Particulars
Complaint number: 8837
Lodged by: Malatji & Co Attorneys
Date of article: 22 February 2021
Headline: GEMS rocked by corruption investigation involving R300 million
Sub-headlines: The Government Employees Medical Scheme (GEMS) is embroiled in a web of fraud and corruption claims totalling over R300 million;
: This has triggered public fears that GEMS, which is in the running to be appointed as administrator of the NHI, will sink the fund due to corruption; and
: Over a period of five years, GEMS paid more than R300 million to companies in which its executives had direct financial interests.
Author of article: Sipho Masondo
Respondent: Prof. George Claassen, News24’s internal ombud
1.1 The crux of Goolab’s complaint is that the article falsely, unfairly and misleadingly suggested that he had “left” GEMS under a cloud.
1.2 He also complains that the:
1.3 He asks for a public apology similar in prominence to the article, together with a summary of this adjudication.
2.1 The relevant sections of the Press Code are:
2.2 Malatji & Co Attorneys only lists four sections of the Press Code (1.1, 1.2, 1.9 and 10.1), but in its presentation of Dr Goolab’s complaint it became clear that there were more sections involved.
3.1 The first two sentences of the article aptly summarise what the story is about. They read, “The Government Employees Medical Scheme (GEMS), which is positioning itself to administer the National Health Insurance (NHI) fund, has been rocked by allegations of tender rigging, fraud, maladministration and corruption totalling more than R300 million. The accusations of graft at GEMS are detailed in a series of 10 explosive forensic reports (conducted by Ligwa Advisory Services) which show that over a period of five years the scheme had appointed and paid more than R300 million to companies in which some of its executives had direct financial interests.”
3.2 Goolab was mentioned in the following statements:
4.1 General remarks
4.1.1 Allow me to start with some general comments, before I deal with the complaint itself.
4.1.2 Both sides’ arguments are largely directed at either blaming, or exonerating, Goolab.
4.1.3 However, it is not for this office to decide which is which. I am not mandated to decide how good or how bad Goolab may be– my focus is purely on whether the disputed parts of the article were in breach of the Press Code or not. To put it differently: I am not adjudicating Goolab; I am adjudicating News24’s article.
4.1.4 Therefore, it comes as no surprise to me that, with respect, much of the correspondence from both sides are irrelevant in that either Goolab did not mention these in his complaint, or they were not mentioned in the article.
4.1.5 I have therefore ignored all correspondence pertaining to the following matters:
4.1.6 These matters merely served to divert the attention away from the real issues at hand.
4.2 ‘Left’ – under dubious circumstances
4.2.1 The crux of Goolab’s complaint is that the article falsely, unfairly and misleadingly suggested that he had “left” GEMS under a cloud.
4.2.2 He argues that this impression was created because the word “left” was used in the context of executives who had been accused of wrongdoing – of which he was one. He submits that the use of the word “left” was intended to imply that he had left under the same circumstances as the other two executives
4.2.3 He argues it was incorrect to record that he had “left” GEMS – he says he served a full five-year term at GEMS (from 2013 until 2018). He says he was offered a further term, which he declined. However, there was an agreement reached between him and GEMS for him to stay on until January 2020.
4.2.4 He adds that Goolab:
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4.2.5 Prof. George Claassen replies that Ligwa, who was commissioned to look into several contracts at GEMS, has produced 10 forensic reports – and points out that all the corruption uncovered by Ligwa happened under Goolab’s watch (who was principal officer at the time). |
4.2.6 Malatji notes that Claassen did not respond to the complaint about the use of the word “left”.
4.2.7 He also denies that any of the Ligwa reports which the article relied on implicated Goolab in any fraud or corruption (as he says the article did), or of having any direct or indirect financial interests in the entities which were awarded the contracts, as the article suggests.
4.2.8 “There is a vast difference between a finding by Ligwa relating to an irregularity in the processes of approving an extension of a contract, (which was at any rate subject to being renewed in accordance with the terms thereof), and the leap to fraud and corruption as set out in the article,” he argues.
Analysis
4.2.9 The gist of Goolab’s complaint is that the use of the word “left” was intended to imply that he had left under a cloud – specifically, under the same circumstances as the other two executives (Mfenyana and Nkonyana).
4.2.10 Unfortunately, News24 does not reply to this part of the complaint.
4.2.11 This leaves me with the question: How would a reasonable reader have interpreted the statement in question? In other words, was it reasonable to believe that Goolab had left under a cloud (like two other people, also mentioned in that sentence), based on the use of the word “left”? And on the context within which it was used?
