Iqbal Meer Sharma vs Mail & Guardian

Complainant: Iqbal Meer Sharma

Lodged by: Iqbal Meer Sharma

Article: Transnet tender boss’s R50-billion double game – Guptas, Duduzane Zuma are hidden stakeholders in a strategic locomotive subcontracting company.

Author of article:  Lionell Faull, Vinayak Bhardwaj, Sam Sole and Stefaans Brümmer

Date: 28 August 2014

Respondent: Mail & Guardian

COMPLAINT

Sharma is complaining about an article published in the Mail & Guardian on 4 July 2014, headlined Transnet tender boss’s R50-billion double game – Guptas, Duduzane Zuma are hidden stakeholders in a strategic locomotive subcontracting company.

He complains that:

  • the story was untruthful, misleading and unbalanced (details below);
  • the article misleadingly implied that he had either a direct or an indirect relationship with VR Laser Services;
  • a board member(s) of the newspaper had an influence on the publication of the story;
  • the sub-headline in the body of the story that referred to Bollywood was misleading;
  • he was not given sufficient time to respond; and
  • allegations made in the article were malicious and that the article has harmed his reputation and dignity.

THE TEXT

The story, written by Lionell Faull, Vinayak Bhardwaj, Sam Sole and Stefaans Brümmer, said that Sharma (who presided over Transnet’s R50-billion tender for locomotives) “has joined forces with the Gupta family and President Jacob Zuma’s son, Duduzane, in a move that potentially puts them in pole position to benefit from key sub contracts”.

The journalists also reported that Sharma had entered into negotiations in December to buy a Gauteng engineering firm (VR Laser Services) that produces steel plate components for heavy vehicle bodies.

They added: “In February, a company in which Rajesh Gupta and Duduzane Zuma are partners acquired their stake in VR Laser – an interest they have endeavoured to keep hidden.”

ANALYSIS

Untruthful, misleading, unbalanced

Sharma says that VR Laser Services consists of two divisions – Inyathi Plate Processing, and VR Armour Plate Components. The former specializes in free issue cutting of all types of steel (and is capable of processing up to 4 000 tons of steel a month ranging from 4-mm plate thickness up to 300-mm), while the latter focusses in the cutting of armour components for the military industry.

 

Also:

The story said…                                              The complaint

Sharma negotiated “in December” to buy VR Laser. Sharma already met with the company in March 2013, initiated formal discussions two months later (in May), and concluded the deal early in December 2013.
Laser Services has “performed services” for Transnet since 2006 to the value of R1-million. The last invoice was in 2011 and represents a paltry amount of business, and the company is currently not doing any business with Transnet.
“Transnet would later create a new structure, formally called the board acquisitions and disposals committee, to supervise the planned pipeline of future large-scale infrastructure spending.” This committee (the Board Acquisitions and Disposals Committee, BADC) did not have the authority to decide on the assignment of tender awards – it merely provided oversight on the process followed by executives.
“Sharma was quietly appointed to chair this committee. Previously, Transnet’s individual subsidiaries had supervised their own procurement processes. The newly created board oversight committee, which Sharma chaired, took over the supervision of all tenders worth more than R2.5-billion. The suggestion that the chairman of the Board was influenced and that the appointment was done “quietly”, pointed to something sinister. The article made no mention of the chairman or of his role, and it neglected to say who had appointed him as chairman.

 

He adds that the Guptas are his friends and have been for over a decade. “I did not meet them in my official capacity as CEO/DDG of Trade and Investment South Africa, a division of the Department of Trade and Industry (as stated in the story).” He states that he is fully aware of the controversial nature of the Gupta family in relation to the SA media. Yet, he says he finds it “disgraceful and cheap conduct on the part of the M&G” to attack him for having an association with the Guptas or Duduzane Zuma – whether he does business with them or not is a personal matter and entirely allowed under the law of the land. The statement about the Guptas and Zuma being “hidden stakeholders” clearly shows that they are targets of the M&G – but now he is being dragged into the assaults on them.

