Ruling by the Press Ombud
3 August 2018
PARTICULARS
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Complainant
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Ms Phumelela Dhlomo, Chief Marketing Officer: Road Accident Fund
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Lodged by
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Dhlomo |
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Date of article
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1 July 2018 |
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Headline
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Broke RAF splurges millions on chairs |
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Author of article
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Mzilikazi wa Afrika |
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Respondent |
Susan Smuts, internal ombud |
Complaint
In general, Dhlomo complains that the article contained factual inaccuracies, misquotes, defamatory statements and ambiguity, which are prejudicial to the reputation of the Road Accident Fund (RAF) and its executives.
In more detail, she says the article falsely stated, as fact, that:
· a contract existed between the RAF and a supplier named Gxakwe Projects;
· this “contract” was for the leasing of 300 chairs;
· the “rental” for those chairs amounted to almost R500 000 per month; and
· the RAF did not timely respond to questions posed on this matter (she says the RAF did respond to questions, but the newspaper did not publish that response).
Note: The RAF has sent letters to the Sunday Times, dated 29 March 2018 and 3 July 2018. These letters have been forwarded to me – but as there is no reference in the complaint itself to those documents, I treat them merely as background information.
Locus standi
Smuts submits that Dhlomo, as an RAF executive, has no mandate from the board to lodge this complaint on its behalf and therefore does not have the standing to do so (as the RAF itself is listed as the complainant).
She argues, “We ask that you defer adjudication on this complaint until such time as a proper mandate by the RAF Board is produced, showing that the individuals who lodged the complaint are duly authorised to do so.”
I have decided to entertain this complaint – not by the board, but by her as a RAF executive, as she herself was sufficiently involved in the RAF, and occupied a senior position in that institution.
The text
The article quoted several sources as saying that the RAF was renting 300 office chairs at R1666 per chair per month from Gxakwes Projects, a firm based in Gauteng, amounting to almost R500 000 a month. This contract reportedly followed a bid to push through a five-year, R60-million furniture rental contract with the same company.
Wa Afrika wrote that the RAF, which is technically insolvent with contingent liabilities of close to R190-billion, pocketed R1.93 for every litre of petrol sold.
He added that the fund failed to answer specific questions. He reported, though, that Dhlomo said in a statement that the fund was renting or leasing furniture instead of buying it because of its inability “to settle claims immediately, resulting in a creditors book of about R8-billion”.
The arguments
Smuts bases her response on:
· several independent sources (who did not know of each other) who “spoke out of concern for good corporate governance”;
· an audio recording on a board meeting where this matter was discussed; and
· correspondence with the RAF.
Sources
The internal ombud says the newspaper has used three sources:
· A RAF board member (at the time) tipped-off the reporter that the fund was renting 300 chairs for R500 000 a month, and that the name of the contractor was Gxakwe Projects;
· Another board member has independently confirmed this information, adding that, as far as he was aware, no paperwork had ever been presented to the board in this regard; and
· A third person within RAF confirmed that it was renting 300 chairs from Gxakwe Projects, but this person did not state what the RAF was paying for the rental.
She said that the board was dissolved by Mr Blade Nzimande in the same week that the newspaper investigated and published the story and argues, “They were therefore knowledgeable sources.”
Audio recording
Smuts says the newspaper had access to an audio recording of part of a board discussion, held on 26 April 2018, in which it appears that board members discussed ways of getting Treasury’s approval for a deal for 300 chairs.
She quotes as follows from this recording:
· “I’ve heard you saying that we can’t do this but what is the …?” (inaudible);
· “Well we need to … I mean we are doing two-month RFQ’s now which is bypassing treasury regulations so I guess the only alternative is to go the treasury and get approval from them … the only alternative is to get a deviation from treasury”;
· “How can 300 chairs cost us a half a million. I still don’t get that”;
· In response, one board member jokingly said “nice chairs” to which there is some laughter; and
· “They charge us half a million because it is a procurement process that is seen to be fair and people know they deal with government so they inflate their prices and that is the reality of the situation. So, for every two months we are paying half a million at the moment”.
The internal ombud argues, “These audio excerpts clearly indicate that the RAF was in a procurement process that is not in accordance with treasury regulations, relating to the leasing of 300 chairs for which the entity was paying half a million every two months, whilst being aware the procurement is irregular and inflated.”
Correspondence
Smuts says the reporter sent detailed and specific written questions to the RAF.
She says the questions put to the RAF were if the fund could confirm or deny that the:
· RAF board took a round robin resolution on March 1, 2018 to rent office furniture from Gxakwes Project CC for R2-million per annum, per region for a period of 5 years?
· above-mentioned award to Gxakwes Project CC didn’t go out on tender?
· RAF did not even ask the National Treasury for a blessing or permission to engage in such a deal?
· deal didn’t eventually go through because some of the board members protested that it was irregular and illegal transactions?
· RAF is currently renting 300 chairs from Gxakwes Project CC for its Menlyn Office in Pretoria for R500 000 per month?
