Connie Myburgh, Nova Property Group vs. Moneyweb

Fri, Aug 21, 2020

Particulars

Complaint Number: 7795

Lodged by: Mr Connie Myburgh, Chairman: Nova Property Group

Date of article: 4 March 2020

Headline: Where is Hans Klopper? – The conduct of key players in the Orthotouch saga demands a forensic investigation

Author of article and respondent: Ryk van Niekerk, editor

Index

Introduction: Six complaints 2

Unacceptable language 2

Complaint 3
1. The article 3
2. Relevant sections of the Press Code 3

The text 3

The arguments 3
1. Introduction 3
2. Done something wrong as Nova’s chairperson; investigation merited 4
3. Dignity, reputation tarnished 10

Finding 11

Appeal 11

Introduction

At the outset, I need to flag two issues:

Six complaints

Mr Connie Myburgh and Nova Property Group (“Nova”) have simultaneously lodged six complaints with the office of the Press Ombud.

The complaint numbers, headlines and dates of publication of the five other complaints are:

7795 – Irba reports Nova to Sars and CIPC (24 February 2020);
7804 – Seven reasons Orthotouch’s dismal failure must be investigated (5 March 2020);
7828 – Covid-19 halts Sharemax auditors’ disciplinary hearing – (17 March 2020);
7829 – Three former Sharemax auditors, 413 improper conduct charges (23 March 2020); and
7830 – Nova: Insolvent, or in a sound financial position? (26 March 2020)

As all the articles complained of are about the same subject and issue, all six of the complaints and adjudications should be read in conjunction with the others. At the end of the last adjudication, I shall make some general comments in a separate addendum.

Unacceptable language

Under the heading Adjudication by the Ombud, Section 3.1 of the Complaints Procedures says, “No complaint written in disparaging, insulting, demeaning or vexatious or similar language shall be accepted.”

Correspondence from the complainant was such that I initially declined to entertain his complaint. The problem was not that he was critical of Moneyweb’s editor – under our country’s Constitution he has every right to speak his mind; the dilemma was that he has crossed the line and attacked the editor in his person.

Chair of Appeals Judge Bernard Ngoepe granted the complainant his appeal against my decision, on condition that he tones down his language.

The complainant has largely complied – but alas, not quite to my satisfaction.

I have seriously considered refusing the complaint yet again, but in the end I have decided against it – I realised that I should take the (extraordinary) tension between the parties into consideration; I also have to accept that we do not live in a perfect world.

What settled the matter, is my belief that ultimately, the adjudication of these complaints is – or should be – in the public interest.

Johan Retief – Acting Assistant Press Ombud

Complaint

1.1 Mr Connie Myburg complains that the editor:

created the false and unsubstantiated innuendo that:
- he had done something wrong as chairperson of Nova;
- the above had merited a forensic investigation; and
has defamed him (personally and in his capacity as the group’s chairperson), as well as Nova.

1.2 He asks for a rectification, retraction and apology to Nova and him, both as an individual and as Nova’s chairperson.

The text

2.1 The article was about a creditors’ meeting of the companies Orthotouch and Zephan that was held in November 2019. Van Niekerk wrote, “This was an obligatory meeting after former property magnate Nic Georgiou put both companies into business rescue. It was also the first official opportunity in years for investors to see anyone representing Zephan or Orthotouch face to face.”

2.2 The article centred on the apparent failure of the Orthotouch directors to fulfil their fiduciary duties to implement the rescue plans.

2.3 The editor referred to a question put by an attendee about Mr Hans Klopper’s absence. (He was the business rescue practitioner of the HS companies.) This question reportedly went unanswered.

The arguments

3.1 Introduction

3.1.1 Before I delve into this complaint, allow me to say that I am going to ignore statements that are irrelevant to the complaint – of which there are quite a few. It follows that I am also going to ignore responses to such statements.

3.1.2 Myburgh leaves no stone unturned to accuse the editor of bias and “utmost malice”, alleging that he was out to create “maximum damage” to him and to Nova. I shall refer to this allegation again in my addendum, after I have adjudicated all six complaints.

