Southern Palace Group of Companies (Pty) Ltd vs. City Press


Mon, Feb 15, 2021

Particulars

Complaint number: 8404

Submitted by: Ian Levitt Attorneys & Conveyancers

Date of article: 4 October 2020

Headline: Transnet service provider DONATED to the entity’s chair – The SIU is probing procurement irregularities and that Popo Molefe’s foundation received almost R1 million from one of Transnet’s service providers

Page: 4

Online: Yes

Author of article: Setumo Stone

Respondent: Rhodé Marshall, managing editor

  1. Complaint                                            

1.1 The Southern Palace Group of Companies (SPG) complains that:

  • the following sentence was factually incorrect, unbalanced and distorted, and that several material pieces of information were omitted: “The controversial award also raised questions of conflicts of interest as the Southern Palace Group donated R350 000,00 to Transnet chairperson Popo Molefe’s foundation in April last year, just months before the Transnet board approved the Company’s appointment in June”;
  • the article contained unsupported and distorted hearsay, designed to create “adverse atmosphere” to the SPG; and
  • the article was unbalanced as it contained references to another article (in the Daily Maverick), but made no reference to the response to the journalist.

1.2 The SPG asks for a retraction and an apology.

  1. Relevant sections of the Press Code

The media shall:

  • 1.1: take care to report news truthfully, accurately and fairly;
  • 1.2: present news in context and in a balanced manner, without any intentional or negligent departure from the facts whether by distortion, exaggeration or misrepresentation, material omissions, or summarization;
  • 1.3: present only what may reasonably be true as fact; opinions, allegations, rumours or suppositions shall be presented clearly as such;
  • 1.8: seek, if practicable, the views of the subject of critical reportage in advance of publication, except when they might be prevented from reporting, or evidence destroyed, or sources intimidated. Such a subject should be afforded reasonable time to respond; if unable to obtain comment, this shall be stated; and
  • 3.3: exercise care and consideration in matters involving dignity and reputation…
  1. The text

3.1 The article was about questions of conflict of interest as SPG donated R350 000 to Transnet chairperson Popo Molefe’s foundation in April the previous year, just months before the Transnet board awarded the company a tender. Stone called the award of the tender “controversial”.

3.2 The story said that the R2.5-billion Tambo Springs flagship project run by Transnet had been referred to the Special Investigating Unit (SIU) after an internal review showed prima facie evidence of procurement irregularities, fraud, corruption and improper conduct.

3.3 Allegations reportedly surfaced that “a former Transnet executive wanted a stake in the project in exchange for getting it done, while other executives were allegedly being hounded out of Transnet because they were too bureaucratic and therefore slowing the progress down”.

 

3.4 “Molefe arrived in 2018, when the bid had already been adjudicated and his board had endorsed and confirmed the appointment of Southern Palace. ‘However, they could also have stopped the transaction, as they did with the others,’ said an insider,” the journalist reported.

  1. The arguments

4.1 Sentence incorrect, distorted

4.1.1 The story said, “The controversial award also raised questions of conflicts of interest as the Southern Palace Group donated R350 000,00 to Transnet chairperson Popo Molefe’s foundation in April last year, just months before the Transnet board approved the Company’s appointment in June.”

4.1.2 SPG complains that this sentence was factually incorrect, unbalanced and distorted, and that several material pieces of information were not reported. In this regard, it provides this office with the journalist’s questions and its responses. (Details below, under ‘Analysis’.)

4.1.3 It says the journalist omitted to report its response that:

  • it provided support to the Foundation, which funded the education of destitute youth, and that it had made three donations – R330 000, R300 000 and R350 000 respectively (between 22 June 2016 and 1 April 2019). This means that two of the three donations took place prior to Molefe’s appointment on 23 May 2018;
  • the Transnet tender was issued to the market on 1 June 2016 – nearly two years prior to Molefe’s appointment as Transnet chairman; and
  • the Southern Palace Joint Venture (SPJV) received an email on 31 August 2017, advising that its bid had been favourably considered – also prior to Molefe’s appointment.

