Compliant: Khaya Ngqula
Lodged by: Billy Gundelfinger
Article: Fat-cat parastatal bosses come and go, but they get the cream (front page), and Getting paid to go away – Robert Laing introduces the boys who made a mint out of quitting (page 5).
Author of article: Brendan Peacock and Robert Laing
Date: 22 February 2011
Respondent: Sunday Times
Dr Khaya Ngqula, the former CEO of South African Airways (SAA), complains about two stories in the Sunday Times that were both published on December 5, 2010. The stories were headlined Fat-cat parastatal bosses come and go, but they get the cream (front page), and Getting paid to go away – Robert Laing introduces the boys who made a mint out of quitting (page 5).
The complaint is that both stories erroneously portray Ngqula as a failure; and that the second story untruthfully states that he was sacked.
The intro to the first story (written by Brendan Peacock) reads: Seven of the top-10-earning executives at SA’s parastatals have either left or are leaving. And a number of them left under a cloud.” It goes on to say that pay at entities such as SAA should be seen in the context of regular news about failure, controversy and financial bail-outs. The story then refers to Ngqula, who reportedly “tops the rankings” and who has received a “controversial” R9.35 million “termination benefit” – the amount that he reportedly “was paid to go away”. The story also says that the SAA Board took action against Ngqula for cash spent outside of his financial mandate that needed to be paid back, and that a law suit for R30.8 million against him was announced. Further thinking was reportedly required on how to recoup R141 million in misspent sponsorship money.
The second story (by Robert Laing) starts by making the following statements:
- “Getting fired can produce a particularly bountiful payday for a CEO…”
- “Indeed, he (the CEO) can ‘earn’ more in that single day, while cleaning out his desk, than an American worker earns in a lifetime of cleaning toilets.”
- “Forget the old maxim about nothing succeeds like success: today, in the executive suite, the all-too-prevalent rule is that nothing succeeds like failure…”
The story then says that it was not surprising that six SAA executives made this year’s top earners’ list, “…thanks to the generous severance packages implemented under Khaya Ngqula before he was sacked as CEO in March last year.” The story also says that Ngqula’s R9.35 million golden handshake was the list’s fourth-highest exit package.
Next to the story a picture of Ngqula is accompanied by these words: “Golden parachute: Khaya Ngqula of SA Airways”.
We shall now consider the merits of the complaint:
Portrayed as a failure
The first story states: “Pay at entities such as…SAA…should be seen in the context of regular news about failure, controversy and financial bail-outs.” (emphasis added)
The second story says: “Forget the old maxim about nothing succeeding like success: today…nothing succeeds like failure.” (own emphasis) The next sentence refers to Ngqula. The caption to a photograph of him reads: “Golden parachute: Khaya Ngqula of SA Airways”.
Ngqula complains that the above-mentioned sentences and caption erroneously portray him as a failure – while, instead, he was commended that he did an outstanding job as the CEO of the SAA. He says that audited financial statements of SAA speak for themselves, adding that the SAA made a profit as a result of him having implemented his restructuring programme.
He also says that the allegations that he was a failure are defamatory and that he has been humiliated and embarrassed by these stories.
The Sunday Times argues that it was justified in its reportage to portray Ngqula as a failure “in light of the findings in the KPMG report”. KPMG is a global network of professional services firms providing audit, tax and advisory services.
The newspaper points to the following in the KPMG report, revealing that he failed to comply with his duties:
- he approved of and concluded retention contracts totalling R27 million – this amount exceeded the SAA’s financial limit and Ngqula was not authorized to spend this amount;
- he concluded sport sponsorship agreements in excess of the limit he was authorized to spend – he concluded a contract with professional golfer Angel Cabrera for R21 million and sponsored the Association of Tennis Professionals from 2006 to 2009 to the value of R120 million;
- he secured sponsorships for the Africa (golf) Open held in 2008 – both he and his wife had an interest in the companies that obtained rights in this event;
- he used R500 000 of SAA’s money to take friends and associates to various world cup events between 2006 and 2008;
- he concluded leases to the value of R3.3 million for hospitality suites that were hardly used; and
- he did not disclose his interest in a company that SAA awarded a tender to.