3.1.3 To keep the issues as simple as possible, I am:

not going to repeat myself, as often happens in the relevant correspondence that has landed on my desk; and
grouping together several issues that are addressed separately in the communication with this office.

3.1.4 I am cognisant of the fact that simplifying matters can be dangerous. Over-simplifications will inevitably lead to wrong interpretations and decisions. However, the intricate nature of the complaint at hand has forced me to simplify. I trust I have not missed any nuances in this process. If I have, it was not intentional. The exercise was indeed all but easy.

3.1.5 Myburgh’s (and Nova’s) refusal to respond to Moneyweb’s questions is a recurring theme. He says Nova has long ago come to understand that, “to respond to Mr van Niekerk, merely provides him with another platform and opportunity, to further report his incorrect, and in the view of the Nova Group, damaging and defamatory narrative, regarding the Nova Group and its functionaries”. He adds, “To respond to every article written about the Nova Group by Mr van Niekerk in order to satiate his obsession with the Nova Group, will be a waste of time, money and resources, as the reportage is no more than sensationalist writings.”

3.1.6 On the other hand, I note (with appreciation) that the editor nevertheless persisted in giving Nova a right of reply.

3.1.7 Still, this is an extremely unhealthy situation. Given the tension between the parties (let’s be honest!), I have little hope that this adjudication will do anything to improve this situation. I am nevertheless going to try to do the seemingly impossible – to bring the parties closer to each other. But, in the end, the choice is theirs.

Done something wrong as Nova’s chairperson; investigation merited

3.2.1 Myburg complains the editor created the false and unsubstantiated innuendo that:

he had done something wrong as chairperson of Nova; and
the above had merited a forensic investigation.

3.2.2 He says the editor referred to him as:

one of “the Orthotouch triumvirate who were supposed to save the R4.6 billion that around 18 700 people invested in the failed Highveld Syndication (HS) schemes”; and
the chairman of Nova, linking him to previous reporting in regard to similar topics, “in a clear attempt to link all of his reporting regarding me to the Nova Group” – which linked his position at Nova with developments at Orthotouch.

3.2.3 Van Niekerk argues that Myburgh was a director of Orthotouch, the entity that was supposed to “rescue” the investors’ investments, at the time that the events he reported on took place. He says Myburgh was appointed to the board on 9 January 2012 and resigned on 30 October 2018, adding that a Windeed Company Report proves this information.

3.2.4 He says:

The Orthotouch board, which included Myburgh, failed to implement the conditions of the original business rescue plan (“BR Plan”), or the subsequent Section 155 Scheme of Arrangement (the two rescue processes);
As his reporting shows, nearly all the properties were sold off to third parties under questionable circumstances in contradiction of the conditions of the rescue schemes. Myburgh, as director, would have co-authorised many, if not all, of these transactions;
His articles on Orthotouch was based on his own investigation into and analysis of the actual sales transactions related to the 79 properties. The research was done over a period of eight months, during which he consolidated information contained in thousands of pages of official documents including the court papers, the business rescue plan, the Section 155 Scheme of Arrangement, and 150 title deeds into one spreadsheet. The information was used in several articles, published during 2019 and the first quarter of 2020; and
He sent “countless” questions to Orthotouch, including detailed questions regarding the sale of properties to third parties – but he never received any response.

3.2.5 From the above, the editor concludes Myburgh’s claim that the article was not based on facts is incorrect. He also points out that the relevant facts have never been challenged before a court, or before the office of the Press Ombud. He adds that the apparent failure of the Orthotouch directors to fulfil their fiduciary duties to implement the rescue plans justified an investigation into the conduct of the Orthotouch board, of which Myburgh was a director.

