Themba Mfeka vs. Mail & Guardian

Wed, Mar 3, 2021

Present at a Zoom hearing, held on 23 February 2021:

For the complainant:

Adv Pieter van der Berg

Mr Johan Esterhuizen, of Shepstone & Wylie Attorneys

Mr Themba Mfeka

For the publication:

Sipho Kings, editor

Sabelo Skiti, reporter

The Panel of Adjudicators:

Wara Fana, press representative

Roy Mnisi, public representative

Johan Retief, acting Press Ombud

Particulars

Complaint number: 7843

Complaint lodged by: Mr Theunise Esterhuizen, of Shepstone & Wylie Attorneys

Date of article: 11 March 2020

Headline: Municipal Workers Retirement Fund comes under scrutiny – Mfeka in a sticky spot

Print and online: Yes

Author of article: Sabelo Skiti

Respondent: Sipho Kings, acting managing editor, as well as Skiti

Complaint

1 Mr Themba Mfeka complains that the article as a whole was untrue, unfair and unbalanced. In this regard, he singles out the following:
1. 1.1 The role, functions, responsibility and duties of a principal officer;

1.1.2 is duty not to disclose sensitive information;

1.1.3 Some of his responses that were not properly reported; and

1.1.4 Statements about the Financial Sector Conduct Authority (FSCA) – details below.

2 In particular, he complains that the following allegations were inaccurate, or misleading, or unjustified, or unfair:

“ … some trustees accused Mfeka of trying to protect Busha”;
“[Mfeka] allowed JM Busha to do its own administration of the assets it was managing”;
“[Mfeka] allowed JM Busha to submit statements that did not reflect the true position of the assets he was managing”;
“[Mfeka] and the board of trustees allowed JM Busha to manage almost R2-billion in funds even though its fidelity cover is substantially less than that”;
“…[Mfeka] was aware of a critical misrepresentation by Busha to the fund but did nothing about it”; and
“The [FSCA] had previously confirmed its investigation would also include a leg to scrutinise whether the actions of … [Mfeka was] in line with [his] fiduciary duties.”

1.3 He also complains that the:

sub-headline ‘Mfeka in a sticky spot’ was designed to put him in a bad light; and
reportage has tarnished his dignity and reputation.

1.4 He requests a correction, retraction and an apology.

Sections of the Press Code complained about

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.

The text

3.1 The article was about the firing of “controversial asset manager” JM Busha Investments by the board of trustees of the Municipal Workers Retirement Fund (MWRF), after it had lost R60-million of municipal workers’ money.

3.2 In this regard, several damning allegations (details below) were levelled against Mr Themba Mfeka, the MWRF fund’s principal officer.

The arguments

1 Article as a whole

4.1.1 Principles of pension funds not considered

4.1.1.1 In general, Mfeka says the article implied that he had:

not fulfilled his functions as principal officer properly; and/or
been responsible for the actions or investments made by JM Busha; and/or
condoned or assisted wrongdoing on the part of JM Busha.

4.1.1.2 He says the pension industry is a specialised field, and one would have thought the journalist would have brought himself up to speed with certain rudimentary and trite principles applicable to the pension fund industry, including legal obligations of a principal officer. “He dismally failed to do so. This is bad journalism,” he submits.

4.1.1.3 Kings says he finds it hard to respond to this allegation without any examples of “bad journalism”.

Analysis

4.1.1.4 The panel adjudicates this part of the complaint when dealing with Sub-section 4.1.2 below.

4.1.2 First consequence: Duties, rights, obligations of principal officer misconstrued

4.1.2.1 Mfeka says the first consequence of this failure is evidenced by the fact that the journalist did not consider the obligations and rights of the principal officer.

4.1.2.2 He submits, “All decisions relating to the appointment of or transacting with investors, the making of investments, and supervising such investors and investments, rest with the Board of Trustees. The Principal Officer has no obligation, duty or right in this regard. The statements in the article … which assert or imply that I failed to take certain steps, is based on the false premise that I did have the authority or duty to have taken certain steps. This is not the case, and by not alerting the reader to the true facts, the impression is created in the mind of the reader that I did not fulfil my duties, and assisted wrongdoing by JM Busha.”

4.1.2.3 Kings says Mfeka’s logic is flawed when he says that the Board of Trustees on its own dreams up investment firms and appoints them. “He wants to seem like he is a bystander with no influence and authority, when he knows that his role as the accounting officer - the person who is in charge of operations - is integral because he drives [the process] and is accountable in the process that leads to the board accepting or not accepting his recommendation or vetting that informs which companies are to be appointed. Mr Mfeka knows very well that not only is he authorised, he is [also] duty bound to protect the interests of the fund and advise the trustees if there are any risks.”