The Sunday Times adds that Cheryl Carolus, chairperson of the SAA Board, made the following submissions to the chairperson of the Standing Committee on Public Accounts on September 2, 2010 regarding KPMG’s findings:
- “…the failures were mainly in the area of procurement and wasteful expenditure. An extensive and costly investigation had been launched which had cost approximately R20 million. The Board realized that it needed to draw the line and hand over matters to the authorities. She was confident that SAA would recover enough of the money in question to cover its costs. It had to fix the failures in corporate governance.”
- “(Ngqula)…being sued for R37 million. Criminal charges had been laid. SAA had every intention of pursuing the matter. The case could become even bigger. At present action was only taken where hard evidence had become available already. SAA intended to recover all of the unauthorized expenditure. The Board was keeping a rigorous watch. It would act as more evidence was uncovered.”
The newspaper argues that, in light of these statements (“the veracity of which is not in dispute”), the statement that Ngqula is a failure is fair – and it relates to a matter of public interest.
The newspaper concludes: “Whatever commendations Dr Ngqula may have received, he also faces accusations of exceeding his authority and (of) failing in his fiduciary duties.” It adds that the action being taken by SAA suggests that Ngqula’s successes at the parastatal have been overshadowed by his failures.
In his reply to the newspaper’s response, Ngqula “vigorously” oppose the accusations that he had exceeded his authority and had failed in his fiduciary duties. While he does not deny that SAA took action against him in this regard, he says that this action “does not make this an established fact”. He adds: “The fact that KPMG had issued a forensic report is irrelevant, as the claims being made by SAA arising from such a report are being strenuously defended.” He argues that the statements in the report constitute allegations and adds: “The KPMG report is not a tested factual finding and is currently the subject of litigation.”
He adds that Carolus’s statements are irrelevant.
Ngqula argues that the submissions regarding KPMG’s findings (mentioned above) were neither fair nor honest, adding that the Sunday Times did not seek verification of these issues “which they could easily have done”.
It should be noted that the newspaper justifies its reference to “failure” on the findings in the KPMG’s report. However, at the time of publication, these findings were nothing more than (un-proven) allegations. Even though it may have been tempting for the newspaper to have come to its failure-conclusion, it was pre-mature to assume that some/most/all of the findings in the report were substantially true – even before a court of law has made a ruling.
It should be remembered that everybody is innocent until proven guilty.
The second story says that Ngqula was sacked as CEO in March the previous year and that his R9.5 million golden handshake was the list’s fourth-highest exit package. (The first story does not say that he was sacked – it only states that he was “paid to go away”).
Ngqula denies that he was sacked – he says that he resigned and argues that his letter of resignation dated March 6, 2009 proves this. From this, he argues that it was unreasonable for the newspaper to report as a fact that he was sacked.
The Sunday Times argues that:
- SAA issued a statement on March 10, 2009 saying that “by agreement Dr Khaya Ngqula’s employment with SAA has terminated”;
- prior to this, he was suspended;
- the Minister of Public Enterprises ordered an investigation into allegations against Ngqula during his time at SAA;
- KPMG concluded a forensic report, a summary of which was made public. This report identified instances where Ngqula had exceeded his authority and failed to comply with his fiduciary duties as CEO of SAA;
- the SAA then instituted a claim against him, and indicated that another may follow;
- the KPMG report has been handed over to the Commercial Crime Unit of the Police; and
- at the time of the termination of his services it was widely reported by reputable media (it mentions Fin24 and the Mail & Guardian) that he had been fired.
