Gemfields Ltd and Montepuez Ruby Mining Limitada vs The Continent and Mail & Guardian


Mon, Feb 14, 2022

 

Complaint 9294                                                                                                      

Ruling by the Deputy Press Ombud

Date of articles:                  28 August 2021 (The Continent)  4 September 2021 (M&G online)

Headline of publication:   Cabo Delgado is a warzone, but profiteers are doing a roaring trade // Cabo Delgado is a warzone, but profiteers strike it rich.

Author:                               Luis Nhachote

Particulars

  1. The Continent and Mail & Guardian are both subscribers to the Press Code. The publications share some content, such as the article forming the subject of the complaint.
  1. Peter Leon from the law firm Herbert Smith Freehills submitted a comprehensive written complaint on behalf of Gemfields Ltd (“Gemfields”), which is involved in Mozambican mining operation Montepuez Ruby Mining Limitada (“MRM”) together with its partner, Mwiriti Limitada (“Mwiriti”). The official complainants are Gemfields and MRM. Except where necessary to distinguish between the companies, I will refer to the complainants as the “mining companies”.
  1. Sipho Kings, editorial director of The Continent, responded on behalf of the publications. The Mail & Guardian agreed to abide by any outcome of the ombud process.

Complaint

  1. The mining companies complain about a raft of alleged transgressions of the Press Code, being:
  1. 1.  Clause 1.1. requiring truthful, accurate, and fair reporting;
  2. 2.  Clause 1.2. dealing with balanced reporting;
  3. 3. Clause 1.3. distinguishing between facts and allegations;
  4. 4. Clause 1.7. by not verifying doubtful information;
  5. 5. Clause 1.8 enjoining the media to seek pre-publication comment; and
  6. 6. Clause 10 relating to headlines.
  1. The mining companies identified 11 instances of alleged transgressions which can broadly be divided into 9 different complaints. This is helpful to deal systematically with the complaint and I will follow the same structure in this ruling.
  1. The complainants and respondents could hardly have more opposed perspectives on the subject matter of the article: Kings describes the reportage as a critical investigation into the “resource curse” of the neighbouring country while the mining companies say they are unfairly targeted through innuendo, unjustified inferences, and baseless accusations while they are responsible role-players in the Mozambican economy.
  1. Leon summarises the complaint as follows:  “(T)he article conveys, among other things, that MRM and its owners are:
  1. 1. responsible for torture of illegal miners, which has driven the miners into the ranks of insurgents in a conflict in a totally different area of Cabo Delgado, 230 kilometres away from the mining operations; and
  2. 2. Evading compliance with Mozambique’s tax regime by shifting assets offshore and hiding their ownership structure.”
  1. Kings provides the following backdrop: “The situation in northern Mozambique is horrific. That violence is now regularly in the news… Northern Mozambique is home to some of the world’s most valuable resources, from gems to gas… This particular article looked at how that country’s natural resources continue to be exploited while a war rages across northern Mozambique, and Cabo Delgado in particular. It also noted that a foreign company had gone into partnership with a local elite to exploit natural resources. This was based on a research report as well as the work of a journalist with extensive experience in Mozambique.”
  1. The article carried a sub-headline in The Continent version only. It contextualised the article as follows:

“It’s been four years since the insurgency began, forcing French oil giant Total Energies to stop its operations. But a recent study found that mining in the province has been forging ahead regardless.”

  1.  Although the Mail & Guardian online version does not have the same sub-headline, the introduction to the story is the same as The Continent’s. It records that the Maputo-based NGO Centre for Public Integrity published a study “showing that requests for mining concessions in Cabo Delgado have increased in tandem with the raging armed conflict”.
  1. According to the report, the study showed that Mwiriti Mining, Gemfield’s partner in MRM, is the biggest single holder of concessions in the province and that the company is “owned by retired general Raimundo Domingos Pachinuapa” and another. The article then notes that Pachinuapa is a veteran of Mozambique’s struggle for independence and a senior figure in the ruling Frelimo party.
  1. The above is a necessary introduction to considering the complaints in context.

