Airports Company South Africa (Acsa) vs. Business Day


Tue, Feb 5, 2019

Ruling by the Press Ombud

5 February 2019

Particulars

Lodged by: Mr Mbulelo Ndlovu, from Cowan-Harper-Madikizela Attorneys

Date of article: 18 September 2018

Headline: Aurecon’s contract exposes Acsa to conflict of interest claims – Lulu Gwagwa,CEO of Lereko Investments and a board member of FirstRand, Massmart and Sun International, is also the chair of Aurecon SA

Online: Online only

Author of article: Neels Blom

Respondent: Susan Smuts, internal ombud

Complaint                                            

The crux of Acsa’s complaint is that Business Day (BD) has relied on an unauthenticated document regarding an alleged contract between itself (Acsa) and a company called Aurecon, and that the newspaper did not “independently” verify its information but merely relied on a single, anonymous source – which led to inaccurate and unfair reportage.

Following this, Acsa complains the article falsely stated:

  • the contract that was apparently entered into between itself and a company called Aurecon was worth R400-million;
  • Aurecon had been “allocated” a tender to develop a cargo facility at OR Tambo International Airport – and that it transpired without a public tender advertised for this contract; and
  • Ms Lulu Gwagwa, CEO of Lereko Investments and a board member of FirstRand, Massmart and Sun International, was also the chair of Aurecon, and that an image of her accompanying the story inferred that she was either involved in corrupt activities, or implicated in a conflict of interest.

The company adds that the:

  • headline was misleading; and
  • journalist did not seek comment from itself, or from Gwagwa.

The complaint is also about earlier articles in an attempt to establish a “pattern” of unethical reportage over a period of time (which, given Section 1.3 of the Complaints Procedures, I am not at liberty to entertain).

The text

The article was about a possible conflict of interest relating to a contract between Acsa and Aurecon SA, as Gwagwa reportedly was the chairperson of both organisations.   

The contract concerned the development of a cargo facility at OR Tambo International Airport.

Blom also wrote: “Details of a R400m project, called Midfield Cargo Development, allegedly show that [the contract] was allocated to Aurecon SA in July 2018, as confirmed in a letter to an Aurecon official signed on July 26 by Mthuthuzeli Mboniswa, group manager of Acsa’s supply-chain management unit. The buyers for Acsa were identified in the letter, which was seen by Business Day…”

The journalist added that this document could not be independently authenticated and that Acsa had questioned its veracity. However, a source at Acsa reportedly insisted that the letter was authentic and that the amount of R400-million was indeed accurate. The source also said that the tender for the Midfield Cargo Development was not advertised as required under Treasury regulations. He reportedly expected this amount to grow far greater with the inclusion of procurement and construction.

The arguments

Documents not authentic, verified

NDLOVU says the reportage was based on a document (dated 26 July 2018) that the newspaper could not authenticate – and yet it presented the message as if that document had been confirmed by an Acsa source. He says the authenticity of the document was in question as Acsa had cancelled the tender in April and that it has not been re-published since. He says the tender will be published only once the scope of the project is finalised and investment approval is obtained from the relevant bodies.

Moreover, he submits, it was not clear what steps were taken, if any, to independently verify the credibility of this source. He adds that the document might have been altered, or even conjured up.

He says that when Acsa’s media consultant Trevor Jones requested a copy of the source document, Blom told him to rather focus on the project and not on that document.

He says that, even though Acsa denies the existence of the R400-million project allocated to Aurecon, Blom appears to have rather believed his source.

Referring to the statement by the source that “…under standard engineering practice, Aurecon should also be appointed for the supervision phase to avoid detached liability”, Ndlovu argues an impression was created that the source’s version was correct, also regarding the allegation that the “allocation” of the tender to Aurecon was not advertised.

SMUTS says Acsa seems to argue that because it denied the truth of the information evident from that document, the manuscript itself cannot be authentic and reliable.

She says the newspaper fully explained the nature and content of the source document to Acsa before publication (as outlined below).

She adds that the article gave further information regarding the source document – it disclosed that the document was a letter, that the “buyers” listed in the letter were Mr Thami Mncube and Mr Louis Kombora, that the project manager was Mr Kenosi Mokolobate, and that the value of the project was said to be R400-million.

