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Musa Capital Vs. Sunday World

Ruling by the Deputy Press Ombudsman, September 28, 2010

This ruling is based on the written submissions of Musa Capital and the Sunday World newspaper.

Complaint

Finance company Musa Capital (MC) complains about a story in the Sunday World, published on January 16, 2011and headlined Musa Capital offices raided for missing R700m.

MC complains that the following is either inaccurate or misleading, namely the:

• Word “raid” in the story;
• Reference to about R700 million that was reportedly missing;
• Headline;
• Reference to “Musa Capital Zambia Limited”; and
• Sentence, “This was not done”.

The company adds that it has provided the journalist with information, but that he has neglected to use it. MC also complains about several words or phrases that I have already dismissed regarding a complaint about a similar story (in CitiBusiness, published two days before the one in the Sunday World). These refer to the following words/phrases that are (near) identical in both stories:

• Confidentiality;
• An alphabet puzzle of companies;
• Cross-border transactions; and
• ‘Ordered’ to provide all relevant bank accounts and an explanation of the monetisation process.

I am dismissing these parts of the complaint for the same reasons that I have dismissed them in the CitiBusiness finding. Visit www.presscouncil.org.za (rulings 2011, Musa Capital vs. CitiBusiness, dated July 11, 2011) for that ruling. For ease of reference, I have copied my analysis of these issues under Appendix at the end of the analysis of the complaint at hand.

Analysis

The story, written by Andile April, says that officials from the Financial Services Board (FSB) and forensic experts from accounting and consulting firm PricewaterhouseCoopers (PWC) acted on a court order and “raided” MC’s head offices. This reportedly came after MC was accused of ripping off the Bakubung-ba-Ratheo of about R700 million. The story quotes an anonymous source as saying that the investigators spent the entire day scrutinizing documents in search of the Bakubung tribe’s money, adding that MC’s offices “were being torn apart”. The story ends by stating that MC was ordered to provide, by December 10, an explanation of the “monetisation process” – something that was reportedly not done.

I shall now look at the merits of the complaint:

‘Raid’

The sentence in dispute says: “A swarm of forensic investigators descended on Musa Capital’s Johannesburg offices in a raid that lasted the whole day.”

MC denies that the visit by forensic investigators from FSB was a raid.

Sunday World responds that the FSB said that the offices were raided.

MC replies that:
• the word “raid” is not attributed to a source in the story;
• this office has already found that CitiBusiness has breached the Press Code on the same matter; and
• our finding states that a raid contains the crucial element of taking something from a place without the owner’s consent – and argues that nothing was taken without its permission. MC says: “Indeed, the article never mentioned that items were removed from Musa’s Office”.

The company also denies that its offices were “torn apart”, as the source reportedly said. It says: “In fact, as per our press statement issued on 20 January 2011, PWC conducted itself professionally, and Musa fully co-operated with PWC…”. It adds that its offices were open for business, with an orderly office, both during and immediately after the inspection.

I note that the press statement mentioned above was issued after the publication of the story.

Firstly: I am not going to find against the newspaper just because I have ruled against CitiBusiness on the same matter, as this time there is a material difference between the two stories on this issue – the CitiBusiness story does not call the action a raid (this is only mentioned in the headline and the caption). Also, consider that it is not my task to establish if the offices were raided or not – I need to establish if the newspaper’s reportage on this matter was justified.

Let’s now take a closer look at the story. It reads that MC has felt the “wrath of the law” (first paragraph) when investigators “descended” on it “in a raid” that lasted the whole day (second paragraph). These statements are presented as facts, without any attribution.

However, the fourth paragraph does refer to an unnamed source who reportedly said that the investigators spent the entire day scrutinizing equipment and documents and also that “their offices were being torn apart” (fifth paragraph). The sixth paragraph again mentions this source.

The first issue here is whether the reference to a “raid” can reasonably be ascribed to this source.

While there is some doubt, I am willing to give the newspaper the benefit of the doubt on this point.

