Particulars
Complaint Number: 7792
Lodged by: Mr Connie Myburgh, Chairman: Nova Property Group
Complaint about:
Author of article and respondent: Ryk van Niekerk, editor
Index
Introduction: Six complaints 2
Unacceptable language 2
3.4 Dignity, reputation 16
Introduction
At the outset, I need to flag two issues:
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Six complaints Mr Connie Myburgh and Nova Property Group (“Nova”) have simultaneously lodged six complaints with the office of the Press Ombud. The complaint numbers, headlines and dates of publication of the five other complaints are:
As all the articles complained of are about the same subject and issue, all six of the complaints and adjudications should be read in conjunction with the others. At the end of the last adjudication, I shall make some general comments in a separate addendum.
Johan Retief – Acting Assistant Press Ombud |
1.1 The article
1.1.1 The gist of Nova’s complaint is that the sub-headline and the article falsely and maliciously stated that:
1.1.2 From this flows other, secondary complaints, namely the statements or innuendos that:
1.1.3 He also complains it is incorrect to refer to Nova as a “rescue vehicle” for Sharemax.
1.1.4 In conclusion, he complains that the reportage has tarnished his dignity and reputation, in his personal capacity, as well as that of Nova – adding that this has caused him and Nova incalculable and unnecessary harm.
1.1.5 He requests a public apology, as well as an unequivocal retraction and rectification from Moneyweb.
1.2 Comments on Moneyweb’s platform
1.2.1 Myburgh complains that:
1.2.2 He asks this office to ensure that Moneyweb does not utilise, make available or allow its platform to accommodate and be used by members of the public to comment on with irrelevant matter, hate speech, aggression, insults, outpouring of venom and personal attacks (with reference to such articles and comments that relate to Nova and its functionaries).
1.3 Press Code
The relevant Sections of the Press Code are:
1.4 Moneyweb’s UGC policy
Under Section 8 of Moneyweb’s UGC policy headlined, Prohibited Postings and Registration Details, the relevant sections are:
2.1 The article said the Independent Regulatory Board of Auditors (Irba) referred a Reportable Irregularity (RI) to the Companies and Intellectual Property Commission (CIPC) and South African Revenue Service (Sars) regarding Nova (a group of companies trading in property investment and property development) for investigation. Although the nature of the RI had not been disclosed, van Niekerk wrote that the mere referral to CIPC and Sars “suggests possible transgressions of the Companies Act and tax legislation”. The sub-headline stated as fact that Nova was going to be investigated for possible transgressions in this regard.
2.2 Comments on Moneyweb’s platform, mainly directed at Nova and its directors, include:
3.1.1 Before I delve into this complaint, allow me to say that I am going to ignore statements that are irrelevant to the complaint – of which there are quite a few. It follows that I am also going to ignore responses to such statements.
3.1.2 Myburgh leaves no stone unturned to accuse the editor of bias and “utmost malice”, alleging that he was out to create “maximum damage” to him and to Nova. I shall refer to this allegation again in my addendum, after I have adjudicated all six complaints.
3.1.3 To keep the issues as simple as possible, I am:
3.1.4 I am cognisant of the fact that simplifying matters can be dangerous. Over-simplifications will inevitably lead to wrong interpretations and decisions. However, the intricate nature of the complaint at hand has forced me to simplify. I hope I have not missed any nuances in this process. If I have, it was not intentional. The exercise was indeed all but easy.
3.1.5 Myburgh’s (and Nova’s) refusal to respond to Moneyweb’s questions is a recurring theme. He says Nova has long ago come to understand that, “to respond to Mr van Niekerk, merely provides him with another platform and opportunity, to further report his incorrect, and in the view of the Nova Group, damaging and defamatory narrative, regarding the Nova Group and its functionaries”. He adds, “To respond to every article written about the Nova Group by Mr van Niekerk in order to satiate his obsession with the Nova Group, will be a waste of time, money and resources, as the reportage is no more than sensationalist writings.”
3.1.6 On the other hand, I note (with appreciation) that the editor nevertheless persisted in giving Nova a right of reply.