She notes: “Save for denying that such a contract exists, ACSA has not claimed that any of the remaining details contained in the source document is false, such as the names of individuals or their positions. Business Day established, prior to publication, that at least the person who sent the letter and the person to whom it was addressed are indeed officials at those entities.”

The internal ombud adds:

  • There is nothing in the document and in Acsa’s response that clearly renders the document a fake; and
  • The document was handed to BD by very senior source at Acsa who was directly involved in the project design – which serves as verification of the authenticity of the document.

Therefore, she concludes, the newspaper had no reason to doubt the authenticity of the document and reasonably believed in the truth of the information it conveyed.

She also says the article stated that:

  • the details contained in the source document “allegedly show” that a R400-million contract was allocated to Aurecon, and did not state this as fact;
  • the document “could not be independently authenticated”; and
  • Acsa had questioned its veracity.

She argues: “We submit that Business Day was entitled to communicate to readers the import of the source document, balanced against ACSA’s responses thereto.”

Smuts adds that the article attributed a view expressed by the source that he expected the R400-million to grow with the inclusion of procurement and construction phases in the project. She says the next paragraph explained the reasoning behind this view: “An earlier scoping design document described the work as ‘professional services for the design, procurement and supervision of the construction’ of the new cargo facilities at OR Tambo.”

The story then continued: “This means that under standard engineering practice, Aurecon should also be appointed for the supervision phase to avoid detached liability, though Acsa denied following this practice”.

Smuts concludes that the opinion of the source was based on the following:

  • The scope of work included design, procurement and supervision of construction;
  • Aurecon has already been appointed for professional engineering services, meaning the design phase; and
  • Standard engineering practice calls for the one who designs to also procure and supervise construction, in order to avoid what is termed detached liability.

“The view was therefore lawfully expressed and conforms with the requirements for protected comment set out in the Code of Ethics. ACSA’s response hereto, namely that it does not apply standard engineering practice, is given in the article,” she submits.

Analysis

Blom’s reference to the document in question (a letter on an Acsa letterhead, directed to Aurecon, dated 25 July 2018 and signed on July 26) was accurate: It mentioned R400-million as the estimated value of the contract, and said that it was allocated to Aurecon SA. The signature, apparently, was that of Mthuthuzeli Mboniswa, group manager of Acsa’s supply-chain management unit.

The central issue is the reason why Acsa questions the veracity of the document – the tender, the company says, was cancelled in April and has not been re-published since. The company seems to argue that it could not have awarded / allocated the contract under such circumstances.

After having studied all the documentation at my disposal, the absence of the following (crucial) matters did not make any sense to me:

  • Acsa never provided me with evidence that the contract was cancelled, despite that fact that this was material to its argument and that it had more than one opportunity of doing so; and
  • Having accused BD of not verifying the authenticity of the document, I would have expected Acsa to do just that – confront Mboniswa with the question if indeed it was his signature and if yes, why he had signed it. Again, I have no evidence to this effect.

(These relate to what was not said. I address the difficulties I have with what was communicated to me lower down.)

In other words, Acsa’s neglect to boost its argument by providing me with solid evidence, has not helped its cause.

What also counts in BD’s favour is that Blom in fact reported that the document could not independently be authenticated and that Acsa had questioned its veracity. These statements, I believe, have adequately balanced out the rest of the reportage.

Given these considerations, I am not blaming BD for reporting on the content of the document in question, and also not for the way in which it did so. In fact, public interest dictated that this was precisely what the newspaper should have done – on condition that it mentioned Acsa’s views on this matter (which Blom duly did).

In addition, I take into account the seniority and the credibility of BD’s source. I have no reason not to believe the newspaper in this regard.

Aurecon

The journalist reported that Acsa had awarded Aurecon a contract to help develop a cargo facility at OR Tambo International Airport, and quoted a source who claimed that the tender for the Midfield Cargo Development had not been advertised (as required under Treasury regulations). The source also reportedly said he expected the amount of R400-million to grow far greater with the inclusion of procurement and construction.

Acsa disputes that:

  • it has “allocated” the tender to Aurecon without advertising it; and
  • the alleged contract was worth R400-million.

