Kuben Moodley vs. Sunday Times
Mon, Apr 3, 2017
Ruling by the Press Ombud, Johan Retief, and a Panel of Adjudicators (Peter Mann, public representative, and Mahmood Sanglay, representing the press.)
April 3 2017
This ruling is based on the written submissions of candidate attorney Nicole Gohari of Stein Scop Attorneys, on behalf of Mr Kuben Moodley, a former director of the company LornaVision (Pty) Ltd, and those of Susan Smuts, legal editor of the Sunday Times newspaper, as well as on a hearing held in Johannesburg.
The panel convened meetings on February 6, March 16 and March 27 before concluding the matter.
Representing Moodley, who attended all three meetings, was Adv Jean Meiring, with Mr Frans Basson assisting him and Gohari attending as well. Adv Willem de Klerk appeared on behalf of Sunday Times, with Smuts assisting him and the journalist, Stephan Hofstatter, attending the first and third meetings.
Moodley complains about a report in the Sunday Times of 14 August 2016, headlined ‘Gupta pal’ in R380m SABC licence-fee deal – Contract awarded without tender, extended without authority and not delivered on, say sources.
The gist of his complaint is that both the article and the headline, without any regard for the facts, presented layer upon layer of insupportable allegations and innuendo, which – mainly through passing references to his “shady” associates, but also otherwise – left the reader with the false impression that Moodley had benefitted from corruption.
In particular, he complains that the text falsely said or implied that:
· he had relations with the Gupta family; and
· the contract between LornaVision and the SABC was suspect.
He adds that the newspaper did not give him a reasonable time to respond to its questions.
The particulars of the complaint are detailed below.
The article, written by Stephan Hofstatter, purported to expose alleged corruption regarding a “suspect debt-collection deal” between the SABC and LornaVision. The introductory sentence adequately summarized the story. It said, “Politically connected businessman Kuben Moodley stands to rake in R380-million from a suspect debt-collection deal with the SABC authorized by the broadcaster’s acting CEO, James Aguma.”
Documentation prior to the hearings
The complaint in more detail
Gohari explains that LornaVision collected licence fees owed to the SABC. She says it offered a “unique service” (the details of which are not relevant for this adjudication), and that it performed much better than its counterparts.
Based on these considerations, the executive committee of the SABC resolved to contract with the company, without inviting competitive tenders.
She explains further, “[State-owned] companies, like the SABC, are generally obliged to put contracts out to tender before awarding them. However, one of the legally recognised exceptions… is that a tender process need not be followed …where it is impractical to do so. One of the well-established instances of such impracticality is where there is only one entity that can provide the service or product in question. This exception clearly applies to the contract …with LornaVision. … LornaVision is the only entity in South Africa …in a position to provide services using a solution as sophisticated as CCS (its system of operation). … it should be no surprise that the SABC did not put the contract out to tender. That should be all the clearer to anyone who reads the contract (between the SABC and LornaVision).”
Gohari says the SABC and LornaVision met on 25 February 2016, when it was agreed that, in light of its “demonstrable success … in a very short space of time” the ambit of the contract would be extended so that the company would be responsible for collecting debts in respect of at least 60% of all outstanding amounts.
Moodley complains that the headline created the false and unfair impression that:
· he was personally associated with the Gupta family – yet that is not what the story proceeded to say;
· this “association” pointed to corruption on his part as the Gupta family has, rightly or wrongly, become synonymous with corruption in the popular media; and
· he had been a party to the contract and due to be personally paid R380-million – again, without any substantiation in the article.
Gohari argues, “Linking persons to the Gupta family has become a cheap, easy and indeed inscrutable way of damning people by association. The same, in fact, applies to the SABC, which – whatever the truth of the matter – has for the past year or so been subjected to extraordinarily negative press coverage.”
In particular, Moodley complains about the following aspects:
Contract awarded ‘unlawfully’; ‘corruption’
The story said, “Internal documents seen by the Sunday Times reveal that Aguma awarded the contract to Moodley’s company without going out to tender. The SABC’s executive committee approved deviating from the normal process.” The article added that the contract was “suspect”, and quoted an unnamed source as saying that the SABC’s legal department had raised concerns that the contract had been “irregular”.
Hofstatter also reported that, “[I]n its contract the scope was expanded to include being paid a cut for collecting from pirate viewers, too. SABC sources say that this was never authorized.”
Moodley complains that reportage such as this, which ignored the proper context (as stated above under the sub-heading “Background”) falsely suggested that the contract might have been awarded unlawfully to LornaVision (read: corruption).
He adds that this reportage was not reasonably true – the contract provided that Mr James Aguma, the then financial officer of the SABC, who signed it on behalf of the broadcaster, was “duly authorized” to do so. In fact, such a provision was not even necessary, as Aguma anyway had the authority to sign the contract. It was also stamped and signed by the Head of Legal Services of the SABC.
“This makes the allegation that the ‘pirate viewer’ provision was not authorized highly unlikely and not reasonably true,” Gohari argues.
‘Guilty’ by association
The sentences in question read, “Moodley is a former special adviser to Mineral Resources Minister Mosebenzi Zwane and golf partner of Salim Essa, a kingpin in the Gupta family. He is also a former business associate of Mark Pamensky, a director of the Gupta family’s company Oakbay resources and Energy.”
Moodley complains that these references were unfair.
Gohari argues, “For this to be included in the article is unfair since it does not prove – as it is plainly meant to – that Mr Moodley has ever associated with the Gupta family. It is a dishonest attempt at substantiating the headline. Given that, in South Africa, the Gupta name has become synonymous with corruption, this dishonesty immediately creates bias in readers’ minds that Mr Moodley is in all likelihood himself a corrupt businessman. This is unfair reporting that is devised to influence readers to accept more readily that the sting of the article is true and to be less critical than they might otherwise be as to the remainder of the allegations in it.”
His ‘alter ego’
Moodley complains that the article described LornaVision as belonging to him, with the implication that he stood to pocket the income generated under the contract – blurring the distinction between him and the company in fact created a distortion.
Gohari explains that the story repeatedly referred to LornaVision as “Moodley’s company”, as well as stating that he himself would “rake in” the R380-million that LornaVision allegedly stood to make under the contract.
Instead, she says that Moodley:
· and LornaVision were distinct and separate persons;
· was not the only director;
· was not involved in LornaVision’s day-to-day business; and
· would not receive monies owed by the SABC (it would be paid to LornaVision).
“This statement … is devised to create bias in readers’ minds. It is calculated to leave them with the impression that, since Mr Moodley is a ‘corrupt businessman’ and LornaVision is his alter ego, the company is necessarily being used as a tool to achieve corrupt ends.”
LornaVision performing ‘poorly’
The article quoted SABC sources as saying that its licence revenue collection had not improved since LornaVision entered the scene, that the company was not delivering, that the contract amounted to a “great loss”, and that LornaVision was doing “far worse” than debt collectors were doing – while invoicing the broadcaster for millions of rands every month. Hofstatter quoted a source as saying: “They are invoicing the SABC millions every month but we aren’t seeing the revenue shoot up.”
Moodley complains that this reportage was false, as the opposite was true – apart from the initial fee, LornaVision’s revenue was entirely performance-based.
Gohari argues, “Construed together, these allegations [lead] readers inexorably to the conclusion that Mr Moodley, using LornaVision as a vehicle, must be involved in wideranging corruption at the SABC. [He] emerges falsely accused, tried and sentenced.”