3.1.7 Still, this is an extremely unhealthy situation. Given the tension between the parties (let’s be honest!), I have little hope that this adjudication will do anything to improve this situation. I am nevertheless going to try to do the seemingly impossible – to bring the parties closer to each other. But, in the end, the choice is theirs.
3.2.1 Referred for investigation
3.2.1.1 The gist of Nova’s complaint is that the article falsely and maliciously stated that:
3.2.1.2 Myburgh complains these statements were false and requests the editor for proof thereof.
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3.2.1.3 Van Niekerk replies Irba has officially confirmed that it referred an RI to these regulatory authorities for investigation.
3.2.1.4 He adds:
3.2.1.5 From this, the editor concludes that Myburgh’s assertion that the CIPC was not investigating the affairs of Nova is unfounded.
3.2.1.6 Regarding the investigation by Sars, the editor says two former Sars employees confirmed the process Sars follows upon receipt of a referred RI from Irba. These sources have proven to be trustworthy, he says, adding that he needs to protect their identity. “Both individuals confirmed that Sars would initiate a preliminary investigation on receipt of a referred RI from Irba, which would entail a risk assessment and a projection of possible recoveries. A decision to investigate the company further is based on the findings of the preliminary investigation,” he says. 3.2.1.7 He explains that he consulted the former Sars employees, as Sars does not disclose any information regarding its relationship with taxpayers. Even so, he said he did approach Sars – but without success. “However, from the responses of the two former Sars employees, it is an inescapable conclusion that Sars initiated at least a preliminary investigation, following Irba’s referral of the RI to Sars,” he attests. 3.2.1.8 He adds, “The same conclusion flows from Section 5 of the Auditing Professions Act. The section compels the IRBA to ‘notify any appropriate regulator’. The fact that a RI has been reported to Sars bears the unavoidable implication that the auditor believes there may have been an unlawful act or omission in respect of tax laws, because Sars is the administrator and regulator of such laws.”
3.2.1.9 Regarding Myburgh’s denial that Sars, the Registrar of Companies and the CIPC were investigating Nova “and certainly not in regard to “fraud, theft, contraventions of the Companies Act and tax legislation and regulations”, Van Niekerk replies that the article made no reference, direct or inferred, to Nova being investigated for fraud or theft. He quotes the relevant paragraph in the article as follows: “Although the nature of the RI was not disclosed, the Auditing Profession Act states that any RI highlights a potentially unlawful act committed by directors or the management of the company, which may lead to creditors and other stakeholders suffering a ‘material financial loss’. This may be fraudulent or amount to theft, or represent a material breach of any fiduciary duty.” |
3.2.1.10 In essence, Myburgh repeats his argument in his reply to the editor’s response to his complaint. He says that, at the time of publication, the editor had no proof of any investigation by Sars. He also notes that the editor omits any reference to the Registrar of Companies, because he has no such proof – and yet he reported it in his article (he says).
3.2.1.5 Analysis
3.2.1.11 The crux of this matter is the question whether Moneyweb was justified to report that Nova was “...to be investigated (for possible transgressions of tax legislation and the Companies Act)”.
3.2.1.12 Van Niekerk refers in this regard to a document by Irba, dated 24 January 2020, in which the latter responded to the following question: “I just want to enquire whether the RI reported to Irba on 5 December related to the Nova Property Group has been rectified or not?” This was Irba’s answer: “The second report indicating that the RI is continuing was received on 4 January 2020. This has been onward reported to the CIPC and SARS.”
3.2.1.13 On the face of it, this constitutes the proof that Myburgh was asking for – an RI was reported to the CIPC and Sars with regards to Nova.
3.2.1.14 But not so fast – this does not necessarily mean that the CIPC and Sars were going to investigate the matter. This is the point: The reporting of an RI does not automatically lead to an investigation (as pointed out by Myburgh, and confirmed by an internet search). According to an Irba document, there is no obligation for the auditor to carry out an investigation of the potential reportable irregularity – although it is “advisable that the auditor, when the auditor suspects that a reportable irregularity has or is taking place, conducts such investigation and confirmation of facts as is necessary to enable the auditor to report in terms of the Act”.
