Ruling by the Press Ombud
29 July 2016
This ruling is based on the written submissions of Advocate Boyce Mkhize and those of Gayle Edmunds, managing editor of the City Press newspaper, as well as on a meeting between myself, Mkhize and the editor, Dumisane Lubisi, which was held in Johannesburg on July 20.
Mkhize is complaining about a story in City Press of 12 June 2016, headlined Look who is back, as well as about an article in the same newspaper on 5 April 2015, headlined MEGA’s massive corruption scandal – A failing Mpumalanga parastatal’s former CEO is believed to have quit his job to escape consequences of misspending at least R40m.
Section 1.3 of our Complaints Procedures states that a complaint may be lodged not later than 20 working days after the date of publication – unless there are reasonable grounds to accept a late complaint.
In this case, the 12 June 2016 story was based on the 5 April 2015 one, which prompted me to ask City Press, in the interest of fairness, to allow me to take both into account. I specifically asked the newspaper for permission – and I have abided by its decision – as the April 5 story was way out of time.
After the editor consulted with his colleagues, City Press obliged, for which I am grateful. I commend Lubisi for such a brave decision (as he could easily just have turned down my request).
Complaint
Mkhize complains the:
· stories falsely and unfairly suggested a report stated that he had personally incurred irregular expenditure while he had been CEO of Mpumalanga Economic Growth Agency (Mega), to the tune of R25-million;
· newspaper did not provide him with a copy of this report despite several requests; and
· journalist did not interview him (his complaint that Mega also did not interview him falls beyond the scope of my mandate).
He also questions the existence of the report, as Mega denied any knowledge of it, and concludes that the reportage has defamed him.
The text
12 June 2016
This story, written by Charl Blignaut, referred to a previous report that Mkhize had left Mega “under a cloud”. He wrote, “[Mkhize] was implicated in a forensic report, compiled after his departure, into R40 million worth of procurement and financial irregularities at the parastatal.”
Mkhize reportedly resigned when the responsible MEC in the provincial government disbanded the Mega board for poor performance.
Blignaut proceeded to report that Mkhize was “the one doing forensic investigations”, this time for the SABC – and he cited “insiders” who claimed that the procurement managers were targeted after being unwilling to sign off on a number of payments, involving at least five companies, “because of procedural irregularities”.
Mkhize reportedly denied any wrongdoing at the time of leaving Mega “and said he was stepping aside to give the interim board a fresh start”.
Blignaut continued, “However, a report – compiled by Mega’s audit committee with the help of audit firm PricewaterhouseCoopers – made several findings against Mkhize, including that he personally incurred about R25.8 million in irregular expenditure.”
5 April 2015
The article, written by Sizwe sama Yende, was accompanied by a blurb stating that Mkhize had been “personally identified” as having mismanaged R40-million “in possible corruption in a forensic audit investigation Mega’s finances”, and that he had received R4.4-million as a golden handshake.
The journalist reported that Mkhize was “personally implicated by a forensic audit report investigating R40 million worth of procurement and financial irregularities at Mega”.
City Press reported that during Mkhize’s stint as CEO, Mega was “riddled with corruption”, and cited several examples of irregular behaviour.
Analysis
On the agenda of our meeting was the question as to the status of the report on which the newspaper based its articles; if I were satisfied that the report was legitimate, the second issue would be whether the newspaper accurately and fairly reflected the content of that document.
The status of the document
At our meeting, Lubisi explained that Mega had denied the existence of a forensic audit, while the matter was in fact about an internal audit report. Mkhize disputed this, as Mega had denied any knowledge of such a report.
Mkhize also complained that City Press did not give him a right of reply with regard to the June 12 story – which the newspaper said it could not do, as its source had asked the publication to keep the report confidential.