NDLOVU says Acsa confirmed that Aurecon had been appointed in February 2018 through an open tender process to provide scoping and professional services for development of a midfield cargo terminal. He also denies that the value of the tender “allocated” to Aurecon was R400-million (as the value of the tender was not yet finalised). He says that, once the scope had been finalised, Aurecon would make an investment request through the Capex Committee and that an open tender would subsequently be published.

He says Aurecon is part of the panel of suppliers for professional services, and emphasises that it was selected through an open tender and approved by the National Bid Adjudicating Committee in February 2018 (which is in line with Acsa’s supply chain management procedures).

He adds: “The appointment of service providers to a panel is a sourcing strategy which allows for speed of execution when services are needed within a short space of time while the investment decision has not yet been finalised. Panels take many forms, but in the case of infrastructure delivery within Airports Company South Africa, a strategy was implemented that creates panels for different types of professional services that might be required for the infrastructure development programme.

“The open market was therefore approached to identify providers of professional services that qualify based on functional specifications. These functional specifications include, for example, experience, competencies, necessary professional grading and so on. Therefore, the service providers appointed to each panel were evaluated on functionality… Once an investment decision is made (and therefore funding allocated to commence the procurement activity), all compliant service providers that form part of the panel can then be accessed in line with the industry pricing scales as and when required.”

He says the value of the tender was not yet finalised.  

In the end, he concludes, the (misleading) overall tenor of the article was that Aurecon would be involved in the construction of the R400-million project, and that its “allocation” to that company had not been pursuant to a public tender process.

SMUTS says Acsa does not deny that there is a contract between it and Aurecon – it is the scope and value of the contract that is in dispute.

She says the source document shows that the contract is for “Engineering Services” on the “Midfield Cargo Development” project at OR Tambo International Airport, valued at R400-million, commencing in July 2018.

She also states that the word “allocated” was a direct quote from the source document itself – which made the reportage fair and accurate.

She also points out that the article did not state it as fact that “the tender for the Midfield Cargo Development was not advertised as required under Treasury regulations” – it attributed the statement to a source. The article also stated that a search for tenders published by Acsa showed an expired call for tenders in 2016, and adds that no other (relevant) tender advertisements could be found.

Further correspondence

On January 15, I emailed Ndlovu the following question: “You have indicated in your complaint Acsa confirmed that Aurecon was appointed in February 2018 through an open tender process (to provide scoping and professional services for development of a midfield cargo terminal). Can you please provide me with any evidence to this effect?”

In response, NDLOVU sent me copies of the following documents:

  • The Bid Document: Bid COR 153/2017/B for the appointment of a panel of consulting engineering professional services across ACSA airports (electrical, mechanical, structural/civil);
  • A list of bidders that responded to the bid, which includes Aurecon;
  • Evaluation and scoring by the Bid Evaluation Committee (in which Aurecon scored above the minimum threshold);
  • Submission by the Bid Evaluation Committee (“BEC”) to the National Bid Adjudication Committee (“NBAC”) post evaluation of the Bids dated 20 February 2018 (Although Aurecon qualified, its name was erroneously excluded from the list of recommended bidders to NBAC);
  • Re-submission by the BEC to NBAC for inclusion of Aurecon amongst recommended bidders and explaining the error in their initial exclusion dated 16 July 2018;
  • Approval of BEC submission including Aurecon amongst successful bidders; and
  • Letter of award to Aurecon dated 25 July 2018.

He says that, from these documents, it is clear that:

  • Aurecon’s bid was assessed and evaluated with other bids in February/March 2018;
  • Aurecon’s bid went through the formal bidding process, from compulsory bidding, to evaluation by the BEC until their appointment was signed off by NBAC on 16 July 2018 hence their letter of appointment is dated 16 July 2018;
  • none of the bidders were appointed in February 2018, the meeting of NBAC approving the initial appointments (erroneously excluding Aurecon) was held on 19 March 2018. The letters of appointment could only have gone out thereafter; and
  • the appointment of Aurecon as a member of the panel had nothing to do with the appointment/resignation of Gwagwa.

He argues that Blom’s sources were therefore factually incorrect in stating that:

  • The appointment of Aurecon was not pursuant to an open tender process;
  • Aurecon was appointed for the development of the Midfield Cargo;
  • The value of the project allocated to Aurecon was R400-million; and
  • “It was expected that the amount would grow faster with the inclusion of procurement and construction”.