4.1.4 It concludes, “Ultimately, the entire context of the Article and in particular the context that [the disputed] paragraph was written toward the beginning of the Article and in [a paragraph much later] almost at the end of the article, demonstrates that the journalist paid mere lip service to Southern Palace’s responses to his questions and wrote the article in such a manner that the context demonstrates that it was designed to place Southern Palace in an adverse light.”

4.1.5 In an affidavit, Dr Popo Molefe says the article suggested that the donations made to the Popo Molefe Foundation constituted “perverse incentives” directed at him. He submits the Foundation is managed by an independent Board of Trustees which was established and registered in 1998. He says he is one of the trustees.

4.1.6 Also, the Foundation’s affairs are audited by an independent firm. “It can thus never serve as a conduit for perverse incentives. The Foundation conducts itself in an open and transparent manner and its website contains details of its sponsors and donors… I am not a beneficiary nor is anyone in my family a beneficiary of the trust. Had … Stone conducted proper investigations this would have been clear to him.”

4.1.7 He adds that the article did not only bring him into disrepute, but also the Foundation – “which impacts adversely on its ability to do charitable work”.

4.1.8 Molefe also points out that the donations in question commenced prior to him joining Transnet. After he joined this institution, the Board disbanded the acquisition and disposal committee (on 28 May 2018) in order to ensure that directors would not be involved in acquisitions.

4.1.9 Rhodé Marshall says the SPG fundamentally argues that a single paragraph (the one cited in Section 4.1.1) out of a story of 20 paragraphs does not mention specific information – and then continue to label the entire story as factually incorrect, unbalanced and distorted.

4.1.10 She says the complaint is basically that City Press should never have highlighted the perception of the conflict of interest, which is fundamental to the story. “Their version was reflected in the story, but it appears the complainant is unhappy that the story was published at all, whereas we believe this issue of governance and what was perceived to be wrong with it were worthy of bringing to the public,” she submits.

4.1.11 “Simply put, the complaint is more about the structure of the story because the information that the complaint demands to have in the story is ‘by and large’ contained in the story,” she says – and remarks that the newspaper is not certain which Press Code provision covers a complaint on the structure of the story, “which is a product of editorial independence”.

4.1.12 The next issue, the editor says, is whether the SPG was in fact awarded the contract in August 2017, or rather in June 2019.

4.1.13 The editor submits, “To advance their version the complainant seeks to create a false impression that as of August 2017 the Southern Palace Group consortium had an active contract with Transnet, which is factually incorrect. What is correct is that the bid would have been adjudicated in August 2017, and this fact is recorded in the story. But the appointment was approved and confirmed by the Transnet board chaired by Popo Molefe in June 2019, which was approximately two months after the Southern Palace Group donated R350,000 to the Popo Molefe Foundation.”

4.1.14 In this regard, Marshall says the following statements are factually correct:

  • The invitation for the tender and adjudication was concluded before Molefe arrived at Transnet in 2018 – which were reflected in the article;
  • In 2018 Molefe was appointed the chairperson of the Transnet board, which had the final decision to approve the appointment of service providers;
  • The official appointment of the SPG was concluded and announced in June 2019. This information was explicitly put to Transnet and it was never disputed. It was also explicitly put to Molefe and similarly never disputed. A Transnet press statement to confirm the approval and appointment in June 2019 is publicly available;
  • During the period between Molefe’s appointment in 2018 and the finalisation of the appointment of the SPG in June 2019 there was a dispute in Transnet whether the state-owned entity should proceed with the transaction;
  • In the period between the adjudication of the tender in August 2017 and the official announcement of the SPG consortium as the successful bidder, there was a dispute within Transnet whether to proceed with the award, or not;
  • Between Molefe’s appointment in 2018 and the official announcement of the Southern Palace Group consortium as the successful bidder in June 2019, he was, in his capacity as the chairperson of the Transnet board, in a position of authority to influence and direct the final decision of Transnet with regard to the dispute whether or not to proceed with awarding the contract to SPG;
  • The Popo Molefe Foundation supported youth development in sport and promoted the rehabilitation and integration into society of young people who have found themselves on the wrong side of the law, and this is recorded in the story; and
  • In April 2019, two months before the decision to appoint the SPG consortium was ratified by the Transnet board chaired by Molefe and announced publicly in June 2019, SPG donated R350,000 to the Popo Molefe Foundation.