This is why:

More often than not the structure of a hard news story is as follows: The intro and sometimes also the second paragraph present the core of the news; then follows a sentence or two that gives context or further information; thereafter the story normally elaborates on the information given in the first/second paragraphs.

When seen in this light, there may be a link between the “raid” of the second paragraph and the “source” in the fourth. This makes it journalistically sound to accept that the information about the “raid” probably came from this source.

More importantly, also note that the words “torn apart” are directly ascribed to the source. This strengthens my conviction that the word “raid” may indeed be derived from this source.

This justifies the use of the word “raid” – which is not to say that it was true that MC’s offices were indeed raided.

However, I wanted to verify this issue – as I have said, there still was some doubt. So I took the newspaper up on its initial promise to make known its source to me.

The newspaper instead sent me an executive summary – addressed to the North West premier – by the administrator of the Bakubung Traditional Authority.

The editor wrote: “My source is reluctant because (reason omitted by me). That is why (the source) has made this document available to you because it – officially – talks to what (the source) spoke to us about which has been admitted as true by the administrator. I really think the document I have forwarded to you is sufficient to back up (the source’s) claim.”

While I do not blame the newspaper for not revealing its source to me – even though I would never have disclosed his/her name – this did not help the newspaper’s case.

So I was left with the administrator’s document. However, there is nothing in this document that supports the reportage that FSB has in fact raided MC’s offices.

This brings me to the next issue, namely the question if the information of the “raid” also came from the FSB.

I have already given the newspaper the benefit of the doubt regarding its anonymous source, because journalistic practices can support this decision.

In this case, however, there is nothing of this sort – there is nothing in the story that prompts me to believe that the information about a raid could have been obtained from the FSB.

So, I asked the newspaper to put me into contact with the relevant person at the FSB from whom the newspaper says it got its information. (The anonymous source is from outside the FSB.)

The Sunday World has not replied to this request.

Therefore: I conclude that the story made use of one, anonymous source (only) to support its use of the word “raid”.

At this point I have to say that it is a dubious journalistic practice to use one, anonymous person as its only source (read: without verification) – as s/he may have ulterior motives and may not have spoken the truth. It is also an accepted fact that the more serious the allegations are against the subject of reportage, the more the newspaper is obliged to verify its information. In this case, with special reference to the use of the word “raid”, there is no question that the newspaper should have informed the public that it relied on one, anonymous source for this specific piece of information.

In fact, it is more than a dubious practice. Art. 1.4 of the Press Code clearly states that, when there is reason to doubt the accuracy of a story, it shall be verified – and if it has not been practicable to verify, it shall be stated in the story.

This has not happened.

This means that, although I am giving the newspaper the benefit of the doubt in that I have decided that the use of the word “raid” can be ascribed to a source, it still was not justified in using that word without informing the public that the source’s information could not be verified.

The story also should have presented the source’s view as his/her opinion, and should not have stated that opinion as a fact – both in the story and in the headline. (See Art. 1.3 of the Code.) I am left with no documentation and no verification, and with only one, anonymous source (whom I cannot contact).

Therefore:

• even though I cannot establish if the use of the word “raid” was accurate, the story should have informed the public that it could not be verified;
• it was not fair to MC to present the view of one person (anonymous, without verification) as the truth;
• this reportage was not justified; and
• it unnecessarily put MC in a bad light.

Missing money

The story says that MC was accused of “ripping off” the Bakubung tribe to the amount of about R700 million and that investigators from FSB and PWC were scrutinizing documents “in a search (for) the Bakubung tribe’s money”.

MC complains that the money is not missing and says that it did not hold or control the funds. It says that authority over and responsibility for the community’s money lies with the Traditional Council.

Sunday World replies that the amount of R700 million that was not accounted for was dealt with in a court case which April attended. The newspaper says: “Court documents show the action brought by the administrator was about compelling them to account for the R700m which the community alleged was unaccounted for.”