Complaint 1: Lack of comment

  1. Leon says the journalist forwarded two questions to MRM on 27 August 2021, a day before publication. It is necessary to quote the questions verbatim:
  1. 1. “How has the instability in (Cabo Delgado) affected your project?”
  2. 2. “Do you think your project has contributed to feelings of inequality and alienation that have fed to the insurgency?”
  1. Kings rightly capitulates: “The failure to send the complainants detailed questions is not acceptable. The reporter sent two questions which did not give the respondents a sense of what the article would say about their operations, and which did not give them a fair chance to respond in detail.”
  1. This concession is fairly made. It is a basic tenet of responsible journalism to provide an opportunity to subjects of critical reportage to respond prior to publication. The requirement to clearly seek comment on all material allegations to be raised serves several purposes, notably to (a) adhere to the audi alteram partem rule and (b) to verify information and eliminate any potential misunderstandings.
     
  2. It is not insignificant that some of the mistakes that will be dealt with below could have been avoided in its entirety had the journalist engaged meaningfully with the complainants.
  1. This transgression of Clause 1.8. of the Press Code overlaps with many of the complaints that will be considered below. I will deal with this aspect summarily at the end of the complaint, rather than with each individual complaint.

Complaint 2: “Gemfields paid Mwiriti [US] $2.5 million for 75%”

  1. The publications reported:

“Despite formally having capital of just 30 000 meticals, and without any prior capabilities for exploitation of mineral resources or experience of the international market for precious stones, Gemfields paid Mwriti $2.5-million for 75% in the joint venture, MRM.”

  1. The mining companies say this is misleading as Gemfields paid the purchase price for the ruby concession rights held by Mwriti. Leon continues: “The whole point of the transaction was that Gemfields would bring the ‘capabilities for exploitation of mineral royalties’ and the ‘experience of the international market for precious stones’.”
  1. They also argue that the statement insinuates “that Gemfields grossly overpaid for its stake in the joint venture, presumably for some corrupt or improper purpose”.
  1. Kings says the article focused on the ongoing reality where politically connected individuals acquire the rights to natural resources and then sell on access to these. According to him the article does not insinuate that Gemfields “grossly overpaid” for their interest in MRM.
  1. I agree with Leon that the use of the word “despite” cannot reasonably be interpreted in another way than to raise questions about the transaction. However, the reasonable reader will not take the sentence quite as far as to read into it allegations of corruption.
  1. It appears factually correct that Gemfields paid $2.5 million to Mrwiti – albeit for the ruby rights. It is also not disputed that Mrwiti had limited capital and capabilities. Read in isolation, there is no factual inaccuracy. It is the juxtaposing of these two statements that distorts the facts in an unbalanced manner.
  1. The publications therefore transgressed Clause 1.2. of the Press Code.

Complaint 3: Allegations of torture

  1. The article reads:

“Year after year MRM has been selling gems in international markets and making a huge profit. However, the mining operations have not been without controversy. Videos surfaced in 2012 following the torture of illegal miners who were digging for rubies in Nahamamumbir by Mozambique’s security forces (FDS) to ensure that they cleared the area…

“In 2019, Gemfields agreed to pay $7.6-million in compensation to people living around its ruby mine in Montepuez, who allege they were the victims of human rights abuses by the police and security guards employed by Gemfields.

“The company agreed to make the payment without admitting any liability, though it said it had been ‘proactive and constructive in addressing the wider issues raised by the local communities through this case’.”

  1. Both parties dissected the semantics of the paragraphs in detail in their submissions. Kings says the 2012 “torture” was attributed to Mozambique’s security services only. Leon feels otherwise. He says the paragraphs that follow link Gemfields and the MRM to the “controversy” and attributed “the torture of illegal miners” to MRM or Gemfields. He highlights that this office, in the matter of Gemfields PLC et al vs Mail & Guardian (12 May 2016) rebuked the Mail & Guardian for implying without sufficient justification that MRM “were in some way or another involved in the killing of people in the area” and torture.
  1. Says Leon:

“It is true that Gemfields, on a no-admission-of liability basis, paid a settlement to clients of Leigh Day Solicitors in 2019 who had alleged that they suffered human rights abuses by police and private security at MRM’s concession. But this is not evidence that any such abuses actually took place… No evidence was ever presented in a court and no court ever made a finding that such abuses took place, let alone were attributable to Gemfields.” (My underlining)

