Pravin Gordhan vs Sunday Times

Complainant: Pravin Gordhan

Lodged by: Tebogo Malatji of Gildenhuys Malatji Inc

Article: Call to probe Pravin Gordhan over SARS spy saga – KPMG report confirms our story piles pressure on ex-finance minister

Author of article: Piet Rampedi, Mzilikazi wa Afrika and Stephan Hofstatter

Date: 15 December 2015

Respondent: Susan Smuts, legal editor of the Sunday Times

Complaint

Gordhan is complaining about a front-page story in Sunday Times of 4 October 2015, headlined Call to probe Pravin Gordhan over SARS spy saga – KPMG report confirms our story piles pressure on ex-finance minister. He also complains about an editorial headlined, Keep shady doings in SARS out in the open (page 16).

He complains that the:

·         article and the headline were couched in terms which implied that he had been dishonest;

·         editorial raised the question of the publication’s motives regarding its reportage; and

·         newspaper did not give him reasonable time to respond, and that the questions to him were inadequate.

The texts

The article was written by Piet Rampedi, Mzilikazi wa Afrika and Stephan Hofstatter.

The front-page story called for a probe into whether former finance minister Pravin Gordhan knew that a rogue unit at SARS had been spying on taxpayers. Reportedly, this was a recommendation in a KPMG report submitted to SARS commissioner Tom Moyane. The story called this a confirmation of news reports that the unit had been “engaged in unlawful interception of communication”.

“The (KPMG) report, seen by Sunday Times reporters, reveals that SARS blew more than R106-million in taxpayers’ money running ‘a covert and rogue-intelligence unit’ that spied on South Africans, and then repeatedly lied about its existence to the public.”

The article also stated that, according to the KPMG report, SARS needed to engage the Office of the Public Protector and apologise for misleading it.

The journalists reported, “SARS officials under the tenure of former SARS deputy commissioner Ivan Pillay told the public protector the rogue unit did not exist. ‘[This] constitutes possible criminal liability to mislead the Office of the Public Protector,’ the report says.”

The story made several references to Gordhan, which will be quoted below.

With reference to the unit, the journalists quoted the KPMG report as stating that:

·         it had operated outside the normal controls, protocols and over-sight structures of SARS;

·         its agents had unlawfully intercepted communications of taxpayers; and

·         its agents had unlawfully monitored, recorded and transcribed recordings at National Prosecuting Authority offices on Pillay’s instructions.

The editorial said the newspaper’s continued reporting on the existence of a rogue unit were corroborated from three independent quarters – a report by Adv Muzi Sikhakhane, an advisory board under the leadership of retired judge Frank Kroon, and now a report by auditing firm KPMG. “All three have been unequivocal about their findings – that former deputy commissioner Ivan Pillay should be held accountable for establishing an unlawful unit that operated with intelligence functions.”

It mentioned the minister in the following sentence: “The KPMG report – on which we report today – asks that Pravin Gordhan explain how he could not have known what was happening under his watch, first as SARS commissioner and then as finance minister.”

Analysis

Implication of having been dishonest

After setting out the allegedly unlawful activities of the “rogue unit”, the article stated with reference to Gordhan:

·         The KPMG report recommended that he should face a probe into whether he knew about a rogue unit at SARS that had been spying on taxpayers;

·         He was SARS commissioner from 1999 to 2009 and finance minister from 2009 to 2014, before he was moved to co-operative governance;

·         The rogue unit was established by Pillay at the time when he Commissioner of SARS;

·         He had (previously) publicly denied any knowledge of the alleged unit’s unlawful activities;

·         He issued a statement in May saying he had never approved any illegal activities while heading SARS and that “the establishment of an additional unit within the Enforcement Division was entirely legal. Any suggestion to the contrary is rejected emphatically”;

·         The KPMG report found no evidence that he had been informed about the existence of the unit; and

·         Considering his position as accounting officer, it was reasonable to expect that he ought to have known of the existence of the unit, and that this aspect required further investigation.

(I shall entertain the comments of Gordhan’s successor, Mr Oupa Magashula, about Gordhan under the sub-heading, No reasonable time to respond; questions inadequate below.)

From this, as well as from the main headline, Gordhan concludes that the newspaper attempted to create an impression that he was the focus of the (KPMG) report, and that he had dishonestly denied involvement in illegal activities.

Malatji argues, “The thrust of the article was that a forensic report had concluded that ‘it was reasonable to expect that’ our client ‘ought to have known of the existence of the [allegedly rogue]unit’ and that he should therefore ‘face a probe into whether he knew a rogue unit at the South African Revenue Service was spying on taxpayers’.”