I note that the newspaper:
• does not say that this information comes from its source;
• says that the information was contained in court documents; and
• never supplied me with this information, despite my request on 1 February to “please provide our office with all the documentation that may assist us in this matter” and my specific request on September 27 to provide me with the court documents that the newspaper says it based its reportage on.

So: How justified was the newspaper to publish the accusation that MC has “ripped off” the Bakubung of about R700 million?

This must be clear: I am not in a position to decide if MC has ripped off the Bakubung or not, neither is it my job to do so. My only question is whether it was reasonable for the newspaper to have reported the way it did.

Again, I have only the administrator’s document to work with.

MC was quick to question the validity of this document.

But not so fast: Let me first take a look at the content of this document.

The simple fact is that it does not refer to R700 million at all, nor does the amounts mentioned in it add up to that amount.

So: After I have given the newspaper several chances to convince me that it was justified in publishing the allegation that MC was accused of ripping off the Bakubung of R700 million, it has failed to do so – I cannot come into contact with the source, Sunday World did not provide me with the relevant court documentation, and the documentation that the newspaper has provided me with, does not back up this claim.

I therefore have no reason to believe that this reportage was justified, accurate or fair. And again, the newspaper did not verify this information.

This also means that the question as to the validity or invalidity of the administrator’s document is irrelevant as it does not back up the newspaper’s reportage anyway.

This issue is even more serious than the use of the word “raid”. The allegation is an extremely serious one – it can unnecessarily harm MC’s name and, in fact, has the potential to ruin its future.

The headline

The headline reads: Musa Capital offices raided for missing R700m.

MC complains that this is inaccurate as there was no raid, and denies that the R700 million was missing. The company says that the latter has been proven by the audited financial statements of the companies where the community’s assets were held. MC adds that this information has been repeatedly reported to the community in public meetings held by the Bakubung tribe – and that it was made available to the Sunday World.

“Raid”: The headline states a source’s opinion as a fact; it also does so without verification.

“Missing R700 million”: I have already decided that the reportage on this matter was not justified, fair or accurate.

‘Musa Capital Zambia Limited’

The sentence in dispute says: “The source further says the forensic investigators might not find much at Musa Capital offices as the Bakubung funds have been moved to the new, Zambia-based Musa Capital Zambia Limited.”

MC complains that there is no such entity as “Musa Capital Zambia Limited”, adding that April made no attempt to verify this statement with itself.

Sunday World replies that this information comes from a source.

I am again left with only the administrator’s document. This document indeed refers to a company in Zambia – but I note that MC never disputed that it had a company in Zambia. All that is in dispute is the name of “Musa Capital Zambia Limited”.

The document does not mention “Musa Capital Zambia Limited”.

MC also furnished me with a copy of an official, properly signed document from the Office of the Registrar of Companies in Lusaka. This document, dated 14 September 2011, states that the name “Musa Capital (Zambia) Ltd” is available for immediate registration/incorporation.

This makes it improbable that the name was official at the time of the publication of the story in dispute.

The story does ascribe the information to a source, so the newspaper was justified to report it as such (again, this does not mean that it was true). But again, this piece of information was not verified, as it should have been (or mentioned that it could not have been verified).

Note that I have given the Sunday World an extra chance to provide me with documentation to substantiate its reportage – an opportunity that the newspaper missed.

‘This was not done’

The story refers to:
• a High Court order to supply complete accounts and documentation to the Bakubung, and states that MC did not comply; and
• an order to provide by December 10 an explanation of the monetization process, and adds: “This was not done.”

MC says that these statements are false.

Sunday World says that it is a fact that MC “did not comply by that date”. It says: “In fact, the community shares were transferred from BCDC to ACRV, a company controlled by MC!”

MC argues that the newspaper states it as a fact that it had not complied, but does not attribute this “fact” to a source. It adds that the newspaper never contacted MC’s executives to verify this information.