4.1.15 The editor concludes it is factually correct that at least in the period between Molefe’s appointment in 2018 and the finalisation and conclusion of the contract to the SPG in June 2019, he could have been conflicted when he participated in the proceedings to finalise the award to the SPG, due to the fact that it had since June 2016 been donating funds to his Popo Molefe Foundation.

4.1.16 “And more narrowly,” she continues, “it is factually correct that at least during the period between April 2019 and the official announcement of the Southern Palace Group consortium as the successful bidder in June 2019, Mr Molefe could have been conflicted when he participated in the proceedings to finalise the award to the Southern Palace Group consortium just two months after the Southern Palace Group donated R350,000 to the Popo Molefe Foundation. Therefore the story as published is factually correct and balanced and the complaint must be dismissed in its entirety.”

4.1.17 SPG replies the argument that it takes umbrage with one paragraph of the article is plainly untenable – it says its complaint clearly is about the whole article.

4.1.18 It remarks the newspaper’s response to the complaints that Molefe’s appointment “was approved and confirmed by the Transnet Board in June 2019” is directly contradictory to another statement in the story which said, “Molefe arrived in 2018 when the Bid had already been adjudicated and his Board had endorsed and confirmed the appointment of Southern Palace”. SPG argues, “The fact that the response of the City Press Newspaper puts forward a different version to that contained in the article is entirely self-defeating because it is not open to the City Press Newspaper to change the contents of the article in its response to the letter of complaint.”

4.1.19 It concludes that Stone had a hidden agenda, and authored the article with the intention of bringing it, as well as Molefe, into disrepute.

4.1.20 Molefe adds that the OR Tambo Springs project was awarded to a consortium, which SPG is “but one of the companies involved” – unlike the impression created in the article that Transnet had awarded the project solely to SPF.

Analysis

4.1.21 Whether SPG’s complaint is only about a certain sentence or not (as it is argued both ways, above), the fact remains that this sentence is at the centre of the matter.

4.1.22 This sentence stated, “The controversial award also raised questions of conflicts of interest as the Southern Palace Group donated R350 000,00 to Transnet chairperson Popo Molefe’s foundation in April last year, just months before the Transnet board approved the Company’s appointment in June.”

4.1.23 I am now taking a close look at the questions and responses (as provided to me by SPG, and not disputed by City Press) to see if the reportage was accurate (or not) and fair (or not). Let me be clear: By “fair” I do not mean that City Press was obliged to publish all SPG’s responses – this is about the omission of information that was material to the matter.

4.1.24 To simplify matters, I am marking Stone’s seven questions from A – G.

4.1.25 So then, here are the questions and responses:

QUESTION

RESPONSE

A. What is the nature of your (Mr Solly Mahlangu’s) relationship with Molefe and how long have you known him?

I know him as a reputable community leader and a struggle icon. I have known him for about 20 years. I don’t have any business relationship with him.

B. How long has SPG been donating to the foundation, what is the motivation behind the donation/s, what is the total value of the donation/s to the foundation to date, and on what date was each of the donations made?

SPG provides support to the Popo Molefe Foundation which, inter alia funds the education of destitute youth. SPG have made 3 donations to date as follows: 22 June 2016: R330 000.00; 22 May 2018: R300 000.00; and 01 April 2019: R350 000.00. Total: R980 000.00

C. Did you consider that making a donation to the foundation of Molefe while you are bidding for work in Transnet would raise questions of conflict of interest and how did you rationalise the decision?

The Transnet tender was issued to the market on 1 June 2016 nearly two years prior to Molefe’s appointment as the chairman of Transnet. The Southern Palace Joint Venture (SPJV) responded to this bid and received an email from Transnet on 31 August 2017 that its bid was considered favourably by Transnet. According to the Transnet website Molefe was appointed to the Board of Transnet on 23 May 2018, some months after the adjudication of SPJV’s bid. SPJV was accordingly not in a position at the time of its bid submission to consider a conflict of interest.

D. Noting that non-executive   directors are precluded from participating in operational issues, to your knowledge, did Molefe play any role in the awarding of the bid to SPG?