On July 21, I sent the following e-mail to the CEO of Mega, Mr Xola Sithole, to get some sort of clarification on the status of the report relied on by City Press:
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Adv Boyce Mkhize has lodged a complaint with my office about reporting by City Press on his resignation from Mega. At the heart of this reportage is a report by Mega headlined, Mpumalanga Economic Growth Agency Internal Audit Report Supply Chain Management and data analysis. The copy of the report that City Press has provided with, is dated 12 December 2014 (at least, that is the date of the covering letter). The situation is that the source who gave the newspaper the report asked that it be kept confidential, and that Mkhize himself has not had the privilege of perusing that document. While I (of course) respect the newspaper’s promise to keep this confidential, I also note with concern that City Press could (therefore) not ask Mkhize for his comment on the report. What I am going to ask you, is based on journalistic concerns (as the fact that Mega has not made this report available to Mkhize is none of my business). As the Press Ombud, though, I am asking you to consider releasing this report to Mkhize – for the single reason that it would enable him to comment on the matters raised in that document. Again, from a journalistic point of view it is not fair to a subject of critical reportage if that person has not had a proper opportunity to respond to allegations levelled against him. I do understand that Mega may have its reasons for not releasing the report to Mkhize, and I shall respect your decision if the decision is to keep it that way. |
On July 27, Sithole responded as follows:
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[We] have considered your email dated 21 July 2016 … and wish to respond as follows: 1. On receipt of the request from Adv Mkhize regarding the report in question, we conducted an internal investigation to ascertain the existence or otherwise of the said report. Our findings were that we do not have any such report in our possession and have no knowledge of it. We duly communicated these findings to Adv Mkhize. I have attached that correspondence to this email for reference purposes. 2. We reiterate that we have no knowledge of such a report and have never commissioned an investigation (forensic or otherwise) in respect of any matters relating to Adv Mkhize’s previous employment as CEO of MEGA. Consequently, we are not in a position to supply anyone with a report we do not have in our possession or have any knowledge of. 3. Should you have such a report in your possession, our only other recommendation would be that you make it available to us so we can peruse it and provide a considered response. We hope that this clarifies our position. |
This put me between a rock and a hard place, so on July 27 I e-mailed the editor:
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Please see the correspondence below… I am now faced with a nearly impossible situation – Mega has denied any knowledge of the report and also denies having commissioned any such investigation into the matter – forensic OR OTHERWISE. Given this situation, I am now forced to ask you for a SIGNED copy of the report and present Mega with those signatures. This is the only way out from here. (Judge Ngoepe is sure to ask for a signed report, especially given Mega’s denial, should the matter reach him.) In the absence of signatures, and given Mega’s denial, I would have to conclude that the report was a fake (even though it certainly looks legitimate). Your journalist(s) surely should have some explanation for presenting me with an unsigned report. |
This was Lubisi’s response, sent to me on July 28:
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We are struggling to find the signed version of the report. We are still working on it and I hope that it would eventual be found. However, I find it odd that Mega and Sithole would deny any knowledge of the existence of the report. Below, find communication between Ziwaphi's Tom Nkosi and Mega on the very same topic. A story which the newspaper later carried. I am fascinated by the fact that Mega and Sithole, in particular, responded to Ziwaphi and confirmed that such an audit had happened. While we might not have a signed copy of the report, however Mega's denial of conducting such an audit versus the response given to Ziwaphi are intriguing to say the least. Also, Mega has never (not once since the stories have been published) ever denied knowledge of the report. Any head of investigation would question and attack media if their institution is alleged to have done something while they have not. I do not know why the denial, but Sithole's denial of the existence of the report to yourself and Mkhize cannot be used as basis to deny that the report we presented to yourself is the real one - although unsigned. Sithole confirms such to Ziwaphi and Premier David Mabuza refer to such a report in response to Mpumalanga Legislature question. From here, it is clear to me that Sithole is not telling the truth to yourself and Mkhize. Why would he confirm existence of an audit to Ziwaphi and Premier Mabuza confirming such (following the publication in 2015) and then now deny such? I hope this will help. Shout if you need further assistance from me. |
The relevant parts of the correspondence between Nkosi and Mega to which the editor referred me went as follows (I have underlined the latter’s response):
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As you are aware, (the newspaper) Ziwaphi has been investigating and reporting on some of the activities that have been happening at the MEGA since the installation of the former CEO of MEGA, Mr Boyce Mkhize. [MEGA] instituted an internal audit in December 2014 which found evidence that a number of officials, including, but not limited to, Boyce Mkhize…have contravened the Supply Chain Management policies. The investigation also confirmed the allegations of wrong doing by these individuals which formed the basis of the Ziwaphi enquiries last year. [In] terms of the Public Finance Management Act and the Treasury Regulations, the Accounting Authority (Board) is required to investigate allegations of financial misconduct within 30 days. Why has the MEGA Board failed to investigate the allegations against these officials (See 2 below) as stipulated in the Act and the Treasury Regulations? On becoming aware of allegations of financial misconduct, the Board commissioned an Internal Audit investigation. A report was produced which made specific recommendations. The Board has endorsed these recommendations and they are at various stages of implementation or further investigation. [The] MEGA Board chairperson is on record that there would be consequences with the previous CEO in terms of a clause in the "mutual agreement of separation” - what consequences has the former CEO faced as of today 10 March 2014? As indicated…above, the recommendations from the Internal Audit Report on the matter are at various stages of implementation or further investigation. |
I do not know why Mega denies the existence of this report to both Mkhize and me, as it has indeed acknowledged the existence of such a report in earlier correspondence.