  1. This denial of liability is quoted fairly in the article itself. Stripped from the legal concepts that matter greatly in law and less so in the public opinion, there were important developments since the 2016 ruling by the Press Ombud: People claimed that they were victims of human rights abuses by the police and private security guards around MRM’s operations. Gemfields agreed to compensate those claimants and to establish a mechanism to prevent human rights violations. It is fair to say it is controversial.
  1. I agree with Kings that the activities reportedly captured on video in 2012 is not attributed to MRM or Gemfields, but to Mozambique’s security forces. It is a relevant statement because the reported activities occurred close to MRM’s operation, even though the statement does not claim that MRM or Gemfields itself was involved. The statement that there were videos in 2012 of torture of illegal miners by Mozambique’s security forces should be read in the context of the reported denials by Gemfields. Read together, a reasonable reader would not interpret it as an established fact that MRM/Gemfields were guilty of torture.
  1. The mining companies say they are not aware of videos that surfaced. However, this is not dispositive of the issue of whether the videos showing “torture” by Mozambican security forces as the video incidents are not attributed to the complainants. It is not an allegation against MRM or Gemfields.
  1. This part of the complaint must fail.
  1. The companies further complain that the sub-heading “Lucrative mines, with some torture” is in breach of Clause 10 as it “suggests that the complainants are responsible for torture” and therefore it is incorrect.
  1. I already found that the video activities do not refer to the complainants and the complainants’ denial of liability for their settlement agreement was fairly stated.
  1. Consequently, the sub-heading was not in breach of Clause 10.

Complaint 4: The “recruited youths”

  1.  The offending passage reads:

“People in Cabo Delgado believe some of those youths who were treated so brutally in Montepuez might have been recruited by the insurgents to join their ranks.”

  1. The complainants say there is no adequate basis or source to link alleged incidents in and around Montepuez with the insurgency “some 230 kilometres away (as the crow flies)”.
  1. The “quotation” – if it can be viewed as such – does not attempt to reflect a fact. Moreover, the “belief” by “people from Cabo Delgado” is not per se completely outlandish.
  1.  Both sides referred me to aspects of a research paper in the Georgetown Journal of International Affairs where the causes of the insurgency are examined. The causes are identified, and it appears generally accepted, to include aspects such as poverty, inequality, local elite and ethnic politics, organised crime, and Mozambican youth recruited or abducted from “pockets of grievance that have intensified over the last decade as Cabo Delgado’s natural resources industry booms”.
  1. Had this paragraph about the “people from Cabo Delgado’s” opinions not been sandwiched between the allegations of torture in 2012 and MRM’s no-admission-of-liability payment to complainants of human rights abuses, I might have been inclined to find that the gist of the paragraph was justified.
  1. Three factors leave the respondent publications foul of the Press Code:

40.1.  Given the placing of the paragraph, a reasonable reader would think that the author is referring specifically to the “tortured” individuals referred to in the preceding paragraphs and not generally people aggrieved by mining activities. There is indeed no basis to speculate that those particular “torture victims” have been recruited by insurgents.

40.2.  The speculation was also unfair towards Gemfields and MRM because they were not asked for comment on this aspect. The question posed to MRM was whether they “think (their) project has contributed to feelings of inequality and alienation that have fed to the insurgency”. This was a valid question with a comprehensive response from the mining companies.

40.3. It is quite something else to speculate that people who were allegedly tortured in 2012 or those who received compensation for (denied) human rights abuses in 2019 have been recruited by insurgents.

  1. Clause 1.3. requires the media to present opinions, allegations, rumours or suppositions clearly as such. For reasons already stated, I do not think the publications did otherwise.
  1. It is, however, not enough to merely identify that something is a rumour or allegation by unidentified people. There is a rider to the freedom to report unconfirmed allegations.
  1. Clause 1.7. requires the media to verify the accuracy of doubtful information, if practicable; if not, this shall be stated.
  1. The Continent and Mail & Guardian is in breach of Clause 1.7. for insinuating without justification that the specific individuals who allege human rights abuses could have been recruited by insurgents.