4.2.12 Let me take a closer look at that sentence. It said that Ligwa had presented GEMS “in January 2018” with a series of hard-hitting forensic reports (that had “accused” the three people of wrongdoing). It went on to say that Mfenyana and Nkonyana had left in April 2017 – in other words, before the reports were delivered. And most probably before the investigation started.
4.2.13 On the other hand, Myburgh reported that Goolab only left GEMS at the end of January 2020 – in other words, a full two years after the reports had been delivered. This does not support a view that the impression was created that he had left GEMS under a cloud. Therefore, I do not believe that readers could reasonably have understood that the journalist meant to suggest that Goolab had left under dubious circumstances.
4.2.14 In the end, it was true that Goolab had “left” the company. I do believe Goolab reads too much into the word “left”.
4.2.15 I comment on Goolab’s submission that the article has implicated him in fraud and corruption in sub-section 4.4.4 – 4.4.8 below.
4.3 Payment of R170-milllion to Teledirect
4.3.1 Goolab complains the statement that he had a role to play in the payment of R170-million to Teledirect was false.
4.3.2 Malatji submits: “The GEMS AIRs do not mention that our Client is implicated in any of the investigations. In fact the GEMS AIRs consistently indicate that the chairperson of the Board gave a vote of thanks to our Client on behalf of the Board of Trustees. In the 2017 GEMS AIR, the chairperson thanks our Client on ‘dealing with the challenges arising from the extensive tender investigations’. The investigations are further captured in the 2018 GEMS AIR as part of the Minutes of the 12th GEMS Annual General Meeting held on 31 July 2018. In all of these GEMS AIRs, the Board of Trustees through the chairperson expresses its appreciation for (sic) our Client for his leadership.”
4.3.3 He says this information was publicly available and was further published in the GEMS annual integrated reports (AIR) between 2016 and 2019.
4.3.4 The attorney also provides this office with a letter, dated 1 March 2021 and signed by the chair of GEMS Board of Trustees (Dr SM Hlatshwayo), inter alia advising that Goolab, on the instruction of the board, had launched the forensic investigation into the corruption allegations, and that the investigation subsequently revealed that he had not been implicated in the corruption allegations.
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4.3.5 Claassen replies that, not only did corrupt activities at GEMS happen under Goolab’s watch (as the principal officer), but investigators even recommended that the board should take action against him (regarding the Teledirect contract). 4.3.6 He says the report shows that the GEMS Board had approved that Teledirect be paid R5.50 per member per month – while Goolab signed a contract approving a fee of R5.70 per member per month. “The report concludes that this was an irregularity for which the board should consider possible action against him,” he submits. 4.3.7 He quotes as follows from the Teledirect report: “Though the difference between the Board approved and contracted amounts was insignificant, we consider this irregular on the part of Ms Nkonyana who accepted the fee and Dr Goolab as he signed the Teledirect contract.” 4.3.8 The internal ombud argues: “From a good corporate governance’s point of view, it was a … misstep for Dr Goolab to agree with the board to pay Teledirect R5.50 per member per month and then to sign a contract agreeing to pay the company R5.70 per month… So the claim that Dr Goolab was not implicated simply doesn’t stand up to scrutiny.” 4.3.9 He also says News24 is not aware of the letter written by Hlatshwayo, presumably to Goolab’s lawyers, to confirm that he (Goolab) had not been implicated by Ligwa’s reports and that he had driven the process to get the alleged corruption investigated. He points out, however, that this letter stands in stark contrast with the facts, as argued by News24, that Goolab was implicated and that the Board should have considered taking action against him as per the recommendation of Ligwa’s investigators. |
4.3.10 Malatji denies that Goolab was reportedly found to have played a role in the payment of R170-million to Teledirect – instead, he says, the Ligwa report found that the contract had been extended at the behest of Nkonyana (and not Goolab).
Analysis
4.3.11 The sentence in dispute read, “Teledirect’s one-year contract was extended for two more years without board approval and the company was eventually paid R170 million. Investigators found … Goolab had a role to play in the saga”.
4.3.12 I do not know if it is true that Goolab had a “role to play” in the payment of R170-million, as Claassen contends – and neither am I mandated to find that out. What I do know, though is that Ligwa’s report says he had a role to play. It is not for me, or for News24, to decide on the merits of this statement. All that News24 has done is to report what the Ligwa report says. If Goolab wants to dispute this, he should take up the matter with Ligwa and not with the messenger.
4.3.13 I have checked Claassen’s version of what the Ligwa report says against the report itself. I am satisfied that he quoted it accurately, and in context.
4.3.14 I have noted the content of Hlatshwayo’s letter but, in light of the above, I cannot see how that can make any difference to what the Ligwa report states.
