Simphiwe Hamilton vs. Business Day


Wed, Feb 29, 2012

Ruling by the Deputy Press Ombudsman

December 8, 2010
 
This ruling is based on the written submissions of Mr S. Hamilton, executive director of the Aerospace Maritime and Defence Industries Association (AMD), and the Business Day newspaper.
 
 
Complaint
 
Mr Simphiwe Hamilton complains about two stories in Business Day, headlined Military in ‘cash for access’ offer to industry (July 22, 2010) and More examples of defence ‘cash for access’ emerge (July 28, 2010).
 
Hamilton complains that the following sentences/phrases in the first story are inaccurate:
  • “buying access to public servants responsible for adjudicating the purchase of military hardware”;
  • “that will include branding of all sponsors”;
  • “smaller companies would be disadvantaged”; and
  • “Sponsoring a state buyer is a conflict of interest that is unlawful”.
The following sentence in the second story is also said to be false: “The AMD has been squeezing its members to bankroll military courses, golf days, corporate gifts, balls and conferences for several years” (second story).
 
Hamilton also says that the newspaper failed to contact the AMD for comment.
 
Analysis
 
The first story says that a major “cash for access” scandal was brewing regarding a meeting of the SA National Defence Force’s (SANDF’s) Military Command Council (MCC) at a luxurious gold estate. Companies in the defence manufacturing industry reportedly would each contribute R20 000 in sponsorship towards a work session of the MCC. The story says that this would allow these manufacturers “to buy access to public servants responsible for adjudicating the purchase of military hardware”.
 
It continues that Hamilton wrote to members of his organization inviting them to “…sponsor the work session (of the MCC) to promote the existing good working relationship between the SANDF and the defence industry”.
 
The story then quotes three sources who all are critical of this sponsoring practice. The gist of their opinion is that it “can only lead to a conflict of interest”. One source reportedly says: “Sponsoring a state buyer is a conflict of interest that is unlawful”. The story says that DA defence spokesman David Maynier called on the Minister of Defence to launch an internal investigation into the matter and to ensure that any money collected from the defence industry was returned.
 
The second story builds on the first, with the intro reading: “Revelations last week that the defence force asked the defence industry to sponsor a meeting of the Military Command Council at a luxurious north coast golf estate was the tip of the iceberg, with dozens of similar requests coming to light this week.” The story says that the requests for sponsorship by the SANDF ranged from prestige golf days, banquets, cocktail functions, conferences, etc. and that about 40 such requests were made in the past five years.
 
The story states that the Minister of Defence has, subsequent to the publication of the first story, ordered that no sponsorship for the meeting of the MCC be accepted.
 
Maynier reportedly said that the AMD has been squeezing its members to bankroll military courses, golf days, corporate gifts, balls and conferences for several years.
 
We shall now consider the merits of the complaint:
 
The first story:
 
‘Responsible for adjudicating’
 
The sentence in dispute says: “…it (the sponsoring of the event) allows the manufacturers of defence equipment to buy access to public servants responsible for adjudicating the purchase of military hardware.”  (emphasis added to highlight the complaint)
 
Hamilton says that this is not correct. He argues that members of the SANDF’s top structures are not responsible for adjudicating the purchase of military equipment – the Armaments Corporation of SA (Armscor) is mandated by law to do that.
 
Business Day admits that Armscor does do all the tender documents and then makes recommendations to the military. The newspaper says: “But to suggest that Armscor makes the critical decisions on what type of weapons and material the military needs is not true.” It argues that the SANDF’s top structures would tell Armscor what they want and need, adding: “Many of those top soldiers would serve in the Military Command Council…”
 
In his reply to the above, Hamilton says that the defence tender process has several stakeholders, including Parliament and the general public. He says that the core relationship in this process consists of the SANDF (as the user who states a capability requirement based on operational considerations), the Department of Defence (as the buyer), Armscor (as the acquisition agent and contracting authority) and industry (as a supplier on a competitive basis). He adds: “It was not thus the military’s unfettered opinion but rather a decision made and agreed to by both the public and the political establishment.” The newspaper’s reportage on this matter is therefore inaccurate, he concludes.
 
On the basis of the above-mentioned, it appears that the use of the words in dispute is technically not correct.
 
It is a question, though, if this technical inaccuracy goes to the heart of the story. I do not think so. An internet search reveals that the Department of Defence’s Chief Director Legal Services Mamoloko Kubishi reportedly said that the MCC was an entity used by the Chief of the Defence Force to discuss matters of strategy. I would be surprised if “matters of strategy” would exclude the purchase of weapons.
 