3.2.1.15 It is true that Mathekga confirmed the investigation by the CIPC, as the editor submits – but I also note that this confirmation came only after the article was published.
3.2.1.16 I have no evidence at my disposal to the effect that Sars was conducting an investigation into Nova – not even after publication. I note that the editor did get some information from former Sars employees, but – as Myburgh rightly has pointed out – that evidence amounts to hearsay.
3.2.1.17 This brings me to the inevitable conclusion that Moneyweb was justified to report the RI regarding Nova and to speculate that this might have led to an investigation by the CIPC and Sars, but that it was not justified to state as fact that Nova was going to be investigated – not by Sars or by the CIPC. I have no such evidence at my disposal (at the time of publication, that is).
3.2.1.18 I need to add, though, that:
3.2.1.19 Secondly, the article indeed did not state that Nova had been investigated “for fraud or theft”. The relevant paragraph in the disputed article the editor referred to read, “Although the nature of the RI was not disclosed, the Auditing Profession Act states that any RI highlights a potentially unlawful act committed by directors or the management of the company, which may lead to creditors and other stakeholders suffering a ‘material financial loss’. This may be fraudulent or amount to theft, or represent a material breach of any fiduciary duty.”
3.2.1.20 Clearly, the article stated that the:
3.2.1.21 These statements were justified, as an RI reported to Sars implies the auditor believes some tax laws could have been transgressed – and it justified the editor to mention potential unlawful acts.
3.2.2.2 Example are the following sentences in the article:
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3.2.2.3 Van Niekerk emphasises that the article did not state that Nova had contravened the Companies Act and tax regulations – it merely stated that it may have contravened the Companies Act and tax regulations. He argues that the ordinary reader would not have attached such an interpretation to this statement. “At most, it indicates the possibility of a contravention, which may yet turn out to be unfounded.”
3.2.2.4 Referring to some court verdicts, the editor says Myburgh’s contention that the reasonable reader would assume a law has been contravened is not supported by case law that deals with the meaning a reasonable reader will attach to a statement that a person is under investigation. In short, he argues that a reasonable reader would have discerned the difference between being investigated for a crime, and having committed one. 3.2.2.5 While the nature of the RI was not disclosed (which was reflected in the article), the editor says the definition of an RI, and the fact that it was referred to Sars and CIPC, offered “some unavoidable insights” into the unlawful acts or omission such a RI may entail. 3.2.2.6 He argues the fact that the nature of the RI was undisclosed could not justifiably have prevented him from reporting on the matter. In this regard, he refers to Clause 1.9 of the Press Code that requires the media to state where a report is based on limited information. “This is exactly what I have done, by making it clear that the nature of the RI was undisclosed, but the fact that it had been referred to the CIPC and Sars hinted, or suggested, that there may have been contraventions of laws that those particularly regulatory bodies are concerned with. I want to emphasise again that any referral of a RI to the CIPC and Sars is extremely serious, especially for a company such as Nova, which was specifically set up to ‘rescue’ the investments of former Sharemax investors. The company's accounting needs to be above any reproach,” he submits. 3.2.2.7 Van Niekerk says the information about the nature of an RI in the article merely summarised the definition of an RI set out in Section 1 of the Auditing Profession Act. He quotes this definition as follows: “Reportable irregularity: means any unlawful act or omission committed by any person responsible for the management of an entity, which — (a) has caused or is likely to cause material financial loss to the entity or to any partner, member, shareholder, creditor or investor of the entity in respect of his, her or its dealings with that entity; or (b) is fraudulent or amounts to theft; or (c) represents a material breach of any fiduciary duty owed by such person to the entity or any partner, member, shareholder, creditor or investor of the entity under any law applying to the entity or the conduct or management thereof.” 3.2.2.8 The editor submits that this reference was not linked to Nova, or its directors. “The purpose of the paragraph is to explain that any RI reported to Irba, and which is onward reported to the CIPC and Sars, is extremely serious and may relate to an ‘unlawful act or omission committed by any person responsible for the management of an entity’. I cannot, with the greatest respect, report about something as technical as a RI and not explain to my readers what it is, as Mr Myburgh appears to expect,” he argues.