· Regional General Manager of Menlyn (and current Acting COO) Dineo Thabede, CFO Rodney Gounden and the Acting CEO (COO) Lindelwa Jabavu motivated for the ongoing rental of chairs from Gxakwes Projects CC?
She says the RAF merely elected to forward a response, dated 29 March 2018, which it had previously sent to a reporter for a different story earlier in the year, along with a pro forma covering letter “that evaded dealing with the specific questions”.
To these questions, she submits, the RAF merely responded that “all the questions” the reporter posed were “non-starters”, because no tender had been awarded, and other generalised statements about compliance with procurement processes. Notwithstanding the RAF’s failure to respond to specific questions, Smuts continues, the newspaper made a fair effort of reflecting the RAF’s comment in the story (as obtained from their attached media response dating back two months earlier).
She says in a subsequent text message to the spokesperson of the RAF, the reporter pointed out that the RAF response answered questions different to the ones he had posed – but even then, the RAF still failed to send any further response to the questions.
The internal ombud argues that the RAF refused to present the facts that would contradict the newspaper’s information. “The RAF, after the second request, merely denied the truth of certain statements. But the denial in itself is ambiguous and open to several meanings. We submit that this demonstrates a reluctance to disclose information that invites adverse conclusions to be drawn.”
She adds: “Their qualified denials compel us to speculate as to what exactly we got wrong. What they seem to deny is the name of the contractor and/or the number of chairs and/or the nature of the furniture leased and/or the price payable. If any of these details are incorrect in our story, then the RAF has to explain which particular details they dispute, and then provide their version of the facts. That would enable us to test the information with our sources. We are unwilling to retract information which is reasonable to accept as true without being given this opportunity.”
Based on this, Smuts submits that the statement in the article, which said that the fund “… yesterday failed to answer specific questions”, was therefore “entirely true”.
In conclusion, Smuts says that the complaint to this office is an exercise in legalistic smoke and mirrors. “We submit that even if the RAF now tenders making disclosure, it is too late. We submit that the complaint is malicious or vexatious and we ask that you exercise the discretion given to you in terms of paragraph 1.6.2 of the Complaints Procedures to refuse acceptance of the complaint,” she asserts.
Returning to the RAF’s response of 29 March, Smuts argues that it merely re-enforced the newspaper’s belief in the accuracy of its information. She quotes from this document: “Since the last attachment by the Sheriff more than 12 months ago at our Menlyn Branch, we have been leasing furniture and computer equipment. While the leasing is more expensive, it does enable us to manage attachments.”
“This clearly indicates that, on the RAF’s own version, there is an existing lease agreement in place for furniture at one of their branch offices,” she submits.
She adds that the publication approached Gxakwe Projects for comment on the allegation as well – who did not deny the existence of the contract, but instead informed the reporter that the RAF has “all the answers” to his questions. “This is certainly not the type of a response one would expect if, as the RAF maintains, there is no contract with Gxakwe at all,” she argues.
Conclusion
Smuts concludes: “Based on all of the above, the Sunday Times published its story. We had no doubt that the information about the RAF leasing 300 chairs at an exorbitant rate, was true. Our sources included a board member who is clearly an informed source. His version was independently confirmed by two other sources, as well as the audio recording of the discussion at a board meeting. The RAF’s refusal to respond to specific questions and Gxakwe’s failure to deny the existence of the contract, all contributed to the newspaper’s belief in the information it was given.”
Analysis
Sources
The use of anonymous sources is not ideal. In this case, though, it is understandable that the sources wanted to remain unidentified. The fact that the newspaper has used three knowledgeable sources – including two from the previous board – and that they were independent of each (I have no reason to disbelieve Smuts on this issue) count heavily in the newspaper’s favour.
Audio recording
I have listened to the audio recording of part of a board discussion, held on 26 April 2018 on this issue, and am satisfied that Smuts correctly quoted from that recording (see above).
I therefore need to agree with Smuts when she concludes: “These audio excerpts clearly indicate that the RAF was in a procurement process that is not in accordance with treasury regulations, relating to the leasing of 300 chairs for which the entity was paying half a million every two months, whilst being aware the procurement is irregular and inflated.”
Correspondence
Given the fact that wa Afrika has received general answers to specific questions, coupled with the RAF’s own admission that it was renting furniture for its Menlyn office, the reporter was justified in stating that the fund “… yesterday failed to answer specific questions”.
It is also difficult to fathom how the renting of furniture can take place without a contract or a lease agreement. If there is no such contract or lease agreement in place, as Dhlomo states, that in itself would constitute a reason for the newspaper to be suspicious.
Conclusion
I accept that the information about the RAF leasing 300 chairs at an exorbitant rate was reasonably true. This is based on:
· the use of three informed and independent sources;
· the audio recording;
· the RAF’s own admission that it was renting furniture for its Menlyn office;
· the RAF’s general response to specific questions; and
· Gxakwe’s failure to deny the existence of the contract.
Finding
The complaint is dismissed.
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
Press Ombud