Pastor Alph Lukau & Others vs City Press

SUMMARY

The headline to the story in dispute read, Pastor, church and associates in unholy financial mess (published on 3 July 2022).

This ruling by Press Ombud Herman Scholtz was based on the Press Code that  was in effect before 30 September 2022.

 

The article was about Pastor Alph Lukau, leader of the controversial Alleluia Ministries International (AMI) church, who allegedly faced liquidation.

The first complaint was that the following sentence was inaccurate: “Multimillion-rand investments and companies belonging to controversial Alleluia Ministries International (AMI) church leader Alph Lukau and associates are believed to be undergoing liquidation…” The Ombud upheld this complaint. He said it did not assist City Press to highlight that “it is believed” that Lukau-linked companies were undergoing liquidation – they were either being wounded up or not. The newspaper could have ascertained this information by directing an enquiry to the Companies and Intellectual Property Commission (CIPC), he added.

Scholtz also upheld the complaint about the following sentences/phrases:

• “Secondly, Tarsus Shared Services did not/has not obtained a liquidation order from the Master of the High Court to dissolve assets of companies and entitles ‘linked to Pastor Lukau’.” The Master of the High Court did not issue liquidation orders, he remarked – only the court could;
• “The master of the high court on Wednesday subpoenaed the liquidators of the entities, cited as … ” He said the Master did not subpoena the liquidators – the Master subpoenaed banks, among others, based on a motivation by the liquidators; and
• The statement that the entity and entities linked to Lukau were “believed to be” under liquidation. This reportage did tarnish their dignity and reputation, as the reportage did not amount to a fair and accurate report of court proceedings,” he motivated.

Scholtz dismissed the complaint that:

• Lukau did not get a right of reply prior to publication. While City Press did ask for comment, and included the comment in the article, it was even not necessary to do so as the information was based on court papers; and
• the article should have stated that it was based on limited information, that Lukau’s privacy was invaded, and that the newspaper did not do enough to verify its information. The Ombud pointed out that the article made it clear that its information was based on court papers.

The Publication was directed to publish an apology and correction for the breaches of the Press Code.

 

THE RULING ITSELF

Date of articles:                  3 July 2022

Headline of publication:   “Pastor, church and associates in unholy financial mess”

Author:                                  Mduduzi Nonyane

Particulars

1. The complainants are Pastor Alph Lukau, Alleluia Ministries International (“AMI”), Pastor Celeste Lukau and Mr John Ferguson, all represented by Sim & Buzo Attorneys.

2. This ruling is based on written representations by Mr Sim and responses by Rapule Thabane from City Press.

3. I also requested copies of court documents which were considered.

Background

4. AMI and its leader, Pastor Alph Lukau (“Lukau”), is in the news due to alleged financial difficulties. I say “alleged” as the link between Lukau and AMI on the one hand, and the other entities appears to be in dispute.

5. What is not in dispute, is that Kings Vision Holdings (Pty) Ltd (“KVH”) has its fair share of financial difficulties. Mr Ferguson was the only director of the company when it entered liquidation, although Lukau is a former director. The entity is in liquidation. There are or were several court applications relating to KVH and its financial position.

6. At the risk of oversimplifying a matter which is all but straight-forward, the nub of City Press’ reportage on the matter is the following:

6.1 Multi-million-rand entities “belonging to…Lukau and associates are believed to be undergoing liquidation”;

6.2 Liquidators found that “financial entities belonging to Lukau have no meaningful assets, despite millions flowing from their bank accounts”;

6.3 “Lukau and his associates owed multiple creditors more than R100 million”;

6.4 One bank account under scrutiny held R42m which was earmarked for the purchase of the church’s megapremises in Lyndhurst, but investigations could not detect where the money had ended up.

7. In somewhat provocative style, the headline summarised the status quo as an “unholy financial mess”. The article is reportedly based on court documents.

8. But, as with most highly technical subject matter, the devil is in the detail. The complainants list a raft of alleged transgressions of the Press Code.

Complaint

9. The complaint cites several clauses of the Code:

9.1 Failure to report truthfully, accurately, and fairly (Clause 1.1)

9.2 Insufficient pre-publication comment (Clause 1.8)

9.3 Failure to verify the accuracy of doubtful information (Clause 1.7)

9.4 To state where information is based on limited information (Clause 1.9)

9.5 Offending the privacy, dignity and reputation of the complainants (Clause 3)

10. Thabane responded that City Press is not in violation of the Press Code as “every fact stated can be backed up and most of the information is from court papers that the complainants are aware of”.

11. Thabane proceeded to list case numbers of court cases and what transpired during those proceedings. It is not necessary to repeat all those submissions although I have had regard to them all.

