Complainant: Alan Mukoki
Lodged by: Alan Mukoki
Article: Shabangu banked on connections
Author of article:
Date: Craig McKune
Respondent: Mail & Guardian
This ruling is based on the written submissions of Mr Alan Mukoki and the Mail & Guardian newspaper, as well as on an informal hearing that was held on June 8, 2012. This hearing was attended by the M&G’s editor and reporter, Mukoki, as well as his legal advisor, Mr Leslie Pupuma.
Mr Alan Mukoki, the former chief executive officer of the Land Bank, complains about a story in the Mail & Guardian on 14 October 2011, headlined Shabangu banked on connections.
Mukoki complains that the:
· story neglects to mention that the forensic report was incomplete;
· use of the word “fraud” in relation to him was not put into context;
· story falsely links the closure of the Land for Development Finance Unit (LDFU) to the forensic investigation;
· statement about three legal opinions that were sought by bank officials is false; and
· newspaper did not seek and publish his side of the story.
He raised his complaint with the M&G’s editor, who replied that he did not believe that Mukoki had a case. The editor offered him an opportunity to write a letter, which Mukoki did not make use of. Mukoki also referred his complaint to the newspaper’s internal ombudsman, who found that the complaint was without substance and that a correction that was published was sufficient.
The story, written by Craig McKune, focuses on Mr Roux Shabangu, a businessman, who allegedly positioned himself to benefit from R130 million in Land Bank loans. These loans were reportedly part of a R1 billion loan that the Hawks were investigating. At the centre of the issue is the LDFU which, apparently driven by Mukoki, approved loans amounting to almost R1 billion in 2006 and 2007.
In general, the M&G argues that the story is factually correct: an investigation did take place and it did uncover irregularities and allegations of fraud. The newspaper says the story did not state that an audit had been done – it only said that a forensic investigation was ordered by the former Minister of Agriculture. The result of the forensic investigation was the author’s opinion about the possibility of irregularities and alleged fraud – it says that it merely reported this conclusion.
I shall now consider the particulars of the complaint.
The sentence in dispute reads: “But the unit was closed down when a forensic investigation (the Deloitte report), ordered by the former Minister of Agriculture and Land Affairs, Lulu Xingwana, uncovered serious irregularities and alleged fraud on the part of bank officials, including Mukoki.”
Mukoki complains that the Deloitte report is incomplete as its own authors stated that their report was not accurate, verified and corroborated. He also says that the report was unsigned, and argues that the story should have mentioned this fact. He adds: “Though the forensic report authors have raised their own doubt about the accuracy of their forensic report, the Mail and Guardian ignores this completely and does not raise this doubt with the readers…”
He also says that, although the use of the word “fraud” is qualified by the word “alleged”, the story mentions that “serious irregularities” have been uncovered, without the same qualification – and again without pointing out that the report was qualified.
I asked the editor if this “neglect” did not constitute some imbalance (by the mere lack of mentioning the report’s limitations), as the impression may have been created that this investigation was pretty authoritative.
He responded that, given the modest weight the story gave the report, and the way events have unfolded since it was first published, this did not create an imbalance. “We were sketching what is already common cause and in the public domain. We did not treat the findings as gospel but focused on a summary (of) events as they unfolded….The fact is that since the original publication of the report, its findings have been borne out and resulted both in the closure of the unit and a criminal probe by the Hawks. That is, the circumstances have changed in a way that strengthens the credibility of the original report… In the context of a story which very briefly summarized events, and which was published after the report’s credibility had been increased by the closure of the unit, it was not necessary to burden the story with further detail. That the report was unsigned is not of critical importance… we stand by our approach to summarizing a complex story carefully and accurately while omitting details which are no longer germane to the basic issues: the report uncovered alleged fraud and irregularities, and led to the unit being shut down.”
I also asked the editor why the sentence uses the word “alleged” only in relation to “fraud” and not also to “serious irregularities”.
