Appeal Hearing Decision: National Home Builders’ Registration Council vs Mail & Guardian

SUMMARY

The headline to the story in dispute read, Building board lines its pocket – A dossier makes allegations of members’ fees escalating and plans to outsource their own work (published on 13 April 2018).

This ruling by the Appeals Panel was based on the Press Code that was in effect before 30 September 2022.

 

The article said that, according to a dossier compiled by executives of the council, the board of the National Home Builders’ Registration Council (NHBRC) had held more than 100 meetings in a year, that it had planned to outsource its core work, and that its members had lacked even a basic knowledge of their job.

Tshepo Nkosi, manager: corporate communication and stakeholder relations of the NHBRC, complained that the article was deliberately biased, unfair, distorted and vexatious – this was despite providing the newspaper with a factual response (which it had omitted to report). He also said it was inaccurate to state that the board fees had escalated from R6-million in 2014 to R11,5-million in 2015.

The Ombud dismissed the complaint, upon which the NHBRC applied for leave to appeal.

The Panel said that, at the hearing, the issues were if the:

• headline and the contents of the article were inaccurate and misleading; and
• reportage was unbalanced in that it left out some material response which had been supplied, in writing, by the appellant’s spokesperson.

The Panel overturned the Ombud’s ruling and ordered that the newspaper had to:

• retract the headline and to apologise for it;
• apologise to the Board for the impression created in the story that members of the Board acted improperly in earning their remuneration during the respondent’s financial years 2014/2015 and 2015/2016; and
• incorporate the explanation given to it by the Board for the increase in the executives’ remuneration during the above financial years.

 

THE RULING ITSELF

BEFORE THE APPEALS PANEL OF THE PRESS COUNCIL OF SOUTH AFRICA

In the matter of

NATIONAL HOME BUILDERS’ REGISTRATION COUNCIL                      APPELLANT

AND

1. This is an appeal by the National Home Builders Registration Council (“appellant”) against the Ruling of the Ombud of the Press Council of South Africa, dated 13 July 2018.  The complaint was against the Mail & Guardian (“respondent”) in respect of the article published by the respondent on 13 April 2018, with the headline “Building board lines its pocket”.  The respondent says the article was based on a dossier compiled by three executives of the appellant, one of whom was on suspension. The headline speaks for itself.  The content of the story was that there was mismanagement and corruption by the appellant’s board. It was said for example that members of the board spent time on unnecessary meetings, resulting in their remuneration increasing drastically. There were allegations that the board eroded governance and reporting structures and also that too many staff members were suspended. In his Ruling, the Ombud restated the complaint as follows: “Nkosi (communications officer of the applicant) complains that the article was deliberately biased, unfair, distorted and vexatious – despite providing the newspaper with a factual response (which it has omitted to report). He also mentions it was inaccurate to state that the board fees had escalated from     R6 –million in 2014 to R11,5- million in 2015”. The respondent’s response, which the respondent still stands by, was that the report was balanced and accurate, and that the headline was a reasonable reflection thereof.  The defence was upheld by the Ombud, and the complaint was dismissed in its entirety.  The appellant sought, and was granted, leave to appeal.
2. At the hearing of the appeal, there were really two points in issue. Firstly, the complaint that the headline and the contents were inaccurate and misleading.  The second complaint was that the reportage was unbalanced in that it left out some material response which had been supplied, in writing, by the appellant’s spokesperson.
3. We mention at the outset that the role played by the media is an important one in a democratic state. It helps promote transparency and informs the public about what is happening around them; this would be of particular importance in respect of taxpayer funded institutions such as the appellant. Nobody needs a lecture on the importance of the role played by the media, and its freedom.  Equally so, nobody needs to be reminded of the media’s responsibility to ensure accurate and balanced reporting, for it is only that kind of reportage that would be of interest, use and importance to the public.

The complaint that inaccurate information was given in the headline and the body.