The M&G denies that the article contained lies and fabrications. On the contrary, “it is based entirely on facts gleaned from a combination of documentary evidence and on-the-record corroboration by identified sources”. It says that this corroboration included speaking to the former majority owner, Mr John van Reenen (who sold his share of the company to Sharma), and to the minority empowerment shareholder, Mr Benny Jiyane (who later agreed to sell his stake to Craysure Investments, the company associated with Rajesh Gupta and Duduzane Zuma).

The newspaper says Sharma appears to be arguing that VR Laser is a defence, and not a rail company. While it does not dispute that VR is a key player in the defence industry, it argues that Inyathi performs technical functions that conceivably can be used for the manufacturing of components for locomotives.

Besides, even VR Armour Plate’s capabilities and expertise are relevant to locomotive manufacturing. The company’s website says that this division is capable of “fabrication of hulls/capsules”.

“As such, the two constituent companies cited by Mr Sharma have the combined capability to cut steel plate of multiple thicknesses AND to manufacture vehicle hulls, or bodies.”

The publication adds that:

  • it twice offered Sharma the opportunity to correct and/or clarify all salient factual matters ahead of publication – a chance of which he did not make use. (Also see the arguments below under the heading Not sufficient time to respond);
  • the story did reflect that the purchase agreement was concluded in December;
  • the article mirrored the fact that various elements of the purchase agreement took time to tie up over several months post-December;
  • the story made it clear that Transnet had not finalised the locomotive tender award until March 17, which means that Sharma had tied up his private interest in VR Laser a matter of weeks before the tender was finalised – “this (undisputed) timing is critical to understanding why his dual role as BADC chair and investor in VR Laser was problematic”;
  • the fact that Sharma first met with VR Laser in March 2013, does not exonerate him from concerns about his conduct as BADC chairman – “indeed, it exacerbates the concerns”; and
  • Sharma knew that a second, much bigger contract was looming – the award of which he would again be supervising (Transnet had announced in October 2012 that 1 064 locomotives would be procured).

The M&G concludes there is demonstrable evidence that VR Laser intended to benefit from forthcoming Transnet refurbishment contracts; that the company had done so (albeit on a limited scale) since 2006 – a fact that was confirmed by Transnet; and that all the major bidders for the Transnet locomotive tender actively considered VR Laser as a potential subcontractor.

“It is noteworthy that neither Sharma in his complaint, nor any other relevant party, has denied these highly significant visits by all the eventual winning bidders that took place as Sharma was concluding negotiations for the acquisition of VR Laser.”

Regarding the Guptas: The newspaper says that the sketching of the Guptas’ role relied on previously published articles in both the M&G and in Business Day (June – July 2011). Questions were put to him about this matter, but he chose not to respond.

Moreover, Sharma told the newspaper in 2011 that he had no business relationship with the Guptas. Yet, the article cited two demonstrable business relationships with the Guptas since late 2013 – Craysure Investment’s acquisition of a 24,9% stake in VR Laser, and the transfer of shares from Gupta-linked companies to companies owned by Sharma and Mr Salim Essa – majority owner of VR Laser Services – in the National Agricultural Development Project.

The newspaper provided this office with documentary evidence to back up its argument.

The M&G also denies that the article attacked Sharma for having an association with the Guptas and Duduzane Zuma. It says that it was true that there was a relationship – knowledge of which was in the public interest (as Sharma served on the Transnet board and was the chairman of BADC, while they partly co-owned various parts of the VR Laser entity).

The newspaper says that the story’s blurb (the sub-headline) should be read in the context of the headline and the opening paragraph.

These stated:

  • “Transnet tender man’s R50-billion double game” (headline);
  • “Guptas, Duduzane Zuma are hidden stakeholders in a strategic locomotive subcontracting company” (sub-headline); and
  • “The man who presided over Transnet’s R50-billion tender for locomotives has joined forces with the Gupta family and President Jacob Zuma’s son Duduzane, in a move that potentially puts them in pole position to benefit from key subcontracts”.

It argues: “Taken together, these elements accurately summarise a factual situation that is in the public interest. As is standard journalistic convention, the facts are then fleshed out in considerable detail within the body of the story, bolstered by documentary evidence such as share registers and on-the-record source corroboration.”