12. It is clear that both parties relied on court papers to substantiate their allegations and complaints. Unfortunately, and despite the best efforts of the Public Advocate to seek further clarity from both parties on the various court cases in different courts, the water only got muddied further. What became apparent, is that the parties had different interpretations of the same court documents.

13. In the interest of fairness and getting to the heart of the facts, I requested City Press in terms of Clause 6.1.3. of the Complaints Procedure to furnish me with the court documents relied upon. Court documents are not confidential. I was satisfied that no prejudice would ensue to any party if I had regard to the source documents (court papers) in this matter.

Analysis

14. I have had the benefit of reading 243 pages of court papers provided by City Press.

15. One of the privileges and curses of being a journalist, is having to be or to become an expert in any number of fields within weeks or even days. It is the work of a journalist to make sense for her or his readers of the subject matter. To do this, the journalist must master the subject matter him- or herself before attempting to interpret it for readers.

16. It is a daunting task. In the current matter, mastering the subject matter would require some understanding of the Insolvency Act and insolvency procedures, court procedure, and the Companies Act. I have sympathy with journalists who do not have a legal background and find themselves in the minefield of reporting on litigation and legal matters. However, that remains the duty of journalists. They have access to experts, senior colleagues, and their sources to guide them through complex subject matter.

17. This prelude is necessary as it appears City Press got lost in the labyrinth of technicalities.

18. What follows is my attempt to reflect the objective facts and allegations made by the parties to the litigation.

19. KVH is in liquidation. It started out as a voluntary liquidation initiated by the company itself but was later converted to a court-ordered liquidation at the instance of a creditor, Tarsus Shared Services. The reason Tarsus insisted on converting proceedings appears to have been a desire to subject the financial affairs of KVH to an insolvency inquiry in a way that would not not have been possible had the liquidation remained a voluntary liquidation process.

20. This insolvency inquiry into KVH was initiated by the liquidators of KVH. The liquidators say in court papers they have established that vast amounts of money flowed through the accounts of KVH while the defunct company (KVH) has very little assets to show for it. According to the liquidators, over R250 million flowed through only one bank used by KVH over the period January 2019 to February 2020. The liquidators requested bank statements of KVH from other banks as well.

21. Importantly, the liquidators allege that multiple millions of rands flowed from KVH to Lukau, Lukau’s wife, and entities linked to Lukau. The liquidators allege, based on a very preliminary investigation, that the following individuals or entities received the following payments from KVH:

21.1 Mr Ferguson: R2 430 500 (with deposits of R7718.39 made to KVH)

21.2 Pastor Lukau: R1 110 194.36 (with deposits of R350 000.00 made to

KVH)

21.3 Celeste Lukau: R1 924 758.00

21.4 Alleluia Ministries: R12 024 710.67 (with deposits of R3 675 195.00

Made to KVH)

22. The liquidators state that they are attempting to understand, through the inquiry, the extent and rationale of transfer of funds and that many of those transactions could be impeachable transactions, a concept stemming from the Insolvency Act. In layman’s terms: The liquidators say they might want to consider looking to Lukau and associated persons and entities to recover money that allegedly flowed from KVH to them.

23. In order to further the inquiry, the liquidators asked the Master of the High Court to issue subpoenas to, amongst others, most commercial banks, to provide documents and information for the insolvency inquiry. The subpoenas asked the banks to provide all the bank statements of Lukau and associated entities and other documents.

24. Lukau and associates felt that the issuing of the subpoenas for their information was unjustified and procedurally flawed. They approached the Gauteng High Court (Pretoria) on an urgent basis to stop the banks from divulging their information during the insolvency enquiry. The liquidators pushed back by filing answering papers detailing what can be euphemistically described as alleged links between Lukau and associates on the one hand, and KVH on the other.

25. The outcome of the urgent application is unknown to me and not relevant for current purposes. The above is, in short, the factual matrix that was available to City Press at the time of publication. I have no doubt that the contents of the court papers are in the public interest.

Factual inaccuracies

26. Clause 1.1. of the Press Code requires accuracy in reportage. This office has consistently held that even relatively small inaccuracies in reporting amounts to a breach of the code. This is because the Code demands accuracy and not ‘substantial accuracy’. (See Tim Edwards v YOU, Huisgenoot and News24, Complaint 8939)

27. The article stated: “Multi-million-rand investments and companies belonging to controversial Alleluia Ministries International (AMI) church leader Alph Lukau and associates are believed to be undergoing liquidation….”

28. The complainants say this is inaccurate and City Press was alerted to this misapprehension before publication. In fact, City Press quotes attorney Sim in the report as saying, “No entities owned by any of our clients are currently undergoing any liquidation process by the master of the high court”.

29. It does not assist City Press to highlight that “it is believed” that Lukau-linked companies are undergoing liquidation. The entities are either being wound up or not. It is a fact that is ascertainable by any member of the public by directing an enquiry to the Companies and Intellectual Property Commission (CIPC). Such information is even available in real-time and after-hours through several service providers and websites.