4.1.2.4 Mfeka says the journalist implies that the principal officer should scrutinise statements submitted by investors, and that it was his responsibility to check a “R60 million misstatement”. He denies this, adding that the reader has not been informed of the true duties of a principal officer.

Analysis

4.1.2.5 The panel needs to be clear from the outset: Our task and responsibility is not to determine whether Mfeka was guilty of the various allegations levelled against him by some sources, as suggested by Van der Berg – we are not a court of law, or some quasi-judiciary forum. In other words, we are not judging Mfeka; rather, we focus our attention on the M&G’s article. Our only concern is whether the newspaper was justified in its reportage – and if its understanding (or misunderstanding) of the role, responsibilities and duties of the principal officer has led to either inaccurate or unfair reporting.

4.1.2.6 In this regard, we quote the gist of the now famous National Media v. Bogoshi case, in which Judge Joos Hefer stated as follows: “The publication in the press of false defamatory allegations of fact will not be regarded as unlawful if, upon a consideration of all the circumstances of the case, it is found to have been reasonable to publish the particular facts in the particular way at the particular time.”

4.1.2.7 This means that, if journalists can show that they were not negligent in their reportage, they cannot be held liable, even if they were wrong – as long as they acted in good faith and reasonably believed that their information was accurate. This underlines what the panel has stated in Sub-section 4.1.2.5.

4.1.2.8 At the centre of this debate is the question what powers Mfeka, as principal officer, had and did not have.

4.1.2.9 At the hearing, Mr Van der Berg submitted that the basic premise of the journalist had been wrong regarding the role of a principal officer,and argued that this misperception had led to unfair and inaccurate reporting.

4.1.2.10 The gist of the advocate’s arguments was that Mfeka, as principal officer, did not have any decision-making powers – and that the allegations levelled against him could therefore not be true and accurate. Citing from legal documents, Van der Berg explained that the principal officer had no fiduciary duties and had no obligation with regards to finances either. Mfeka, he submitted, was not a trustee, and neither was he a member of the Board – adding that he had no voting rights.

4.1.2.11 Mfeka’s sole responsibility, the advocate argued, was to implement decisions taken by the Board. The responsibility for decisions, he stressed, lied with the trustees and the Board.

4.1.2.12 In support of his arguments, Van der Berg sent the following three pieces of documentation to the panel immediately after the hearing (after having been requested to do so): Financial Services Board, Circular no. 13, dated 11 June 2007, and headlined Good Governance of Retirement Funds:

13. The board is responsible and accountable to the members for the administration of the fund, including the3 prudent investment of fund assets.

18. The principal officer’s functions include:

18.1 ensuring that decisions of the board are executed;

18.2 ensuring that the fund complies with the formal requirements of the law, including directives from the Registrar, SARS and any other relevant regulatory authority;

18.3 liaising on behalf of the board with service providers to the fund, unless where there is direct contact between the board and the service provider;

18.4 contributing at board meetings even though, as principal officer, he or she does not have any vote in any decisions of the board if he/she is not a board member.

49. The investment performance of the fund assets is the most important factor in determining whether the fund will be able to deliver on the retirement benefits … or whether there will be a sufficient amount accumulated … for an adequate replacement of income. The proper management of the investments of the fund is a critically important component of the governance of a fund.

50. It is important that the board ensures that the mandates given to service providers clearly define the board’s expectations and reporting requirements relating to the performance of the investments. The board should therefore not endorse mandates or agreements that are vague or ambiguous. Any contractual arrangement between a fund and an investment manager should set out clearly the benchmarks against which performance will be measured. Any contract should be on such terms and conditions that are acceptable to the fund, and my require independent legal advice being given to the fund in that regard.

71. Boards are held accountable for any actions and decisions taken by their mandated sub-committees, agents, office bearers and duties outsourced to service providers. As such, the members of the board of the fund can be held jointly and severally liable for the actions of their mandated agents.

72. A fund should have clear written rules and control processes in place for the financial management and funding, investment management and the safeguarding of assets, delegation of duties, outsourcing of functions and selection process to be followed in the evaluation and appointment of service providers.

4.1.2.13 Van der Berg also quoted as follows from various sections of the Pension Funds Act, 24 of 1965:

7.C. The object of a board shall be to direct, control and oversee the operations of a fund in accordance with the applicable laws and rules of the land. In pursuing its object the fund shall … have a fiduciary duty to members and beneficiaries in respect of accrued benefits or any amount accrued to provide a benefit, as well as a fiduciary duty to the fund, to ensure that the fund is financially sound and is responsibly managed and governed in accordance with the rules of this Act.