4. In its application for leave  to appeal, the appellant had inter alia argued that the headline and the contents of the story were wrong and misleading because  in reporting that since 2015 the cost of remunerating the directors increased exponentially from a budget of R4.5 to R18m in 2016, the respondent failed to distinguish between executive and non-executive directors; had this been done, it would have been shown that the latter group had in fact been paid quite less; that is, their payments would have constituted a very small portion of the R18m.  At the hearing, the argument about the failure to distinguish between the two categories (and a third one, namely, senior managers) was, while not quite abandoned, described by appellant’s counsel as being merely a red herring: the fundamental complaint was that the respondent failed to inform the reader as to how the figure of R18m was arrived at, even though the relevant information had been given to the journalist. This is the complaint we must now consider. In developing its argument, the appellant, in its heads of argument,

says that the thrust of the article, in line with the headline, is contained in the third paragraph of the article, which reads: “The board members’ fees escalated from about R6-million in 2014 during the term of the previous board to more than R11.8-million in 2015.  According to the NHBRC’s annual reports, spending on board members, executive and nonexecutive, increased to more than R18-million in the 2016 financial year.”

5. It is common cause that R18m was indeed paid (to all categories combined: non-executive directors, executive directors and senior managers).  But the headline says board members unduly benefitted themselves; surely that is what lining their own pockets means!  The appellant’s gripe is that, even as the story was written and the headline coined, the respondent was in possession of, or had access to, information which had been made public and which explains why and how the payments were made. This information would have shown that the money was properly and regularly spent; yet the respondent omitted putting it in. It cannot be denied that this information would have indeed negated the allegation of irregular payments, misappropriation or corruption. The information was contained in the appellant’s published 2015 and 2016 annual financial statements.  These reports were available before Parliament and its library as well as on the appellant’s website. Save to state that it could not open appellant’s website, the respondent did not deny that the information was indeed publicly available as the appellant argued. The information would have explained why the payments rose in 2014/2015, to R18m in 2015/2016.

5.1    Re 2014/2015 Financial Statement: Explanations are given for the increase; for example, that a Chief Financial Officer was appointed on 1 October 2014 at a cost of R939, 919.00.  Prior to that, there had not been a Chief Financial Officer since 1 December 2013; on 1 November 2015 a new Executive Manager was appointed (additional R129,211.00); and also Advisor: Special Projects at a cost of R2,060,122.00 was appointed; a position which did not exist in 2014.  The appellant says this information could have been gleaned from its statements, which were readily available.

5.2    The 2015/2016 Financial Statement: The main reasons for the increase in the 2016 financial year are also given in the financial statement. In this period, the number of non-executive members of the board increased from 12 in the previous year to 18; also, an employee who had been in a lower position and thus her salary not included in the previous period, rose to an executive position with a salary of R2,057,150.00.  This salary, by virtue of her position, had to be included in the financial statements unlike when she was in a lower position. Furthermore, the Minister appointed one of the board members as Executive Chairman, thus raising remuneration.

The headline, and the body, made such serious allegation that it was incumbent on the respondent to give the reader the information referred to above, which explains why the remuneration figures rose. Of course, the headline, as a result of this omission, rhymed with the content of the story.  No explanation, let alone a satisfactory one, is given why such material information was left out. The conclusion is inescapable that had the information been given, what appeared to be a juicy story, as foreshadowed in a tantalizing headline, would not have been juicy at all. The question arises what would be the point in an institution, financed by taxpayers, publishing its financial statements if they are not scrutinized, especially by the media.  Clearly the dossier was compiled by amongst others a disgruntled employee; the journalist should have done more before accusing people of lining their pockets.

6. The appellant is financed through taxpayer’s money.  Given the prevailing climate of alleged corruption by parastatals, such allegations are more likely to be readily accepted as true by the public.  While the press plays an important role in exposing corruption, it also has a duty to inform the public accurately. When the media makes serious allegations but withholds exculpatory information, it is a disservice to the public; it amounts to inaccurate reporting. It is our finding that the respondent reported in a manner that was in breach of article 1.1 of the Code of Ethics in that both the headline and the contents of the article were inaccurate and unfair.

The complaint that the appellant’s response was omitted in the report

7. This refers in particular to the explanation for the decision to outsource.  When this point was argued by the appellant, it was contended for the respondent that the point could not be raised before us because it was not mentioned in the complaint and therefore not adjudicated by the Ombud.  It was argued that this being an Appeal Tribunal stage, we were restricted to the four corners of the record. We dismissed the objection for two reasons:

7.1    Firstly, this is a so-called wide appeal where a new point may be raised; particularly, as it is the case here, where all the facts relied upon were at all times part of the record.