30. The sentence is a breach of Clause 1.1. of the Press Code.

31. The objective fact borne out of the court papers is that KVH is the only entity being wound up. KVH may be linked to the Lukau camp in a way in the way described above, but it does not mean that KVH is “owned” by the Lukau camp. Furthermore, City Press identifies the entities by name in the report, but there is no indication that any entity other than KVH is being wound up.

32. The complainants go on to state:

“Secondly, Tarsus Shared Services did not/has not obtained a liquidation order from the Master of the High Court to dissolve assets of companies and entitles ‘linked to Pastor Lukau’. Again, the only entity that was liquidated, being KVH Holdings, was liquidated voluntarily and Tarsus Shared Services had no part in such liquidation.”

33. Any person familiar with insolvency proceedings would spot a factual error in the passage. The Master of the High Court does not issue liquidation orders. Only the court can. This again shows the need for journalists to ensure that they are guided by experts in the fields they are reporting on.

34. However, I cannot agree with the complainants’ statement that “Tarsus Shared Services had no part in such liquidation”.  What I have seen in the documents provided, is a court order made on 11 April 2022 by the Honourable Madam Justice Crutchfield in an application brought by Tarsus in which it was ordered that “(KVH’s) voluntary winding-up by special resolution in terms of section 349 read with sections 200 and 351 of the Companies Act, 61 of 1973 is converted to a winding-up by the Court in terms of section 346(1)(2) of the Act”. I have explained in layman’s terms what the significance of this is. KVH is not in voluntary winding-up anymore. It is now in a winding-up by order of the court prompted by Tarsus.

35.  The next issue stems from the following passage:

“The master of the high court on Wednesday subpoenaed the liquidators of the entities, cited as Kings Vision Holdings (KVH), Premier Consulting Services, Al Resident Holdings and The Palace Boutique Hotel – whose directors are Lukau, his wife Celeste and business partner John Ferguson – to furnish the applicant (Tarsus) with assets belonging to the group”.

36. The complainants say “the Master of the High Court did not issue subpoenas in relation to entities referred to in the article to furnish Tarsus with assets of the group”.

37. After reading the court papers, it is clear that this complaint has substance. Firstly, the Master did not subpoena the liquidators. The Master subpoenaed banks, amongst others, based on a motivation by the liquidators. Secondly, none of the subpoenas included in the court papers were to the effect that any person had to “furnish…assets” to Tarsus.

38. The statement in the complainant’s complaint is, however, somewhat coy.

39. The publication indeed got its terminology wrong. But the objective facts borne out of the court papers does not completely exculpate the “Lukau entities” from all allegations of impropriety, as one may be led to believe through the complaint. The subpoenas to the banks (rather than the Lukau entities) called for all bank statements, etc. (rather than assets) of the Lukau entities as the liquidators believe funds were transferred to those entities.

40. While the passage under scrutiny is therefore in breach of Clause 1.1. of the Code, it would not serve the readers of City Press to apologise for these errors without clarifying the facts.

Pre-publication comment

41. It is common cause between the parties that the journalist approached Lukau on 1 July 2022 for comment prior to publication.

42. The questions were, broadly, whether entities belonging to Lukau, his wife, and Ferguson were undergoing liquidation and whether KVH was unable to fulfil its obligations.

43. Mr Sim gave a detailed response, clarifying that no entities owned by his clients were undergoing liquidation. He also said Kings Vision Holdings was placed in voluntary liquidations and that no claims have been proven against that entity at the time of the response.

44. Those comments from Sim were included in the article almost in their entirety.

45. But before the adequacy of the questions come into play, it must be considered whether pre-publication was indeed required by the Code. From the City Press report, it is clear that the article was purportedly based on court papers.

46. In Gama v Sunday Times (Complaint 8901), this office found that it is not necessary to obtain pre-publication comment when reporting on court proceedings or quasi-judicial proceedings. However, there is an important rider to this: the reportage must be a fair and accurate account of the court proceedings.

47. I have already found above that the reportage of the court proceedings was inaccurate. For that, the publication will have to make amends.

48. However, I have no reason to doubt the bona fides of the publication in their reporting of the court proceedings. They believed that they were giving a fair and accurate account of court proceedings when the article appeared. There was no obligation to contact the complainants for comment at the time of publication. The fact that it has since emerged that the reporting was inaccurate, cannot reasonably place a retrospective obligation on the publication where there was none. There cannot be a breach of Clause 1.8. based on information which has emerged after publication.

49. Notwithstanding the absence of an obligation to contact the complainants, City Press indeed sought comment and included the complainants’ responses at length. This is mildly mitigating for the publication. At the very least, the complainant’s version was included in the article.