A phrasing such as the following may therefore have been more correct: “…public servants who can influence those who are responsible for adjudicating the purchase of military hardware”.
 
‘Branding of all sponsors’
 
The story reads: “Each member of the (military) council will get a bag, folder and stationery that will include branding of all sponsors including ‘relevant and classy corporate gifts’.” (emphasis added to highlight the complaint) This statement is attributed to an e-mail that Hamilton’s letter of invitation was supposed to contain.
 
Hamilton says that the AMD has decided that no sponsor branding would be allowed as part of this specific request for financial support.
 
Business Day argues that Hamilton’s claim does not take away the fact that defence industry members were being offered the opportunity to have a luxury banquet with the military brass and tell them about their products. It adds that, if the defence industry did not see opportunities to stay on the right side of the generals in order to gain advantage, it “…begs the question as to why they would spend so much money sponsoring all these events in the first place.”
 
The newspaper has a point, but it does not address the complaint adequately. The sentence says that the gifts (a bag, a folder, stationery, and “relevant and classy corporate gifts”) would include branding of all sponsors. The newspaper does not defend the veracity of the statement in dispute; it also does not dispute Hamilton’s argument that this is not true.
 
It is therefore reasonable to accept that this statement is not correct – even though it indeed is probably true that defence industry members would get a chance to promote their products, as the newspaper states.
 
Smaller companies ‘disadvantaged’
 
The sentence in dispute reads: “Prominent Western Cape defence contractor Richard Young…who was invited to be a sponsor, said in an e-mail to Mr Hamilton that smaller companies would be disadvantaged…”
 
Hamilton denies that smaller companies would be disadvantaged. He argues that smaller members of the AMD are always encouraged to combine their support or to make minimal contributions to ensure their ability to participate in these events.
 
The newspaper does not respond to this part of the complaint.
 
It need not have to – the sentence in dispute is a quote that is presented as such and not as a fact. Hamilton does not dispute that Young’s e-mail to him contains these words. The newspaper was squarely within its rights to report Young’s words.
 
An ‘unlawful’ conflict of interest
 
This appears to be the heart of the complaint.
 
The story quotes Young again, who reportedly said that sponsoring a state buyer constitutes a conflict of interest that is unlawful and “probably” unconstitutional. It also quotes Maynier who reportedly said that this practice is a conflict of interest that is “completely unethical and possibly illegal”.
 
Hamilton says that the practice of sponsoring stakeholders within an industry sector is an established and common practice both internationally and locally. He denies that it is either unethical or illegal, adding that the transparent and inclusive manner with which the defence industry has been managing this “…has ensured that there was never any possibility for stakeholders to be exposed to being unwittingly engaged in activities that would lead to a conflict of interest.”
 
He adds that “sponsorships” do not (necessarily) infer “conflicts of interest”.

Business Day argues that:
  • the practice of requesting sponsorship may be widespread, but that it still boils down to a conflict of interest.
  • it is in the public interest to report on the relationship between potential bidders for military supply contracts and the senior command of the SANDF. “Only in this way will a rational assessment of how defence tenders are structured and who wins them be possible.”
  • Hamilton’s claim that the sponsorships were done in an open and transparent way is “highly questionable” – the invitation documents were all stamped “confidential”. It adds: “It was only the story published in Business Day that brought the whole issue into the public domain.”
  • it is “unbelievable” for Hamilton to suggest that potential defence contractors would not be engaged in activities that promote a conflict of interest – “consider all the Mercedes cars that were dished out to the likes of Yengeni and Co.”
  • in the European Union, the spending of “schmooze” money is now illegal.
  • the subsequent response of the Minister of Defence was instructive. The newspaper says that she ordered that no sponsorship be obtained from the defence industry for this particular meeting and that a review of the practice was to be undertaken.
  • the statement that the practice of sponsoring could be illegal and unconstitutional is a direct quote of Young (who is a member of the AMD and “surely has a right to his opinion”).
In his reply to the above, Hamilton says (regarding sponsoring being done openly and transparently) that every company in the industry received the e-mail from the AMD and that its content was known to the Defence Department as well as to SANDF officials – and when it draws the interest of Parliament or the Auditor-General, the information would be readily available.
 
He adds: “The classification of documents in the military is a matter of course and cannot be questioned.” He also explains that the document contained information about the venue and time of the meeting (attended by high ranking officials). This, he argues, could compromise SA national interests (for example, the bugging of the venue) – which was why the document was classified.
 
He also says: “What is unacceptable and should not be allowed is for BDFM…to seek to demonise this practice (of sponsoring) without putting a shred of evidence on the table.”
 
Hamilton rejects the newspaper’s arguments regarding the Minister of Defence’s subsequent action and the European Union as irrelevant.
 