146. Before issuing a regulator’s directive in terms of this Part, the financial sector regulator must:

a. give the financial institution or person to whom it is proposed to issue the directive a draft of the proposed directive and a statement of the reasons why it is proposed to issue it, including a statement of the relevant facts and circumstance; and

b. invite the financial institution or person to make submissions on the matter…

4.1.2.14 In addition, Van der Berg furnished the panel with an undated and unsigned document headlined, South African Municipal Workers’ Union National Provident Fund.

10.1.8. The BOARD shall establish sub-committees in order to advise, assist and make recommendations in all matters relating to the operation of the Fund.

10.1.11. The TRUSTEES may decide that any power of decision on any matter that is vested in them, other than a financial matter of the Fund, shall be delegated to the MEMBER representatives…

Under the sub-headline, Powers of the BOARD, it is stated as follows:

10.4.1. The BOARD shall generally take all steps required to give effect to the objects of the FUND and to fulfil their duties in terms of rules and the ACT.

10.4.2. In particular, the BOARD shall have the following powers:

a. to receive, administer and apply the moneys of the FUND;

b. to operate a banking account in the name of the FUND;

c. to effect and/or maintain contracts with INSURERS;

d. to raise, borrow or lend moneys, at interest or otherwise, for the purposes of the FUND;

e. to acquire, hole alienate or otherwise deal with any movable or immovable property of the FUND, subject to the provisions of Section 19 of the ACT;

f. In respect of all moneys not immediately required to meet current charges upon the FUND, to lend, invest, put out at interest, place on deposit, make advances or otherwise deal with the moneys of the FUND upon such securities and in such manner as they may determine and to realise, vary, reinvest or otherwise deal with such securities as they may determine and in particular to advance moneys on the security of first mortgage bonds over immovable property; provided that any advance on first mortgage shall not exceed seventy-five per cent of the value of the immovable property concerned as assessed on the date of the advance.

4.1.2.15 What these documents show, is that a Board is responsible for whatever has expired – not the principal officer. This was the essence of Van der Berg’s argument at the hearing.

4.1.2.16 But is it all that simple? The panel also notes the FSCA’s communication 7 of 2019, dated 12 December 2019 on the role of a principal officer – which, to the best of the panel’s knowledge, is still valid.

4.1.2.17 We hereby quote relevant sections from this document:

2.2 The principal officer has a legal duty to protect the members of the fund by reporting to the Authority any matter that may prejudice the members of the fund. Such duty involves reporting the conduct of the board members and service providers where they act in a manner that prejudices the members of the fund. It should be noted that, in terms of section 8(6)(a) of the PFA, the principal officer’s duty to report to the Authority extends beyond the principal officer’s appointment.

2.3 The duty to protect extends to the fact that the principal officer is usually the official contact person with the Authority and is required to satisfy him/herself with the authenticity of statutory submissions made to the Authority. In this regard, the principal officer must sign various statutory submissions such as the fund’s annual financial statements, valuation reports, section 14 transfer applications, applications for exemption or extension etc. before it can be submitted and considered by the Authority.

2.4 In most funds, the principal officer is the first contact with third parties and manages service providers. The principal officer is responsible for reporting to the board, and in appropriate cases to the Authority where there may be prejudice to the members, matters arising from such interactions or the performance of such service providers to the fund. The principal officer is also expected to provide guidance to the board on matters requiring the board’s decision and for the execution of such decisions. This will include the guidance on the appointment or termination of service providers.

2.5 Importantly, it is often found that, for practical purposes, the decision-making powers of the board are delegated to the principal officer subject to a certain limited threshold and ratification by the board.

2.6 It follows from the aforegoing that a principal officer owes a fiduciary duty to the fund/s, and should therefore avoid conflicts of interest in much the same way that a board is required to do so pursuant to section 7C(2)(c) of the PFA.

4.1.2.18 The crux of this document is that the principal officer:

should protect members of the fund by reporting any possible wrongs;
is expected to provide guidance to the board on matters requiring the board’s decision and for the execution of such decisions; and
often receives delegated, decision-making powers;
owes a fiduciary duty to the fund.

4.1.2.19 The above is supported by Directive PF No. 5, dated 10 December 2010 (headlined, FSBSA Pension Funds Act…), that states under Section 7: “Section 8(6)(b) of the Act requires a principal officer to inform the Registrar in writing where he/she becomes aware of any matter relating to the affairs of the pension fund which, in the opinion of the principal officer, may prejudice the fund or its members.”