I also take into account Premier David Mabuza’s response to a question by Mr A.M. Benadie in the Mpumalanga Legislature.
According to the extract from the Legislature, he asked the Premier the following question: “With regards to the recent Forensic Audit report that was investigating corruption worth R40 million at MEGA, can the Honourable Premier please answer the following? Is the Premier aware of this report, has he seen it and will it be released…to the public in the spirit of transparency?”
Mabuza responded as follows:
“[I] am not aware of a Forensic Audit report that was investigating corruption worth R40 million at MEGA. During the meeting of the MEGA Audit Committee, a report requesting the Board to condone irregular expenditure was presented by management. The Board did not condone the expenditure but instead requested the Internal Audit to conduct a special audit on this irregular expenditure to establish the cause and it was discovered that internal processes and controls relating to supply chain were not followed in most instances.”
The Premier denied the existence of a forensic audit report (which is not in dispute), but he did refer to a report presented by Mega’s audit committee.
Based on the above-cited reaction of Mega to Nkosi, as well as on Mabuza’s reference to an internal audit report, I conclude that it was reasonable for City Press to have believed that such a report did exist – and that it could report on the matter, given the public interest involved in this case.
However, I am not in a position to establish whether the document on which City Press based its articles was the final report – the version it sent to me is unsigned, and for some unknown reason the newspaper has up to now not been able to find a signed report.
As the newspaper cannot prove to me that it was given the final report – the one that Mega has accepted – I believe City Press should have been more circumspect in this regard. (See my sanction below.)
My next step is to ascertain whether the stories accurately and fairly reflected the document on which City Press based its reportage.
Fair, accurate reporting?
The first story
Two references to Mkhize and Mega may be potentially harmful. These are:
· Mkhize left Mega “under a cloud” – he “was implicated in a forensic report, compiled after his departure, into R40 million worth of procurement and financial irregularities at the parastatal”; and
· “[A] report – compiled by Mega’s audit committee with the help of audit firm PricewaterhouseCoopers – made several findings against Mkhize, including that he personally incurred about R25.8 million in irregular expenditure. The report found that 76 of 439 companies on the database had the same directors, 108 companies used the same fax number, 42 companies had the same cellphone number and 181 used the same land line”.
Firstly, the report was conducted about matters which had transpired when Mkhize was Mega’s CEO. As such, I accept that he was responsible for its activities. In fact, the report itself stated, “The former CEO as the Accounting Officer had the prerogative, having due regard to … recommendations … to award tenders.”
On page 14 of my copy of the report, evidence was presented that tenders had exceeded the budget by more than R7-million. This was published under the sub-headline Seven Million irregular expenditure arising from tenders.
Also, under the headline Non-compliance with legislation and internal policies – Engaging with suppliers not registered on approved database (pages 35 and 36 of my copy), an amount of approximately R25-million was mentioned.
If Mkhize challenges the use of the word “personally” (responsible), he must think again – as the CEO, he had been responsible for this situation. Personally.
Also, the story did not say that he had personally gained by irregular expenditure – he incurred these amounts, meaning (again) that he had been responsible for these expenditures.
I have studied the report carefully, and I am satisfied that not only did the journalist accurately cite this document, but also that he did so fairly – there is nothing in the report that mitigates these irregular expenditures.
In fact, the only information not included in the story would rather have exacerbated the picture as far as Mkhize is concerned.
At the meeting, the editor conceded that the story falsely stated that the document was a “forensic report”, as it was rather an “internal audit report”.