Complaint 5: The “privileged few”

  1. Leon complains that the article indicates that MRM is owned by “a privileged few” and that only a limited number of individuals benefit from the income derived from the mining operation, which is – according to him – incorrect. This is because MRM creates jobs, pays vast amounts of tax to the Mozambican government, and Gemfields itself is a listed company in which “any” person can buy shares.
  1. The relevant paragraphs read:

“That means, CIP pointed out, that ‘it becomes difficult [to] identify the beneficiaries of the concessions, which can be Mozambicans in conflict of interest, or even ‘with power and political capacity to influence the dynamics of the sector for their own benefit’.

“Where owners of Cabo Delgado’s mining concessions can be identified, however, the names of powerful families such as Chipande, Chissano, Talapa, and Waty crop up….

“Mwiriti issued a statement following CIP’s report, saying that the use of offshore structures was perfectly legal, and mining activities are still carried out in-country. CIP’s researchers suggested, meanwhile, that the lack of transparency over who really owns mining concessions ‘may be behind land conflicts’ in Cabo Delgado…

“But if greater transparency only reveals the true extent to which Mozambique’s riches are concentrated in the hands of a privileged few, then deeper changes will be needed to overcome the resentment that is contributing to unrest in Cabo Delgado.”

  1. The mining companies say the last paragraph “indicates that “MRM is owned by a privileged few”. I disagree. In context of the preceding paragraphs, it is clear that the article reports on the CIP report that focused on ownership of mining concessions in general.
  1. On their own version, Gemfields could only enter the joint venture (MRM) because Mrwiti – apparently co-owned by a political influencer – had the ruby concessions in the first place. This underscores the point made by the article.
  1. Based on this finding, I find it unnecessary to deal with the remainder of the mining companies’ submissions on this aspect.

Complaint 6: Deaths due to collapse of the mines

  1.  A paragraph in the article states:

“Meanwhile, artisanal mining continues on MRM’s concession, despite the best efforts of police and private security to crack down on the activity. MRM said that it knew of 21 people who died while mining illegally on its concession in 2020, and a further eight by the start of August this year. Most of the deaths were due to the collapse of mines they had dug.”

  1. The mining company says it is not aware of any deaths, other than as a result of the collapse of pits dug by illegal miners. Leon says: “The last sentence suggests that some of the miners’ deaths were owing to causes other than mine collapses, presumably owing to the ‘crack down’ by police and private security.”
  1. Kings says “nobody knows for a fact that all the deaths were as a result of collapsed mines”. Leon retorts: “The Continent does not claim to know that any of the deaths were not a result of collapsed mines.”
  1. These arguments are splitting hairs. I do not think that there is an improper insinuation in the sentence. Readers accustomed to regular news reporting about zama-zamas know that some illegal miners die due to accidents owing to unsafe mining practices even if it does not lead to the collapse of a pit, conflict amongst competing illegal miners, deprivation, etc.
  1. To the contrary, if the article recorded the deaths at MRM’s concession without stating the known, overwhelming cause of death, it could have created a wrong impression that some of the illegal miners died due to the “‘crack down’ by police and private security.’
  1. This complaint is dismissed.

Complaint 7: “Mwriti earned $17.9-million”

  1. The article recorded incorrect figures for an auction of rubies in Singapore. According to the complainants, Mwriti only received $3.1-million from MRM in 2019.
  1. The publications conceded the error and offered to correct the mistake.
  1. The publications were in breach of Clause 1.1. requiring accuracy.

Complaint 8: The offshore issue

  1. The complainants rightly take issue with the sub-heading “Owners in hiding” and the paragraph stating:

“But the CIP report raises another concern: the company has apparently shifted ownership of its mining concessions offshore, to a mysterious company called Nairoro Resources Holdings, domiciled in Mauritius – known as Africa’s tax haven.”