“Hidden stakeholders”: The M&G says that Sharma, Essa and Jiyane independently of one another failed to disclose that the Guptas and Zuma held a stake in VR Laser. “The story reflected their evasions, and contrasts if with the evidence contained in the share registers.”

The newspaper concludes that the story has not violated the Press Code and did not wage a war against the Guptas and Zuma – neither was Sharma “collateral” (which would mean that he was an innocent bystander in the story, as opposed to being its central figure).

The BADC: The M&G says it put questions to both Sharma and Transnet regarding the formation and function of the BADC, but neither responded. “Mr Sharma now corrects us to say that this committee’s existence pre-dated his appointment to it. This may be the case, but we took reasonable steps to verify all our information with [them].” Still, it should be kept in mind that the committee had overall supervision of all Transnet group tenders above a certain threshold amount, which included the contract for 1 064 locomotives.

The newspaper also denies that the article claimed that the BADC “decides on the assignment of tender awards” (as Sharma seems to suggest in his complaint). It notes a Transnet press release on 17 March 2014, announcing the awardees of the tender for 1 064 locomotives. This release inter alia said: “The award follows an open and public tender process overseen by the Board of Directors through a sub-committee of independent directors.” (emphasis added)

The M&G mentions several passages in the article referring to the BADC as performing an oversight and supervisory function.

The newspaper adds that the reference to Sharma’s “quiet” appointment was not intended to cast sinister aspersions on anybody. “Rather, the appointment was quiet in comparison to the public outcry that met his mooted appointment as board chair…his appointment…passed unnoticed at the time by politicians, the media and the general public.”

Again, Sharma chose to ignore questions in this regard.

My considerations

I am adjudicating the above point by point, in the same order:

VR Laser – two divisions

Sharma’s argument that VR Laser Services consists of two divisions is neither here nor there. The M&G’s contention that these two divisions have the combined capability to cut steel plate of multiple thicknesses and to manufacture vehicle hulls makes its reporting on this issue reasonable.

Negotiations, performing services

It may be true that Sharma met with the company in March 2013 already and initiated formal discussions two months later; the fact of the matter remains that the purchase agreement was concluded in December. The statement in the article that Sharma negotiated “in December” to buy VR Laser is therefore essentially true (even though there have been discussions prior to December.

BADC

The complaint on this issue is frivolous. Sharma says that the BADC did not have the authority to decide on the assignment of tender awards, but the story did not say that – it merely said (several times) that this committee had to supervise (oversee) matters.

Quietly appointed

I have no reason not to believe that Sharma’s appointment was “quiet” in that it went greatly unnoticed. The implication of something sinister is not necessarily embedded in the article.

Guptas, Duduzane Zuma

I accept Sharma’s argument as outlined above, but that does not really speak to the heart of the matter. Sharma and the Guptas may have been friends for over a decade, and it may be true that doing business with them is “entirely allowed under the law of the land” – but the M&G’s argument that the business relationship between them is in the public interest overrides Sharma’s complaint (on this issue).

Also, I do not believe the article was meant as an attack on Sharma.

The documentary evidence the M&G provided shows that the Guptas and Zuma were indeed stakeholders in VR Laser (as outlined in the newspaper’s argument above). Because Sharma denied this, the reference to “hidden stakeholders” was justified.

Misleadingly implying a relationship with VR Laser Services

Sharma complains that the article misleadingly implied that he had either a direct or an indirect relationship with VR Laser Services. He says that he needed to secure additional investors, which is why he approached Essa – who bought approximately 75% of VR Laser Services while an existing shareholder remained with the balance. “I did not participate in the company… [and]I remain with a property company (VRLS Properties) and have nothing to do with the operating business.”

The M&G says it seems that the crux of Sharma’s argument appears to be that he only bought VRLS Properties, “the company which owns the factory premises where VR Laser operates”, and not VR Laser itself.

However, the newspaper says there are many ways in which Sharma has “much to do” with VR Laser. These include:

  • The intent to purchase VR Laser at the outset;

Motivation:

In his complaint, Sharma confirms that he approached VR Laser first, and that he included Essa afterwards. “It is clear that Mr Sharma’s intent to buy VR Laser was unambiguous at the outset.”