She attests that LornaVision has performed in exemplary fashion and has more than earned the remuneration it received from the SABC. She says the report was based on hearsay and argues that Hofstatter had no basis for believing that it was reasonably true.
Gohari adds that LornaVision was entitled to invoice the SABC, and argues that there is no obligation on the company to increase the SABC’s revenue – rather, it is (only) to attend to debt collection. Also, LornaVision did not invoice the SABC without performing services. It has only invoiced the SABC for debt actually collected.
“This is unfair reporting which creates the impression that LornaVision is not performing its obligations under the contract and is simply pocketing money through the submission of false invoices. That this accusation is juxtaposed with the foregoing one that LornaVision is causing the SABC a loss is also unfair since together they scream out that corruption is happening when, in fact, that is not the case.”
The sentences in dispute read, “The documents show that LornaVision was also paid its consulting fees before all services were rendered. Three weeks after LornaVision was appointed it invoiced the SABC the full consulting fee of R2.1-million for its 24-month pilot upfront – and was paid in full six weeks later.”
Moodley disputes that the R2.1-million was for consulting services, stating that this statement was untruthful and not reasonably true – rather, it was remuneration for constructing and implementing its debt-collecting operation and cleaning the entire database at the SABC to comply with the requirements of the Auditor-General (AG). “This much is palpably clear from the terms of the contract,” Gohari says.
She argues that, accordingly, no “deliverables” could be forthcoming before payment was due. This was false reporting which unfairly created the impression that LornaVision had received payment for services it had failed to render.
No proper opportunity to respond
Moodley says the article constituted critical reportage as it has unnecessarily harmed his reputation – and therefore Hofstatter should have given him a proper opportunity to respond to the allegations made against him. (The journalist did send him a number of questions, initially to the wrong email address.) Moodley complains that he was not given reasonable time to respond to them.
Gohari adds that the newspaper did not contact LornaVision for comment.
Moodley says the story as a whole constituted false, distorted, unbalanced and injurious gutter journalism. He adds that Hofstatter was known by readers as an investigative reporter. This, says Moodley, exacerbated the situation – readers would have accepted that the piece was a product of proper investigative techniques, which it was not.
Sunday Times responds
The headline reasonably reflected the contents of the article. Paragraph two of the article explained the use of the words “Gupta pal” in the headline; the R380-m deal is also explained in the story.
Contract awarded ‘unlawfully’; ‘corruption’
Smuts argues that the article justifiably described the contract with the SABC as a “suspect debt-collection deal”, based on the following:
· The contract was awarded without going out to tender. This is not the standard way of doing business in the public sector. Treasury regulations state there must be exceptional circumstances for failing to put a contract out to tender. No explanation of exceptional circumstances was provided by either the SABC or by Moodley prior to publication;
· In terms of the resolution (dated 24 June 2015) authorizing the by-passing of a tender process, LornaVision was appointed from “date of signature of the contract” (10 July 2015). The same resolution approved payment of the sum in excess of R2.1-million for services to be rendered in terms of a yet-to-be signed contract. According to e-mail correspondence two SABC officials found it “disturbing” that LornaVision was appointed in July 2015, but had apparently been paid in full on 14 September 2015; and
· The scope of the initial contract was extended to include a cut on the collection of licence fees from pirate viewers. However, the resolution made no mention of this. The argument that the responsible SABC executive had the proper authority to sign the contract is not convincing. The resolution only authorizes the executive to sign a contract with LornaVision as outlined in that resolution, and nothing more. If the expanded scope of the contract was authorized subsequent to the board resolution on 24 June 2015 and before the contract was signed on 10 July 2015 “then he is invited to provide us with a copy of this authorization”.
‘Guilty’ by association
Smuts replies that the article did not accuse Moodley of being corrupt – instead, it stated that he was politically connected and benefitted from a questionable deal with the SABC.
She argues that the reporting was justified as Moodley was a special advisor to Zwane.
This is important, as it has been widely reported that the latter had:
· been at the centre of a questionable Gupta dairy project in the Free State while MEC for agriculture in that province;
· been involved in arranging for Gupta wedding guests to land at Waterkloof Airport; and
· joined the Guptas on a trip to Switzerland to negotiate Glencore’s sale of Optimum Coal to the Guptas.
The legal editor also argues that it was justified to mention Pamensky, as he and Moodley were former business associates. This is important, as Pamensky had been:
· on the board of Gupta company Oakbay Resources and Energy; and
· appointed to the board of Eskom shortly after joining Oakbay. (Eskom awarded several suspect coal contracts to Oakbay companies.)
Also, Moodley was a golf partner of Salim Essa and reportedly friends with him. It has been widely reported that Essa had been:
· at the heart of the Gupta business empire and intimately involved in most of their controversial business dealings with state entities, including Denel, Transnet and Eskom; and
· friends with Pamensky and a director of one of the latter’s companies.
Smuts submits that the reference to Moodley as a “Gupta pal” was based on the above, “and readers would have understood it as such”. She adds that mentioning his links to the Gupta family was true and in the public interest.
His ‘alter ego’
Smuts calls Moodley’s attempts to distance himself from LornaVision “spurious” – he was an active director of the company, and he lodged his complaint with this office also on the company’s behalf. She says he is clearly fully aware of the intricacies of LornaVision’s business and the contract in question as he represented the company in the deal and even signed the contract on the company’s behalf.
She argues that the reference to LornaVision as “Moodley’s company” was therefore justified.
LornaVision performing ‘poorly’
Smuts says the publication of the statements to the effect that “revenue collection had not improved” after LornaVision had been appointed and that the company had been doing “far worse than the debt collectors were doing” was justified because:
· the allegations were ascribed to sources, and readers would have understood these statements to be allegations;
· both Moodley and the SABC were afforded the opportunity to comment, and both declined to do so;
· the three paragraphs dealing with these allegations were introduced with reference to “licence revenue collection”, and any further reference to “revenue” in these paragraphs was understood as a reference to licence revenues. Moodley’s argument that it was immaterial whether or not licence revenue had increased is “somewhat astonishing”, and it is entirely reasonable to measure LornaVision’s performance with reference to the level of licence revenues;
· three sources confirmed that work was taken away from the SABC staff employed to do the job and that LornaVision was performing poorly. One source had access to correspondence between people dealing directly with this issue, and the other two had access to recordings and SMSs of interactions between SABC officials. In one recording the person in charge of the division referred to a report showing that collections have decreased since LornaVision took over. In text messages a senior finance official said that LornaVision had missed its targets and had shown no growth on the previous year. (Sunday Times has a copy of the recording and several SMS messages);
· the newspaper was privy to this information at the time of publication, and both LornaVision and the SABC failed to comment on these allegations. Communicating these allegations as they were at the time was reasonable, because the report was prepared in accordance with acceptable principles of journalistic conduct and in the public interest (as required by Section 3.3.4 of the Code of Ethics and Conduct); and
· the statistical data provided by Moodley to prove that LornaVision had been effective did not render false what the sources told the newspaper. The fact that work was taken away from SABC staff employed to do the job that LornaVision had been given means that the latter’s collections would be higher that the SABC’s – which renders Moodley’s argument meaningless. Furthermore, what Moodley terms “collections” or “recoveries” is also subject to dispute – according to sources, what LornaVision classified as successful collection did not equate to an actual collection of cash outstanding. These sources say the only meaningful comparison would be a year-on-year one that shows actual cash collections.