3.2.2.9 He concludes, “The referral of the RI to CIPC and Sars is a significant event and is extremely serious. It is therefore newsworthy and a matter of substantial public interest, as it has a direct bearing on the conduct of the Nova board and the ability of the company to repay the R5 billion to investors.” |
3.2.2.10 Myburgh argues that the use of the word “may” did not alter the impressions and innuendos created by the article. He mentions the sub-headline to the article, which stated as fact that Nova was under investigation.
3.2.2.11 He says there is a tension between the use of the word “may”, and the categorical statement in the sub-headline. “One should ask, which version is correct, the one containing the word ‘may’ or the one not containing this word, but which latter statements is a categorical statement that the Nova Group ‘is to be investigated’,” he asks.
3.2.2.12 Myburgh submits the editor did not know what the nature of the RI was, and his views in that regard could only have been conjecture, speculation and supposition.
3.2.2.13 Secondly, Myburgh denies that there were any “irregularities”, let alone “significant irregularities”. He says:
3.2.2.14 Myburgh says it is correct that an RI was reported. However, he adds:
3.2.2.15 He argues that the editor’s reference to “the hints are there” did not detract from the impression and innuendo created by these words, namely that Nova could have acted beyond the law.
3.2.2.16 In conclusion, Myburgh denies that Moneyweb’s reportage concerning the RI was in the public interest.
Analysis
3.2.2.17 Having been issued with an RI (about which there is no dispute), there is nothing wrong, not remotely, with the editor stating that Nova might have contravened an Act – that is indeed what an RI implies: a possibility.
3.2.2.18 It is not for me to pronounce on the rhetoric about “evidence of significant irregularities” at Nova. It falls outside the mandate of this office to decide on the merits of this “evidence”.
3.2.2.19 I take the editor’s point, namely than any RI is a serious matter; I also understand, though, that not all IRs are equally serious.
3.2.2.20 I do not doubt, not for a single moment, that this matter is in the public interest.
3.2.3 Nova ‘rescue vehicle’ for Sharemax
3.2.3.1 The sub-headline stated, “Sharemax rescue vehicle to be investigated for possible transgressions of tax legislation and the Companies Act.” (My emphasis.)
3.2.3.2 Myburgh says from the context it is clear that the “Sharemax rescue vehicle” referred to Nova, and complains that this reference is inaccurate and untruthful.
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3.2.3.3 Van Niekerk states the background as follows: The Nova Property Group was established to act as the “rescue vehicle” of the failed Sharemax property syndication scheme. Around 18 000, mostly elderly people invested nearly R5 billion in Sharemax. The scheme was criticised in the financial press for, among other things, the suspiciously large returns it offered investors. In 2011, the Sharemax scheme collapsed, leaving a large number of investors in dire financial straits. Subsequently, the Sharemax investors voted for a Section 311 Scheme of Arrangement which resulted in the creation of Nova. Consequently, Nova took control of the former Sharemax assets. Nova was tasked with managing the properties and earning profits to repay the money the 18 000 investors put into the company. Developments at the company are therefore of significant public interest. Mr Myburgh wrote the actual rescue plan, which set out the structure of the rescue process, following which he became the chairman and significant shareholder of the company. 3.2.3.4 Over the years, the editor continues, his investigations into Nova revealed evidence of significant irregularities at the company, which included the board paying themselves what he views as exorbitant salaries, taking shareholding and management control of the company without paying a cent, the seemingly significant overvaluation of properties, the suspension of payments to debenture holders, the sale of properties to cover operational expenses and several contraventions of the Companies Act. “From these investigations, it was clear to me that the company was not being managed to the benefit of the former Sharemax investors… The publication of the result of these investigations has gone almost entirely unchallenged, whether by way of litigation, or before the Ombudsman,” he says. |
3.2.3.5 Myburgh replies that the references to the history of the Nova Group are irrelevant to the complaint and should be ignored by me. However, being “forced” by the editor to provide answers, he does respond to this matter. Asking this office to sanction the editor for his “behaviour”, he says:
Analysis
3.2.3.6 The gist of this part of the complaint is the question if Nova could justifiably called Sharemax’s “rescue vehicle”.