He says this information was available, had Blom taken time to interrogate his sources and/or request more information from Acsa.

The NEWSPAPER responds that these documents rather prove that the article was properly sourced, that the information relied upon was accurate, and that any comment expressed on the documents in the newspaper’s possession was justified.

It says the documents show that material details around the timing of Aurecon’s appointment were not previously disclosed.

These include that:

  • Aurecon was excluded from the panel of consulting engineers recommended by Acsa’s BEC on 20 February 20181 and that it was again excluded from the final panel approved by the NBAC on 19 March 20182;
  • it was only on 16 July 2018 that application was made to add Aurecon to the panel, claiming that its initial exclusion was as a result of “a typo” – a mere ten days before Aurecon was allocated the contract in the R400-million Midfield Cargo Development project;  and
  • Aurecon’s last-minute addition to the panel was only recommended by the Supply Chain Management Group Manager on 14 August 2018, about a week before the announcement of Gwagwa’s appointment as Chairperson of the Acsa Board.

It submits: “The documents also show that ACSA falsely claimed in its complaint that Aurecon ‘was appointed in February 2018 through an open tender process to provide scoping and professional services for the development of a midfield cargo terminal’. It is now clear that Aurecon was never appointed through an open tender process for the development of the midfield cargo terminal or in fact, was appointed at all in February 2018. The belated application for their appointment came only in mid-July 2018, and then only to be part of a panel to render seemingly ad-hoc “projects or maintenance work” to several ACSA departments. Their appointment in the Midfield project only came about on 26 July.”

Moreover, BD says when it confronted Acsa with its information, the company denied all knowledge of a R400-million contract with Aurecon – a denial which it repeated after publication of the article. Acsa also denies this in its initial complaint, and later claimed that Aurecon was only awarded a “scoping services contract” on 25 July 2018, worth R4.9-million.

However, the letter of award to Aurecon confirms that on 26 July 2018, Aurecon was “allocated” the “Midfield Cargo Development” project at OR Tambo Airport, at the “estimated project value” of “R400-million”. The newspaper argues that this “completely contradicts” Acsa’s assertions and fails to bear out its own version of events. Besides, nowhere in these documents does it show that a contract valued at R4.9-million was awarded to Aurecon (as formerly stated by Acsa).

 

It concludes: “Based on the records now released by ACSA, it appears that Business Day was entirely correct in stating that a ‘R400-million project, called Midfield Cargo Development, was (allegedly) allocated to Aurecon in July 2018’. ACSA’s failure to disclose knowledge of the project allocation, before and after publication, can only be deliberate and presumably aimed at misleading the newspaper and the ombudsman.”

Analysis

Ndlovu’s argument is confusing as he has stated that:

  • the contract was awarded to Aurecon in February;
  • the tender was cancelled in April and that it has not been re-published since; and
  • Aurecon’s name was re-submitted to the BEC (on 16 July 2018) after it was formerly erroneously excluded.

This has left me with the following questions:

  • How could Aurecon’s name have been re-submitted in June after it was already awarded the contract in February?
  • If the tender was cancelled in April, does it not follow that the “awarding” of the contract was also null and void?
  • If the tender has not been re-published after its cancellation in April:
    • on what basis was Aurecon’s name re-submitted in July?
    • does this not mean that Aurecon was indeed appointed without due processes?

While these questions hang in the air, I accept that the reportage on this issue was justified.

Gwagwa

The story said: “The award of a contract to [Acsa] to help develop a cargo facility at OR Tambo International Airport has exposed the state-owned airports operator to allegations of a conflict of interest, following the brief tenure of Lulu Gwagwa as its non-executive chair.” Blom added that Gwagwa was, inter alia, also the chairperson of Aurecon.

ACSA says Business Day “incorrectly” understood that Gwagwa had been its chairperson, and submits that she was never appointed as such – Ndlovu says she had merely been offered the position, which she declined (which means that her appointment could not have been “reversed”, as stated in the article).

Ndlovu adds that an image of Gwagwa is splattered in the article with an inference created of her being involved in corrupt activities in collusion with Acsa and Aurecon; or, at best for her, being involved in a conflict of interest situation.