In later correspondence, Smuts refers to the final management report by the Auditor-General to the SABC, dated August 2016 and covering the period up to March 2016.
Under the heading “Collection of TV licences”, the report reads (in full, unedited): “The SABC is still not collecting the majority of TV licence fees as the significant amount of users are not paying. This is also due to the inadequate maintenance of the customer data base and collection controls. Decreases in collection rates have been experienced for the past years and continue to decrease. Investments need to be made in the improving controls to increase collections. These improvements will be limited by the current cash flow constrants.”
(No response from Sunday Times)
No proper opportunity to respond
Smuts submits that Hofstatter afforded Moodley a reasonable opportunity to comment. The reporter called him on Thursday afternoon and put the allegations to him. Moodley asked him to put his queries in writing, which he did at 17:47 on the same day. Also, the questions covered the essence of the allegations published in the story.
However, the journalist got Moodley’s e-mail address wrong, and re-sent his questions to him at 10:45 the following day, with an apology for the mistake. In that e-mail Hofstatter asked Moodley to respond by 15:00. At 15:22 he sent him a message, asking when he could expect a response. He then received a response via a text message, which was adequately reflected in the story.
She also argues that Moodley did not indicate that he needed more time to respond. His response also did not indicate that more details would have been forthcoming, had he been given the time.
Smuts attests that Moodley’s decision not to respond properly to the questions is an important factor to take into account – “[F]or even if the truth of the allegations cannot be proved, publication may nonetheless be reasonable, all things considered.”
The legal editor refers in this regard to the matter of Malema v Rampedi and Others, a decision of the Johannesburg High Court in 2011. The court regarded Malema’s failure to respond adequately to questions as an important factor favoring the reasonableness of the publication. She quotes the court’s decision as saying that the applicant “was in a position to properly answer and properly set forward facts which would cast a different light upon the issue should he have wished to do so” – and by failing to do so, added credibility to the newspaper’s sourcing.
Smuts argues that Moodley’s decision not to provide a proper response while he was able to do so, should not result in the newspaper being punished. She also cites the so-called Bogoshi defence, which is referenced in Section 3.3.4 of the Code of Ethics and Conduct.
In general, Gohari replies the newspaper did not answer the lion’s share of the objections framed in the complaint, and argues that its response “[s]eeks to justify the basis upon which the newspaper considered it appropriate to wave a slanderous (sic) and lazy article out of strands of conjecture.”
She adds that Sunday Times appears to say that, once an association, however tenuous, is shown between the subject of a news report and the Gupta family, a rebuttable presumption arises that there is something untoward with the former’s business dealings – even if proper research and investigation would have shown the contrary. “This approach is wholly impermissible and runs counter to the various precepts of the Code…”
In particular, she replies inter alia as follows (I am omitting as many repetitions as possible, as well as some minor disputes that have arisen during the course of the correspondence):
· While the article may not have accused Moodley of being corrupt, the very nub of the complaint is that the article subtly wove suggestion and innuendo “into a heady and slanderous mix”, simply through associating him with others. “The contract is then viewed through that prism”;
· The fact that Moodley was employed by the Department of Mineral Resources as advisor to Zwane failed to connect him to any of the three “events” listed above – in fact, they all relate to or implicate Zwane alone. Moodley was not implicated or involved in any of those events; he also did not go on the trip that Zwane undertook to Switzerland with members of the Gupta family. And again, through mere association (this time with Zwane), Sunday Times construed the contract as somehow “questionable”;
· Moodley’s “business association” with Pamensky was about a decade ago. This “association” went no further than their directorships of the same company. “Many people have such associations with many other people.” The fact that Pamensky was on the boards of both Oakbay and Eskom had no bearing on Moodley;
· Essa was Moodley’s golf partner for a specific game of golf (on 9 June 2013, at the Houghton Golf Club). He has many other golf partners;
· Sunday Times sets out no facts to substantiate the statement that Moodley was “Gupta’s pal”;
· There were exceptional circumstances regarding the awarding of the contract, as confirmed by the SABC (resolution number 17/06/15 – G86), which emphasised that it was aimed at assisting the SABC “in dealing with root causes of audit matters raised by the AGSA, in respect of accounting for TV Licence revenue in compliance with IFRS.” Therefore, the resolution is not “completely silent” on the exceptional circumstances, as alleged by Sunday Times;
· The payment of R2.1-million was for the implementation of the system and for data cleansing delivered to the SABC at the outset of the contract. Further payment was on a contingency basis. If Hofstatter had read the contract, he would have known that it provided for two distinct forms of payment to LornaVision. The payment of R2.1-million occurred once LornaVision had successfully performed the above-described tasks under the contract;
· The SABC had obtained a clean audit, in July or August 2016, from the Auditor-General in consequence of the new system and the data cleansing performed under the first stage of the contract;
· Regarding the later correspondence submitted by Smuts (the excerpt of the AG report), the context of the paragraph is not known and is “somewhat vague”; it appears to refer to the past and it runs counter to Moodley’s understanding that the AG gave the SABC a clean audit. Also, the article is dated after the story was published. Still, it cannot be contradicted that LornaVision has started transforming the SABC’s collection of licence revenues through the implementation of a transformative in-house business model;
· LornaVision has removed 1.6-million deceased persons from the SABC’s books – saving millions of rands in the process;
· The scope of the contract was not extended to include pirate viewers – this was part of the initial agreement (and this is now happening, for the first time – approximately 4 000 former pirate viewers have now signed up and are paying in full);
· There is no justification for the allegation that LornaVision was doing “far worse” than the debt collectors;
· Reference to the amount of R380-million suggested that the figure would represent LornaVision’s profit – which would be “well-nigh impossible to achieve”. Hofstatter should be asked to explain how he calculated that amount.
Male fides: Documented arguments for, against dismissal of complaint
On 8 December 2016, Sunday Times requested this office to dismiss Moodley’s complaint on the basis that he has attempted to mislead the Ombud and has acted in bad faith, based on the release of the former Public Protector’s report headlined State of Capture.
Smuts points out that reports by the Public Protector are binding unless set aside by a court of law. “The State Capture report has not been set aside and must be accepted as authoritative,” she argues.
The legal editor says that Moodley, in his complaint to this office, had been at pains to distance himself from the Gupta family.
She continues, “[W]e submit that the Public Protector’s report places him squarely in the state capture enterprise involving Eskom and the Guptas… Most significantly, the Public Protector found that Mr Moodley’s Albatime paid money into a Bank of Baroda account that funnelled money to the Gupta’s Tegeta company. Tegeta bought the Optimum Mine and Holding Company from Glencore after Eskom officials orchestrated a series of events that forced Optimum into business rescue. In essence the Public Protector found that Moodley’s company helped fund an irregular Gupta transaction.”
Smuts then lists some “key facts” according to the Public Protector. They are:
· Moodley’s wife was a member of the Eskom board, as well as employee of Albatime;
· She did not declare her spouse’s involvement in the purchase of shares in Optimum Coal Holdings (OCH);
· Zwane is responsible for policy for Eskom;
· Moodley was an advisor during the Tegeta purchase of OCH;
· Moodley’s company Albatime made payments for the benefit of Tegeta towards the acquisition of OCH;
· Zwane was reported to have met with Glencore’s CEO, Ivan Glasenberg, at the Dolder Grand Hotel in Zurich in late November or early December 2015.