7.2    Secondly, it is not strictly correct to say the point was not raised.  In its original letter of complaint, the appellant said the following:

“It is clear from the angle and tone taken on the story that you were on the prowl to convey a distorted message about the NBHRC Board despite efforts made to provide your newspaper with a factual response (see the attached file).  The glaring omission of our response indicates a lack of journalistic integrity and ethics and we will be taking this up with the Press Ombudsman.  It is disappointing that the Mail & Guardian has allowed itself to be used in driving a certain agenda despite the facts presented to it”. Own emphasis)

The appellant then went on to mention what it described as an “example (of) your journalist’s blatant disregard for (sic) factual reporting”. The example given relates to the monies paid.  The respondent sought to restrict the appellant’s case to the example given.  But as the letter of complaint says in so many words, the omission of the information about the monies paid was just an example.

7.3    Thirdly, in his Ruling, the Ombud said that the story did not omit any important information. This finding of his clearly kept the issue of omission of information alive, thereby enabling us to consider whether he was right or not.

We therefore proceed to consider whether there was indeed a material omission of part of the appellant’s written response as contended for by the appellant. We cannot be restricted to one singular omission that is described in so many words as a mere example, when the appellant had taken the trouble to submit a comprehensive written response to material questions.

8. The following exchange took place between the journalist and the appellant’s spokesperson, Mr Nkosi, regarding the outsourcing. The journalist’s question: “Why would NHBRC outsource one of its core functions?”. The appellant’s spokesperson gave a particular response in writing (see below). The article, however, went on to report as follows: “The dossier also accused the council of trying to outsource work that forms the core of the NHBRC’s functions …. The dossier alleges that there is absolutely no evidence that the board conducted a thorough assessment to determine whether outsourcing would work” (own emphasis); this despite the fact that the journalist was sitting with the following written response from the appellant’s spokesperson: “NHBRC Response: The NHBRC’s establishing legislation does make provision for the organisation to outsource the inspectorate function where necessary.  The homebuilding industry is by and large cyclical and seasonal which makes it incumbent on the organisation to ensure that employees do not sit idle during slow seasons.  Following extensive research, it became apparent that the NHBRC ought to consider a hybrid inspectorate model, which combines both insourcing and outsourcing when it made economic sense.  This is particularly apparent in the subsidised housing sector, where the NHBRC human resources are over stretched, in terms of servicing outlying and rural areas.  This provides for opportunities for SMME’s and other competent service providers to supplement the NHBRC inspectorate”.  Not only does the appellant’s response provide a rational explanation for outsourcing and that the law allowed it, but also states that extensive research had been done, thereby contradicting directly the allegation that no assessment was done prior to outsourcing. The underlining of the above portions of both the allegation and the spokesperson’s answer to it was done to demonstrate the materiality of just one omission given as an example.

The omission of relevant and extensive response which was moreover in writing, resulted in unbalanced reporting.

9  It is our view that the respondent breached article 1.2  of the Code of Ethics.

10. For the reasons given above, the appeal must succeed. The following Order is therefore made:

10.1  The Ruling by the Press Ombud dated 13 July 2018 that the appellant’s complaint is dismissed, is hereby set aside, and replaced by the following: The respondent has acted in breach of articles 1.1 and 1.2 of the Code of Ethics and Conduct for South African Print and Online Media

10.2  The respondent must publish a statement in which the respondent:

10.2.1: retracts the headline that the Board of the respondent lines its pocket.

10.2.2: apologizes to the Board for the above headline and the impression created in the story that members of the Board acted improperly in earning their remuneration during the respondent’s financial years 2014/2015 and 2015/2016

10.2.3: incorporates the explanation given to it by the appellant for the    increase in the executives’ remuneration during the above financial years

10.2.4 incorporates the appellant’s response regarding the outsourcing of its work.

10.3 The statement must reference the story and its headline published by it on 13 April 2018.

10.4 A copy of the proposed statement to be published must be submitted simultaneously to the Director of the Press Council for approval, and to the appellant for comment, within 4 days of receipt of this Decision, after which the appellant, if so wishes, shall submit its comment to the Director and the respondent within 3 days of receipt of the proposed statement.

10.5 In the event the parties do not agree on the final version within 3 days of receipt of the appellant’s comment, the Director shall have the final say, after which the respondent shall publish the statement as approved by the Director in its next edition following the Director’s approval.

Dated this 16th day of October 2018

Judge B M Ngoepe, Chair, Appeals Panel

Ms C Mohlala, Public Representative

Mr T Makhadi, Media Representative