4.1.2.20 The panel has other documentation to the same effect, but we believe the above-mentioned should suffice.

4.1.2.21 After the hearing, the panel asked Van der Berg to respond to this issue. His response boils down to the statement that it was not the thrust of the article, nor Mfeka’s complaint, that he failed to report issues to the Registrar. “Instead, the report went much further and placed the blame for the alleged problems with the JM Busha investment on Mr Mfeka,” he says.

4.1.2.22 From the above, the panel concludes that the responsibility and duty of a principal officer is not merely re-active (read: acting upon instructions) – it is also pro-active (meaning: taking some action on her or his own).

4.1.2.23 The consequence of this conclusion is that the allegations against Mfeka could have been justified (as he was expected to do more than just implement decisions) – which, in turn, means that the newspaper was justified to publish the allegations as allegations.

4.1.2.24 The panel has received evidence of an email, shortly before the story was published, that Mfeka indeed knew about concerns existed about investments JM Busha had made on behalf of MWRF outside South Africa. (We keep this as vague as possible, so as to protect the source.)

4.1.2.25 This information justified the reportage on this issue.

4.1.3 Second consequence: Duty not to disclose confidential information

4.1.3.1 The second consequence of this failure, Mfeka says, is evidenced by the fact that he did not take into consideration that he had a duty not to disclose confidential information.

4.1.3.2 In particular, he continues, Skiti failed to mention he stated that he could not answer some of the questions due to the confidentiality restraints. “I made it quite clear in my responses to the journalist’s questions that I am bound by a duty of confidentiality not to respond to all his questions. It was made quite clear in all my responses that much of the information he sought was confidential and that I could not respond to it. However, the journalist simply made the allegations … without informing his readers that I could not respond to it by reason of confidentiality restraints.”

4.1.3.3 Mfeka emphasises that the confidentiality restraints are imposed by law, adding that the principal officer answers to the Board of Trustees, “and is thus bound by the same duty of confidentiality relating to the fund’s transactions”.

4.1.3.4 Kings responds that, on two different occasions in the article, it was stated that Mfeka said information could not be shared with third parties.

Analysis

4.1.3.5 This is what the article said:

“[Mfeka] refused to confirm the termination and the meeting with the regulator, saying it was a matter for the board. ‘No third party may have privileged information. Any engagement between the fund and FSCA remains as such. The FSCA is a reputable institution. They will not put that at risk’ ”; and
“On the issue of the fidelity cover he said: ‘That information was shared between JM Busha and the fund then. It cannot be shared with third parties now…”

4.1.3.6 The panel considered the question if these references adequately reflected Mfeka’s concern, which is that the article did not take into consideration that he had a duty not to disclose confidential information.

4.1.3.7 We do believe that Skiti could have stated the duty-aspect with more circumspect. However, given the two citations above, we are not convinced that the omission of the word or notion of “duty” was weighty enough to have constituted a breach of the Press Code.

4.1.4 Responses not properly reported

4.1.4.1 Mfeka says he previously responded to allegations on various emails exchanged between him and Skiti, and complains that the journalist never reported his response.

4.1.4.2 “Instead”, he argues, “the article created the impression that he did not want to [answer] or did not have an answer to the allegations made by the journalist’s ‘mysterious and anonymous source’.”

4.1.4.3 “He confirms statements that were expressly denied by me because of the confidential nature thereof. He makes allegations without substantiating evidence and input from the key persons involved, this means he writes these articles based purely on speculation and has no journalistic integrity… He only quotes my responses out of context to fit his agenda.”

4.1.4.4 Kings says Mfeka has not cited any example to prove his point. The reality, he continues, is that Mfeka picks and chooses what he wants to respond to – “but this impression, though true, is not created in the article. The article makes the impression that R60-million belonging to municipal workers is lost, all is not well on the fund, and JM Busha is being treated with kid gloves.”

4.1.4.5 Mfeka agrees – the article indeed portrays the notion that the R60-million was lost. “However, the article goes further and places the blame on the principal officer. The blame (if any) should be imputed to the board of trustees, and not the principal officer,” he submits.

Analysis

4.1.4.6 The panel asked Van der Berg what specific responses he referred to. We find his response in this regard not satisfactory. He referred to a statement that Mfeka was not to be blamed for the loss of the money, but could not take the matter any further.

4.1.4.7 This was not enough to convince the panel that this part of the complaint had sufficient legs to stand on.

4.1.5 References to FSCA

4.1.5.1 In general, Mfeka complains that the references in the article to the Financial Sector Conduct Authority (FSCA) leaves “much to be desired”.