Note that the story indeed presents it as a fact that MC did not comply, without attribution. I also keep in mind that the allegation (presented as a fact) of non-compliance is a serious one.

Again, I cannot find for the Sunday World as it has not produced any evidence to support its reportage – not even after I have given the newspaper an extra opportunity to substantiate its facts.

Therefore, I again do not have any basis to accept that the reportage on this matter was justified, fair or accurate.

I also believe that there was reason to doubt that this reportage was accurate and that this information therefore should have been verified, or that the story should have mentioned that the information could not have been verified.

Comment not used

MC says that it has provided April with relevant information, but complains that he has neglected to use this information.

MC adds that it as well as members of the Bakubung’s Traditional Council have briefed April “as to the precise details of the monetization process and the subsequent allocation by the community of the monies derived from the monetization process to investments and development projects”. MC complains that the journalist nevertheless persisted in ignoring the information given to him.

This time the shoe is on the other foot. MC supplied me with various documents, but not with proof that it indeed provided April with relevant material that he did not use.

General comments

The story in dispute could only have caused MC unnecessary and serious harm. I sincerely hope that this finding will go a long way in undoing some of this damage.

For the record, my email to the newspaper on September 27 (at 08:16) read:

• …you say that the FSB called PWC’s actions a “raid”. I need to verify this with the FSB itself. As your confidential source is from outside the FSB, I suppose there would be no problem to put me into contact with the right person at the FSB?
• …regarding the “missing R700 million”: You say that Andile got this information from a court case. I have no documentation to this effect. Please send me the relevant copy. (The last document you sent me does not mention R700 million.)
• …the document mentioned above does not mention “Musa Capital Zambia Limited” either – it only refers to “Zambia”. Do you have any other document that uses “MC Zambia Ltd”?
• …regarding the sentence “This was not done.” Do you have documentation to base this reportage on?

As this complaint has dragged on for much too long, I gave the newspaper until noon the next day to respond. As indicated above, the newspaper did not make use of this opportunity.

APPENDIX (from the CitiBusiness finding)

‘Confidentiality’

The sentence in dispute says: “Musa Capital repeatedly cited confidentiality in refusing to disclose the whereabouts of the cash, while at the same time creating an alphabet soup of companies, some of which have been involved in cross-border transactions.”

MC complains that the use of the words “cited confidentiality” implies that it used confidentiality as a spurious reason for not supplying information. It argues that, as a financial services provider, confidentiality governs virtually all of its transactions on behalf of clients. MC says that it is a perfectly normal commercial requirement and that Sergeant distorts it to suite his purpose of “proving” that it has something to hide.

Sergeant replies that the use of “confidentiality” is described by an arbitrator as one of Musa’s “dilatory” defences. He says: “There was nothing confidential about Wesizwe donating the shares to the community.”

MC replies that “confidentiality” is a perfectly normal commercial requirement and that it had nothing to do with “the whereabouts of the cash”.

At an informal hearing, the newspaper said that transparency was required in this case and that the mentioning of confidentiality was therefore appropriate.

Note that MC complains that the words “cited confidentiality” imply that it hid behind “confidentiality” to not supply information – yet, at the same time, MC argues that confidentiality is a normal commercial requirement.

MC admitted at the hearing that the phrase in dispute is factually correct, as it indeed cited confidentiality in refusing to disclose information.

‘An alphabet soup of companies’

The disputed phrase is cited in the sentence discussed above.

MC complains that the phrase in dispute implies that it has created fronting organisations to cover nefarious financial dealings. It says that the companies referred to are “special purpose vehicles” that were utilized as part of the monetisation structure (it says that these are often created as part of the normal course of business in the investment banking environment). It adds: “Sergeant knows this information, but prefers to distort the truth.”

Sergeant replies that he has listed 28 companies in one of his numerous e-mails to Musa and/or its lawyers (ENS) and sought details on its “alphabet soup of companies”.

At the hearing, Jimerson argued that the disputed phrase is “destructive language”.

