SA Communist Party vs. City Press
Wed, Dec 12, 2018
Ruling by the Press Ombud
12 December 2018
Lodged by: Ms Reneva Fourie, Secretariat Coordinator of the South African Communist Party
Headlines, dates: VBS Bank paid for SACP – In return for the money, the party would stop making noise about the bank’s controversial relationship with the Guptas (11 November 2018); and: Here’s the VBS payment proof, SACP (19 November 2018)
Pages: Front-page lead (first story); page 2 (follow-up article)
Author of articles: Ngwako Modjadji
Respondent: Dumisane Lubisi, executive editor
Informal meeting: Johannesburg, 11 December 2018
Complainant represented by: Alex Mashigo, SACP spokesperson
Newspaper represented by: Lubisi, Modjadji, Rapule Tabane
The SACP complains that the:
story falsely and unfairly stated that it had:
- received money from VBS;
- offered the party’s silence on VBS’s relationship with the Gupta family in exchange for the money;
- headline and sub-headline were false and misleading; and
- reportage has caused it unnecessary reputational damage.
The first article said that VBS Mutual Bank had ordered a branch manager to make a R3-million payment to fund the national congress held by the SA Communist Party (SACP) last year, “allegedly in exchange for the party’s silence on the bank’s relationship with the controversial Gupta family”.
It added that Vele Investments, the bank’s majority shareholder, had used one of its subsidiary companies to foot the bill for the use of facilities at the Birchwood Hotel and the OR Tambo Conference Centre.
A senior executive of the bank reportedly told the newspaper how Vele Investments had conspired to use a “subsidiary” company account (MML Food Services) to conceal VBS’s link to the SACP payment.
The follow-up article was about “proof” that MML had paid R3-million into Birchwood Hotel’s bank account for the venue used for the SACP’s national congress.
Modjadji stated that this new information gave “credence to claims that the SACP, which has fashioned itself as a corruption buster, benefitted from VBS despite the party’s strong denials” to this effect.
He also quoted Mashilo, who inter alia denied that the SACP had received a cent from VBS.
Money not coming from VBS
The SACP says that, at the time of the donation (in July 2017), VBS was a bona fide bank.
Fourie argues that, when a donor effects a transfer from its own funds from its bank account, it cannot be said it was the bank’s money. In other words, the money did not come “from” the bank, but “through” it.
Besides, she adds, receiving sponsorships does not per se amount to corrupt, fraudulent or illegal activities.
In this case, Fourie says, the donor (MML) had a bank account with VBS. She submits the money belonged to that company and not to the bank, which rendered the statement that the SACP had received money from VBS incorrect.
LUBISI says the story did not mention that the SACP received money from VBS – this payment did not go into the party’s coffers, but was for the use of the venue where the SACP hosted its national congress. He argues: “So, the insinuation that the story said the SACP received money from VBS must be discarded since that is not contained in the story in any form.”
He also refers to the follow-up story, in which proof of payment was published (it showed that R3-million had been paid by MML to Birchwood Hotel).
He remarks the articles never asserted that VBS was not a normal bank at the time of the payment – what the stories did point out, was that the money paid to Birchwood Hotel had belonged to, or had been looted from VBS.
In this regard, the editor refers to the newspaper’s source, who detailed how VBS chairman Tshifiwa Matodzi (who was also chairperson of Vele Investments) had instructed a bank manager to make the payment from MML’s bank account – after VBS had put R19-million into that account some three months earlier.
Lubisi also refers to the Great Bank Heist report by Adv Terry Motau, who inter alia detailed the following:
- On 19 March 2017, Matodzi instructed VBS former treasurer Phophi Mukhodobwane and CFO Phillip Truter to wipe out the overdrawn balances of some 34 accounts held at VBS in the name of Matodzi and his various associates and companies in which he held an interest, and crediting those companies with fictitious amounts totalling R248 950 000;
- Matodzi ordered personnel to create new facilities and, in most cases, increase overdraft facilities on these accounts; and
- Matodzi created fictitious investments in his own name and in those of five other parties associated with him.
He says Motau’s report further showed that MML received a R19-million and a R17.5-million overdraft facility as per Matodzi’s instructions to Mukhodobwane and Truter.
Lubisi says that, just over three months later, Matodzi instructed a bank manager to make a payment from that same account to Birchwood Hotel.
From this, the editor concludes that the money paid from MML’s bank account did not belong to that company – these funds, he asserts, belonged to VBS (as per its deposit of R19-million some three months earlier). MML merely used the “fraudulently fictitious deposit” it received to make payment to Birchwood Hotel for the SACP to hold its congress, he says.
He concludes: “[MML] received the fictitious deposit from VBS and therefore the money it paid out for the SACP three months after the deposit belonged to the bank and not the company.”
FOURIE replies that the proof of payment showed that MML had donated the money, and not VBS (as presented in the headline).
She submits that the follow-up article “went beyond the bounds of peddling lies and was highly dishonest, misleading and sensational, seeking to entrench in the minds of society that a crime was committed” – but without any evidence to this effect. She calls the statement that the money was “looted” from VBS “pure speculation, hearsay and completely unscientific”.