4.1.5.2 He says that earlier reportage in a publication to the effect that the FSCA had referred the matter to the Special Investigating Unit (SIU) was false – and adds that the reporter should have rectified the position in his later report on 11 March 2020. “There was a duty on him to have stated that the statement was wrong, and that the SIU was not seized with the matter,” he argues.

4.1.5.3 Instead, he says, the article in dispute stated that he had been summoned by the FSCA to a meeting to “explain the fund’s actions since learning of the breach of mandate”. “This is not true. I did meet with the FSCA, but I was there to furnish information to the FSCA, and was not asked to ‘explain’ anything. I was certainly not summoned by the FSCA as an accused person, or a suspect, or a wrongdoer, as the article implies,” he submits.

4.1.5.4 Secondly, he says it is also untrue that the FSCA in its investigation would also “scrutinise whether the actions of both Mfeka and the Board of Trustees were in line with their fiduciary duties.” There is no such investigation, he says. “I informed the journalist that the FSCA had not informed me of any investigation against me. The journalist should have stated this in his article, and good journalism required that he should have asked the FSCA why I had not been informed about the investigation,” he submits.

4.1.5.5 He says the last sentence of the story stated, “FSCA’s spokesperson Thembisa Marele would only say it will allow the regulator to look into a few conduct issues they picked up.” He argues this was not in line with the statement that there was an investigation to see whether he had acted in line with his fiduciary duties.

4.1.5.6 He adds it is debatable whether the principal officer has a fiduciary duty towards the fund as is the case with trustees.

4.1.5.7 In the end, he concludes, readers are left with the impression that “because of serious wrongdoing I am being investigated by the FSCA, whilst this is not the case”.

4.1.5.8 Kings says the FSCA is mentioned in the context of calling Mfeka for a meeting, and looking into the matter. “The FSCA suspended Busha’s license, after looking into the issue and then called Mfeka to a meeting as part of investigations,” he submits.

4.1.5.9 The editor adds the M&G was shown email evidence confirming that the complaints and reports were forwarded to the SIU.

4.1.5.10 He says the newspaper knows that Mfeka did meet with the FSCA at its offices - and at its behest - and was asked questions pertaining to JM Busha and their work for the MWRF. “We know that the FSCA was investigating the entire matter… [and that] two sources - one at the FSCA and one with direct knowledge of Mr Mfeka being called [to] the meeting - say he was asked questions about the fund [and] its relationship with JM Busha. Mr Mfeka’s presence at the FSCA was not a social call, nor was it something he could have opted out of. It was a formal meeting,” he argues.

4.1.5.11 Kings says the M&G quoted Mfeka correctly where it reported that he had “refused to confirm the termination and the meeting with the regulator”, saying it was a matter for the board. He quotes, “No third party may have privileged information. Any engagement between the fund and FSCA remains as such. The FSCA is a reputable institution. They will not put that at risk.”

4.1.5.12 The editor adds, “How the fund chooses to communicate its work cannot be up to the Mail & Guardian to determine. Impeccable sources spoke about an investigation and the suspension of JM Busha’s, and that is enough to consider what was going on is/was an investigation. The FSCA has actually used the word ‘investigate/investigation’ in their correspondence with us, even though in this particular instance they phrased it like this. The Mail & Guardian cannot speak for the FSCA, but looking into a few conduct issues they picked up sounds like part of an investigation exercise, which at the end of the day is a fact finding exercise.”

4.1.5.13 He concludes, “The article states that the FSCA is investigating the fund and people allege that Mr Mfeka as accounting officer for the fund is partly responsible for that which has caused the investigation … (as alleged by more than one person with knowledge of intimate detail about the fund’s inner workings) [by] enabling or not acting to protect the fund from some of the misconduct.”

4.1.5.14 Mfeka says the journalist could have checked with the SIU whether they did indeed receive a complaint from the FSCA. Instead, he says the newspaper hides behind a “complainant/whistle blower” whose identity it does not want to reveal. The information is false, and it does not become a journalist to continue to rely on information which he knows he cannot substantiate, he contends.

4.1.5.15 He argues the nub of this part of his complaint is that the article implied that he had been summoned by the FSCA as “an accused person, or a suspect, or a wrongdoer, as the article implies”. He says the newspaper does not deny that this is what the article in fact implied. “It also seems that he now accepts that I was in fact not summoned as a ‘accused person, or a suspect, or a wrongdoer’,” he submits.

4.1.5.16 He concludes the newspaper does not deny that this particular statement in the article was untrue. The journalist does not even rely on any “source” to back up its version, he submits.

