Appeal Hearing Decision: ADV Boyce Mkhize vs City Press

IN THE MATTER BETWEEN:

ADV BOYCE MKHIZE                                                                                APPELLANT

AND

[1]     On 5 April 2015 City Press (“respondent”) published a story about Mr Boyce Mkhize (“appellant”) with the headline “A failing Mpumalanga parastatal’s former CEO is believed to have quit his job to escape consequences of misspending at least R40m”.  On 12 June 2016 respondent published another story with the headline “Look who is back”.  These articles were referring to the appellant, who was at one time the CEO of the parastatal referred to, known as the Mpumalanga Economic Growth Agency (“MEGA”).  The content of both articles carried allegations that the appellant had acted irregularly in handling the financial affairs of MEGA; eg by making irregular payments to contractors or by awarding tenders.  He had left MEGA in the midst of these allegations with 3 years more to go on his contract.  Reference to “Look who is back” is to the role he played thereafter at the South African Broadcasting Corporation (“SABC”).

[2]     Appellant did not lodge any complaint against the first article, but only did so when he lodged one against the second one.  The respondent did not object to the fact that the complaint in respect of the first story was out of time, and the Ombud therefore considered both complaints.

[3]     The complaints were summarized by the Ombud in his Ruling dated 29 July 2016:

“l     stories falsely and unfairly suggested a report stated that he had personally incurred irregular expenditure while he had been CEO of Mpumalanga Economic Growth Agency (Mega), to the tune of R25-million;)

l   Newspaper did not provide him with a copy of this report despite several requests; and

l   Journalist did not interview him………..

He also questions the existence of the report, as Mega denied any knowledge of it, and concludes that the reportage has defamed him.”

[4]     The Ombud held that the respondent violated article 1.1 in two respects. Firstly, that it failed to state that the report on which it based its stories was not a final report. Secondly, in wrongly stating that the report was a “forensic report”  instead of an ‘internal audit report”. He also held that respondent breached article 1.3 of the Code in that respondent failed to mention that the use of the word “corruption”, although justified, should have been stated as respondent’s own interpretation. A sanction was then imposed in the form of a reprimand. The rest of the complaints were dismissed. The appellant was unhappy and lodged an appeal; in response, the respondent also lodged a cross-appeal.  Leave to appeal was granted to both parties.  The respondent said that it had since come across more information, which it submitted to the Office of the Ombud.

[5]     The stories turned on a report, which respondent referred to as a “forensic report” and which allegedly implicated the appellant.  According to the respondent, this report had been commissioned by MEGA and was submitted to it. But MEGA denied the existence of such a report.  By the time the appeal came to be heard, the following were the main issues:

(a)     whether such a report existed;

(b)     whether the respondent’s articles accurately reflected the contents of the report, assuming that it did exist;

(c)     whether the articles were correct in alleging “corruption” on the part of the appellant;

(d)   whether the Ombud was correct in holding that respondent breached article 1.3 of the code;

(e)    appellant’s complaint that he was not given the opportunity to comment on the report.

We now need to deal with these issues.

Whether the report did exist

[6]     A substantial portion of the appellant’s argument was directed against the existence of the report, relying heavily on the fact that MEGA had consistently denied its existence. On the other hand, respondent insisted that the report did exist, notwithstanding MEGA’s denial of it.  Respondent said that it had seen both the unsigned and the signed (final) version already at the time of writing its first article; it later secured and kept a copy of the signed off version. A copy of the signed off version was submitted to us on the basis of confidentiality as clearly the appellant had not been given a copy by MEGA.  We have seen the report. It is so detailed and comprehensive that it cannot be anything but a report commissioned by, and submitted to, MEGA. We therefore find against the appellant on this point.  However, that is not the end of the matter. Was the report a forensic report or an internal audit report?

[7]     The report in question is entitled “Internal Audit Report”. Respondent conceded that it was indeed not a “forensic report” in the sense that the latter is understood to be, at least technically, but argued that this was immaterial. In this respect, respondent argued that, after all, the investigative methods used in compiling both a forensic and an internal audit report are the same, and so too the objective. Respondent further argued that an ordinary reader would not appreciate the (technical) difference.  This is not a good argument. The truth of the matter is that the report in question is not a “forensic report”, which is something quite different; moreover, there was this added allegation that it had been prepared with the participation of external auditors, namely, PricewaterhouseCoopers (PwC).  The public would therefore consider a “forensic report” prepared through the assistance of external auditors of such high international reputation as more damning than an internal audit report. Our view is therefore that, by reporting that the appellant was implicated by a “forensic report” when this was not the case, the respondent violated article 1.1 of the Press Code as the Ombud found.  MEGA is not before us, and it is therefore not for us to determine why it denied the existence of not only a forensic report, but also any other report.

Whether the articles accurately reflected the contents of the internal audit report

[8]     Having found that a report existed, albeit in the form of an internal audit report, the next issue is whether the articles accurately reflected its contents. It is a lengthy and detailed report; we will only restrict ourselves to some of the parts material to determining the issue at hand. One thing sure is that the report makes certain adverse findings:

8.1    There is a heading “R7Million irregular expenditure arising from tenders”. This appears on page 15 of the report.  The finding in that regard reads: 2 out of 25 tenders “have exceeded the budget which leads to an increase in irregular expenditure from tenders to R7Million.” Details are then given.