Gwagwa, CEO of investment company Lereko Investments and a board member of FirstRand, Massmart and Sun International, is also the chair of Aurecon SA, an infrastructure management consultancy. It is part of the Aurecon global engineering consulting group and is responsible for all operations in Africa.

In a Sens announcement on Monday September 10, Acsa told noteholders that “Gwagwa will no longer be taking up the position of non-executive director and chair” of Acsa and that Deon Botha would continue acting as the board’s chair. Although the cabinet approved Gwagwa’s appointment in August, the nature and the reasons for its reversal last week were not provided. The transport department would say only that Gwagwa had declined the appointment, although this came weeks after her appointment had already been announced.

SMUTS refers to a letter by Acsa CEO Bongani Maseko (undated in my version of the document), in which he announced the appointment of seven non-executive members to the Board. The list included Gwagwa, as the new chairperson.

She says this notice followed an announcement by cabinet to this effect.

She also mentions the JSE Sens announcement, issued on 10 September 2018, which stated that Gwagwa “will no longer be taking up” the position as chairperson.

Regarding Acsa’s statement that it merely offered Gwagwa the position, which she has declined, Smuts says the journalist dealt with the relevant facts in the third paragraph of the article, where he points to the cabinet announcement, the Sens announcement and comment from the Department of Transport on the issue. “These apparently conflicting versions are relevant to the article and thus were fairly included,” she argues.

The internal ombud also denies that Gwagwa’s image was “splattered” in the article without any reference as to whether her prior comment was sought – she points out that paragraph 4 of the story clearly stated that she “has not responded to Business Day’s emailed questions”. She adds that, subsequent to publication it became apparent that Gwagwa intended to respond but had sent her response to an incorrect email address. “It is therefore common cause that the newspaper tried to get her prior comment and had stated as such in the article”, she says.

Smuts remarks that Acsa does not complain about the main aim of the article (a possible conflict of interest between itself and a company named Aurecon SA), while in fact it is the subject of certain factual disputes.

She says the “conflict of interest claims” statement is rooted in the fact that Aurecon, whose chairperson is Gwagwa, was apparently awarded a contract by Acsa in July 2018, about a month before the same person was appointed as that body’s chairperson. Some two weeks later, she continues, the JSE issued a Sens announcement that Gwagwa “will no longer take up” the position as Acsa chairperson.

Smuts submits: “Based on these facts Business Day presented the main angle of the story as a possible conflict situation having established itself.”

Analysis

Acsa’s denial that Gwagwa was ever the chairperson of its Board cannot hold water as the following facts are not in dispute:

  • Its own CEO (Maseko) has announced the appointment of seven non-executive members to the Board, including Gwagwa, as the new chairperson;
  • This notice followed an announcement by cabinet to this effect; and
  • The JSE Sens announcement, issued on 10 September 2018, stated that Gwagwa would “no longer be taking up” the position as chairperson.

Headline misleading

The main headline read: Aurecon’s contract exposes Acsa to conflict of interest claims.

ACSA complains the headline presented the “contract” as fact, while the article merely referred to it as an allegation.

Ndlovu says the headline has slanted the reportage towards accepting as fact the unverified information relied on in the article, notwithstanding Acsa’s denial of those facts. He says it created the misleading impression of corruption and / or collusion between Acsa, Gwagwa and Aurecon.

Analysis

It is not true that the article portrayed the contract as an allegation. The introductory sentence to the story read: “The award of a contract to Aurecon SA by Airports Company SA (Acsa) to help develop a cargo facility at OR Tambo International Airport has exposed the state-owned airports operator to allegations of a conflict of interest, following the brief tenure of Lulu Gwagwa as its non-executive chair.”

The headline merely followed suit. Given my other arguments above, I believe that the headline was also justified.

Comment not sought

ACSA complains that the journalist did not seek comment from itself, or from Gwagwa. It adds that there is no reference in the article to whether their account of their alleged involvement in the matter has been sought, not from Acsa and neither from Gwagwa.

SMUTS says BD did ask for comment, and reported in the article as follows: “In response, Acsa said Aurecon was part of a panel of suppliers for professional services”. This was followed by a verbatim quote by Acsa’s spokesperson.