Analysis

4.1.5.17 The crux of the matter was if the:

FSCA had been investigating Mfeka, as stated in the article; and
journalist should have reported that the lost R60-million had not been referred to the SIU.

4.1.5.18 Also in contention was the statement that Mfeka had been “summoned” where he was asked to “explain” the fund’s actions.

Mfeka under investigation

4.1.5.19 The sentence in dispute read as follows: “The regulator had previously confirmed its investigation would also include a leg to scrutinise whether the actions of … Mfeka … were in line with [his] fiduciary duties.”

4.1.5.20 Skiti reported this as fact, not as an allegation.

4.1.5.21 No such evidence was put before the panel in correspondence prior to the hearing; we therefore requested such evidence to establish whether this statement could be justified.

4.1.5.22 The newspaper then sent us a screenshot, dated 25 February 2020, in this regard. This read, “Although the regulator could not confirm, the Mail & Guardian understands it followed a number of conduct issues, including the risk created by the 2018 R60-million investment, without prior permissions, in the Namibian SME bank that was later placed into liquidation. [FSCA spokesperson Tembisa Marele] said: ‘We confirm that we are investigating JM Busha Asset Management Pty Ltd, following allegations that the asset manager has breached investment mandates given to it. The Authority intends to also look at the fund’s trustees to establish if the compromised their fiduciary duties in any way’.”

4.1.5.23 The message accompanying this, sent at 13:28, read: “Let me know it it’s okay”; the response came back at 13:40 with the message, “Yes, it’s all good bhuti.”

4.1.5.24 The panel notes this only proves that the FSCA investigated JM Busha – not Mfeka.

4.1.5.25 The panel asked Van der Berg to reply to this matter. In short, he responded that the text did not:

state that the principal officer’s conduct would be “looked at”; and
suggest that there was any investigation to establish whether the trustees or the principal officer breached their fiduciary duties. “In other words, the ‘okay’ from ‘Thembisa FSCA’ is vastly different from what was eventually printed in the Mail and Guardian article which led to the complaint.”

4.1.5.26 We also take into account Van der Berg’s emphatic statements that Mfeka had never been informed of any such investigation against him.

4.1.5.27 Based on this evidence, or rather the lack thereof, we conclude that the newspaper was not justified to state, as fact, that the FSCA was investigating Mfeka.

Matter referred to the SIU

4.1.5.28 Mfeka does not complain Skiti reported that the matter was referred to the SIU; in fact, his article did not even mention the SIU. The complaint is that the journalist should have stated that the investigation had never been referred to the SIU – in reaction to another article in another publication where such a statement had been made.

4.1.5.29 The panel does not believe that Skiti was dutybound to correct a mistake (if it was one) made by another publication.

4.1.5.30 (The journalist did send the panel documentation regarding the SIU that was dated a few months after the story in question had been published. That was not helpful.)

‘Summoned’, ‘explain’

4.1.5.31 The word “summoned” simply means a notice to appear at a specified place. The panel believes that Mfeka has received such a notice.

4.1.5.32 The statement that he was asked to “explain” puts context to the “summons”.

4.1.5.33 This part of the reportage was accurate.

4.2 Particular statements

4.2.1 General comments

4.2.1.1 The panel now deals with the question whether it was reasonable for the M&G to have published the allegations made by its sources as allegations.

4.2.1.2 Of course, an allegation cannot be published simply because someone has made it – there has to be some kind of reasonableness to it, a possibility that they may be true.

4.2.1.3 At the hearing, Skiti argued that the matter was in the public interest, and that he believed that the allegations could have been reasonably true.

4.2.1.4 We also ascertained that the journalist made use of three sources from the Board (that consisted of 10 – 13 members). The first source, he testified, approached him. He then spoke to two other sources, who corroborated his information. (Two of these sources were dependent on one another, which means that Skiti got his information from one source and corroborated it with another.)

4.2.1.5 That complied with the Press Code.

4.2.1.6 In an ideal situation, Van der Berg is correct when arguing that the allegations cannot be true because Mfeka, by law, did not have any such decision-making powers. But we do not live in an ideal world. In fact, the gist of these allegations was that he had exceeded his powers.

4.2.1.7 Therefore, while there was a possibility that there could have been some truth to the allegations against Mfeka, the publication of the allegations, as allegations, was justified and reasonable.

4.2.2 The particular statements

4.2.2.1 ‘… some trustees accused Mfeka of trying to protect Busha’

4.2.2.1.1 Mfeka complains that this statement was inaccurate/misleading/unjustified/unfair.

4.2.2.1.2 Kings replies this allegation was made by several people, independent of each other, who asked not to be named because (a) they are not allowed to speak to the press, and (b) they feared that Mfeka would punish them for doing so.