Consider the following:
• MC does not complain that the disputed expression is incorrect – it merely says that it implies some underhanded actions;
• MC admits that it did create some companies; and
• the expression does not necessarily imply wrong-doing.

Again, the disputed phrase does not necessarily imply fronting organisations to cover nefarious financial dealings.

‘Some of which have been involved in cross-border transactions’

The words in question are used in the same sentence discussed above.

MC complains that the use of this phrase in the context of both the overall story and this specific paragraph seeks to give the (false) impression that the cross-border transactions are in some way illicit. It says: “But Sergeant is working to some private agenda in which the implication of malfeasance is useful to him.”

The newspaper says the information that Musa has been involved in cross-border transactions is in the public domain.

MC again does not complain that the words in dispute are false; it merely says that these words imply that cross-border transactions are in some way illicit.

At the hearing, the accuracy of the statement was not in dispute. However, Jimerson argued that this is just one example of how the journalist wanted to influence public opinion against MC.

Clearly, the statement in dispute is accurate and does not necessarily imply covered-up wrongdoing on MC’s part.

‘Orders’ (twice)

The story says that there was an “order” to provide bank statements, as well as an “order” to explain the monetisation process.

MC complains that, given the level of the reporter’s access to lawyers for one of the factions of the Bakubung community, Sergeant should know that both “orders” to which he refers were in fact negotiated agreements between the parties.

Sergeant says that “access” is his business and that Musa has an unhealthy obsession with him. He adds: “During the early weeks of December, Musa somehow managed to persuade the IDC to let go of hundreds of millions of rands in cash belonging to the Bakubung. As anyone by now would imagine, the cash went to anyone but the Bakubung. Musa has, as usual, refused to comment on my request to explain the deal, and no doubt wishes me dead. There are court orders against any further alienation of Bakubung assets, so this IDC matter is yet another instance of Musa being in contempt of court.”

He adds: “Orders, from negotiations or otherwise, are orders. In any event, Musa and its lawyers capitulated, as the arbitrator, John Myburgh SC, has made patently clear, and did not ‘negotiate’ in the normal sense of the word.”

At the hearing, Jimerson argued that the reference to court orders was a misrepresentation, as there were no court orders, only negotiated agreements.

However, it appeared that these “negotiated agreements” became a court order after they were negotiated successfully. This makes the reference to “orders” factually correct.

(End of CitiBusiness finding)

Finding

‘Raid’

The use of the word “raid” can be ascribed to a source.

However, this reportage was based on one, anonymous source only (read: without verification) and the story did not state this fact. This is in breach of Art. 1.4 of the Press Code that says: “Where there is reason to doubt the accuracy of a report and it is practicable to verify the accuracy thereof, it shall be verified. Where it has not been practicable to verify the accuracy of a report, this shall be mentioned in such report.”

The story also presents the word “raid” as a fact, while in fact it was the opinion of a source. This is in breach of Art. 1.3 of the Code that states: “…Where a report is not based on facts or is founded on opinion, allegation, rumour or supposition, it shall be presented in such manner as to indicate this clearly.”

This amounts to unfair reporting, which is in breach of Art. 1.1 that states: “The press shall be obliged to report news…fairly.”

Missing money

The newspaper did not or could not provide me with any ground to convince me that the statement that MC was accused of ripping off the Bakubung to the amount of about R700 million was reasonable, accurate and fair reportage.

This statement, even though it was presented as an accusation, is in breach of Art. 1.4 of the Code.

It is also in breach of Art. 1.1 of the Code that states: “The press shall be obliged to report news truthfully, accurately and fairly.”

The headline

I have already decided that the word(s) “raided” and “missing R700m” were the views of a source, but that they were presented as facts, and that they were not verified. The relevant words in the headline are therefore also in breach of Art. 1.3 and Art. 1.4 of the Code.
‘Musa Capital Zambia Limited’

The newspaper did not verify this information and it also did not inform the public that it could not do so. This is in breach of Art. 1.4 of the Code.