So let’s take a deep breath and focus on the issue. The matter is really very simple. It is not for me to establish whether or not the process was transparent, if there really was a conflict of interest or if the sponsoring of the event may have been unlawful or unconstitutional – the fact of the matter is that the sentences/phrases in dispute are all quotes from Maynier and Young. The story indeed presents the allegations not as facts, but as the opinion of people. The sources had a right to say what they reportedly said; and Business Day had the right to publish that.
 
The second story:
 
‘Squeezing members to bankroll’
 
The story quotes Maynier who said that the AMD has been “squeezing its members to bankroll military courses, golf days, corporate gifts, balls and conferences for several years.”
 
Hamilton denies this, saying that sponsorship is voluntary and that companies sponsor on the basis of their own assessments, plans and budgets.
 
Business Day does not respond to this part of the complaint.
 
This is again a quote; and again, the newspaper only reports what Maynier said.
 
Not asked for comment
 
Hamilton complains that Business Day failed to contact the AMD or him for comment.
 
The newspaper says that attempts to contact the AMD were unsuccessful.
 
I asked Business Day for proof that it indeed tried to contact the AMD. It said that it could not do that, as it worked from its parliamentary offices and that records were not attainable. This is unfortunate.
 
However, when a newspaper has unsuccessfully tried to contact somebody for contact, it normally states that fact – which Business Day in this instance did not do.
 
I am therefore giving the benefit of the doubt to Hamilton on this point.
 
Art. 1.5 of the Press Code is clear: A newspaper should seek the views of the subject of serious critical reportage prior to publication. It has to be noted, though, that the more serious the allegations against the subject of reportage is, the more the newspaper has a duty to ask for its views.
 
In this case, the newspaper published the quite serious allegation that sponsoring equals a conflict of interest; it also quotes sources who reportedly said that the practice is unlawful and probably also constitutional. These are serious allegations.
 
I have already said that the newspaper was within its rights to publish these allegations (which may or may not be true) – but then this right should have been balanced with giving the AMD the opportunity to respond.
 
The same goes for the statement that the AMD has been “squeezing its members to bankroll…” It is unfair not to have given the AMD an opportunity to respond to this allegation.
 
 
Finding
 
‘Responsible for adjudicating’
 
The use of the words “responsible for adjudicating” is technically not correct. However, this part of this complaint is dismissed as:
  • this is not material to the story;
  • the MCC’s task was to discuss matters of strategy – which may easily have included the purchase of weapons; and
  • it is reasonable to believe that the members of the MCC may have had an influence on those people who were “responsible for adjudicating” the purchase of military hardware.
‘Branding of all sponsors’
 
It is reasonable to accept that the use of the words “branding of all sponsors” regarding the gifts is incorrect (even though the purpose of sponsoring the event may have been to do exactly that). This is in breach of Art. 1.1 of the Press Code that states: “The press shall be obliged to report news…accurately…”
 
Smaller companies ‘disadvantaged’
 
The sentence in dispute is a quote that is presented as such and not as a fact. This part of the complaint is dismissed.
 
‘Squeezing members to bankroll’
 
The sentence in dispute is a quote that is presented as such and not as a fact. This part of the complaint is dismissed.
 
An ‘unlawful’ conflict of interest
 
The phrases in dispute are quotes that are presented as such and not as facts. This part of the complaint is dismissed.
 
Not asked for comment
 
Hamilton is given the benefit of the doubt because the newspaper did not state that it had tried to reach the AMD for comment and also because it could not provide our office with proof that it indeed tried to contact the AMD. The failure to ask the AMD for comment is in breach of Art. 1.5 of the Press Code that states: “A publication should usually seek the views of the subject of serious critical reportage in advance of publication…”
 
Sanction
 
Business Day is:
  • cautioned for breaching Art. 1.1 of the Press Code; and
  • directed to apologise to Hamilton for not asking him or the AMD for comment (since some allegations regarding the AMD were quite serious)
The newspaper is directed to publish a summary of this finding (not the whole ruling) and sanction on the same page that the first story was published.
 
Our office should be furnished with this text prior to publication.
 
Please also include the following sentence: “Visit www.presscouncil.org.za (rulings, 2010) for the full finding.”
 
Appeal
 
Please note that our Complaints Procedures lay down that within seven days of receipt of this decision, anyone of the parties may apply for leave to appeal to the Chairperson of the SA Press Appeals Panel, Judge Ralph Zulman, fully setting out the grounds of appeal. He can be reached at khanyim@ombudsman.org.za.
 
Johan Retief
Deputy Press Ombudsman