4.2.2.1.3 He adds they all also flagged that the “lost” SME investment was brought to Mfeka’s attention in November, and submits he did nothing about it. (He says he was asked about this prior to publication).

4.2.2.1.4 The editor says that, on 9 December 2019 MWRF trustee Khanyisile Mlaba sent an email to fellow trustee Mpumelelo Nontshintshi, and copied Mfeka, highlighting an article by Amabhungane stating that JM Busha lost money in Namibia. He says Mlaba asked for clarity as JM Busha was one of their investment companies. Mfeka responded a day later, saying he only met with JM Busha the previous day (same day Mlaba sent her mail) and would issue a communique to all. He also says he is surprised that this information was being circulated as it was sensitive and “is not an issue for gossip and should be handled with care, the same way we did with Steinhoff”.

4.2.2.1.5 “Handling this with care only serves to protect JM Busha, as they ultimately were until the very end. The fact that Busha was removed from the Shepherd Bushiri Investment – which was known to Mfeka since it was made as he gets regular reports from the investors – is further evidence of the fact that information was not properly explained to trustees.”

Analysis

4.2.2.1.6 Based on our general comments in Sub-section 4.2.1, the panel decides that the newspaper was justified to publish this allegation as an allegation.

4.2.2.2 ‘[Mfeka] allowed JM Busha to do its own administration of the assets it was managing’

4.2.2.2.1 Mfeka complains that this statement was inaccurate/misleading/unjustified/unfair.

4.2.2.2.2 Skiti says both Selekane, the fund’s consultants, and the relevant bank (Nedbank) confirmed they were not Busha’s administrators.

4.2.2.2.3 The reporter says Mfeka avoided answering questions, was arrogant and went on the attack, instead of clearing up his alleged bad journalism.

4.2.2.2.4 On March 4, he wrote the following to Mfeka: “It is at this point sir that I feel it prudent to inform you that my questions, which you refer to as gossip, are genuine attempts to get your version of what happened with JM Busha as well as your meeting with the FSCA. It is unfortunate that you choose to treat it with such contempt and arrogance. I am merely trying to establish whether what I understand to be facts is indeed true or not. I would therefore implore that you pay attention to the questions and respond so that your views and versions might be captured. I will insert these responses in the article for now, but please know that you still have an opportunity to respond fully (if you wish) by the close of business today as I will not be in a position to make amendments tomorrow.”

4.2.2.2.5 He says Mfeka did not take this seriously and exercise his right of reply – he simply ignored him.

Analysis

4.2.2.2.6 At the hearing, Van der Berg said it was not within Mfeka’s power or authority to “allow” JM Busha to do its own administration of the assets it was managing. He also argued that he had no decision-making powers.

4.2.2.2.7 The panel took note of this – but then again, Skiti did not state this as fact. Instead, he reported it as an allegation. We have already decided that the M&G was justified in publishing the allegations as allegations.

4.2.2.3 ‘[Mfeka] allowed JM Busha to submit statements that did not reflect the true position of the assets he was managing’

4.2.2.3.1 Mfeka complains that this statement was inaccurate/misleading/unjustified/unfair.

4.2.2.3.2 Skiti says statements submitted by Busha to the fund over the period of 2019 and 2020 show that they simply cannot be true. “For one, the SME investment – which was lost in 2017 when the bank was placed under liquidation – was still listed on statements of January 2019 under the money market portfolio of the investments. Why, as Principal Officer, did Mr Mfeka not check a R60-million misstatement after the loss was brought to his attention? It was clearly untrue that the R60-million was there and it was generating a monthly accrued income (R372 000.00) as reported in the statements.”

4.2.2.3.3 The reporter says he can make the statements available, while still not disclosing his sources’ identities.

Analysis

4.2.2.3.4 Based on our general comments in Sub-section 4.2.1, the panel decides that the newspaper was justified to publish this allegation as an allegation.

4.2.2.4 ‘[Mfeka] and the board of trustees allowed JM Busha to manage almost R2-billion in funds even though its fidelity cover is substantially less than that’

4.2.2.4.1 Mfeka complains that this statement was inaccurate/misleading/unjustified/unfair.

4.2.2.4.2 Skiti says Mfeka was asked about this matter to which he responded, “That information was shared between JM Busha and the fund then. It cannot be shared with third parties now. Look around you, and tell me that every rand is covered by fidelity cover.”

4.2.2.4.3 He says this means that Mfeka was seeking to regularise the lack of cover by insinuating it is standard practise for not every rand to be covered.