  1. In fact, a reading of public records would quickly have clarified that nothing was “shifted” and nothing is “mysterious”.
  1. Kings concedes this.
  1. The statement that Mauritius is “known as Africa’s tax haven” added additional sting to the insinuations.
  1. On this score, Kings digs in his heels: “Mauritius is a known tax haven. Given the Panama Papers, and more recent Pandora Papers, it is fair to say that companies that move their operations to tax havens are not conducting open business.”
  1. The statement is generalised and unconvincing. The mining company rightly points out in reply that they did not “move their operations”. The operations are 100% in Mozambique.
  1. For the above reasons, the statements contravened Clauses 1.1. (want of accuracy), Clause 1.2., being a departure from the facts by material omissions, and Clause 10 for using a misleading sub-heading.

Complaint 9: The headline

  1. The publications carried different headlines. Again, the parties have different interpretations on what the headline conveyed.
  1. Leon says the headline suggests that the complainants, as “profiteers” are somehow responsible for or even profiting from the conflict in Cabo Delgado.
  1. The Continent insists that this is too narrow of an interpretation and provides an innocuous reading. “..(T)he headline was noting that even during a war, some people and companies were profiting. This is true,” King says.
  1. According to The Continent, the sub-heading (which did not appear in Mail & Guardian) contextualised the headline of their article.
  1. The companies say that a) Gemfields actually incurred a net loss of $93.2-million for 2020 as it was unable to generate any revenue from its ruby business, and b) “profit” and “profiteering” are not synonymous. Leon refers to the Collins Thesaurus definition of “profiteer” as “racketeer”, “exploiter”, “extortionist”, “bloodsucker”, and “black marketeer”.
  1. To that, I may add the definition of “profiteering” in the Merriam-Webster dictionary: “the act or activity of making an unreasonable profit on the sale of essential goods especially during times of emergency”. And the Oxford Dictionary: “a person who makes a lot of money in an unfair way, for example by asking very high prices for things that are hard to get”.
  1. It is an established principle that readers read a headline as part of the bigger article – i.e. not in complete isolation. However, the sub-headings only intensify the negative connotation to the word “profiteer”. So does the juxtaposing of the “warzone” with “striking it rich” (Mail & Guardian) and “roaring trade” (The Continent).
  1. There is no foundation in the article itself that justified the use of the word “profiteers”.
  1. Consequently, the headline was in breach of Clause 10 of the Press Code.

Conclusion

  1. From the publications’ response as well as the complainants’ reply, it appears that there were settlement negotiations before the matter was referred for adjudication. It also appears from Kings’ response that The Continent offered a right of reply to the complainants, “provided it is factually correct”. I am of the view that a right of reply is appropriate in this matter. An apology is necessary.
  1. The publications breached Clauses 1.1, 1.2,  1.7, 1.8. and 10 of the Press Code in the ways listed above.
  1. As the article appeared in both publications, there is no reason why both publications should not correct the article.
  1. The infringement are Tier 2 (serious) infringements.
  1. The Continent and Mail & Guardian are directed to apologise to the complainants for the following inaccuracies and infringements:
  1. 1. Not affording the complainants a fair opportunity to comment on material allegations raised against them.
  2. 2. Wrongly implying impropriety in the amount ($2.5-million) Gemfields paid to Mwiriti for mining rights.
  3. 3. Suggesting that youths that were allegedly tortured in 2012 around Montepuez might have been recruited by insurgents.
  4. 4. Inaccurately stating that Mwiriti earned $17.9-million from an auction in 2019 and to correct it by stating the much lower amount of profit earned.
  5. 5. Wrongly suggesting that MRM “shifted” its ownership offshore, that the company’s structure is opaque and that it is not conducting open business.
  6. 6. Using a misleading headline and sub-heading.
  1. The wording of the apology must be approved by the Deputy Press Ombud before publication and should mention that the complainants referred the complaint to the Press Council and that the full ruling is available at www.presscouncil.co.za.
  1. The apology should be published either on page 2 of the printed publication(s) or on the pages the article appeared on. It should be at the top of the online article.
  1. In addition to the apology, the publications are directed to allow the complainants a right of reply not exceeding 300 words. If any content in the right of reply is objectionable to the publications, it may refer the objection to the Deputy Press Ombud for a decision.

Appeal

The Complaints Procedure lays 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.

Herman Scholtz

Deputy Press Ombud

10 February 2022