· The Public Protector received independent information that Mr Zwane met Mr Glasenberg between 30 November and 5 December. Rajesh (Tony) Gupta and Salim Essa were also present;
· The purchase agreement for the sale of all shares held in in OCH to Tegeta was signed on December 10 2015;
· Glencore owned the Optimum Coal Mine (OCM) and OCH prior to February 2016;
· In 2013, OCM wrote to Eskom to say it expected to lose R881-million in 2013 because it was costing more to produce the coal for its contract with Eskom than it was making from it;
· Eskom refused to renegotiate the contract, and OCM was eventually put into business rescue;
· On February 10, 2016, the Eskom board approved the sale of shares from Glencore to Tegeta, and released OCH from the guarantee given to Eskom;
· Moodley’s former business partner, Mr Mark Pamensky, is a member of the Eskom board;
· Pamensky has significant business interests with members of the Gupta family, including through Tegeta;
· Nazia Carrim, who was an Eskom board member at the time, is married to a family member of Salim Essa, another business associate of the Gupta family;
· Brian Molefe chaired the Eskom board at the time;
· Marriam Cassim, formerly employed by the Gupta’s Sahara Computers, was on the Eskom board at the time;
· Molefe is friends with members of the Gupta family;
· President Zuma’s son Duduzane is a business partner of the Guptas. They have secured major contracts with Eskom through Tegeta; and
· Cellphone records place Molefe in the Saxonwold area on 19 occasions between 5 August 2015 and 17 November 2015. Molefe called Ajay Gupta 44 times between 2 August 2015 and 22 March 2016, and Ajay Gupta called Molefe 14 times.
Smuts concludes, “We submit that the Public Protector’s state capture report places Mr Moodley firmly in the events that led to Glencore being coerced into selling OCH to the Gupta’s Tegeta… His protestations to your office that he was not involved in any of the examples we offered regarding Mr Zwane have been exposed as a lie. We submit that his representations to your office have not been made in good faith, and are not to be trusted. In the circumstances, it is not possible to proceed in confidence that the information placed before you (and us) is bona fide. We ask you to refuse to entertain the complaint.
Moodley says the aspersions cast on him are unsubstantiated and scurrilous. In turn, he accuses Sunday Times of bad faith and says, “[a]larmingly, it is the newspaper that is not to be trusted”.
Regarding the State of Capture report, he says the newspaper abdicated its fundamental role as truth-seeker, accepting the report in question chapter and verse – even though there are challenges to it afoot.
He argues that the office of the Public Protector refrained from making contact with him prior to the publication of the report, adding that he has instructed attorneys to consider what proceedings might be appropriate in the circumstances – “[t]hose circumstances most pertinently being that the report contains fundamental and material untruths about us”.
He says that the “central untruth” in that report is the statement that Albatime (Pty) Limited, a company of which he is the sole director and of which his wife is an employee, made payments in relation to shares in OCH. He attests, “This statement is not true. Albatime did not contribute any monies to purchase shares in OCH. Albatime did not acquire shares in OCH.”
He argues that, when it comes to the Gupta family, the newspaper considers itself justified to construct scurrilous accounts out of thin air.
Moodley also points out that the list Smuts has compiled from the State Capture report, which is supposed to paint a damning picture of his complicity and deceit, has very little to do with him – “[a]nd, to the extent that they do, are either false or wholly innocent”.
Regarding the allegation that he was “an advisor during the Tegeta purchase of OCH” (with the intention to convey that he was an advisor to Zwane during the Tegeta purchase of OCH and, by implication, that he must have had some insidious role to play in it), he points out that he had a six-month contract with the Minister in 2016. “My remit as such advisor was to assist Mr Zwane in his dealings with white monopoly capital, both in South Africa and abroad, in light of my experience in the corporate financial sector. I had no role whatsoever to play in respect of any transactions of this kind or indeed of any transactions whatsoever,” he says.
Male fides: At the first meeting; documentation afterwards
At this hearing, the newspaper presented heads of argument which included new evidence, which had not been seen by Moodley or his legal team. The panel decided this was unfair, and decided to reconvene after the complainant had an opportunity to study and respond to the newspaper’s presentation.
This resulted in the tabling of three more documents (in addition to two already received): For the sake of convenience we call these three additional documents Addendum A (the newspaper’s heads of argument), Addendum B (Moodley’s response to Addendum A), and Addendum C (the newspaper’s reply to Addendum B).
Addendum A: Sunday Times’s heads of argument
In this document, De Klerk submits that Moodley has misled this office with regards to:
· his association with the Gupta family;
· the allegation of a causal link between the work LornaVision had done under contract with the SABC and the clean audit the SABC received;
· the manner in which the amount of R2.1m the SABC paid to LornaVision was characterised; and
· the claim that LornaVision performed better than other traditional debt collectors.
The motivation for the Gupta-link in the story appears in the second paragraph which read, “Moodley is a former special adviser to Mineral Resources Minister Mosebenzi Zwane and golf partner of Salim Essa, a kingpin in the Gupta empire. He is also a former business associate of Mark Pamensky, a director of the Gupta family’s company Oakbay resources and Energy.”
De Klerk says Moodley’s arguments that he has not been implicated in any way with the Guptas are false – he was implicated in the controversial sale of Optimum Coal to the Guptas during the time he was acting as special advisor to Zwane. In the State of Capture report the Public Protector found evidence that Albatime (of which Moodley was the sole director) paid an amount of R10-million towards the Guptas’ acquisition of Optimum Coal.
The attorney argues that Moodley made no attempt to bring this fact to the attention of this office. He says, “It was incumbent upon him to have disclosed the fact that he was indeed implicated and that there is indeed a suggestion that he was involved. His omission to do so is deceitful.”
Moodley also did not disclose that he had been in e-mail communication with Mr Eric Wood during December 2015 and February 2016. Wood was a director of Trillian Capital and Regiments Capital. One of Trillian Capital’s majority shareholders is Trillian Holdings, of which Salim Essa is the director. The Public Protector also found that both Trillion Capital and Regiments contributed money towards the Guptas’ acquisition of Optimum Coal.
De Klerk quotes Moodley’s complaint, in which he states that the service offered by LornaVision has transformed the performance of the SABC, adding that, “For the first time since LornaVision’s involvement, the SABC received a full unqualified audit from the Auditor-General.”
The advocate argues that the AG’s report had nothing to do with LornaVision. In fact, he says, the company mainly responsible for the clean audit was Lezaf Consulting, a “completely separate firm of chartered accountants”.
He concludes, “LornaVision’s (false) submission … was made in an attempt to disprove allegations contained in the Sunday Times article to the effect that LornaVision is not delivering.”
De Klerk says it is untrue and misleading that LornaVision was paid R2.1-million for “cleaning the entire database at the SABC” – it was Lezaf Consulting, and not LornaVision, that cleaned the database. He adds it is also untrue that the contract between LornaVision and the SABC made it clear (as alleged by Moodley) that the firm would be paid a maximum of R2.1-million for the construction and implementation of the pilot programme on the 10 000 licence renewals per month – he says the contract does not say anything about the cleaning of the database.
Moreover, the SABC’s resolution provided for the payment of R2.1-million for services rendered over the two-year course of the contract – yet Moodley justifies receiving full payment within three weeks, falsely and misleadingly claiming credit for work done by others.