‘This was not done’

I have no reason to believe that the sentence in dispute is accurate or fair and therefore find it to be in breach of Art. 1.1 of the Code.

There was reason to doubt the accuracy of the reportage. The lack of verification, or of informing the public that the information could not be verified, is in breach of Art. 1.4 of the Code.

Comment not used

This part of the complaint is dismissed.

Sanction

The Sunday World is reprimanded for:
• using one anonymous source only, without verification and without mentioning this fact in the story (breaching Art. 1.4 of the Press Code) with regards to the use of the word “raid”, the allegation that MC was accused of ripping off the Bakubung for about R700 million, the phrase “Musa Capital Zambia Limited” and for stating “This was not done” (regarding the provision of all relevant bank accounts and an explanation of the monetization process);
• reporting inaccurately and/or unfairly (breaching Art. 1.1 of the Code) with regards to the word “raid”, the reference to the “missing R700 million” and the sentence “This was not done”; and
• stating someone’s view as a fact (breaching Art. 1.3 of the Code) with its use of the word “raid”.

The newspaper is also reprimanded for using the unverified words “raided” and “missing R700m” in the headline.

The newspaper is directed to apologise to MC for the harm that it unnecessarily caused the company.

Sunday World is directed to publish a kicker on its front page that includes the word “apology” or “apologise” and “Musa”. The text should refer to the following text that is to be published on page 7:

Finance company Musa Capital (MC) lodged a complaint with the Press Ombudsman’s office about a story in the Sunday World, published on January 16, 2011and headlined Musa Capital offices raided for missing R700m.

The story, written by Andile April, said that officials from Financial Services Board (FSB) and forensic experts from PWC (an accounting and consulting firm) acted on a court order and “raided” MC’s head offices. We wrote this came after MC was accused of ripping off the Bakubung-ba-Ratheo of about R700 million. We quoted a source who said that the investigators spent the entire day scrutinizing documents in search of the Bakubung tribe’s money and added that MC’s offices “were being torn apart”.

Deputy Press Ombudsman Johan Retief said in his finding that this story “could only have caused MC unnecessary and serious harm” and that it even “has the potential to ruin its future”.

He reprimanded us for:

• using one anonymous source only, without verification and without mentioning this fact in the story (breaching Art. 1.4 of the Press Code) with regards to the use of the word “raid”, the allegation that MC was accused of ripping off the Bakubung for about R700 million, the phrase “Musa Capital Zambia Limited” and for stating “This was not done” (regarding the provision of all relevant bank accounts and an explanation of the monetization process);
• reporting inaccurately and/or unfairly (breaching Art. 1.1 of the Code) with regards to the word “raid”, the reference to the “missing R700 million” and the sentence “This was not done”; and
• stating someone’s view as a fact (breaching Art. 1.3 of the Code) with its use of the word “raid”.

He also reprimanded us for using the unverified words “raided” and “missing R700m” in the headline.

Retief said that it is a dubious journalistic exercise to use one, anonymous person as the only source of a story – as s/he may have ulterior motives and may not have spoken the truth. He continued: “In fact, it is more than dubious. The Press Code clearly states that, when there is reason to doubt the accuracy of a story, it shall be verified – and if it has not been practicable to verify, it shall be stated in the story.”

He dismissed the complaint regarding the use of the word/phrase “confidentiality”, “an alphabet puzzle of companies”, “cross-border transactions’, and “ordered” to provide all relevant bank accounts and an explanation of the monetisation process, saying that our reportage regarding these issues was factually correct. He also dismissed the complaint that MC provided our journalist with relevant information that he omitted in the story.

• We hereby apologise to Musa Capital for the unnecessary and serious harm that we caused the company.

Visit www.presscouncil.org.za (rulings, 2011) for the full finding.

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 contacted at Khanyi@ombudsman.org.za.


Johan Retief

Deputy Press Ombudsman

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