He adds the reportage that Gordhan had never publicly denied any knowledge of the unit’s unlawful activities was couched in terms which implied that he had been dishonest.

The attorney concludes, “The contents of the article which concern our client were therefore both temporally and definitionally distinct from the subject matter to which our client’s statement referred to and quoted in the article related. Therefore, it could not have been sufficient for the publication to simply reflect our client’s views made in respect of separate (albeit related) allegations. The reference to our client’s previous statement is in any event couched in terms which imply a conclusion that our client is dishonest.”

Smuts denies the story suggested that the newspaper tried to create the impression that Gordhan had been the focus of the report. “We (merely) reported on the findings of the report, and focused on what we believed were the most newsworthy and relevant aspects… [W]e were (also) at pains to reflect that the KPMG report found no evidence that Mr Gordhan was informed of the existence of the unit.”

She says the references to Gordhan mainly referred to findings of the KPMG report.

The legal editor also denies that the content of the article and the subject matter of Gordhan’s statement were distinct. She says that the inclusion of the statement was relevant, especially in light of the limited response from Dumisa Jele, Gordhan’s chief of staff. She also denies the story implied that Gordhan was dishonest. “Furthermore, it accords with the letter he [sent]in response to the article… [I]f Mr Gordhan had decided in the interim to distance himself from the May statement, it would still have been legitimate to include a reference to the statement in our story. The only…legitimate objection he could have to the inclusion of the statement is if he did not make it, which he has not claimed.”

My considerations

The central question is this: Would the reasonable reader have been left with the impression that Gordhan was dishonest?

The relevant issues in this regard, arising from the complaint, are whether the article and the headline created the impression that Gordhan:

·         had dishonestly denied involvement in illegal activities; and

·         was the focus of the KPMG report.

However, a much more fundamental issue is at stake here. (Even if Gordhan did not address the issue below, a Panel of Adjudicators has recently decided that this office may entertain new issues in a finding if these are important enough.)

The reportage as a whole essentially stands or falls with the validity of the KPMG “report”, and therefore also with its summary.

The newspaper is adamant that both these documents are genuine, and even provides the panel with a photograph of the cover page of the report itself. This is headlined, South African Revenue Service – Report on Allegations of Irregularities and Misconduct – KPMG Services Proprietary Limited. It is dated 3 September 2015.

The panel notes that the articles consistently refer to this document as a “report”, and not as a “draft report”.

However, on 14 December Deputy Finance Minister Mcebisi Jonas was reported as saying that the document being referred to was still a draft and that there was no final report as yet.

We then asked the newspaper for comment on this issue.

Van den Berg explains: “The (newspaper’s) investigative units’ sources confirm that the KPMG have handed over the final report. A draft was sent to the Commissioner and SARS’ attorneys commented on the draft. A final report was prepared taking into account the comments in the SARS’ lawyer’s letter. Thereafter eight copies of the report were prepared each one clearly watermarked and the recipients including (sic) the Minister of Finance and his deputy. From a KPMG perspective it appears to be final and was sent to SARS and Treasury some time ago.”

On the other hand, these were the Deputy Minister’s words on this matter:

The KPMG report remains a draft. There is no final report and there is a process of responding to all the issues…that they have raised both in terms of the content and the structure of the report and what to do with the report in any case. That process is going on. Until that process is finalised and has been signed off by both clients, which is SARS and Treasury, we can’t actually have a final report.”

It is unthinkable for this panel to simply ignore these words – whether our action in this regard is “unusual” or not.

This left the panel with two versions which were mutually exclusive.

To clear up this matter once and for all, the Ombudsman asked KPMG itself whether the report had already been released or not. I was told on good authority that there were six draft reports, and that the copy that was leaked to Sunday Times was among the earlier ones. Also, that the final report has not been released yet.

Based on this, the panel has to accept that the “report” with which Sunday Times worked was a draft, and therefore that no statement contained in that draft was final. Furthermore, not only could these “findings” have been changed, but there is no reason to assume that even the final findings would have been accepted by SARS (or Treasury).

This means that not only was the content of the stories inaccurate, misleading and unfair, but the conclusions in both the editorial and the sub-headline of the main story (namely that the newspaper’s reportage prior to the “release” of the “report” had been validated) cannot be correct – or were, at best, premature.

The only conclusion that the panel can come to is that the newspaper’s reportage has unnecessarily tarnished Gordhan’s dignity and reputation.