Outperforming other debt collectors
De Klerk asserts it is untrue that LornaVision’s services are “far superior” to those of traditional debt collectors, as claimed by Moodley. He says the latter failed to disclose data relating to the period after January 2016, leading up to the publication of the article on August 23. “The SABC’s own licence collection data shows that in July and August 2016 the other debt collection agencies exceeded their targets while Lorna Vision failed dismally to reach theirs,” he attests.
The failure to disclose this information as well as the comment by the A-G that collection rates continued to decrease, De Klerk argues, amount to an attempt to mislead this office.
Addendum B: Moodley’s response
Clean audit; R2.1-million
Firstly, Moodley says these accusations rest upon a grossly negligent or malicious misreading of both the contract and Annexure A (to the contract).
He says the nub of his complaint is that the newspaper failed in its basic task, namely to fulfil responsibly the role expected of a newspaper, which is to investigate the truth of allegations made and to present a fair and balanced story – as is (again) evident from these accusations.
He argues that, in sum, it fails to understand the distinct roles of an auditing firm and a business like LornaVision – hence the “extraordinary sweeping statement” that “the A-G’s unqualified report has nothing to do with Lorna Vision” (which Sunday Times based on a reply by Lezaf Consulting to some questions by the newspaper).
He also points out that the contract does not refer to “consulting fees” (regarding the payment of R2.1-million) at all, and says Sunday Times fails to understand that the money was for LornaVision’s activities in constructing and implementing (the SABC’s) debt collection operation and in cleaning the entire database of the SABC to comply with the A-G’s requirements.
Moodley says the newspaper takes extraordinary pains to disassociate LornaVision from Lezaf. This is misleading, he submits, as the contract mentions the SABC TV Licence solution in conjunction with Lezaf Consulting.
Moreover, Clause 7 of the contract makes provision for LornaVision to do data cleansing, etc. This is substantiated by Annexure A to the contract under the heading, “Pricing”.
He concludes, “In light of those three passages from the contract and annexure A to it, it is startlingly dishonest of the newspaper to frame [these] accusations in the heads.”
Moodley also argues that the newspaper has misinterpreted Lezaf’s communication with its journalist, saying it would appear that the writer was referring to Lezaf as being “qualified in the area we were contracted for” and not the SABC, as the heads indicate.
On the statement that LornaVision’s claim to have contributed to the clean audit is false, he adds that the newspaper must at least have taken account of the clear terms of the contract, quoted above, and found some basis to reject them. “This the newspaper did not do,” he alleges.
Moodley stresses that the words “consulting fees” are absent in the contract. “For the newspaper to continue to use this term and characterization – in contradiction of all the evidence – beggars belief,” he submits.
He denies his statement that the payment of R2.1-million for “constructing and implementing” the debt collection operation and “cleaning the entire database at the SABC” was misleading.
Moodley concludes, “Accordingly, simply on the basis of the terms of the contract and annexure A, which … have throughout been at the newspaper’s disposal, the great bulk of the newspaper’s averments in the heads – scurrilous and defamatory as they are – are untruthful and devious. In fact, every single material averment is in one respect of another false or misleading… It is, with respect, the newspaper that has acted in a demonstrably mala fide way – from the very publication of the impugned article to the contents and manner of presentation of the heads.”
Secondly, Moodley says these accusations rest upon a studied ignorance of LornaVision’s role and expertise.
He says it has never been LornaVision’s contention that the work it did under the contract was the sole and exclusive reason for the SABC’s clean audit. “However, it cannot be denied, even on the facts available to the newspaper, that LornaVision played a significant role in that being achieved,” he asserts.
He points out Annexure A makes it clear that LornaVision specializes in the management and cleaning up of data – a role that an auditing firm, like Lezaf Consulting, cannot perform.
He avers, “Had the newspaper not halted its enquiries with me and the spectre of my alleged association with the Gupta family, but rather enquired into the curriculum vitae and track record of the other director of LornaVision, Mr Frans Basson, a legendary figure in the debt-collecting industry in South Africa, it would never have published the article – nor indeed the heads. Had it undertaken even basic investigative work, it would have learnt of the exigencies of the collections process. The first step in that process is, crucially, data cleaning and data enrichment. In basic terms, this ensures that the correct accounts are targeted through the best possible contact information.”
He gives several examples of what LornaVision has done to prove his point, concluding that the firm’s achievements were “remarkable” and stating that this company and Lezaf “worked cheek-by-jowl to achieve the twin aims of their respective contracts”.
Moodley says another fundamental misconception on the part of the newspaper concerns the task the A-G undertakes in considering the financial statements of a state-owned entity – it also considers whether a sustainable business model is in place, an aspect that falls within LornaVision’s ambit.
Outperforming other debt collectors
Moodley says the Sunday Times has no foundation for its allegation that LornaVision has not bettered the traditional debt collectors.
He provided the panel with screenshots of Powerpoint presentations generated by LornaVision. These were not SAP-system generated. He explains that, from the inception of its performance under the contract, LornaVision was aware that certain employees of the SABC were unhappy with the new regime. He continues, “It was LornaVision’s sense that certain employees had received ‘kickbacks’ from those debt collectors and aimed to scupper its new role. For that reason, LornaVision intentionally populated a number of Powerpoint presentations with false data, which it disseminated so that it might try and discern who the errant employees were. Accordingly, the screenshots upon which the newspaper seeks to rely are intentionally inaccurate.”
Moodley categorically states that, as compared to 2103-2016, LornaVision has – construed across all types of debtors’ books – performed better than the traditional debt collectors.
Addendum C: Sunday Times’s reply to Moodley’s response
De Klerk says Moodley has not taken issue with any of the newspaper’s submissions regarding the power of the adjudication panel to entertain the application for the complaint to be dismissed on the basis provided in Article 1.6.2 of the Code. Accordingly it is common cause that the panel would be within its rights to reject the complaint in toto, without regard to the merits thereof, should the Sunday Times succeed in showing that the complaint is “fraudulent, frivolous, malicious or vexatious”.
De Klerk says Moodley’s claims - that “it has never been Lorna Vision’s contention that the work it did under the contract was the sole and exclusive reason for the SABC having obtained a clear audit. However it cannot be denied … that Lorna Vision played a significant role in that regard” is a significant back-pedal from the position previously adopted by him (he previously claimed LornaVision has transformed the SABC and that, since LornaVision’s involvement, the SABC received a full and unqualified audit from the Auditor-General for the first time.)
With regards to LornaVision having worked “cheek-by-jowl” with Lezaf Consulting, the attorney says the fact that Moodley has not mentioned this before is just another example of how LornaVision unjustifiably claimed particular accomplishments to which it was not entitled.
Outperforming other debt collectors
De Klerk says Moodley has made the most astonishing revelation, namely that LornaVision has deliberately created and disseminated fraudulent documents, explaining this by claiming that it was an attempt to entrap “errant employees” at the SABC.
He says Moodley did not offer any explanation as to who appointed LornaVision to conduct a witch hunt amongst SABC staff, and who mandated them to disseminate false and deliberately misleading data relating to the state broadcaster, or from what source they derive the power to investigate alleged corruption within the SABC and to set about on entrapment exercises.
He submits that on the basis of this confession alone, the panel should reject the complaint.