4.4 Material omissions
4.4.1 Goolab complains that the story failed to mention:
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4.4.2 Claassen does not reply to this part of the complaint. |
4.4.3 Malatji says the contract was awarded on the basis that it may be annually renewable for a maximum of two successive periods. He argues, “The article thus intentionally departed from the facts and instead provided a summarization.”
Analysis
4.4.4 Let me recap what the story actually said about Goolab, for that is going to be the litmus test in adjudicating this part of the complaint – if the article indeed put him in a bad light (read: connected him with fraud and corruption), the onus would have been on News24 to provide context and to not omit material information.
4.4.5 The article mentioned Goolab as follows:
4.4.6 The first bulleted sentence did not say Goolab was “found guilty” of wrong-doing – it said he was “accused” of wrong-doing. Moreover, I have already decided that there was nothing wrong with the use of the word “left”. The second bulleted sentence is not relevant in this regard; the third bulleted sentence merely stated that he had a “role to play” – it did not say what role it was.
4.4.7 I also note that his name did not appear in the main headline, and also not in the three sub-headlines; moreover, his picture was not published with the story.
4.4.8 Overall, I do not believe that reasonable readers would have thought the article suggested that Goolab was guilty of fraud and corruption. If I did, I would have seriously considered the omissions, as listed by Malatji – which is not the case.
4.5 Based on limited information; no proper verification
4.5.1 Goolab complains that News24 had not obtained information from the Saps and/or Hawks investigations and/or the information from the GEMS AIR and argues that it should have stated such. “Instead, it is clear that no effort was made to obtain the information to present a balanced news coverage report,” he reckons.
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4.5.2 Claassen emphasises that News24 solicited comment from Goolab prior to publication, and that he did not respond. “Had he responded, News24 would have reflected his side of the story in full. We indicated this in the report, as required by the Press Code. The audi alteram partem requirement was, therefore, thoroughly adhered to,” he submits. 4.5.3 He argues, “The fundamental issue at the centre of the circumstances surrounding Dr Goolab’s complaint is that he objected to the fact that he was not given the right to reply before the original story was published, as the Press Code requires. From the story, it is very clear that he was indeed given that right to respond. Everything else is secondary and of little value. What lies at the core of the matter is that News24 solicited comment from Dr Goolab and he chose not to respond. And it was published as such in the story.”4.5.4 And adds, “Whether or not his complaints have merit – and we argue that they don’t as set out in the sections below – is irrelevant. The Office of the Press Ombudsman should settle the matter based on the fact that Dr Goolab chose not to give his version. This should be the primary and only consideration… Asking the Press Ombudsman to conclude that News24’s coverage was unfair and not balanced cannot be reached in the absence of a version by the complainant. This also goes against the principles of natural justice.” |
Analysis
4.5.5 I do not believe, as Claassen states, that the “fundamental issue at the centre of the circumstances surrounding Dr Goolab’s complaint is that he objected to the fact that he was not given the right to reply”. In fact, he does not complain about the audi alteram partem rule at all (Section 1.8 of the Press Code). His complaint is about verification – from outside sources, such as the Saps and the Hawks.
4.5.6 I do agree with the internal ombud, though, that it was unfortunate that Goolab chose not to respond.
4.5.7 Be that as it may, the article was about the findings of the Tigwa investigations. I do not expect the media to verify findings of a report – they are messengers, not courts of law.
4.6 Headlines, captions misleading
4.6.1 Goolab complains that the headlines were misleading and failed to reasonably reflect the contents of the report. He denies that he had any direct financial interests in the companies mentioned in the article and in the sub-headings.
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4.6.2 Claassen does not respond to this part of the complaint. However, from the rest of his replies to the complaint, it can safely be assumed that he denies that the headline and sub-headlines were misleading and they were not reasonably reflective of the article. |
Analysis
4.6.3 Section 10.1 of the Press Code says, “Headlines … shall not mislead the public and shall give a reasonable reflection of the contents of the report or picture in question.”
4.6.4 This, to my mind, is exactly what the story’s headline and sub-headlines have done. And I do not agree with Goolab that he could reasonably have been linked to the companies mentioned in those headlines. The headlines did not link him to any company – in fact, the headlines did not mention him at all.
4.7 Dignity, reputation
4.7.1 Goolab complains that the story, the headline and the sub-headlines were intended to (and did) harm and injure his good name, reputation and character.
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4.7.2 Claassen does not respond to this part of the complaint. However, from the rest of his replies to the complaint, it can safely be assumed that he denies that the reportage has caused any unnecessary harm to Goolab’s dignity and reputation. |
Analysis
4.7.3 Based on my argumentation above, I have no reason to believe that the story has unnecessarily tarnished Goolab’s dignity and reputation.
The complaint is dismissed.
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 Press Ombud