- The fact that Matodzi instructed the bank manager to make a payment (a common practice in the “real world”), did in itself not demonstrate anything untoward;
- It is mere unsubstantiated hearsay to call MML a “subsidiary” of Vele Investments or VBS – MML itself has indicated that it was not a subsidiary, and official records substantiate this. The Motau report did not list MML as a subsidiary either;
- The SACP had no relationship or interaction with MML when the overdraft facility was arranged and therefore, had no knowledge of the transaction. The assumption that the party was complicit in any arrangement that might have existed between MML and Vele / VBS, whether legal or illegal, was therefore “disingenuous, contemptuous and mischievous”;
- The information that City Press received from its source was pure gossip – the SACP’s officials were its General Secretary, its first and second Deputy General Secretaries, its National Chairperson and her / his deputy, and its National Treasurer – and none of those officials have ever been in touch with Matodzi, nor did they ever instruct any of the party’s members to engage with him on their behalf;
- There is no proof that the SACP tried to “conceal” anything; and
- The SACP did a background check on MML, and found it to be a legitimate business that “definitely did not appear to be a front, in any form”.
At the meeting, Lubisi was adamant that the same person who ordered VBS to pay an amount of R19-million into MML’s account (Matodzi), also three months later instructed that R3-million of that money be withdrawn and paid over to the Birchwood Hotel (in lieu of the bill which the SACP had to pay for holding its national congress at that venue).
He concluded from this that the money did not belong to MML, but rather to VBS, and that the former merely featured as a conduit for the payment in question (which would justify the reportage).
He also argued that Matodzi had access to MML’s bank account – which pointed to the fact that he had interests in that company, even though the Motau report did not use the word “subsidiary”.
Mashilo denied that the SACP had received such money from MML, and added the R3-million was paid into a “sub-national” account that was used for the payment of the venue. He repeatedly pointed out that the Motau report did not allege that VBS had paid the money to the SACP.
He was equally emphatic that MML was not a subsidiary of Vele / VBS, and added that the money was not received a day before the congress started, as reported by City Press, but rather some five days prior to the start of the event.
Given the fact that Modjadji used only one source, and an anonymous one at that, I asked him what steps he took to verify the information. He replied that he had tried to get comment from Matodzi, who had refused to respond. He said he also had the Motau report at his disposal.
I need to record that Lubisi revealed the identity of the source to me. I believe there can hardly be a more credible source than this person.
So then, these are my considerations:
- Following an order from Matodzi, an amount of R19-million was paid into MML’s account during March 2017;
- I have no evidence that VBS or any other company or person owed MML that money, which leaves the question why he gave that order;
- Some three months later, the same person (Matodzi) ordered a VBS manager to transfer an amount of R3-million from MML’s account to the Birchwood Hotel to pay for the venue used by the SACP for its national congress;
- The fact that the money did not go directly to the SACP on a national level is not relevant, as it was recorded as a donation at the finance department of the party at a provincial (“sub-national”) level;
- There is no indication in the story, as a concerned Mashilo repeatedly said, that an amount of R19-million was involved regarding the SACP – that transaction was solely between VBS and MML; and
- On both occasions, Matodzi had ordered the transaction. This means, at the very least, that he had some kind of influence over MML’s account at VBS.
The central question now is who paid for the venue – VBS, or MML.
Given the above-mentioned considerations, City Press justifiably was highly suspicious of the amount of R19-million that had been transferred from VBS to MML. The order from the chairman of that bank, and not from MML, that R3-million be withdrawn and paid over to Birchwood Hotel was as suspicious.
Therefore, I have no reason to blame City Press for concluding that the money in fact came from VBS and not from MML – it donated R19-million, as per an order by Matodzi, into the latter’s account, and three months later it paid over R3-million from the same account (as per an order by the same person) to Birchwood Hotel.
Other issues: City Press was wrong in stating that MML was a subsidiary of Vele Investments / VBS, and that the money was paid over a day before the congress started (it was paid over four or five days prior to that event).
SACP threatening to disclose information about the Guptas
The SACP complains the articles falsely stated that it had offered its silence on VBS’s relationship with the Gupta family in exchange for the donation of R3-million and that it had, in effect “strong-armed” Matodzi into paying the money.
LUBISI says its source told City Press that a branch manager who was a personal assistant and paymaster to Matodzi alleged that senior SACP members had “demanded” a R3-million payment from the latter. He says according to this source, this demand was made to stop the SACP from making “noise” about VBS’s relationship with the Gupta family.
The editor adds that, at the time, City Press was also informed that the party had obtained information that VBS had helped open accounts for the Gupta family (at the time when banks in the country were closing the family’s bank account). According to the official, this was the leverage that the SACP used to get the donation.
He also argues the fact that the SACP had a dedicated session to discuss the Guptas at its congress, did not mean the SACP could not have engaged in this behaviour.