50. This incident highlights the important function of pre-publication comment not just for fairness towards subjects of reportage, but also as a tool of verification and to avoid misunderstanding. (See National Arts Council vs The Citizen, Complaint 9532). The response from Mr Sim should have caused alarm bells to ring for the publication. Had the publication seriously considered the response and reconsidered their understanding of the court papers, the errors could have been avoided.

Privacy, verification, limited information

51. The contents of the different clauses of the Press Code overlap to a significant extent. It is meant to be a clear guideline to journalists on how to conduct themselves ethically. From this perspective, the expansive and detailed nature of the Code is highly beneficial.

52. As a “penal code”, for lack of a better word, the Press Code poses some challenges. Most notably, there is the practical consideration of duplication of breaches and the domino effect. It is a very common feature in complaints in that a very large number of clauses that were allegedly contravened, get cited.

53. The domino effect may be illustrated through the following fictitious example: An incorrect fact (Clause 1.1.) implies failure to verify (Clause 1.7), which leads to unbalanced reporting (Clause 1.2), an infringement of the reputation of the complainant (Clause 3.3.), while the incorrect fact also makes its way into the headline of the article, which then gets viewed as a different transgression (Clause 10).

54. In my view, the correct and sensible approach is not to take an overly technical approach by viewing each clause in isolation. The offending act or acts must be considered in a pragmatic way. Where the same act or sentence could potentially fall within more than one clause of the Code, it makes sense to confine the issue to the most appropriate – often the most serious – transgression.

55.  Each finding of a transgression should be for a clearly distinct act or passage in the article. In this case, the wrong of the publication is that it reported inaccurately from court papers.

56. Clause 1.9. requires publications to state where a report is based on limited information, and to supplement it once new information becomes available. The article made it sufficiently clear that the article was, at least purportedly, based on court documents. There was no transgression.

57. In terms of Clause 1.7., verification of information is only required when the information itself is doubtful. A journalist is entitled to report from official documents such as parliamentary documents and court papers without doubting the veracity of the information. (See Forensic Data Analysts, Keith Keating v Daily Maverick) (This is, of course, with the proviso that allegations in court papers must be presented as such and not as established facts.) In principle, there cannot be an obligation on journalists to “verify” information contained in court papers. Finding a breach of Clause 1.7. as it now emerges that the information in the court papers was reported inaccurately, would amount to a duplication of breaches.

58. Regarding the privacy and reputation of the complainants, a distinction should be drawn between the provisions relating to privacy on the one hand and reputation on the other:

58.1 The complainants’ argument of private financial information being divulged, is unconvincing. There is nothing private about what transpires in court proceedings.

58.2 In Avantgarde Development (Pty) Ltd vs Sunday Times and TimesLive (Complaint 9553), I have already expressed my reservations whether complaints of privacy infringements by juristic persons are tenable in terms of the Press Code. Clause 3.1. specifically refers to private lives of individuals.

58.3 Even if there were private facts divulged of juristic entities or natural persons, those facts are undoubtedly in the public interest.

59. Reputation requires special consideration in terms of Clause 3.3. It requires statements affecting the reputation of a complainant to be a) in the public interest, and b) falling within one of the categories listed in Clauses 3.3.1. to 3.3.4.

60. Had the court reporting been accurate, the complaint would not have had merit. But the reportage did not amount to a fair and accurate report of court proceedings.

61. The complainants, including the juristic entity (AMI), is rightly aggrieved by the insinuation that that the entity and entities linked to the Lukaus other than KVH are “believed to be” under liquidation. This was a breach of Clause 3.3. of the Code.

Conclusion 

62. City Press breached Clauses 1.1. and 3.3. of the Press Code.

63. The transgressions are Tier 2 (serious) breaches of the Code for which the publication is reprimanded.

64. The Publication is further directed to publish an apology and correction on all platforms on which they had published or publicised the article complained about.

65. The correction shall clarify:

65.1 That neither of the complainants who are natural persons face sequestration and none of the entities owned by them face liquidation.

65.2 That there was no order or subpoena to hand over any assets. City Press may clarify that the subpoenas issued by the Master of the High Court were for information about alleged cashflows from KVH to the complainants and that the complainants sought an interdict on an urgent basis to prevent the banks from divulging their bank statements.

65.3 The apology to the complainants shall apologise for creating the wrong impression that entities other than KVH are in liquidation.

67. The correction and apology are to appear at the top of the online article. The online article shall be amended to correct the mistakes and the clarification will indicate to readers that the article has been amended.

68. The correction and apology in the print edition is to appear either on page 3 (where the article appeared) or on page 2 at the editor’s discretion.

69.  The correction, apology and amended online article must:

• 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; and
• be approved by the Press Ombud.

Appeal

The Complaints Procedure lays 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].

Herman Scholtz

Press Ombudsman

4 December 2022