Male fides: Decision at the second meeting
The application by Sunday Times to have the complaint rejected on the basis of male fides has resulted in a ‘hearing within a hearing’, which took place on March 16.
At this hearing, the arguments as summarized above in the five documents relating to the newspaper’s application were extensively discussed.
The first issue was Moodley’s alleged link to the Guptas, as revealed in the Public Protector’s report.
Moodley asked the panel for permission to argue where and why the State of Capture report went wrong on this issue. Mindful of the fact that the panel had no mandate to investigate the veracity of that report, the panel denied him the opportunity to argue his case on the merits of the Public Protector’s report.
We did, however, take into account Moodley’s testimony that he had already given instructions to his legal representatives to appeal that part of the Public Protector’s report which found him to be linked to the Guptas. That was his testimony, and the panel has no reason to disbelieve him.
The panel also did not blame Moodley for not bringing the relevant part of the Protector’s report to the panel’s attention, as argued by De Klerk. The reasons for this were threefold:
· The report has been made public, and Moodley could reasonably have expected that the panel was duly informed;
· He had already indicated that he denied a link with the Guptas, which would render a second denial superfluous; and
· He could not reasonably be expected to inform the panel if he believed the State of Capture report was false on this specific issue.
We debated the question of malice, which may be defined as an intention to harm or hurt or, in this case, mislead this office. Cognisant of the fact that one needs enough evidence to accuse another of malice, which is indeed a drastic inference, we eventually decided that we did not have enough grounds to state categorically that Moodley intended to mislead us.
Therefore, we decided to give him the benefit of the doubt on this issue.
Turning to the other issues (the clean audit, the payment of R2.1-million, LornaVision outperforming traditional debt collectors and the alleged intentional population by LornaVision of Powerpoint presentations with false data to identify errant employees) the panel noted the marked differences in the arguments from the two sides. Again, we did not have sufficient evidence to conclude that Moodley had intentionally misled us – which resulted in the same decision, for the same reasons.
We dismissed the “male fides” application brought by the Sunday Times – as well as the counter claim of male fides against the newspaper – and proceeded with the hearing.
The third meeting: debating the merits of the complaint
The panel then turned its attention to the original complaint, as well as to issues discussed at the previous meeting.
The gist of Moodley’s complaint is that both the article and the headline, without any regard for the facts, presented layer upon layer of insupportable allegations and innuendo, which – mainly through passing references to his “shady” associates, but also otherwise – left the reader with the false impression that he had been benefitting from corruption.
Right of reply
The panel deals with this issue first, as to some extent it impacts on some of our decisions that follow.
We refer to the matter Malema v Rampedi and Others, a decision of the Johannesburg High Court in 2011. The court regarded Malema’s failure to adequately respond to questions as an important factor favouring the reasonableness of the publication. The court said that the applicant “was in a position to properly answer and properly set forward facts which would cast a different light upon the issue should he have wished to do so” – and by failing to do so, added credibility to the newspaper’s sourcing.
The importance of this will become clear as our argument progresses.
Turning to the complaint itself, the panel is confronted with questions about whether Hofstatter:
· gave Moodley proper time to respond;
· properly reflected his response;
· neglected to ask him questions about material issues that he addressed in the story; and
· should have tried to contact the only other director of LornaVision, namely Frans Basson.
The relevant facts are as follows:
· Hofstatter sent Moodley an e-mail on Friday, 11 August 2016, at 17:47;
· He asked for a response by 10:00 the following morning;
· Due to a typing error, he did not send it to the correct address;
· The reporter forwarded the e-mail the next morning at 10:45, this time to the correct address;
· In this correspondence he did not adjust the deadline (which had already passed);
· Moodley took exception to this, asking whether he should question the journalist’s intentions; and
· At 11:14 Hofstatter apologized for the mistake and extended the deadline to 15:00.
Moodley did not complain that the time afforded him was insufficient, nor did he ask for an extension. Instead, he responded via an SMS.
Given the nature of the questions, the panel is of the view that it was Moodley’s right, and in his own interests, to ask for an extension. Had he done so and had Hofstatter refused his request, it would have been possible to argue that he was prejudiced by the newspaper. Fact of the matter, though, is that Moodley did respond, without any complaint.
In light of that fact, the panel cannot find that Hofstatter was in breach of the SA Code of Ethics and Conduct for not affording Moodley more time to respond.
Adequately reflecting Moodley’s response?
Moodley responded as follows (un-edited): “Without prejudice to my rights and that of the company mentioned in your letter, kindly be advised this is a contingency based agreement, meaning the company does not earn any return if it does not recover. All governance processes were followed. Who my acquaintance are, is irrelevant to the matter on hand, further I am not currently an advisor to the DMR. Any article that will defame me or any company I am part of will be addressed with the ombudsman and [legal action will be taken].”
Therefore the panel needs to establish whether Hofstatter reported the following parts of Moodley’s response – and if not, whether the omissions were material:
· The agreement was contingency-based;
· All governance processes were followed;
· The identities of his acquaintances were irrelevant; and
· Not currently an advisor to the Department of Mineral Resources (DMR).
The introductory sentence to the story said Moodley “stands to rake in” R380-million, and elaborates on this later in the story by stating, “According to Lorna Vision’s contract, Moodley’s company stands to make a total of R383.5-million if it meets its proposed targets.” (Emphasis added.) Also, “The company stands to make an additional R375-million if it meets it pirate-viewer collection targets.”
Given this context, Hofstatter quoted Moodley as saying, “’This is a contingency-based agreement, meaning the company does not earn any return if it does not recover’, he said in a text message.”
The journalist followed this up by quoting Moodley again: “All governance processes were followed. Who my acquaintances are is irrelevant to the matter on hand, further I am not currently an advisor to the DMR.”
The panel therefore concludes that Hofstatter fully, and correctly, reflected Moodley’s response.
Addressing all material issues?
The issue is whether or not the journalist reported material issues about which he should have asked Moodley’s comment. In order to adjudicate this issue properly, the panel needs to look at the questions, and carefully compare them with what Hofstatter reported.
Hofstatter’s questions were:
- How did LornaVision come to hear of the SABC’s need for such a service, since no tender was advertised?
- How was LornaVision, in conjunction with Lezaf Consulting, appointed to deliver this service?
- What was Lezaf Consulting’s role in delivering the service?
- According to your contract and proposal LornaVision stood to be paid a R2.135-million fee for a 24 month pilot, 10% fee of licence fees collected from existing clients and 27%-40% of fees collected from “pirate clients”. How do these percentages compare with industry norms?
- According to his information LornaVision was paid its consulting fee of R2.135-million in full a month after commencing work. How does the company justify this?
- According to sources in the SABC there had been no appreciable improvement in collections since LornaVision was contracted. What is your position on this?
- What is the total value of licence fees that LornaVision has recovered for the SABC since it was contracted? How does this shape up with SABC monthly collection targets?
- How much has LornaVision invoiced SABC to date?
- You have been referred to in the press as a “friend” of businessman Salim Essa, and are listed at the Houghton Golf Club as his golf partner. What exactly is your relationship with Essa and his… (question not completed); and
- The Department of Mineral Resources lists you as a “special adviser” to Zwane. Would you mind elaborating on what this entails, and what your relationship is with him apart from offering this advice?