3.2.6 “The reference in the article to Orthotouch was to show that Myburgh was involved in another rescue effort of a failed investment scheme,” he submits. He says the article was an opinion piece focussed on the need for authorities to investigate developments at Orthotouch “which saw virtually all the properties being sold to third parties, and not being transferred to Orthotouch as the conditions of the business rescue plan and Section 155 Scheme of Arrangement demanded”.

3.2.7 Van Niekerk says a Windeed report shows that Myburgh was also a director and the chairperson of Nova. He says Myburgh is evidently unhappy that, in addition to being identified as a former Orthotouch director, he was also identified as the chairman of the Nova group – but that reference, he submits, was factually correct.

3.2.8 Besides, he continues, the reference to Nova was also relevant in a broader context: “Orthotouch and Nova are the respective ‘rescue vehicles’ of the failed HS and Sharemax property syndication schemes. Both Orthotouch and Nova are experiencing dire financial problems and it is highly doubtful that they would be able to repay investors in accordance with the rescue plans. There are concerns that the financial problems and the companies’ inability to repay investors, flow from possible mismanagement or possibly worse,” he explains.

3.2.9 Regarding Myburgh’s complaint that he had “regurgitated” previous reports in an attempt to link all of his reporting regarding him to Nova, the editor says the reference related to a previous article about a Section 417 investigation into Myburgh’s and Klopper’s conduct (the latter was an Orthotouch director and also the business rescue practitioner of the HS companies). The editor says the Section 417 report inter alia recommended that Myburgh’s conduct prior to the liquidation be referred to the National Prosecution Authority for investigation.

3.2.10 Van Niekerk argues it was therefore relevant to link the reference to the Section 417 report to the article “as Orthotouch’s business rescue process was … [also] preceded by a significant selloff of assets”.

3.2.11 He says that he published an article on this issue headlined, The dark underbelly of the business rescue industry (22 September 2019).

3.2.12 Mentioning the case number (SEOU Enquiry CAS 11/01/2019), the editor says it is also relevant that the Serious Commercial Crime Unit of the Hawks is investigating Orthotouch and other companies related to the HS schemes.

3.2.13 Van Niekerk concludes that Myburgh’s involvement:

in other schemes was relevant – readers should not be kept ignorant of a key individual’s involvement in other matters, “lest his involvement elsewhere may also be drawn into question”. Otherwise, the editor argues, Moneyweb would be telling only part of the story; and
with Nova and the Section 417 report dealing with his conduct in the Harrison & White business rescue and liquidation process, are not issues that can simply be ignored when dealing with his involvement in Orthotouch. “The reference to these contextual issues with hyperlinks to previous reportage on related matters are (therefore) justified,” he argues.

3.2.14 He also denies that article stated or alleged any impropriety against Myburgh. It merely stated there were irregularities during the rescue processes and that the conduct and decisions of the key players, including Myburgh, should be investigated. He argues Myburgh cannot use the office of the Press Ombud to rewrite the history of this matter in a selective way that reflects positively on him.

3.2.15 Van Niekerk argues that he has hyperlinked four articles to make readers aware of the “greater context” to the issues raised in the article. (Those were headlined, The peculiar case of the Picvest business: Part 3, 4, 5 and 6.)

3.2.16 He adds he has sent “countless (and detailed) questions” to Orthotouch, but it failed to provide any answers to these questions.

3.2.17 He argues that, on the basis of the above, Myburgh’s claim that the article was not based on facts is incorrect. “The facts upon which the article complained of is based, are set out in the article itself and/or referenced by way of hyperlink to previous articles. These facts have never been challenged in this forum or before the court,” he adds.

3.2.18 The editor reiterates a Windeed report that shows that Myburgh was a director and chairman of Nova – which represented hard evidence or, to use Myburgh’s word, “substantiation” for the reportage.

3.2.19 Van Niekerk says that the article in dispute was an opinion piece focussed on the need for authorities to investigate developments at Orthotouch – which saw virtually all the properties being sold to third parties, and not being transferred to Orthotouch (as demanded by the conditions of the business rescue plan and Section 155 Scheme of Arrangement). “Many, if not all, sales transactions were approved by the Orthotouch board, of which Mr Myburgh is a member.”