The headline (Look who’s back) may be offensive to Mkhize but, given the above-mentioned arguments, there is no way that I can find a breach of the Code of Ethics and Conduct – for stating that the person who did leave Mega under a cloud had started doing forensic investigations for the SABC. This was accurate, and fair, reporting.
The second story
Again, the question is whether the reporting was accurate and fair. This is what the story stated about Mkhize and Mega:
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It said the report confirmed that Mega had been riddled with corruption during Mkhize’s stint as CEO. The journalist listed some of the findings against Mkhize, such as that he had: · incurred approximately R25.8-million of irregular expenditure; · paid R3.3-million to three service providers after their contracts had expired; · paid a number of service providers in advance to the tune of R900 000 before they did any work; · overpaid two companies by R5.6-million; · understated irregular expenditure of R4.4-million to Treasury; and · meddled with supply chain management policies and the composition of bid committees, and changed bid-committee decisions to appoint certain companies. The report also uncovered other “improprieties”, such as the hiring of service providers who had not been registered on Mega’s database and who had failed to submit certain required documents such as tax clearance and BEE certificates. The story said the report also picked up evidence of businesspeople who registered more than one company on the database to benefit multiple times on tenders. The report found 76 of 439 companies on the database had the same directors, 108 companies used the same fax number, 42 companies had the same mobile phone number and 181 used the same landline. |
I cannot find any untrue or inaccurate statement in the story, when compared to the report – with the exception of the word “corruption”, which was used both in the story and in the headline.
The use of the word “corruption” was rather the newspaper’s interpretation. The question is whether such an interpretation was justified.
I take into account the fact that “irregular expenditure” is not necessarily to be equated with “corruption” – these are two different concepts.
However, the report itself mentions more than mere “irregular expenditure” – it goes on to talk about payments after contracts had expired, payment of others in advance, overpayments and the meddling with supply chain management policies and the composition of bid committees, and changing bid-committee decisions to appoint certain companies.
Based on these examples, I am not blaming City Press for using the word “corruption” – but because the report itself did not use it, the newspaper should have made it clear that “corruption” was its interpretation and, strictly speaking, not a finding of the audit report.
The rest of the complaint
With regard to the earlier story, Mkhize did get an opportunity to respond.
It would have been fair to give him the opportunity to respond to the allegations or findings contained in the second report – but, as he has not had the privilege of perusing that document, it makes no sense to ask him for comment.
Finding
The report itself
City Press could not provide proof that the report on which it had based its stories had in fact been the final one which had been accepted by Mega. This was unfair to Mkhize, as there was a chance that the document used by the newspaper was not final (even though that chance seems to have been remote). The fact that this was not stated in either of the stories was in breach of Section 1.1 of the Code of Ethics and Conduct. This section states, “The media shall take care to report news…fairly.”
The content of the report
The first story
The story inaccurately stated that the report, on which it was based, was a “forensic report” (rather than an “internal audit report”). This is in breach of Sect. 1.1 of the Code of Ethics and Conduct which says, “The media shall take care to report news … accurately…”
The rest of the complaint is dismissed.
The second story
The use of the word “corruption” both in the headline and in the story was not necessarily incorrect – but it was opinion (interpretation) and it should have been stated as such. This is in breach of Sect. 1.3 of the Code which reads, “Where a report is … founded on opinion … or supposition, it shall be presented in such manner as to indicate this clearly.”
The rest of the compliant is dismissed.
The remainder of the complaint
This part 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), serious breaches (Tier 2) and serious misconduct (Tier 3).
The breaches of the Code of Ethics and Conduct as indicated above are Tier 2 offences.
Sanction
City Press is reprimanded for:
· not stating that the report on which it based its stories might not have been the final one;
· stating that the document was a “forensic report”, instead of an “internal audit report”; and
· not indicating that its use of the word “corruption” was its interpretation (even though its interpretation might have been justified).
The newspaper is directed to:
· publish these reprimands at the top of an inside page;
· provide me with this text prior to publication;
· start the text with the reprimand; and
The headline should reflect the content of the text. A heading such as Matter of Fact, or something similar, is not acceptable.
If the offending article appeared on the newspaper’s website, the correction should appear there as well.
Appeal
Our 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
Press Ombud