The panel shall deal with this paragraph by paragraph (focusing on those that are material and might be problematic, and without repeating ourselves – which, in effect, means that the first five paragraphs are crucial):
One: The first question is whether Hofstatter adequately covered the statement that the debt-collection deal was “suspect”. Of all his questions, the fifth one comes closest. Although Hofstatter did not use the word “suspect” in his correspondence, this question did give Moodley some scope. The second issue is the statement that Moodley stood to rake in “R380-million”. Hofstatter did not ask Moodley about this amount. His references to money were not sufficient to prompt Moodley to suspect that the amount of R380-million was relevant. The third issue is the mentioning of Aguma – which, to the panel’s mind, is not material (as the SABC’s acting CEO at the time, he was involved in the signing of the contract).
Two: The following people were mentioned in connection with Moodley’s alleged connections: Zwane, Essa, Pamensky and the Guptas. Hofstatter did ask about Zwane and Essa, but not about Pamensky and the Guptas. Given the fact that the same paragraph said that Essa was a “kingpin” in the Gupta empire, and given the headline which referred to Moodley as a “Gupta pal” (even if the headline was written after the story, and by someone else), the panel believes that the journalist should have asked Moodley about his relationship with the Guptas. To a lesser extent, this goes for the reference to Pamensky as well.
Three: The statement that the contract “deviated” from normal tender processes is covered by the first question, which mentioned that no tender was advertised.
Four: The story said the resolution to award the contract to LornaVision was “expanded” in the contract to include payment of a cut for collecting from pirate viewers too, and SABC sources said this “expansion” was never authorized. Hofstatter did not ask Moodley about these matters.
Five: The words “consulting fees” (which are a bone of contention) were mentioned. Question 5 mentioned them, and Moodley had an opportunity to respond.
The panel concludes that Hofstatter should have asked Moodley about the following issues, but did not:
· His relationship with the Guptas;
· His relationship with Pamensky;
· The reference to R380-million;
· The scope “expansion” from the resolution to the contract; and
· That the “expansion” was never authorized.
Why not contact Basson?
If Moodley was not in a position to respond to questions, or if he had indicated that Basson was in a better position to reply to some or all of the questions, Hofstatter would have been duty-bound to question Basson, as the only other director. In this instance, Moodley did respond and did not indicate that it was important to contact Basson as well – and Hofstatter had no reason to believe that he should do so. Therefore the panel is of the view that Hofstatter was under no obligation to contact Basson.
Link with the Guptas
This part of the complaint centers on the headline, which called Moodley a “Gupta pal”.
At the hearing, De Klerk referred to the second paragraph of the story, in motivation of the headline. This paragraph read, “Moodley is a former special adviser to Mineral Resources Minister Mosebenzi Zwane and golf partner of Salim Essa, a kingpin in the Gupta family. He is also a former business associate of Mark Pamensky, a director of the Gupta family’s company Oakbay resources and Energy.”
The panel has no qualms with the references to Essa and Zwane – Moodley was indeed a former special adviser to Zwane, and he was also a golf partner of Essa (who was strongly associated with the Gupta family).
We heard argument that the reference to Pamensky as a “former business associate” of Moodley was wrong. The latter explained that he had sold a company to Pamensky, and that they had never been business “associates” or even co-directors. However, we do not view this as material, as Moodley has had a business deal with him (even if not as a business associate).
The panel’s question is not whether these statements were correct or materially correct. The issue is whether these links provided sufficient grounds for Sunday Times to call Moodley a “Gupta pal”.
Focusing on Essa first: It would probably have been correct to say that he (Essa) was a “Gupta pal” as well as a “Moodley pal”. To make the link between Moodley and Gupta, though, one needs to assume that a pal of my pal is also my pal. This is one bridge too far.
The same argument goes for Zwane and Pamensky – the fact that Moodley had relations with them, and in turn they were linked to the Guptas, does not mean that Moodley had relations with the Guptas. A pal of my pal is not necessarily my pal as well.
Calling Moodley a “Gupta pal” is, in the view of the panel, neither fair nor accurate.
Much was said about the meaning of the word “pal” – while, in fact, Joe Public knows full well what a “pal” is.
De Klerk explained that the word “pal” was put in inverted commas in the headline to indicate that it was someone’s view. When asked about who this “someone” was, he replied that it was the newspaper (not a source, let alone a primary one) – a sentiment that could not be discerned from the story itself.
Another material issue was the question whether Hofstatter, by his reference to the Guptas, intended to suggest that family had something to do with the award of the contract to LornaVision. He answered in the negative.
De Klerk also referred the panel to two rulings by the Press Appeals Panel (ANC vs. Daily Dispatch and Jesse Duarte vs. the Mail & Guardian) to strengthen his argument that a subject’s connections to other people may be mentioned (even if they are tenuous) and that a newspaper could not be held responsible for the conclusions drawn by readers based on facts reported.
The panel is fortunate in that Sanglay was part of the panel that sat on one of the cases, and Mann was on the other. In both those cases the relationships, as reported by the newspapers, were found to be accurate and not in dispute (as in the current case). In the M&G instance, the newspaper also published a disclaimer that they were not accusing anyone of malfeasance – but were merely outlining factual connections between various people.
While De Klerk correctly pointed out that the panel is bound by the decisions of the Press Appeals Panel, we also believe that the cases he referred to are materially different from the one at hand. Moodley disputes that he is a “pal” of the Guptas. In the case of the Daily Dispatch and the M&G the alleged relationships were not disputed.
Then, of course, there is the matter of the State of Capture report by the former Public Protector, which links Moodley with the Guptas in that his wife was on the Board of Eskom, and he contributed monies via his company Albatime towards the purchase by Tegeta.
The panel notes that the Sunday Times stated this as fact, and not as an allegation.
The State of Capture report was only made public after the story in question was published. This raises the question whether the newspaper may justifiably use the information in this report retrospectively as a motivation to call Moodley a “Gupta pal” or, on the other hand, whether the publication may use the argument that its reportage was borne out by later events. There are, of course, merits in both arguments.
The crucial fact, though, is that Moodley denies this “link” with the Guptas, and says he has already instructed his legal team to take the necessary steps to rectify this situation (this was his testimony, and the panel has no reason to disbelieve him).
Given all of these considerations, the panel is of the opinion that Moodley’s links to Essa, Pamensky and Zwane were not enough to justify the newspaper’s conclusion that he was a “Gupta pal”.
We emphasise that we cannot categorically state that Moodley was not a “Gupta pal”. What we are saying, is that Sunday Times was not justified in calling him such with the information at its disposal at the time of writing – even if it is established at some later stage that he indeed was a friend of that family.
The reference to him as a “Gupta pal” was unfounded and unfair – and not sufficiently supported by paragraph two of the story (or by the rest of the article, for that matter).
The panel takes into consideration that the Gupta family is widely seen as corrupt (rightly or wrongly) and because of this perception, there is a possibility that Moodley’s reputation has been unnecessarily tarnished by the “Gupta pal” reference.
The story said the contract had been awarded to LornaVision without going out on tender. That, in itself, cannot constitute a breach of the Code, as it is accurate and fair. The panel also takes into account that Hofstatter did mention this issue in his correspondence with Moodley.
We also note that the statements in the story were not presented as fact – the journalist relied heavily on sources which, he says, were senior and authoritative.
One of the sources told Hofstatter that the SABC’s legal department had raised concerns about the contract being “irregular”. Surely, he was justified to publish that. This also goes for the so-called scope creep (without the necessary authorization). The panel returns to this issue below.