It is our understanding that non-executive directors are precluded from participating in operational issues. SPG has no reason to believe differently. In any event, Transnet tender adjudication processes were already concluded when Molefe was appointed.

E. A recent media article alleged that SPG was involved in the stealing close to R180-million from the IDC. What is your comment on the view that the allegations contaminate the work of your business including the donation to the foundation?

The article dated 11 September 2020 is based primarily on the contents of a summons issued by the IDC. A summons only sets out the allegations of one party to the litigation and cannot be taken as fact. Significantly, instead of just recording in a balanced manner what is in the summons, the Amabhungane article amplifies to the contents thereof emotive language which does not appear in the summons. The second to sixth defendant have since entered an appearance to defend and filed a plea in response to the summons, yet you will note that no mention is made of this in the article. This should have been known to Amabhungane at the time of publishing the article. In addition, the article does not disclose that the author of the article directed extensive queries to Southern Palace’s lawyer and received full responses thereto. Quite unfairly the article was then published without consideration for the extensive responses sent by our attorney to the questions posed by the journalist and continues to have a negative impact on our business. Accordingly, the second to the sixth defendant deny the allegations in the summons as set out in the attached plea.

F. What is the current status of SPG’s involvement in the Tambo Springs project and from your understanding what is the status of the project?

As per our above response, the SPJV has been appointed for the Tambo Springs Project. SPG is one party to the JV and is not in a position to comment on the status of the project.

G. Any other comments?

No.


4.1.26 Stone quoted SPG’s responses to his questions A, B, D and E adequately.

4.1.27 The response to Question F was not reported – but that was not material information that could have affected the gist of the story.

4.1.28 In contrast, the response to Question C was not reported at all. I find this to be rather odd, as this was the gist of the matter. The main issue in the story was the possible conflict of interest between SPG and Molefe (and his Foundation). Question C addressed this fundamental issue, which the SPG specifically denied – and which Stone inexplicably neglected to report.

4.1.29 No doubt, this should have been reported.

4.1.30 Let me be clear: I find Marshall’s arguments as well as conclusions, as documented under Sub-section 4.1.9 to 4.1.16 to be reasonable. This is not to say I believe Molefe was indeed involved in a conflict of interest – that is not for this office to decide. I do believe, though, that the story was in the public interest and that City Press was squarely within its rights to publish an article that raised this question.

4.1.31 While I have not found any inaccuracies in the story, I did find some serious omissions or neglect (as pointed out above).

4.1.32 My ultimate conclusion, therefore, is that the reportage was accurate in what it stated, but unfair in what it did not report.

4.2 Unsupported hearsay

4.2.1 SPG complains that the article contained extensive averments which can be characterized as unsupported hearsay clearly designed to create adverse atmosphere to it, and resulting in an article which is unbalanced and distorted.

4.2.2 It cites the following in this regard (my underlining):

  • City Press heard that the unprecedented public private partnership project suffered setbacks from the outset, with key deadlines being missed, but Transnet rushed to get it over the line to save face”;
  • “During the scramble to push the project into a bankable deal, allegations surfaced that a former Transnet executive wanted a stake in the project in exchange for getting it done, while other executives were allegedly being hounded out of Transnet because they were too bureaucratic and therefore slowing the progress down”;
  • “Molefe arrived in 2018, when the bid had already been adjudicated and his board had endorsed and confirmed the appointment of Southern Palace. ‘However, they could also have stopped the transaction, as they did with the others,’ said an insider; and
  • “Market insiders also heard that people in Southern Palace’s circles boasted about having influence inside Transnet and claimed credit for getting rid of executives who were seen to be obstructing the process.”

4.2.3 Marshall says it is not even necessary to entertain this leg of the complaint because the complainant does not offer any contradicting version, but merely records that the complainant does not like the fact that such information has been published.

4.2.4 “We are not aware of any press code provision that grants the complainant the entitlement to insist that we should have disclosed more than what we have published in the story.”

4.2.5 SPG maintains that the reportage was based on unsupported hearsay – which was “clearly designed to create adverse atmosphere to the Southern Palace Group of Companies and resulting in an article which is unbalanced and distorted”.