3.2.20 Myburgh’s extensive reply to the above comprises all of 20 pages. I shall attempt a reasonable summary of this reply. His response inter alia includes the following:

His complaint does not relate to “the failure of the two rescue processes”;
He presents this office with the “true facts” of the “rescue processes” to refute the statement that a forensic investigation into Nova was merited – inter alia saying that the Orthotouch BR Plan stated:
- Investors were settled to the amount of R832 858 168;
- Klopper received a dividend of less than 10 cents in the Rand – while HS investors received substantially more than 10 cents in the Rand;
- “Orthotouch ... complied with ... (its) ... obligation to pay interest to the investors .... totalling, from March 2011 until September 2018 an aggregate amount of R1 214 552 709.00”; and
- There was no proof of misappropriation in regard to property transactions – thereby giving Ortotouch’s board of directors a clean bill of health;
He was under no obligation to “rescue” the investments of investors in the HS companies, as he never was a director of HS companies – and he performed all his obligations as a director of Orthotouch;
The HS BR Plan was a huge success and in stark contrast to the editor’s “incorrect and untrue lament” of the “failure” of the two rescue processes;
Klopper was to place HS investors in a better position than as in liquidation, not to “rescue” their investments;
Orthotouch was not in business rescue while he was a director;
It is irrelevant whether he co-authorized anything, as he has no idea what transactions the editor is referring to;
Van Niekerk’s “investigations” do not lead to the establishment of any “facts”;
The editor asks for a “forensic investigation” – but he provides no evidence of anything to be forensically investigated; and
The statement “which saw virtually all the properties being sold to third parties and not transferred to Orthotouch as the conditions of the business rescue plan and Section 155 Scheme of Arrangement demanded”, do not necessitate an investigation, especially as:
- the HS BR plan and the SOA allowed for the sale of properties; and
- all properties were transferred to Orthotouch, and from Orthotouch to third parties, as is allowed by the HS BR Plan and the SOA.

3.2.21 Myburgh reiterates that Nova’s business has nothing to do with Orthotouch and its affairs, and the linking of the two (by referring to him as a director of both) was unwarranted. He says the editor is wrong in stating that he was “unhappy” about the reference to him as a director of both Orthotouch and Nova – that, he submits, is not what his complaint is about. He says he is complaining that the editor falsely and unfairly linked his alleged wrongdoing in regard to Orthotouch to Nova – as if he had has also committed wrongdoings and untoward actions within the latter.

3.2.22 Regarding “investigations”, Myburgh says:

the editor did not only state his view that he (Myburgh) and Orthotouch should be investigated – in fact, he says the article stated categorically that there were incorrect and untoward actions attributed to him as a director of Orthotouch;
he is not aware of the “investigation” into Orthotouch – if there is such an investigation, he continues, it would have nothing to do with the “investigation” the editor is asking for.

3.2.23 Myburgh says the editor contradicts himself by saying, on the one hand, that he did not allege any wrongdoing by him (Myburgh) – while he also says there were irregularities, referring to “conduct and decisions of key players, most notably Mr Myburgh”.

The Orthotouch BRP makes it clear that there were no untoward matters regarding Mr Myburgh in regard to Orthotouch.

3.2.24 Emphasising that Nova was not obliged to “save the investments of members of the public”, he denies that the references to him in the article are true and in the public interest and that opinions he expresses in regard to “those facts” were protected comment.

3.2.25 In conclusion, Myburgh says to the extent to which Orthotouch had to repay historical investments, it has done very well under the circumstances, “including damaging circumstances created by Moneyweb and Mr van Niekerk, through their incorrect and damaging reportage regarding Orthotouch over many years, which reportage added to the reasons why financial institutions refused to fund Orthotouch, with the effect of Orthotouch not being able to source the capital it needed, as envisaged in the Business Rescue process of the HS Companies and the Scheme of Arrangement in regard to Orthotouch, to enhance the property portfolio of Orthotouch, for purposes of paying HS investors. The investors who have received less than what they invested, should blame Moneyweb and the persons working with Moneyweb, for years, to bring about the demise of the Business Rescue process of the HS Companies and the Scheme of Arrangement in regard to Orthotouch.”