He responded: “While we might treat some of the specific findings more cautiously, such as ‘fraud allegations’ against Mukoki, ‘serious irregularities’ is a more generalised claim that justifiably describes at least a number of the investigator’s findings, which have subsequently been upheld. More caution was appropriate in relation to the criminal allegation of fraud, but there is no dispute as to whether serious irregularities were uncovered.”
In his response to the newspaper’s reply, Mukoki says that Cabinet has rescinded the Deloitte report on 5 December 2007.
If this was true, it would have affected the status of the allegations contained in the report. This convinced me to hold an informal hearing.
At the meeting, Mukoki said that he did not blame the newspaper for what it reported, and underlined that the story should have mentioned the fact that the report was incomplete.
In subsequent correspondence, he states that this office has earlier ruled in his favour on the same matter, and argues that this represents a precedent for this ruling. He also states that the Cabinet not only reversed its decision to refer the report to the Police, but also overturned the entire decision to adopt the report.
These are my considerations:
· The Ombudsman panel ruled on March 13, 2008 as follows: “Mr Mukoki argued that the disclaimers by Deloitte should have been included in the story. The panel did not allow itself to be bogged down in the legalistic meaning of the disclaimers (in the report). We applied journalistic yardsticks…” The panel then proceeded to find against the newspaper, not because the disclaimers were not mentioned, but because allegations were portrayed as fact;
· Current Land Bank CEO Phakamani Hadebe wrote to McKune on June 7, 2012: “Regarding the Deloitte Report, he (Mukoki) is right it was not signed. About the signing, this was not an audit report, it was a forensic investigation. The disclaimer by Deloitte, to me, is a normal exercise in such kinds of reports. The investigators will always have a disclaimer…we get such disclaimers on all such reports”; and
· The following was said in a document headlined Statement on Cabinet Meeting of 5 December 2007: “At its meeting of 7 November 2007, Cabinet had resolved that the forensic report on the financial affairs of the Land Bank was to be referred to the South African Police Service and the prosecution authorities for further investigations and possible prosecutions. Cabinet resolved yesterday that this decision will be rescinded pending further internal investigations by the Ministry of Agriculture and Land Affairs” (emphasis added). Clearly, Cabinet rescinded its decision to refer the matter to the SAPS – it did not rescind the report itself.
Based on these considerations, I have no reason to find that McKune should have referred to the disclaimer – as long as the report was treated fairly.
I do not believe that an earlier finding by this office sets a precedent for this ruling as the whole story was about alleged wrong-doings at the Land Bank – in the story in dispute, the main focus is on Mr Roux Shabangu and not on the bank. In fact, the report is mentioned only once in the whole story.
At the hearing, much was made of what happened later to this report and who quoted it. This is not relevant to my finding as my only concern is if the newspaper was justified in its reportage of this specific story.
Mukoki complains that the use of the word “fraud” in the disputed sentence mentioned above was not put in the proper context, which led to the impression that he had embezzled money.
He also refers to the forensic report which states: “It is trite law in South Africa that a misrepresentation includes a failure to disclose information in circumstances where there is a legal duty to do so. In our view, Mukoki had a legal duty to disclose the contents of various legal opinions obtained to the stakeholders.”
He says: “This is the only reason for the fraud allegation in the forensic report … And this is the context within which a fraud charge was intimated against myself for my so called failure to disclose legal opinions.” He concludes that the ordinary reader would have understood that he had embezzled or stolen money, which would be misleading and false.
· the newspaper sids that the Hawks’ spokesperson confirmed that Mukoki had been investigated for fraud and that a case docket had been handed to the prosecutors;
· the story said that alleged fraud was uncovered on Mukoki’s part – it does not state it as a fact, but as an allegation; and
· in the clarification which was published on 21 October 2011, the newspaper stated: “The investigators reported various irregularities and ultimately argues that Mukoki ‘may have committed fraud’, recommending that criminal charges be laid against him.” (own emphasis)
The newspaper was entitled to report on an allegation of fraud. It does not matter what kind of fraud was at stake.