5.2.6 In his affidavit, Molefe refers to the statement in the article that he was under investigation by the SIU. “Fact of the matter is that once I had been appointed to the Transnet Board, I requested the S.I.U. [on 15 September 2020] to carry out the investigation [into irregularities, fraud and corruption within Transnet].” He calls the imputation that the SIU investigated him “plainly malicious and defamatory”.

Analysis

4.2.7 “Hearsay” is when somebody tells you she or he heard from someone else what has happened. The sentences quoted by SPG in this regard does not necessarily suit this characterisation.

4.2.8 Stone quoted a source who alleged that, even though Molefe only arrived in 2018 when the bid had already been adjudicated, the transaction could still have been stopped (by Molefe), as it happened in other cases. This presents the core of the intimation that Molefe could have conflicted interests.

4.2.9 While the newspaper was fully entitled to publish this allegation, it also should have asked Molefe or his spokesperson for a response to this specific issue. I have no evidence of such.

4.2.10 Stone also reported that “marker insiders” had heard that people in SPG’s circles boasted about having influence inside Transnet and claimed credit for getting rid of executives who were seen to be obstructing the process. Stone also neglected to ask SPG’s response to this rather damning allegation.

4.2.11 I deem this neglect to be quite serious. I can only guess at why this was the case, but guessing is not part of my job.

4.2.12 The allegations were serious, and City Press was justified in publishing them – provided that it gave the affected parties a right of reply prior to publication.

4.2.13 No evidence was placed in front of me to suggest that City Press sought comment on any of the allegations documented under Sub-section 4.2.2 above – as it should have.

  1. Unbalanced

4.3.1 SPG complains the article is unbalanced because it contains unfair references to another article which appeared in the Mail & Guardian on 11 September 2020.

Analysis

4.3.2 As SPG also complained about the same article, and both the then acting Public Advocate and the Press Ombud declined to entertain that complaint, I do not think I am at liberty to deal with this part of the complaint – especially not because SPG made some adverse comments about the M&G’s article in the process (and the latter did not have an opportunity to respond to those remarks). I therefore do not even document the arguments for and against this matter.

4.3.3 In any case, I believe that my findings above about the neglect to report some vital responses, as well as the neglect to ask specific questions about specific allegations, adequately deal with these matters.

  1. Finding
  1. Inaccurate, unbalanced, distorted

5.1.1 City Press neglected to report SPG’s response to a central question (that of a possible conflict of interest). This was in breach of Section 1.2 of the Press Code that reads, The media shall present news in context and in a balanced manner, without any intentional or negligent departure from the facts whether by … material omissions …”

5.1.2 Due to the seriousness of the omissions, as outlined above, the neglect to report it was also in breach of Section 1.1 of the Code that says, “The media shall take care to report news … fairly”.

5.1.3 The complaint about inaccuracies in the article is dismissed.

  1. Unsupported hearsay

5.2.1 With reference to Sub-section 4.2.2 above, the newspaper is found to be in breach of Section 1.8 of the Code that says, “The media shall seek, if practicable, the views of the subject of critical reportage in advance of publication…”

5.2.2 This complaint about the reporting of “unsubstantiated hearsay” is dismissed.

  1. Article in Daily Maverick

There is no finding on this part of the complaint.

  1. Seriousness of breaches                                              

6.1 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).      

6.2 The breaches of the Press Code as indicated above are all Tier 2 offences.          

  1. Sanction

7.1 City Press is directed to:

  • apologise to SPG for neglecting to report a response that dealt with the core of the article (the denial of a conflict of interest);
  • report its responses in this regard, clearly pointing out that it dismissed the notion that there was any conflict of interest on Molefe’s part; and
  • publish that this office has reprimanded it for not asking SPG’s response to several rather damning allegations by unidentified sources.

7.2 The newspaper may add, of course, that I have not found any inaccuracies in the story.

7.3 The newspaper is directed to publish the apology and the omitted response at the top of the page on which it appeared, with a headline containing the words “apology” or “apologises”, and “Southern Palace Group”.

7.4 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.
  1. 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 Press Ombud