Lubisi says his source called the R3-million a “bribe”, and detailed how Matodzi ordered the branch manager to make the payment before the start of the SACP’s national congress as follows:
- On 6 July 2017, the branch manager got a WhatsApp message from Matodzi, saying that he must make a payment of R3-million for the SACP national congress;
- Matodzi told him that he was pressurised by SACP leaders to have that payment done because the SACP congress was starting the following day;
- He was instructed to move money from Vele Investments’ bank account to MML Food Services’ bank account; and
- From there, R3-million was directly transferred into the Birchwood Hotel’s bank account. This was done to ensure that the money cannot be traced.
The editor says the source alleged that Matodzi had ordered the payment because SACP leaders were pressuring him – but without disclosing their identities.
At the meeting, Mashilo asked who the SACP officials were who allegedly pressurised Matodzi into paying the money for the congress venue. Modjadji replied that his source did not provide him with the names – upon which Mashilo wanted to know why the journalist did not report that fact in one of his articles.
I agree it would have been better to report the above – but in itself it cannot constitute a breach of the Press Code.
I am cognisant of the fact that it is one thing to say that VBS paid the money (via MML as its conduit), but it is quite another to allege that this has happened due to pressure exerted by the SACP on VBS to do so.
The question, therefore, is if City Press was justified to publish this statement.
Given the credibility of the source (as pointed out above), I do believe that the newspaper was indeed justified to publish the statement as an allegation (and not as fact).
I also need to record that:
- I have no evidence to support the claim that MML was a subsidiary of Vele Investments / VBS; and
- the statement that the R3-million was received “a day before” the start of the congress was incorrect.
However, if MML was a subsidiary of Vele Investements / VBS or not, the fact remains that its account was used by Matodzi to transfer the money – which, by nature, could not change the thrust of the articles.
The SACP complains that the headline of the first story was false and deliberately misleading, as the SACP did not receive money from VBS. It adds that the sub-headline falsely suggested that it took a bribe to be silent about the VBS’s relationship with the Guptas.
LUBISI denies these claims.
Given my arguments above, I believe that the headline (VBS Bank paid for SACP) was reasonably true, and that the sub-headline In return for the money, the party would stop making noise about the bank’s controversial relationship with the Guptas) was in order as well.
I am noting in passing that the main headline did not say that VBS paid millions “to” the SACP, but rather that it paid millions “for” the party. That, to my mind, was correct.
The SACP complains: “[G]iven our individual high standings both domestically and internationally, the allegations have resulted in [irreversible] damage within the minds of the South African society and the global community, affecting future engagements and donations.”
To add insult to injury, it adds, the article did not point out specific officials – the implication, therefore, was that all officials and leaders of the SACP were corrupt.
LUBISI denies these claims.
Given all of my arguments above, I cannot find that the reportage has unduly or unnecessarily tarnished the SACP’s dignity or reputation.
The following statements were false / incorrect / unsubstantiated, namely that:
- MML was a subsidiary of Vele Investments / VBS; and
- R3-million had been paid a day before the congress started.
Both these statements were in breach of Section 1.1 of the Press Code that says: “The media shall take care to report news … accurately …”
The rest of the complaint is dismissed.
Seriousness of breaches
Under the headline Hierarchy of sanctions, Section 8 of the Complaints Procedures distinguishes between minor breaches (Tier 1 – minor errors which do not change the thrust of the story), serious breaches (Tier 2), and serious misconduct (Tier 3).
The breaches of the Press Code as indicated above are both Tier 1 offences, as it did not materially change the thrust of the articles.
City Press is cautioned for incorrectly stating that MML was a “subsidiary” of Vele Investments / VBS, and that an amount of R3-million had been paid to cover the costs of the venue “a day before the congress started”.
The newspaper is directed to publish this caution anywhere on page 2, as well as on all the websites where the stories are carried online.
The text should:
- be published at the earliest opportunity after the time for an application for leave to appeal has lapsed or, in the event of such an application, after that ruling;
- refer to the complaint that was lodged with this office;
- end with the sentence, “Visit www.presscouncil.org.za for the full finding”;
- be published with the logo of the Press Council (attached); and
- be prepared by the publication and be approved by me.
City Press has been cautioned by the Press Council for incorrectly stating that MML Foods was a “subsidiary” of Vele Investments/VBS Mutual Bank and that payment for the venue of the party’s congress was paid a day before it began. The payment was made at least four days before the congress began.
The Press Council said City Press justifiably was highly suspicious of the amount of R19-million that had been transferred from VBS to MML Foods. The Press Council said it had no reason to blame City Press for concluding that the money in fact came from VBS and not from MML Foods.
Other complaints that the SACP had offered its silence on VBS’s relationship with the Gupta family in exchange for the donation of R3-million and that it had, in effect “strong-armed” Matodzi into paying the money; headline that VBS paid millions to SACP was false and deliberately misleading and the sub-headline falsely suggested that it took a bribe to be silent about the VBS’s relationship with the Guptas were all dismissed. Visit www.presscouncil.org.za for the full ruling
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.