That is why the story said: “John van Reenen, one of VR Laser’s founding co-owners, confirmed that Sharma had bought VRLS Properties and that Essa had bought the operational side, VR Laser Services. However, Van Reenen recalled that during initial purchase negotiations Sharma represented both companies. ‘It was always made quite clear to me that [Sharma] had this associate (Essa), who would be taking over the steel company, and that Sharma was negotiating on Essa’s behalf’.”

  • A prior business relationship with Essa in Issar Capital (which bought VRLS Properties);

Motivation:

On Issar’s website, Essa is depicted as a respected SA business and management consultant, and is linked to Sharma.

That is why the story said: “Essa has previously been profiled as one of the ‘leaders’ of Sharma’s investment company, Issar Capital, which owns VRLS Properties. A screen grab of the Issar Capital website, taken in May last year, shows that Essa was the directly involved with Sharma in Issar Capital. Essa no longer appears of this website. Given this back story, Essa was strangely evasive about his connection with Sharma, claiming not to know who owned VRLS Properties. On being told that Issar Capital owns the property company, Essa said he had ‘heard of the name’ and then hurriedly excused himself from the call. He did not respond to further written questions.”

  • A business relationship with Essa in other, overlapping, ventures;

Motivation:

(Appendix 8, to which the newspaper refers, is not in the file)

This is what the story said: “Sharma and Essa are co-directors in another business, solar panel manufacturing company Daqo South Africa, since November 2012. Daqo is headquartered in Issar Capital’s Sandton office. They are also co-directors in a third company, National Agricultural Development Project, since December 2012. This company is not located at Issar Capital. Incidentally, the company’s share register shows that Sharma and Essa each acquired a shareholding in National Agricultural Development Project from Gupta-owned companies on the same day in November last year.”

  • Deriving a direct material benefit from VR Laser;

Motivation:

When initially approached about the transaction, both Sharma and Essa told the newspaper that the former’s company (VRLS Properties) had received rent from the latter’s VR Laser. “Thus, Mr Sharma derives direct material benefit from VR Laser’s business.”

This is reflected in the graphic accompanying the story.

  • A possible intention of deriving future material benefit from VR Laser.

Motivation:

Given the proximity of Sharma and Essa in some transactions, it is difficult to believe that the former has nothing to do with VR Laser.

That is why the story said that the splitting of VR Laser into a “property company” and an “operations company” was done perhaps to ward off accusations of a direct conflict with his Transnet role; and that Sharma could, in due course, profit from the operations company.

The M&G adds that it asked both Sharma and Transnet about conflict of interest, and the story (several times) reflected their denials. However, the article justifiably pointed out the facts that contradicted Sharma’s claims.

My considerations

Documentary evidence provided by the newspaper proves that Essa plays a leading role in Issar Capital.

I also take into account that Sharma confirmed that he approached VR Laser first, and that he included Essa afterwards, along with his admission that his company (VRLS Properties) received rent from VR Laser services.

Therefore, I do believe that the M&G was justified in believing that it was not true that Sharma had nothing to do with VR Laser – even though it may be true that Sharma was not actively involved in the operating business.

Influenced by board member(s)

Sharma says that he has it “on good authority” that a board member (or members) of the newspaper had an influence on the publication of the article.

The M&G denies this. It says: “On the contrary, the story is based entirely on documentary evidence and on-the-record corroboration by sources.” The newspaper adds that it is ironic that Sharma should resort to unnamed sources to bolster his claim in this regard, when the story itself quoted only named sources and cited clearly identified documentary evidence.

My considerations

Sharma never attempted to give this office any evidence of the alleged influence of a board member(s) on publication. In the absence of such evidence, his statement that he had it “on good authority” cannot be strong enough to find against the newspaper on this issue.

Sub-headline misleading (‘Bollywood’)

One of the sub-headlines in the story mentioned Bollywood. This referred to the following statement in the story: “Far from being a grey cog in the government machine, Sharma’s marriage to a Bollywood actress has on occasion landed him in the gossip pages of the Indian tabloid press.”