The panel has to stress that what was contained in the summary may (or may not) turn out to be correct at some later stage – but we are convinced that the newspaper was not justified to present those “findings” as the true version of KPMG’s final report at the time of publication.

This leaves only two options regarding Rampedi, who is adamant that he saw the “report” – either he was misled by his source, or he deliberately misled the public, his newspaper, as well as this office.

The panel is not in a position to determine which of these two possibilities is true, and we leave it to the newspaper to take up this matter with the reporter.

Newspaper’s motives (editorial)

The editorial stated, “The KPMG report – on which we report today – asks that Pravin Gordhan explain how he could not have known what was happening under his watch, first as SARS commissioner and then as finance minister.”

Malatji states, “The thrust of the editorial appears to be that the alleged KPMG report should be made public. While this statement…is contained in an editorial piece, it is clearly made as a statement of fact, and does not constitute comment. The comment portions of the editorial are written in a manner which raises the question of the motives the publication had in printing both the article and the editorial. There is an emphasis on self-vindication rather than a demonstration of honest expression of opinion, or honest and balanced reporting of facts. The publication also appears to have placed its own dignity and reputation above those of our client.”

He adds, “No attempt was made in the editorial to reflect our client’s view, present or historical (regarding this statement).”

Smuts regards the complaint concerning a statement of fact in the editorial as puzzling. “Comment is protected both under the Press Code and the Constitution provided the facts on which it is based are fairly stated. There is no prohibition on stating facts in comment pieces – the opposite is in fact true. We submit the facts in the editorial were fairly stated.”

She adds that the KPMG report did ask the questions about Gordhan – and the editorial properly attributed these questions to the report.

She also submits that the newspaper was perfectly within its rights to comment that the KPMG report had vindicated its reporting prior to the texts that were published on 4 October 2015. “Our newspaper and our reporters had been subjected to a campaign to undermine them. It does not follow from the published comment that we put our own dignity and reputation above that of Mr Gordhan. Even if such a case had been persuasively made by the complainant – which we deny – it would not demonstrate a breach of the Press Code in and of itself.”

My considerations

Even if an editorial includes a statement of fact (which it often does), it cannot be in breach of the Press Code – unless the statement in question is demonstrably untrue.

Section 7 of the Press Code is relevant in this instance. It reads:

·         7.1: “The press shall be entitled to comment upon or criticise any actions or events of public interest provided such comments or criticism are fairly and honestly made;

·         7.2: “Comment by the press shall be presented in such manner that it appears clearly that it is comment, and shall be made on facts truly stated or fairly indicated and referred to;

·         7.3: “Comment by the press shall be an honest expression of opinion, without malice or dishonest motives, and shall take fair account of all available facts which are material to the matter commented upon.”

However, this specific statement of “fact” is not a statement of fact at all – it is contained in a draft document that still underwent some changes, and may not even be accepted by SARS in the first place.

No reasonable time to respond; questions inadequate

Gordhan complains that:

·         both the article and the editorial constituted critical reportage in respect of himself, which means Sunday Times should have given him reasonable time to respond – which it did not do; and

·          the newspaper did not accurately inform him (or Jele) what was to be published, and therefore did not enable him to comment meaningfully.

Firstly, Malatji explains that the newspaper sent an e-mail to Jele, as Gordhan’s chief of staff, at 11:49 the day before the article and editorial were published, asking him to comment before 15:00 that same day.

“It was sent mere hours before the publication deadline of a weekly newspaper, which does not have the same time constraints as a daily publication, giving my client less than a reasonable time in which to comment.”

Additionally, Malatji says that Gordhan was not:

·         afforded an opportunity to respond to Magashula’s comments;

·         informed that the KPMG report allegedly recommended criminal proceedings against him for approving Pillay’s contract (he was not informed as to what was going to be published);

·         told that the article would be focused on himself, rather than on the KPMG report; and

·         provided with the KPMG report.

Smuts agrees that the amount of time given to Gordhan was truncated, but this was because the newspaper only received the report late in the week – and contacted him as soon as the journalist could verify his information, she says.

However, she argues that although the time given for response was “severely limited”, the subject matter of the questions could not have come as a surprise to Gordhan – he had previously been approached for comment regarding a story on Mr Ivan Pillay’s contract, published in October 2014, but he did not respond to the requests despite initially indicating that he would. He had also previously issued statements on the so-called rogue unit. “The only new aspect was that the KPMG report had made findings about these matters.”

The legal editor says the newspaper reflected the response from Jele as well as Gordhan’s earlier statement about the rogue unit, and the latter’s letter was published in response to the articles in question a week after their publication.

