Complainant: Mr Sam Mkhabela
Lodge by: Mr HS Coetzee of Hofmeyr Herbstein
Article: How Fat Cats Looted Land Bank Billions
Date: 15 April 2008
Respondent: Sunday Times
Mr HS Coetzee of Hofmeyr Herbstein & Gihwala Inc appeared for Mr Mkhabela, who was also in attendance.
Mr Eric van den Berg of Bell Dewar and Hall appeared for the Sunday Times. Ms Susan Smuts, Sunday Times Managing Editor, and Mr Wisani wa ka Ngobeni, Sunday Times investigative journalist, were also in attendance.
Mr Mkhabela complained about two articles in the Sunday Times, one on November 11, 2007 headlined “How Fat Cats Looted Land Bank Billions” and the other on November 18, 2007 headlined “Heads roll for loans to fat-cat buddies”.
He complained that the newspaper contravened paragraphs 1.1, 1.2, 1.3, 1.4 and 1.5 of the South African Press Code.
In general Mr Mkhabela said that the articles conveyed as a fact that top officials of the Land Bank, including himself, participated in a fraudulent scheme to enrich themselves and their business associates.
The articles are based on a forensic audit report, which is presented in the news stories as final and unqualified.
The specifics of the complaint were:
1. The opening paragraph – “Top Land Bank officials siphoned off more than R2-billion meant for farmers to fund their close friends and business associates’ luxury golf estates, a sugar mill, equestrian estates and residential developments” – was intended to convey that the complainant was one of the officials participating in the scheme to fraudulently siphon off billions of Rand.
2. In the bullet point that states “Sam Mkhabela, a Land Bank board member who has since resigned, also benefited from the Northern Jungle loan” it was conveyed that the complainant participated in the above fraudulent scheme and resigned as a result thereof. It further conveyed that the complainant improperly participated in the application for and approval of the loan.
3. The statement “… Beneficiaries of the Land Bank Loans were his (Mukoki’s) business associates” conveyed to the reader that the complainant was a business associate of Mr Mukoki who as a result thereof benefited from the loans.
4. The Sunday Times failed to seek the views of the complainant in advance of publication.
This was the second matter that the panel heard on the Land Bank stories by the Sunday Times.
The panel read through the written submissions from Mr Mkhabela and the Sunday Times and also heard oral evidence on February 14, 2008 from Mr Mkhabela and Mr Wisani wa ka Ngobeni, one of the writers of the two articles.
The newspaper’s side was that its story on November 11 was a follow-up to a statement from government dated November 8, 2007 that said the Forensic Audit Report into the financial management of the Land Bank had been completed and submitted to Cabinet on November 7.
Ngobeni said he compiled his report after speaking to sources – two in the Lank Bank, and others in the Department of Agriculture and law enforcement agencies. At the time he had not seen the forensic report.
The panel believes that when the newspaper wrote the first story, the Government had accepted and was acting on the forensic report and it was reasonable for the Sunday Times to report on and even quote from it. The newspaper however went too far in treating the allegations in the forensic report as fact and in sensationalising the report into confirmed allegations of fraud “to fund their close friends and business associates’ luxury golf estates, a sugar mill, equestrian estates and residential developments”.
The headline How Fat Cats Looted the Land Bank assumes that there has been “looting” and creates a very emotionally charged context for the rest of the story. Every name mentioned in the story is automatically associated with the looting.
The auditors’ word, even if accurately quoted, is not gospel. Their findings and conclusions would still need to be led as evidence in court, if it was appropriate, and the auditors would be cross-examined to test their evidence in the normal way that courts do. For a journalist, the qualifications in the forensic report are more reason to treat the contents with the care that the Sunday Times did not exercise.
Good practice in journalism is to treat allegations as just that until they are proved to be true in a court of law. To demonstrate the fragility of the information that the newspaper had, less than a month after Cabinet had decided to refer the forensic report to the law enforcement agencies, it rescinded its decision.
Just as the panel found earlier in the matter between Mr Alan Mukoki and the Sunday Times, the newspaper is in breach of clause 1.3 of the South African Press Code that states: “Only what may reasonably be true, having regard to the sources of the news, may be presented as fact, and such facts shall be published fairly with due regard to context and importance. Where a report is not based on facts or is founded on opinions, allegations, rumour or supposition, it shall be presented in such a manner to indicate this clearly.”
The figure of R2 billion was the newspaper’s sum after speaking to its sources – it was not drawn from the contents of the forensic report.
When the Sunday Times finally got hold of the forensic report, it was given to another reporter who wrote a story that was published on January 19, 2008. In that story the amount was reduced to R1.1billion without any acknowledgement that earlier stories had given an exaggerated figure.
Among the auditors’ “concerns associated” with a loan to Northern Jungle Trading 150 (Pty) Ltd, is the only reference to Mr Mkhabela in the forensic report: “A Land Bank Board member, Mr Mkhabela, has financial interests in Northern Jungle.”
With the story written the way it was, when the newspaper says the audit recommended that Mukoki, his executives and one member of the board should face criminal charges, the reader will obviously jump to the conclusion that Mr Mkhabela is that board member.
The Sunday Times accepts that Mr Mkhabela was not a party to the process of approving a loan to Northern Jungle and says it made no such allegation in its story. It is true that the newspaper did not make such an allegation in its story.
The newspaper also accepts that Mr Mkhabela was not a shareholder at the time – it said he benefited from the loan. In his evidence Mr Mkhabela said he was offered share options and he accepted the terms but in the end he did not exercise the option to buy. Mr Mkhabela said he had declared his interests when he accepted the offer.