The sentence in dispute links the closure of the LDFU to the forensic investigation.
Mukoki complains that this is false. He says that the unit was closed down in February 2007, and the forensic investigation was commissioned almost three months later in May. The report was published in September of that year.
The M&G refers to the bank’s 2008/2009 annual report where the following is stated: “During the 2009 financial year, as part of the stabilisation phase of the turnaround strategy, the bank took a decision to discontinue the LDFU, as the unit’s operations did not comply with the bank’s mandate as contained in the Land Bank Act.”
Using that information the newspaper concluded that the unit was closed down after the forensic investigation.
I asked the editor for more clarity, to which he responded a follows:
“Mr Mukoki’s claim that there was no connection between the closing of the unit and the forensic investigation not only lacks factual support – it is clearly contradicted by the documentary record. In order to support his version Mr Mukoki seriously distorts the sequence of events that can be derived from the Land bank’s own public records. According to him the unit was closed in February 2007, following which the investigation was commissioned.
“However the bank’s 2007/2008 annual report, for example, reports: ‘An independent forensic investigation concluded in September 2007 indicated alleged irregularities in the origination, management and administration of these loans. During October 2007, a moratorium was placed on the approval of any new loans and payouts on existing loans’.”
He added: “In other words, a. The unit was still in operation up to and including at least October 2007; and b. the bank itself explicitly links its decision to freeze the unit’s loans to the findings of the investigation, released a month earlier.
“This ‘moratorium’ later led to the unit being closed, and it is clear that this decision was informed by the investigation’s findings, including the crucial conclusion that the unit’s work fell outside the bank’s mandate.
“According to the bank’s 2008/2009 report: ‘During the 2009 financial year, as part of the stabilisation phase of the turnaround strategy, the Bank took a decision to discontinue the LDFU, as the unit’s operations did not comply with the Bank’s mandate as contained in the Land Bank Act’.
“Again this highlights with crystal clarity the fact that Mr Mukoki is wrong to insist that the unit was closed in February 2007. It also explicitly links the decision to the investigation’s finding that the unit’s work fell outside of the bank’s mandate.
“Mr Mukoki may persist in his claim that there was no connection between the investigation and the closure of the unit, but the facts recorded by the bank’s own public reports cannot be tortured to fit his version. He is simply wrong.”
After hearing out both parties at our meeting and checking the relevant documents cited above, I am satisfied that this part of the complaint has no substance.
Obtaining legal opinion
At the meeting, the two parties agreed that this part of the complaint was satisfactorily dealt with in the M&G’s published correction.
Comment not sought
Mukoki argues that the newspaper should have sought his side of the story about the allegation of fraud levelled against him.
The M&G says it was not necessary to contact him for comment on acts that have been previously reported, as the newspaper was not making serious new allegations against him and was merely conveying the broad context around Shabangu’s background. However, it accepts that it may have been best practice to reflect a denial in appropriate circumstances.
The newspaper “clarified” the situation in its next edition, which included Mukoki’s response. This did not satisfy him.
The newspaper also offered him a chance to write a letter to the editor – an opportunity that he ignored. The editor’s offer to the complainant to write a letter giving his side of the story is important because it reflects a lack of bias, and a readiness to balance information in the newspaper.
At the meeting, the editor further explained that the story was not breaking news as far as Mukoki was concerned.
It is indeed not standard journalistic practice to ask someone for comment if it merely recapped what had happened in the past.
The Complaints Procedure permits a party to apply for leave to appeal against a decision of the Press Ombudsman. An application for leave to appeal, fully setting out the grounds, may be made to the Chairperson of the South African Press Appeals Panel, Judge Ralph Zulman. He may be contacted at Khanyim@ombudsman.org.za