“We submit this constitutes an adequate right of reply.”

Smuts adds that there was no reason for the newspaper to ask Gordhan for comment on Magashula’s comments – the latter’s views were not presented as fact, but were properly attributed as his response to the findings of the KPMG report.

“We (also) point out that Mr Gordhan did not object to or deal with Mr Magashula’s comments in his letter responding to the article. That begs the question of why it is relevant now?”

She says the newspaper does not understand why it should find it “extraordinary” that it reported on a document that Gordhan had not seen. “We were reporting on a document that we had seen. We accept that Mr Gordhan might find it extraordinary that he had not seen the report if we had had access to it, but that is a complaint better addressed to SARS, and not to us.”

My considerations

The journalist gave Jele exactly 3 hours and 11 minutes to respond. The question whether such a short space of time was reasonable will firstly be determined by the degree of “difficulty” and seriousness of the questions posed. I therefore need to look at exactly what the reporter asked.

The journalist’s e-mail said:

As discussed briefly over the phone, Sunday Times has seen the KPMG report which confirms the Sikhakhane report that SARS operated a rogue unit whose activities were unlawful. The report also made a few findings against minister Gordhan.

The report says Minister Gordhan should be investigated because, as the accounting officer (SARS commissioner), it is possible that he ought to have known of the unit’s existence although no evidence was found that he was informed about its existence. Your comment please?

2 It also says SARS, with Minister Gordhan’s approval, offered Mr Ivan Pillay a job for almost 10 years after his retirement, which resulted in Mr Pillay having two contracts of employment running simultaneously. Your comment please?

Please respond at your earliest, preferably by no later than 15:00 today.

The questions were of a serious nature, and Jele certainly would have had to consult with Gordhan before providing a responsible answer.

I also take into account that the e-mail was sent on a Saturday, as well as the fact that Jele did not respond materially to the questions – even though he did not say that the time was too little, the mere fact that he did not provide a proper reply implied that he did not have enough time. If he had replied materially, it might have been a different matter.

Jele replied to the reporter’s request as follows:

[W]e cannot respond to an alleged report that has not been provided to us to comment on. Proper and legitimate processes must be followed.

Therefore, I believe that the journalist did not give Jele enough time to respond properly to his questions.

The newspaper’s reasons for giving Jele such a short time to respond really is not Gordhan’s problem. The publication’s other arguments in this regard (the Minister did not respond to requests in October 2014, etc.) are also flimsy. The fact of the matter is that the KPMG report was new, and Gordhan should have had reasonable time to respond to statements in the article affecting him.

Secondly, regarding the complaint that the reporter did not accurately inform him (or Jele) what was to be published:

I have already listed the parts of the story that referred to Gordhan (there are seven bullet points), and have now compared them with the questions posed by the journalist. Of the seven statements, the reporter covered four – which represented the essence of the matter. The other three points were background material which did not necessitate comment.

Thirdly, the newspaper argues that there was no reason to ask Gordhan for comment on Magashula’s views, as the latter’s comments were not presented as fact, but were properly attributed as his response to the findings of the KPMG report.

I now need to look at what exactly was reported in this regard. The story namely quoted Magashula as saying that Gordhan should take the blame for “fruitless and wasteful expenditure” of approximately R1.2-million. He continued, “Pravin, who was finance minister at the time, told me that Pillay wanted to go and join his family in Holland and that SARS can’t afford to lose him. Pravin suggested that I approve his early retirement and then offer Pillay a three-year contract which he, as [the]minister I was reporting to, was going to approve. It was Pravin who approved everything.”

Surely, those comments were critical of Gordhan – which means it was necessary for the newspaper to give him a proper opportunity to respond, in line with Section 2.5 of the Press Code.

Malatji is correct that the newspaper should have provided Jele with (a summary of) the KPMG report – it is indeed not reasonable to expect someone to comment on a document that he or she has not had the opportunity to peruse.

Before I decide on a sanction (which should follow once I have found that the Press Code has been breached), I firstly need to take a look at Gordhan’s letter, published on 11 October 2015.

It read as follows:

I wish to raise two issues.

The first: both columns follow the “I ought to have known” narrative. The public needs to know that none of the “panels” (and this includes Judge Kroon) set up in this matter have ever approached me to provide any information or perspectives. Nor has KPMG, an international accounting firm which is supposed to be working within the framework of fairness and justice.

So the audi alteram partem principle (hear the other side) did not apply to me at all.