Analysis

I note that, on September 10 (more than a week prior to publication), at:

  • 13:26: Blom sent questions to Jones, requesting confirmation regarding a R4-billion tender that was allegedly awarded to Aurecon by Acsa and the details of the scope of work that was to be done by that company pursuant to the award of the alleged tender;
  • 13:30:  Jones advised Blom that he did not have the required information and that he had forwarded the reporter’s queries to Acsa;
  • 13:37: Blom replied that Gwagwa (whom he “incorrectly understood to be the chairperson of Acsa’s board”) was also the chairperson of Aurecon and that there was a possibility of a conflict of interest; and
  • 16:11: Jones requested further clarity and specifics of the tender and proof of the allegations made in Blom’s e-mail, stating the only information at his disposal was that the R4-billion contract awarded to Aurecon by Acsa was for work on a midfield cargo facility at OR Tambo International Airport.

Then, on September 14, at 14:22, Blom sent another email to Jones purporting to provide more details about the sources of his information, putting his initial questions into context.

In this correspondence, the journalist:

  • claimed that:
    • he had seen a copy of another document dated 25 July 2018 which confirmed that Aurecon has been allocated a project entitled Midfield Cargo Development, that had been addressed to Mr Wynand Schoeman of Aurecon and signed on 26 July 2018 by Mr Mthuthuzeli Mboniswa, Acsa’s group manager;
    • he had evidence that the contract awarded to Aurecon never went on public tender; and
    • based on his understanding, Aurecon would be put on the procurement and supervision part of the construction of Midfield Cargo Development, and also requested a value to the tender that allegedly had been awarded to Aurecon;
  • requested confirmation from Acsa that Gwagwa’s appointment had not been irregular (as this was the perception since it coincided with the award of the tender to Aurecon); and
  • asked about the JSE’s Sens announcement on 10 September 2018 (namely that Gwagwa would no longer be taking up the position of non-executive director and chairperson of Acsa).

At 16:35, Jones requested further clarity from Blom with regard to the documents in his possession and about the nature of the project to which those documents referred. He also advised Blom that his questions had been forwarded to Acsa. Regarding the appointment of board members, he advised Blom that this was done by the Department of Transport – and whatever questions the reporter had pertaining to the appointment of Board members, to direct those to that department.

The reporter replied that he could not share the documents with Jones or identify his sources, and that he was not prepared to put people’s careers at risk. He says there could not be any confusion about which R4-billion (sic) project he was referring to. He also stated that the project was more important that the documents.

Blom then gave Jones a deadline of 14:00 on Monday, 17 September 2018, as he was “under orders to publish”.

On that Monday, at 13:56, Jones requested indulgence as he was awaiting final responses from Acsa – upon which Blom gave him an hour’s extension.

Jones forwarded Acsa’s response as follows (within the prescribed time):

Question 1: Business Day has seen a copy of a document detailing the scope of a R4-billion project for the design and building of the mid-field cargo complex at ORTIA.

Response: Midfield Cargo as a tender was cancelled in April. It has not been re-published. The tender will be published only once the scope is finalised and investment approval obtained from the relevant Capex Committees and the Board.

Question 2: Business Day has seen a copy of another document, dated July 25 2018, serving as confirmation that Aurecon South Africa (Pty) Ltd has been allocated a project titled Midfield Cargo Development. The July 25 document is addressed to Wynand Schoeman (wynand.schoeman@aurecon.co.za). It was signed on July 26 by Mthuthuzeli Mboniswa, designation Group Manager SCM.

Response: Aurecon has been appointed to provide scoping and professional services for development of a new midfield cargo terminal. The documents that you say that you have seen should reflect this. The documents you have seen should also be clear that the amount involved is not R4-billion. The total contract value is presently estimated to be R4.9-million, some 0.12% of the figure quoted to you.

Given all of the above, I cannot take this part of the complaint seriously.

Finding

The complaint is dismissed.

Appeal

The Complaints Procedures lay down that within seven working days of receipt of this decision, either party may apply for leave to appeal to the Chairperson of the SA Press Appeals Panel, Judge Bernard Ngoepe, fully setting out the grounds of appeal. He can be contacted at Khanyim@ombudsman.org.za.

Johan Retief

Press Ombud