8.2    There is a heading: “Irregular appointment of a contractor for tender” on page 19.  There is a finding thereunder which says the appointment of a company known as Mphumelelo was made without the necessary approval.

8.3    On page 21 mention is made of irregularities “regarding contract management between MEGA and service provider”.  Finding: payment of two out of 25 contracts “exceeded 15% or 20% in contravention of (the) Treasury regulations”. The amounts are then detailed.

8.4    As far as the allegation by the respondent that overspending was under-reported to the Provincial Treasury is concerned, it is based on what appears on page 25 of the report.  What appears there is that the amount reported to the Provincial Treasury as irregular spending was R4,030,660.17 less than what should have been reported.  Details of the figures are given.  There was therefore, on the face of it, some under-reporting.

It can therefore be said that the respondent accurately reflected the contents of the report; we therefore agree with the Ombud’s finding on this point.

Whether the articles were correct in saying there was “corruption” on the part of the appellant as well as the implication of the appellant

[9]     It should be mentioned that although the audit report states some explanations, this does not detract from the fact that there were, on the face of it, some findings of irregularities.  At the very least some of the findings in the audit report, such as those mentioned above in paragraph 8, sustain a reasonable interpretation of corruption. It is also stated in the latest article that: 76 of the 439 companies on Mega’s data base had the same directors; 108 companies used the same fax number; 42 had the same cellular telephone number and 181 had the same land line number! The adverse findings mentioned above justify the use of the word “corruption” even if the audit report does not use the word. Moreover, the heading speaks of “possible “ corruption, and the content of the stories speaks of “allegations” of corruption. Insofar as the implication of the appellant is concerned, it should be borne in mind that, at all material times, he was the CEO and therefore the accounting officer.  Fingers had to point at him as these irregularities took place under his watch; the public would understand that he was being implicated in that capacity. In this respect, it is noteworthy that there are no allegations that he personally benefitted. As said earlier, the Ombud’s finding is that respondent breached article 1.3 of the Code in that respondent should have stated that the use of the word “corruption” was its own interpretation and not used in the report. For the reason given above we do not agree with him.

Whether the Ombud was correct in holding that respondent breached article 1.1 of the Code

[10]  The above finding was on the basis that the respondent did not mention that the report it had was not final. But respondent’s answer is that at the time it wrote the first story already, it had sight of the singed version although it did not keep a copy. On this basis, we differ with the Ombud because once you are also in possession of the signed version which is the same as the unsigned one, there is no reason to say the report is not final; after all, you have seen both.

Appellant’s complaint based on the fact that his views were not sought on the audit report by its authors

[11] The appellant argued that respondent should not have reported on the audit report since the authors thereof did not seek his comments. That might have been so; but the fact of the matter is that respondent was reporting on an existing document. Appellant’s complaint is really a matter between him and MEGA. It is in any case important to note that appellant’s comments on the report were sought by the respondent, and that his responses, in the form of the denial of any wrongdoing, reflected. The denials were contained both in the first and the second articles; for example, the following appears in the 2016 article: “At the time of leaving Mega, Mkhize denied any wrongdoing and said he was stepping aside to give the interim board a fresh start.” Appellant’s  complaint cannot therefore stand.

 Conclusion  

[12]   For the reasons given above, the following Order is made:

12.1  The Ombud’s findings are confirmed, save as stated in paragraphs 12.2 and 12.3 below;

12.2 The Ombud’s finding that City Press breached article 1.1 of the Press Code by not stating that the report it relied upon was not a final report is not upheld, and is therefore hereby set aside.

12.3 The Ombud’s finding that City Press breached article 1.3 by failing to mention that the use of the word “corruption” was its own opinion is not upheld, and is therefore hereby set aside.

12.4 City Press breached article 1.1 of the Press Code in saying that it relied on a forensic report instead of saying it relied on an internal audit report; City Press is therefore hereby reprimanded.

12.5 The sanction imposed by the Ombud is, in its entirety, set aside and replaced by the following: City Press is hereby ordered to:

12.5.1   publish the reprimand at the top of an inside page in its next edition immediately following upon the approval referred to in 12.5.2 below by the Director of the Press Council;

12.5.2   within seven days of receipt of this Decision submit to the Director of the Press Council the text for his approval prior to its publication;

12.5.3   start the text with the reprimand;

12.5.4   end the text with the sentence “Visit www.presscouncil.org.za for the full finding”;

12.5.5   the headline should reflect the content of the text; a heading such as Matter of fact, or anything similar, is not acceptable;

12.5.6   if the offending article appeared on City Press’s website, the correction should appear there as well.

Dated this 25^th day of January 2017

Judge B M Ngoepe, Chair, Appeals Panel

Professor F Kruger, Media Representative

Mr P van der Merwe, Public Representative