The Sunday Times also mentions a Portfolio Committee Inquiry into the termination of Ngqula’s contract with SAA (held on March 26, 2009). The newspaper quotes the following from the minutes of that meeting (by Prof Jakes Gerwel, the then chairperson of the SAA Board):
“…the SAA Board took the decision to terminate Mr Ngqula’s contract for what were thought to be very logical reasons. If the Board had not decided to separate with Mr Ngqula, he would still be earning his salary and retention premium while on special leave…SAA would have to continue to pay the full package during a potentially lengthy appeal. It was made clear that if the investigation should uncover wrongdoing, Mr Ngqula’s separation from SAA would not protect him from consequences of the investigation. The Board took the decision to negotiate a termination due to the need to stabilize the company and allow operations to continue without the uncertainties of a CEO on special leave…”
This, the newspaper argues, is an indication that the Board would have fired Ngqula “but for the costly legal implications to SAA”.
While the newspaper admits that the SAA statement does not use the word “sacked” or any other word with that meaning, it says that it believes “that the circumstances surrounding the termination of Dr Ngqula’s services, and the subsequent developments, support the interpretation that he was indeed fired”. It adds that, had he resigned of his own accord, the SAA statement would have indicated that.
The newspaper argues that the timing of the forensic report coincided with the termination of Ngqula’s contract and that this has led various newspapers to report that he had been fired.
The Sunday Times concludes that, at the time of publication, it was reasonable to state that Ngqula had been fired.
In his reply to the newspaper’s response, Ngqula does not deny that:
- SAA issued a statement to the effect that his employment with SAA had terminated (however, in a later document he twice denies that his contract was terminated); and
- following a KPMG investigation into the allegations, SAA instituted action against him.
He does however deny that:
- he was suspended prior to his termination;
- the Minister of Public Enterprises ordered an investigation into allegations made against him (he says has no knowledge of a criminal investigation, save for what he has read in the media); and
- he was fired.
He argues that it is irrelevant whether or not “other reputable media” made the same false statement, adding that had he known about these stories he would have acted on them. He notes that the newspaper has acknowledged that the SAA statement does not use the word “sack”. He says that he is astounded by the newspaper’s “false and defective reasoning” in concluding that the circumstances surrounding his termination and the subsequent developments support the interpretation that he was indeed fired.
He adds that the minutes of the Committee Inquiry are irrelevant.
Firstly: Our task is to decide if the newspaper’s reportage was reasonable at the time of publication (with reference to the well-known Bogoshi case).
Let us look at the facts:
- Ngqula’s letter of resignation contains this one sentence: “I, Khayakhulu Ngqula…hereby resign with immediate effect as a director of South African Airways …”
- The statement issued on behalf of the SAA board reads: “Jakes Gerwel, chairman of the board of South African Airways, has today announced that by agreement Dr Khaya Ngqula’s employment with SAA has terminated. It has been agreed between the parties that the terms of the settlement are confidential but any payments will be reflected in the Annual Report…”
From this documentation it cannot truthfully be stated that Ngqula was sacked; the word “sacked” does not appear in these or any other official document at my disposal. On the contrary, it is clear that there has been a settlement agreement. It should be noted that there is a material difference between “sacked” and a “settlement agreement”.
When considering the newspaper’s arguments one by one, it becomes clear that not a single one of its arguments provides any kind of proof that Kgqula was sacked.
This goes for its reference to:
- the agreed termination of Kgqula’s employment;
- Kgqula’s “suspension”;
- the investigation by the Minister of Public Enterprises;
- the KPMG’s report;
- the SAA instituting a claim against Ngqula and indicating that another may follow;
- the handing over of the KPMG report to the Commercial Crime Unit of the Police;
- other newspapers reporting that Ngqula had been fired;
- a Portfolio Committee Inquiry into the termination of Ngqula’s contract with SAA);
- the quote from the minutes of that meeting.
None of these arguments, not even when taken together, can justifyably lead to the conclusion that Ngqula was fired.
Here are some more considerations:
The newspaper makes an interesting – indeed a remarkable – statement, namely that Gerwel’s quoted words is an indication that the Board would have fired Ngqula “but for the costly legal implications to SAA”. This, in fact, is an implicit acknowledgement by the newspaper that Ngqula was indeed not sacked (despite its own reportage as well as its response to the complaint).