Analysis

3.2.26 The first part of this complaint is that the article has created the false and unsubstantiated innuendo that Myburgh had done something wrong as chairperson of Nova.

3.2.27 It is a fact, according to The Windeed Company Report, that Myburgh was a director of Orthotouch from 9 January 2012 up to 30 October 2018. This is not in dispute.

3.2.28 A Windeed Director Report also confirms that Myburgh was a director at Nova. The document at my disposal is dated 23 May 2019. It shows that Myburgh’s date of appointment was 20 January 2012, while information under “Resignation date” was left open. This means that, according to Windeed, it is correct to say that Myburgh was a director of Nova from 20 January 2012, and that he was registered as such for at least up to 23 May 2019. This is also not in dispute.

3.2.29 While keeping the above-mentioned arguments and responses in mind, I now turn to the litmus test – what was written in the article, and how that should be interpreted.

3.2.30 Firstly, I cannot find any evidence of any kind to substantiate the complaint that the article created the innuendo that Myburgh had done something wrong as chairperson of Nova. Van Niekerk referred only once to Nova – and I do accept that he did so merely to provide further context to his article. The editor cannot be faulted for that.

3.2.31 I believe Myburgh is putting meaning into the text which did not exist. For me, that simply is a bridge too far.

3.2.32 I also take into account that the editor has given him a right of reply – an opportunity which he did not make use of.

3.2.33 The second part of this complaint is that Myburgh’s wrongdoing had merited a forensic investigation.

3.2.34 Van Niekerk has partly, or even mainly, based his argument on his conviction that the Orthotouch directors (including Myburgh) apparently failed to fulfil their fiduciary duties to implement the rescue plans – while Myburgh, on the other hand, is adamant that the BR Plan was a “huge success”.

3.2.35 The real question, then, is not if the Orthotuch directors were guilty of anything unlawful, but only if the editor had enough evidence at his disposal to justify his call for an investigation.

3.2.36 The Section 417 report, which the editor refers to in sub-sections 3.2.9 – 3.2.11 is about the affairs of Harrison and White Investments (Pty) Ltd. This report, dated 7 May 2019 and electronically signed by E. Bertelsmann was headlined, “Report to the Master of the High Court (Gauteng Johannesburg Division) concerning the Insolvency Enquiry into the Affairs of Harrison and White Investments (Pty) Ltd (in liquidation) – Master’s Reference No G 1274/2016.

3.2.37 Myburgh features in this report. I take the editor’s point that it was relevant to link this 417 report to the article “as Orthotouch’s business rescue process was … [also] preceded by a significant selloff of assets”.

3.2.38 In Complaint number 7804 Myburgh warns that this report is confidential, that the editor has obtained and published it in an unlawful manner, “and which is unlawful for him to have attached the report to his response to this office”.

3.2.39 In this regard he submits, “It will be unlawful for the Press Ombud to have regard to this Report, as it is a confidential Report, which is to be accessed only with the written approval of the Master of the High Court, which consent Mr van Niekerk and the Press Ombud do not have.”

3.2.40 Keeping in mind Section 1.4 of the Press Code (“News should be obtained legally, honestly and fairly, unless public interest dictates otherwise” – my emphasis), I continue without hesitation.