3.2.3.7 The sub-headline to the article read, “Sharemax rescue vehicle to be investigated for possible transgressions of tax legislation and the Companies Act” (My emphasis.)
3.2.3.8 Unlike Myburgh, I do not believe that Nova’s history, or at least the different interpretations thereof, is/are irrelevant to this complaint – not as far as references to Sharemax are concerned, that is. I deem a decision in this regard as necessary and, in fact, essential. In any case, it would be impossible to adjudicate this part of the complaint without taking Nova’s history into account.
3.2.3.9 In this regard, I have I asked some experts for their opinion on this matter in order to gain more clarity. Promising anonymity, I wrote to three people whose opinions on this issue I trust. This was my request:
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“I am adjudicating six complaints by Nova Property Group against Moneyweb. At the heart of the dispute are the statements and denials below.”
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3.2.3.10 I received responses – but clearly, I had to do more than ask experts for their opinion.
3.2.3.11 This is how Nova describes itself on its website: “Established in 2011, through the assimilation of a number of smaller, independently-owned companies, Nova Properties became and remains independent as a well-managed group of companies, that renders comprehensive property management and development, accounting, tax and company secretarial services to a self-owned property portfolio.”
3.2.3.12 I believe it is not in dispute that the words “a number of smaller, independently-owned companies” refer to Sharemax.
3.2.3.13 It continues, “Shareholder control of the Group lies with founder shareholders and executive management. This follows a debt to share conversion process during 2011/2012, in which the founder shareholders and executive management made it possible for debenture creditors to convert their debenture debt to ordinary shares in the Group. To the extent to which any debenture creditor elected not to convert his/her debt into shares, the applicable shares (into which the debenture debt was convertible) were issued to the founder shareholders.”
3.2.3.14 The “conversion process” to which Nova refers in this paragraph can only involve properties formerly managed or owned by Sharemax. Nova “converted” these former Sharemax assets by taking them on board in order to assist investors.
3.2.3.15 This means that Nova, in a real sense, tried to mitigate the losses that Sharemax investors stared in the face. In this regard the use of the word “rescue”, is therefore appropriate. Technically speaking, though, Nova did not act as a rescue vehicle for the company called Sharemax – it seems to me that nothing and nobody could rescue it. But it did act as a rescue vehicle for former Sharemax investors. And I am not going to split hairs.
3.2.3.16 If Nova did so successfully, is not for me to decide – and neither is it relevant to this complaint.
3.3.1 Myburgh says comments by readers posted on Moneyweb’s platform after the article in dispute had been published, contained “irrelevant matter, hate speech, aggression, insults, outpouring of venom and personal attacks on individuals” – which flowed from Moneyweb’s “incorrect, negative, malicious and damaging reporting”.
3.3.2 He submits that the editor used the platform “to cultivate, facilitate and encourage” the posting of such comments. Van Niekerk does so, he attests, to pursue his own private interest (to increase its readership).
3.3.3 “It is clear that Moneyweb’s Platform provides a platform to the public at large, designed to accommodate, cultivate, facilitate and encourage commenting on articles published by Moneyweb, which in every instance result in the posting of irrelevant matter, hate speech, aggression, insults, outpouring of venom and personal attacks in regard to parties targeted by Mr van Niekerk and Moneyweb in Moneyweb’s articles, such as the article forming the subject matter of this letter, in order to achieve their own purposes in the pursuit of their own private interests, as opposed to acting in the public interest…” he says.
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3.3.4 Van Niekerk replies that Moneyweb did not receive any report from any user from the website, or via any other means of communication, related to comments published below the disputed article – and neither did it, or any of its journalists, author or edit any of the comments that are in dispute. Therefore, he argues, this office should dismiss the complaint on the basis of Section 15.1 of the Press Code (as cited above, under Sub-section 1.3).