If he had been asked, the matter of the shareholding and benefit would have been clarified. The question of the loan approved for Northern Jungle would also have been clarified. The newspaper was wrong when it said it was a loan for R247 million to develop a golf estate in the Vaal area. According to the forensic report, the loan of R186.9 million for the acquisition of land to be developed into a golf estate in Kempton Park was approved by Mr Mukoki on October 24 2006. This was subject to the land being rezoned.
The newspaper still has not corrected its errors regarding this loan.
The Sunday Times also argues that the benefit Mr Mkhabela obtained flowed from receiving a loan to develop a piece of land. This too would have been put in perspective if the newspaper had asked Mr Mkhabela about it. The newspaper’s version is supported by the allegations in the forensic report but the newspaper treated these as fact and not as allegations.
The newspaper argued that it had merely recorded that he had resigned from the board and did not suggest that he resigned as the result of the benefits from Northern Jungle. Would a reasonable person assume that his resignation was linked to the loan to Northern Jungle? Given context and the use of the phrase “who has since resigned” the probabilities are that the answer is yes.
The newspaper accepts that Mr Mkhabela was not a business associate of Mr Mukoki, the CEO of the Land Bank, but points out that Mr Mukoki reported to the board and Mr Mkhabela was a member of the board.
This has to be seen against the whole story that purported to report on how fat cats looted Land Bank billions. The sub head said: “Cabinet calls for criminal charges after R2bn is siphoned off to fund associates’ business schemes.” If Mr Mkhabela benefited from the loans then he was one of the business associates whose business schemes were funded.
In reality the newspaper is finding him guilty with the rest of “the fat cats and the business associates”.
Finally, the newspaper concedes that it did not get Mr Mkhabela’s comment and that the authors of the forensic report had not interviewed him either. The Sunday Times says it tried unsuccessfully to obtain contact details for him.
It is not impossible for journalists to get the contact details of the subjects of their stories, if not for the first deadline, at least shortly after they publish a one-sided story. The Sunday Times did not do that because they believed they were publishing fact because it had come from the pens of forensic auditors. This made for sensationalist journalism.
1. The major finding of the panel is that the Sunday Times is in breach of Article 1.3 of the South African Press Code that states: “Only what may reasonably be true, having regard to the sources of the news, may be presented as fact, and such facts shall be published fairly with due regard to context and importance. Where a report is not based on facts or is founded on opinions, allegations, rumour or supposition, it shall be presented in such a manner to indicate this clearly.” It is the same finding the panel reached earlier in the matter between Mr Alan Mukoki and the Sunday Times.
The newspaper went too far in treating the allegations in the forensic report as fact and in sensationalising its report and presenting allegations as fact, as fraud “to fund their close friends and business associates’ luxury golf estates, a sugar mill, equestrian estates and residential developments”.
2. Another major finding is that the newspaper is in breach of Article 1.5, which prescribes that a publication should usually seek the views of the subject of serious critical reportage in advance of publication…
The newspaper knew that the authors of the forensic report had not interviewed Mr Mkhabela and that made it important for it to interview him before publishing the allegations. The Sunday Times’ excuse that it tried unsuccessfully to obtain contact details for him is not convincing. It could have continued searching after it had gone to print on November 11 and published his side soon thereafter.
3. From these two major breaches flowed others relating to fact and clarity.
3.1 The amount involved in the Land Development Finance was not “more than R2 billion” but when the newspaper realised it was R1.1 billion it reduced the figure in subsequent stories without acknowledging that its earlier stories had exaggerated the numbers. This is in breach of Article 1.6 which states: “A publication should make amends for publishing information or comment that is found to be inaccurate by printing, promptly and with appropriate prominence, a retraction, correction or explanation.
3.2 If Mr Mkhabela’s comment had been sought before the publication of the report, the details of the loan to Northern Jungle would have been more accurate: it was a loan for R186.9 million (and not R247 million) for the acquisition of land to be developed into a golf estate in Kempton Park (not the Vaal area). The loan was approved by CEO Mr Alan Mukoki subject to the land being rezoned. Mr Mkhabela gave evidence that at the time he was not a shareholder in the company and had nothing to do with the application for a loan or its approval.
3.3 The panel does not accept the newspaper’s argument that it had merely recorded that Mr Mkhabela had resigned from the board and it did not suggest that he resigned as the result of the loan to Northern Jungle. A reasonable reader would make the link from the structure of the sentence: “Sam Mkhabela, a Land Bank board member who has since resigned, also benefited from the Northern Jungle loan.” The since what? is not clarified.
Mr Mkhabela would have told the newspaper that he had asked to leave a few days before the end of his term as a board member because he had personal matters to attend to, the evidence he led at the hearing.
In sum, the stories of November 11 and November 18 purported to report on how fat cats looted Land Bank billions. The sub head said: “Cabinet calls for criminal charges after R2bn is siphoned off to fund associates’ business schemes.” In reality the newspaper found Mr Mkhabela guilty with the rest of the alleged “fat cats and business associates”.
The panel rules that the Sunday Times carry these findings prominently in its pages as soon as possible after getting them. It should place the findings in context to enable its readers to understand them and it should also direct them to the full version of the ruling at www.presscouncil.org.za.
In terms of the Complaints Procedures, within seven days of receipt of this decision, any one of the parties may apply for leave to appeal to the Chairman of the Press Appeals Panel, Judge Ralph Zulman. The grounds of appeal shall be fully set out.
Joe Thloloe, Press Ombudsman
Ronnie Taurog, Press Appeals Panel (public representative)
Peter Mann, Press Appeals Panel (press representative)