3.2.41 In this report, Myburgh was identified as the company’s legal adviser and “who was on retainer for the Company and for the entire group at all relevant times (point 6, page 3);

3.2.42 Under the headline, “Findings and Recommendations” (page 60), and under the sub-section headlined, “Connie Myburgh” (point 96.7), Bertelsmann wrote inter alia:

“Any payments made to him in business rescue were made without the prior approval of the BRP and may be reclaimable on that basis”;
Myburgh “acted on behalf of the purported creditors, the Viking Trust and the Rosek Trust… In addition, he voted in his own capacity as a creditor. He thus knowingly found himself in a triple conflict of interest”;
“It may therefore be advisable to refer the matter to the new legal practice counsel for an investigation and appropriate action if so advised”;
As the legal practitioner who was on retainer to the entire group, including the Company, he must have been aware at a very early stage of the financial woes every company in the group was experiencing. As legal advisor he was obliged to engage the Company directors and management as soon as the red lights of inability to meet financial commitments as and when they occurred began to flicker. He did nothing of the sort”;
“He (Myburgh) continued collecting retainers while the sham of business rescue proceedings played itself out over a period of about 3 years”;
“He (Myburgh) colluded with the Company directors and management in obstructing the flow of justice by delaying the finalization of the liquidation application through the stratagem of the intervention of the Trusts, who were to his knowledge by no stretch of the imagination bona fide creditors”; and
“The actions stipulated above were clearly reckless, if not worse. He is therefore liable to face an application in terms of section 424 (1) and to have its actions referred to the Director of Public Prosecution in terms of section 424 (3).”

3.2.43 Conscious of the fact that Myburgh will disagree with me, I do not blame the editor for asking for an investigation into the company in which he was involved, and which experienced similar problems to the one referred to above.

3.2.44 Note I am not saying he was guilty – my one and only conclusion is that the editor was justified in calling for an investigation.

3.2.45 I therefore believe the editor is correct in remarking that (a) the article did not state or allege any impropriety against Myburgh, but rather (b) stated that the conduct and decisions of the key players, including Myburgh, should be investigated.

3.2.46 I also find the editor’s conclusions, documented above in subsection 3.2.13, to be credible.

3.2.47 On the other hand, I do not find any convincing evidence that the HS BR Plan was a “huge success”, as Myburgh submits – which is not to say there were not some successes.

3.2.48 PS:

I cannot help but note that Myburgh blames the editor for poor financial performances (sub-section 3.2.25 above) – the same claim that he denies in his sixth complaint (Complaint Number 7830) to this office; and
I also need to point out to the editor that the text in dispute was an investigative report (as indicated on top of the article as well) and that, as such, it was not an opinion piece. This is an important distinction, as investigative reports, unlike opinion pieces, are not regulated by Section 7 (“Protected Comment”). I point this out for future reference – Van Niekerk should be careful not to believe that comments in investigative reports are protected merely because they are comments.

3.3 Dignity, reputation tarnished

3.3.1 Myburgh says the false innuendo of improper and untoward actions on his part was defamatory and has unnecessarily put him as an individual and as the chairman of Nova in a negative light.

3.3.2 Van Niekerk denies this. He argues that the references to Myburg in the article were:

true;
in the public interest (“…both Nova and Orthotouch were supposed to be rescue vehicles that were meant to save the investments of members of the public, many of whom have been left in dire financial situations as a result of the questionable management of the companies”); and
opinions that constituted protected comment.

3.3.3 He concludes the investing public has a right to be informed about these matters, “not only so people who are in positions of corporate power can be held to account, but also to educate themselves about, and protect themselves against the kinds of investments. This is a duty I owe to my readers, and one that I take very seriously”.

3.3.4 He quotes from the relevant portion of a recent Supreme Court of Appeal judgment: “Insofar as reference is made to an investigation … it is now settled law that the reasonable reader is well able to discern between being investigated for a crime and having committed a crime… Investigation for criminal conduct or even suspicion of criminal conduct does not amount to guilt. It leaves open the possibility of rebuttal.”

(available at http://www.saflii.org/za/cases/ZASCA/2016/189.html)

Analysis

3.3.5 Given my arguments above, it follows that I have no evidence to uphold this part of the complaint. Van Niekerk has done nothing wrong, and therefore cannot be said to have tarnished Myburgh’s or Nova’s name unnecessarily.

Finding

The complaint is dismissed in its entirety.

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

Acting Assistant Press Ombud