3.3.5 He “emphatically” denies that Moneyweb’s reporting is or was in pursuance of a private interest of its own, in publishing “what appeals to the public and may increase their circulation or numbers of their readers or listeners”, as opposed to reporting what is in the public interest. He challenges Myburgh to provide proof for this allegation. “I state categorically that I have no direct or indirect interest, or benefit in any way, from reporting on the Nova group,” he says – adding that Moneyweb’s reporting is in the public interest, and that developments at the Nova group are of significant public interest. |
3.3.6 Myburgh Moneyweb’s UGP (as cited above, under sub-section 1.4) makes it clear that defamatory comments will be deleted, thereby placing a self-imposed obligation on the publication to vet comments placed on its platform, and to delete defamatory comments, as and when they appear on the platform. “There is no notion of Moneyweb being entitled to wait, for any period of time, before deleting defamatory comments,” he argue.
3.3.7 This, he complains, did not happen. He argues Moneyweb should have removed the comments posted on its platform upon their first appearance, without waiting for a report from readers as to “inappropriate content”.
3.3.8 He submits if Clauses 15.1 and 15.2 of the Press Code exonerates a publication, allowing it to not delete defamatory comments, it is “undoubtedly unconstitutional”.
3.3.9 He concludes that the leaving of the comments on the platform, is sufficient proof of Moneyweb and the editor pursuing their own private interests, contrary to the relevant legal requirements. He adds: “It is untrue, for Mr van Niekerk to state that he has no interest in and does not benefit from his reportage regarding the Nova Group, as his readership is certainly affected by his reportage (he states that he has written more than 60 articles regarding the Nova Group, which averages out at more than one article every two months) and as Moneyweb certainly earns income and Mr van Niekerk a salary, and even bonuses, all stemming from the reportage, and the more sensational the better.”
Analysis
3.3.10 For the sake of clarity, I am again citing the sections of the Press Code that regulate this part of Myburgh’s complaint, as well as Moneyweb’s UGC policy:
3.3.11 Regarding Section 15.1: Clearly, Moneyweb did not author the content of the comments, and neither do I have any evidence that it has edited the content. That, according to the Press Code, is a defense.
3.3.12 Secondly, I have no evidence that Moneyweb has received any written notice about the content concerned.
3.3.13 Based on these considerations, I cannot uphold this part of the complaint.
3.3.14 This renders any further comment on “irrelevant matter, hate speech, aggression, insults, outpouring of venom and personal attacks on individuals” as irrelevant.
3.3.15 I do not believe the complaints that the editor benefits in some way from reporting on Nova, and that Moneyweb was not serving the public interest, merit any comment on my part. If he does, every other editor inside and outside of this country acts in her or his own interests.
3.3.16 If Section 15.1 and 15.2 of the Press Code are unconstitutional – which I do not believe it is – it certainly is not the editor’s fault.
3.4.1 Given my arguments above, I have no reason to believe that the reportage has unnecessarily tarnished the dignity and reputation of either Myburgh or Nova.
3.4.2 I am quite surprised that Myburgh uses the words “hate speech”. According to the Constitution of this country, hate speech occurs when there is propaganda for war, incitement of imminent violence, or advocacy of hatred that is based on race, ethnicity, gender or religion. Clearly, that is not the case here.
4.1 Referred for investigation
4.1.1 The statement, of fact, that Nova was “...to be investigated (for possible transgressions of tax legislation and the Companies Act)” turned a possibility into a certainty. This was in breach of Section 1.3 that reads,“ … opinions, allegations, rumours or suppositions shall be presented clearly as such”.
4.1.2 The rest of the complaint is dismissed.
5.1 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).
5.2 The breach of the Press Code as indicated above is a Tier 2 offence.
6.1 Moneyweb is directed to apologise to Myburgh and to Nova for the statement, of fact, that it was “...to be investigated (for possible transgressions of tax legislation and the Companies Act)”
6.2 The newspaper is directed to publish the apology at the top of the article, with a headline containing the words “apology” or “apologises”, and “Myburg” or “Nova”.
6.3 The text should:
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 Assistant Press Ombud