The following statement by Gerwel should also be considered: “If the Board had not decided to separate with Mr Ngqula, he would still be earning his salary…while on special leave” (emphasis added). From this, it surely is not reasonable to believe that he was sacked.
The newspaper’s conclusion “that the circumstances surrounding the termination of Dr Ngqula’s services, and the subsequent developments, support the interpretation that he was indeed fired” is therefore not reasonable – not only as there is not a single shred of evidence to support it, but also because there is evidence to the contrary. (An agreed settlement cannot be construed as “sacking”.)
This also goes for the newspaper’s further argument that, had Ngqula resigned of his own accord, the SAA statement would have indicated that – the relevant documents at my disposal reveal that there was a settlement agreement.
Regarding the newspaper’s argument that the timing of the forensic report coincided with the termination of Ngqula’s contract and that that has lead various newspapers to report that Ngqula had been fired: The mere fact that other newspapers reported that Ngqula had been fired is no proof that that was in fact true. A careful process of verification would have revealed the truth.
The fact that Ngqula did not lodge a complaint against these newspapers is irrelevant as he may not have known about these reports.
Based on all of the above, I cannot support the newspaper’s conclusion that, at the time of publication, it was reasonable to state that Ngqula had been fired.
Portrayed as a failure
The stories imply that Ngqula was a failure. However, the findings in the KPMG report – on which the newspaper says it based its story – were at the time of publication nothing more than allegations; nothing has been proved yet as the court case was still pending. This means that it is (at least at the time of publication) incorrect and unfair to state it as a fact that he was a failure – a person is innocent until proven guilty. This is in breach of Art. 1.1 of the Press Code that states: “The press shall be obliged to report news truthfully, accurately and fairly.”
The second story states that Ngqula was sacked. This office has no proof that that is true. On the contrary, official documentation makes it clear that he and SAA have rather entered into a settlement agreement. The newspaper made assumptions that were not supported by facts; its reportage can therefore not be construed as either accurate or fair. This is in breach of Art. 1.1 of the Press Code .
The Sunday Times is directed to:
- retract the statement that Ngqula was sacked;
- retract the insinuation that he was a failure; and
- apologise to him for any embarrassment caused to him.
The Sunday Times is directed to publish the following text:
Dr Khaya Ngqula, the former CEO of South African Airways (SAA), lodged a complaint at the Press Ombudsman about two stories in the Sunday Times that were both published on December 5, 2010. The stories were headlined Fat-cat parastatal bosses come and go, but they get the cream (front page), and Getting paid to go away – Robert Laing introduces the boys who made a mint out of quitting (page 5).
The complaint was that both stories erroneously portrayed Ngqula as a failure; and that the second story untruthfully stated that he was sacked.
Both stories were about CEOs who were getting millions after getting fired or after quitting.
Deputy Press Ombudsman Johan Retief found that it was (at least at the time of publication) incorrect and unfair to portray Ngqula as a failure as the findings in a forensic report on which we based our reportage were at the time of publication nothing more than allegations; nothing has been proved yet as a court case was still pending. He reminded us that a person is innocent until proven guilty. This reportage, he found, was in breachof Art. 1.1 of the Press Code that states: “The press shall be obliged to report news truthfully, accurately and fairly.”
With regards to the second story, Retief said that there was no proof that Ngqula was sacked – on the contrary, official documentation made it clear that he and SAA have entered into a settlement agreement. He found that we made assumptions that were not supported by facts and found our reportage to be in breach of Art. 1.1 of the Press Code.
- We retract the statement that Ngqula was sacked and the insinuation that he was a failure; we apologise to Ngqula for any embarrassment caused to him.
Please note that our Complaints Procedures lay down that within seven days of receipt of this decision, anyone of the parties may apply for leave to appeal to the Chairperson of the SA Press Appeals Panel, Judge Ralph Zulman, fully setting out the grounds of appeal. He can be reached at email@example.com
Deputy Press Ombudsman