Sharma complains that this sub-headline had no bearing on the story and argues that this unnecessarily dragged his wife into the matter. He says that he was only once mentioned in the Indian media. “It is [therefore]unconscionable that the M&G would resort to cast aspersions on my character by saying I appear in gossip columns due to my marriage to an actress, when in fact I was a victim of assault.”

The M&G replies that the facts reported are true. “The Indian tabloid media still periodically makes reference to this incident (when Sharma was allegedly assaulted by another Bollywood actor in 2012) – for example, one such article was published as recently as this week (…Bollywood’s crime diaries, July 28 2014).”

The newspaper argues that the purpose of including this information was to show that Sharma was a public figure both in South Africa and in India.

My considerations

The inclusion of the Bollywood remark indeed showed that Sharma was a public figure both here and in India. There is no way that this reference can be in breach of any section of the Press Code.

Not sufficient time to respond

Sharma says that the reporter contacted him less than 48 hours prior to publication (not enough time to respond). He states that he informed the journalist that he was travelling abroad, and that he suggested the reporter should email him his questions. Sharma says that the questions contained contentions and unproven statements, arguing that they needed a considered response.

He adds that the M&G was going to print anyway because of its particular agenda, which is why the newspaper contacted him so late.

The M&G says it contacted Sharma telephonically twice during the afternoon of July 1, after which the reporter sent him an email early the next morning – giving him 24 hours to respond. This, the newspaper argues, was reasonable time (as required by the Press Code). Moreover, when Sharma received the questions, he did not ask for more time. There was further communication between the reporter and Sharma that very day.

My considerations

The nature of the questions (by Faull, dated July 2) was such that I do believe the reporter gave Sharma reasonable time to respond. If he felt that he had too little time, he should have objected when the journalist approached him.

It is regrettable that Sharma did not see his way open to respond to all the M&G’s questions – in the absence of which the newspaper cannot be blamed for reportage that may not have been 100% correct.

Malicious; harming reputation, dignity

Sharma complains that the M&G has essentially become “hacks for hire” to settle personal agendas for its sources. “It is telling that no other media house or news agency picked up or followed up on the M&G story and that Transnet found no substance in the story to warrant any further communication.”

He also denies any conflict between his private business affairs and his role in and responsibility to Transnet – any such inference is “false, malicious and defamatory”, as VR Laser has never done or planned on doing any business with Transnet. The company has not done any business for the past three years and in the preceding five years did business to an average value of R200 000 per year.

He says that the story refers to his position as BADC chairman; this giving him a particular insight into the opportunities that could arise from the tender and that he then acted on the information by acquiring a company to benefit from the locomotive tender.  However, the BADC (under his chairmanship) decided that information relating to the tender would only be disclosed to the officials engaged in adjudicating the tender – so, no information of any substance was shared with the committee. He says he had as much information as Joe Public, and had no knowledge that could have led him to buy a loss-making armour-plate processing factory.

“The fact that board member(s), who are the sources for the story, have been suggesting otherwise to the media is malicious.”

Sharma argues that as a private businessman the only asset he has is his reputation and dignity, “both of which have been harmed by the M&G”. He adds: “If I have violated any law or governance requirements, then I should be exposed and punished, but in the absence of any wrongdoing I should not be dragged through the mud by the M&G.”

The M&G denies that the article was aimed at damaging Sharma’s reputation, dignity and character. Instead, the newspaper says that it intended to inform the public about a matter of public interest (as Sharma occupied a position of public trust as chairman of Transnet’s BADC, in which position he supervised Transnet’s procurement of R50-billion’s worth of locomotives – public money spent for the public benefit).

The journalists also refute the statement that they have essentially become “hacks for hire” to settle personal agendas for their sources. They add that the fact that no other media house or news agency has picked up on the story, and that Transnet did not see the merit in continuing to communicate on this matter, are irrelevant – “the story stands on its own facts”.

My considerations

In light of all of the above, it follows that I do not believe for a single moment that the reporting was malicious or that it has unnecessarily harmed Sharma’s reputation and dignity.

FINDING

The complaint is dismissed.

APPEAL

Our 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 Adjudication Panel, Judge Bernard Ngoepe, fully setting out the grounds of appeal. He can be contacted at Khanyim@ombudsman.org.za.

Johan Retief

Press Ombudsman

 

 

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