In addition, I was expected to respond to an alleged KPMG report that had not been provided to me. How is one expected to respond to selectively chosen paragraphs? Other matters in this regard will be pursued separately.

The second issue: I wish to once again state categorically that I object, for the public record, to any suggestion or insinuation that I knew of or permitted any illegal activity on the part of the national research group. This unit was established to undertake risk assessments which would assist and inform enforcement actions in terms of the law, against illegal trade such as cigarette or abalone smuggling. This has resulted in billions of rands of revenue collected or saved for the fiscus.

I am satisfied that this letter, at least in part, published Gordhan’s views – which Sunday Times should have done in the first place.

 

However, the following matters are still outstanding:

·         The Minister was not given reasonable time to respond;

·         Gordhan’s views on Magashula’s comments still remain outstanding (even if he did not raise that point in his letter); and

·         The fact that the newspaper did not provide Gordhan with a copy of the summary of the KPMG report while asking his views on the contents of that document.

Finding

Implication of having been dishonest

Sunday Times, in its articles, presented a draft finding – which was later changed by KPMG or may even be rejected by SARS – as a final finding. This was inaccurate, misleading and unfair. It is in breach of Section 2.1 of the Press Code that states, “The press shall take care to report news truthfully, accurately and fairly.”

The newspaper is also in breach of Section 4.7 of the Press Code: “The press shall exercise care and consideration in matters involving dignity and reputation. The dignity or reputation of an individual should be overridden only by a legitimate public interest and in the following circumstances:

·         4.7.1: “The facts reported are true or substantially true; or

·         4.7.2: “The article amounts to fair comment based on facts that are adequately referred to and that are true or substantially true; or

·         4.7.4: “[I]t was reasonable for the article to be published because it was prepared in accordance with acceptable principles of journalistic conduct and in the public interest.”

Newspaper’s motives (editorial)

In light of my finding on the status of the so-called KPMG report, I also find that the editorial comment is in breach of the Section 4.7.2 of the Press Code that states, “The press shall exercise care and consideration in matters involving dignity and reputation. The dignity or reputation of an individual should be overridden only by a legitimate public interest and [if]the article amounts to fair comment based on facts that are adequately referred to and that are true or substantially true”.

It is also in breach of Section 7.2: “Comment by the press…shall be made on facts truly stated…”

No reasonable time to respond; questions inadequate

Given the seriousness of the allegations, the little time allowed, the fact that the questions were asked on a Saturday, and the fact that Jele did not respond materially to the questions, Sunday Times was in breach of Section 2.5 which reads, “A publication shall seek the views of the subject of critical reportage in advance of publication… Reasonable time should be afforded the subject for a response.”

The newspaper is in breach of Section 2.5 of the Press Code (“A publication shall seek the views of the subject of critical reportage in advance of publication…”) for not:

·         providing Gordhan with a copy of a summary of the KPMG report while asking his views on the contents of that document; and

·         asking Gordhan’s views on Magashula’s comments.

The complaint that the reporter inadequately informed Gordhan what he intended to publish is dismissed.

Seriousness of breaches

Under the headline Hierarchy of sanctions, Section 8 of our Complaints Procedures distinguishes between minor breaches (Tier 1), serious breaches (Tier 2) and serious misconduct (Tier 3).

The breach of the Press Code as indicated above is a Tier 2 offence.

Sanction

Sunday Times is directed to unconditionally:

·         retract all the texts which are in dispute (the stories as well as the editorial);

·         apologise to Gordhan for not having:

o   provided him with a copy of the summary while asking his views on the contents of that document;

o   given him reasonable time to respond;

o   asked and published his views on Magashula’s comments; and

o   exercising care and consideration regarding his dignity and reputation.

Sunday Times is directed to publish prominently, on page 1, above the fold, a kicker with the words “apology” or “apologises”, together with Gordhan’s name, which refers to the full apology in the text that should be published on page 2, above the fold. This text should include references to all the allegations made in the texts which are in dispute.

 

For the sake of context, the newspaper is also directed to add the gist of Gordhan’s letter, stating that he:

·         says none of the “panels” (including Judge Kroon and KPMG) have ever approached him to provide any information or perspectives; and

·         categorically denies any suggestion or insinuation that he knew of or permitted any illegal activity regarding this matter.

The text, which should be approved by me, should end with the sentence, “Visit www.presscouncil.org.za for the full finding”.

The headline should reflect the content of the text. A heading such as Matter of Fact, or something similar, is not acceptable.

If the story and/or the editorial appeared on the Sunday Times website, the apology should go there as well.

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

Johan Retief

Press Ombudsman