Analysis

4.2.2.4.4 Based on our general comments in Sub-section 4.2.1, the panel decides that the newspaper was justified to publish this allegation as an allegation.

4.2.2.5 ‘…[Mfeka] was aware of a critical misrepresentation by Busha to the fund but did nothing about it’

4.2.2.5.1 Mfeka complains that this statement was inaccurate/misleading/unjustified/unfair.

4.2.2.5.2 Skiti says JM Busha reported investments in other countries as money market investments, but both Mfeka and Busha told the M&G that JM Busha’s investment in Vuka Construction in Swaziland was an equity investment and that is why Busha was a director in the company. “Surely, if Mr Mfeka understood JM Busha’s investment to be an equity investment, he should not have accepted statements saying the investments were money market investments,” he argues.

4.2.2.5.3 Mfeki says the journalist does not deny that his article states (or at the very least implies) that he failed to take certain steps. “These steps are however not required of a principal officer. The governance of a pension fund vests in a board of trustees. As stated previously, the journalist has not taken the trouble to ascertain what the role and functions of a principal officer are, and it seems that he has still not done so in the interim. If he had done so, he would have realised that the problems associated with the fund covered in the article, cannot be laid at the door of the principal officer.”

Analysis

4.2.2.5.4 The newspaper sent the panel a copy of an email, dated shortly before the story was published, which convincingly pointed to the fact that Mfeka indeed knew about concerns about investments JM Busha had made on behalf of MWRF outside South Africa.

4.2.2.5.5 The panel keeps the content of this email confidential, as requested by the editor.

4.2.2.5.6 Van der Berg argued that this was irrelevant. He says the complaint is not that it said that Mfeka was aware of certain concerns about the investment and did nothing about it. He also argues that Mfeka will not have been afforded a fair hearing if the matter is decided on the basis of allegations which he could not respond to.

4.2.2.5.7 On the contrary, having read the email the panel does believe its content relevant.

4.2.2.5.8 We also note that it is not uncommon for a newspaper to reveal evidence to the Ombud on condition that it is kept confidential.

4.2.2.5.9 Van der Berg also states, “The fact that [Mfeka] might have known about concerns also does not affect the fact that he did not have the power, duty or responsibility to have prevented it, by virtue of the legal position of a Principal Officer.”

4.2.2.5.10 The panel agrees that Mfeka did not have decision-making powers. However, we also believe that the newspaper was justified in publishing the allegations against him, as the thrust of the article was that he had exceeded those powers (as argued under Sub-section 4.2.1).

4.2.2.6 ‘The [FSCA] had previously confirmed its investigation would also include a leg to scrutinise whether the actions of … [Mfeka was] in line with [his] fiduciary duties’

4.2.2.6.1 Mfeka complains that this statement was inaccurate/misleading/unjustified/unfair.

4.2.2.6.2 Kings says two impeccable sources confirmed that Mfeka was summoned to the FSCA (this we cannot share details on in any way as to protect the sources).

4.2.2.6.3 Mfeka says the journalist does not respond to his complaint. He says the crucial issue is whether the FSCA was conducting an investigation and whether he had acted “in line with [his] fiduciary duties” – as alleged in the article. He says it appears that the journalist now accepts that his information was incorrect, and that he was not summoned to explain my actions.

Analysis

The panel has already ruled that this sentence was inaccurate and unfair.

4.3 ‘Mfeka in sticky spot’

4.3.1 Mfeka complains this sub-headline clearly intended to put him in a bad light.

4.3.2 The newspaper denies that this was the case.

Analysis

4.3.3 At the hearing, Van der Berg said “sticky spot” means that Mfeka was in trouble, or in a difficult situation.

4.3.4 Given the allegations levelled against him, the panel believes that it was fair and justified for the newspaper to have used the words “sticky spot” – whether those allegations were true or not.

4.3.5 Also, the panel does not believe that Skiti “intended” to put Mfeka “in a bad light”. Hy was merely reporting allegations regarding him – which were in the public interest, and which could have been reasonably true (given his sources).

4.4 Dignity, reputation

4.4.1 Mfeka complains that the reportage has tarnished his dignity and reputation, and says it is significant that the journalist does not deny that the article has defamed him. “Instead he tries to justify making the defamatory statements. His attempted justification holds no water, for the simple reason that he continues to base his attack on me on the erroneous assumption of the duties of a principal officer,” he says – all of which the newspaper denies.

Analysis

4.4.2 The statement, of fact, that the FSCA was investigating Mfeka has unnecessarily tarnished Mfeka’s dignity and reputation.

Finding

5.1 Article as a whole

5.1.1 Principles of pension funds not considered