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 the panel.

9. 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 [email protected].

Karthy Govender, public representative on the Adjudication Panel

Heather Robertson, press representative on the Adjudication Panel

Johan Retief, acting Press Ombud