Some more considerations:
· At the hearing, Meiring for Moodley was at pains to argue that the resolution was formulated by a secretary, implying that one may expect that the wording was not perfect. Neither the panel nor the newspaper can afford to entertain such an idea – the document was circulated for acceptance, and Sunday Times had no other resolution with which to work;
· It may be that the discrepancy between the resolution and the contract was unlawful. It is not the panel’s duty to establish that; the article also did not state that as fact. But surely, because such a possibility existed, based on what sources told Hofstatter, the journalist was justified to report it as such;
· Moodley’s complaint that the article described LornaVision as belonging to him, with the implication that he stood to pocket the income generated under the contract – and that blurring the distinction between him and the company created a distortion – does not hold water. The reasonable reader would have understood the difference between a person and an entity, even though Moodley was not the only director and was not involved in LornaVision’s day-to-day business. He also never referred Hofstatter to Basson;
· The story quoted sources as saying that LornaVision was performing poorly. Hofstatter was justified to treat his sources, as well as the data on the PowerPoint slides, as credible and reliable. And he had a right to report it. The panel also notes that the journalist did ask Moodley about this issue;
· The complaint that the article created the false impression that LornaVision was failing its obligations under the contract and was simply pocketing money through the submission of false invoices does not hold water – there is no suggestion of “false invoices” in the story;
· The complaint about “consulting fees” is noted, but so is the fact that Moodley had an opportunity to correct this perception prior to publication. (The panel shall return to this issue); and
· the allegation that LornaVision invoiced the SABC for the full fee of R2.1-million for its 24-month obligation three weeks after it was appointed, and was paid in full a few weeks later, is not in dispute.
The panel concludes that most of the story was perfectly fine – Moodley was a politically connected businessman; he did get the business without it going out to tender; there clearly was dissent about it in the SABC; the Sunday Times had a number of sources who were concerned and shared documentation with Hofstatter; there was scope creep (there was no provision for recovering of fees from pirate viewers recorded in the resolution); some sources were concerned at LornaVision’s performance, etc.
We note, though, that Sunday Times admitted making a mistake in saying that the SABC’s executive committee approved deviation from normal tender processes in appointing LornaVision a day after that company had received its tax clearance – it happened not a day, but a week afterwards. However, nothing much turns on this as the intention was to reflect that it happened soon after. Be that as it may, it was a factual error and should therefore be rectified.
The panel needs to comment on the gist of Moodley’s complaint, namely that both the article and the headline, without any regard for the facts, presented layer upon layer of insupportable allegations and innuendo, which – mainly through passing references to his “shady” associates, but also otherwise – left the reader with the false impression that he had been benefitting from corruption.
De Klerk made a telling statement in summation of the hearing. He said that, according to Moodley, everybody was wrong except for Moodley himself.
The attorney said that, according to Moodley, the following are all wrong. The:
· Hofstatter’s sources;
· secretary who minuted the resolution;
· Public Protector;
· former procurement officer, who gave evidence to Parliament’s SABC enquiry about the LornaVision contract; and
· data on the Powerpoint presentation.
Conversely, if this point is taken to its logical conclusion, only Moodley is correct. The panel is of the view that that is a bit thick.
Apart from the arguments against Sunday Times which were accepted by the panel, and which will be converted into a finding and a sanction, we do not agree that the nub of the story conveyed the impression that Moodley was involved in corruption – Hofstatter’s reporting was largely accurate and justifiable. For this reason the panel cannot find that the article was unfair to Moodley.
Right of reply
This part of the complaint is dismissed.
Properly reflecting Moodley’s response?
This part of the complaint is dismissed.
Addressing all material issues?
Hofstatter neglected to ask Moodley about his relationship with the Guptas and with Pamensky; to refer to the R380-million he reportedly stood to rake in, as well as to the “expansion” of the scope of LornaVision’s mandate from the resolution to the contract (scope creep), which allegedly was never authorized.
This was in breach of Section 1.8 of the Code which says, “The media shall seek the views of the subject of critical reportage in advance of publication…”
This part of the complaint is dismissed.
Link with the Guptas
The labelling of Moodley as a “Gupta pal” in the headline was not sufficiently supported by the article, was without sufficient substantiation and was unfair, probably causing unnecessary harm to his reputation, and breaching the following sections of the SA Code of Ethics and Conduct:
· 1.1: “The media shall take care to report news … fairly”;
· 10.1: “Headlines … shall give a reasonable reflection of the contents of the report … in question”; and
· 3.3: “The media shall exercise care and consideration in matters involving … reputation.”
The statement that the SABC’s executive committee approved deviation from normal tender processes in appointing LornaVision a day after it got tax clearance was inaccurate (it was a week afterwards, and not one day) and in breach of Section 1.1 of the Code which states, “The media shall take care to report news…accurately…”
The rest of this part of the complaint is dismissed.
Seriousness of breaches
Under the headline Hierarchy of sanctions, Section 8 of the Complaints Procedures distinguishes between minor breaches (Tier 1), serious breaches (Tier 2) and serious misconduct (Tier 3).
The breaches of the SA Code of Ethics and Conduct with regards to unfairly and without enough substantiation calling Moodley a “Gupta pal”, probably causing unnecessary harm to his reputation, and the journalist neglecting to ask Moodley about his relationship with the Guptas and with Pamensky, or to ask him about the R380-million which he reportedly stood to rake in, as well as to the “expansion” of the scope of LornaVision’s mandate from the resolution to the contract (scope creep), which allegedly was never authorized, are all Tier 2 offences.
The statement that the SABC’s executive committee approved deviation from normal tender processes in appointing LornaVision a day after it got tax clearance is a Tier 1 offence.
Sunday Times is directed to apologise to Moodley for:
· unfairly calling him a “Gupta pal” in the headline (based on the information at its disposal at the time of publication), and for the unnecessary harm that this has probably caused to his reputation; and
· not asking him about:
o his relationship with the Guptas and with Pamensky;
o the amount of R380-million which he reportedly stood to rake in; and
o the “expansion” of the scope of LornaVision’s mandate from the resolution to the contract (scope creep), which allegedly was never authorized.
The newspaper is reprimanded for inaccurately stating that the SABC’s executive committee approved deviation from normal tender processes in appointing LornaVision a day after it got tax clearance (instead of a week afterward).
The newspaper is also directed to ask Moodley’s comment on his relationship with the Guptas and with Pamensky, about the amount of R380-million, and about the alleged scope creep – should he wish to comment. The text should:
· be published:
o on the same page as that used for the offending article;
o online as well, if the offending article was carried on its website;
- start with the apology;
- refer to the complaint that was lodged with this office;
- end with the sentence, “Visit www.presscouncil.org.za for the full finding”; and
- be approved by the panel.
The headlines should contain the words “apology” or “apologises”, and “Moodley”.
Addressing the Panel on sanction
Section 5.5 of the Complaints Procedures reads, “At the conclusion of a hearing, and after a Panel has reached a decision, both parties shall be entitled to address the Panel, personally or in writing, on sanctions and, where appropriate, mitigation.”
This section should not be confused with an appeal – it merely gives each party an opportunity to address the panel on the sanction itself. The opportunity to appeal, either the finding or the sanction, remains open for the next seven workings days, as outlined below.
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 Khanyim@ombudsman.org.za.
Mahmood Sanglay (press representative)
Peter Mann (public representative)
Johan Retief (press ombud)