Ruling by the Press Ombudsman
28 November 2015
This ruling is based on the written submissions of Adv Neo Tsholanku, on behalf of Eskom, and those of Susan Smuts, legal editor of the Sunday Times newspaper.
Complaint
Eskom is complaining about an article in Sunday Times of 13 September 2015, headlined How Eskom Bowed to the Guptas – Utility jumped through hoops to give family R4bn for its dodgy deal.
It complains the statement that:
· Eskom went to great lengths to ensure that the Gupta family landed a R4-billion coal deal was not backed up by the content of the rest of the story; and
· the allegation that Eskom executive Matshela Koko bypassed company protocol was incorrect.
Tsholanku adds that the:
· story was published despite the newspaper having been provided with “correct” answers to the journalist’s questions; and
· editor refused Eskom a right of reply after she was asked for an opportunity to correct some “inaccuracies”.
The text
The article, written by Sabelo Skiti, said that Eskom had gone to extraordinary lengths to ensure that the powerful Gupta family landed a R4-billion deal. A Gupta mine (the company is called Tegeta Exploration & Resources) had reportedly failed a coal quality test four times before landing the deal on its fifth attempt. Shortly afterwards, four experienced employees were suspended “after again questioning the quality of the Gupta coal”.
Skiti wrote that insiders laid bare the lengths to which Eskom went to hand the Guptas a deal to supply the Majuba power station in Mpumalanga with coal for the next ten years.
Analysis
Gupta family
Skiti reported, “Eskom has gone to extraordinary lengths to make sure the powerful Gupta family landed a R4-billion coal deal.”
Eskom says that, despite a sensational headline, the content of the article failed to show how Eskom had bent over backwards to accommodate the Guptas.
Tsholanku explains that Eskom concluded a coal supply and off-take agreement with Tegeta in March this year, following a rigorous pre-qualification process. After Eskom received an anonymous tip-off that some of its employees were in cahoots with workers of a third party in demanding bribes from Tegeta, to ensure that it passed the coal quality tests, it immediately:
· suspended all coal collections from Tegeta “as we needed to be assured of the quality of coal that we were receiving”;
· suspended the four employees concerned, pending an internal investigation; and
· asked the SA Bureau of Standards (SABS) to independently analyse a sample of Tegeta’s coal.
He says the SABS’s quality audit confirmed that the coal in question had met Eskom’s specifications – after which the suspension of Tegeta’s coal supply contract was lifted.
Smuts replies that one source (a former senior member in Eskom’s primary energy division, who still had extensive contacts within the energy corporation) told the newspaper about the five tests before Tegeta eventually struck a deal with the corporation. This source informed the reporter that it was unusual for multiple tests to be conducted on coal, as Eskom paid for them – if a coal sample failed to meet specifications, that company would usually not get another chance.
A second source, who worked on the contract management team at Eskom, confirmed this information – and so did a supplier, who told Sunday Times it was difficult to get Eskom to agree to do even one test on a sample.
In addition, two of the sources told the newspaper that the contract was awarded before the coal quality management procedure had been put in place. One of them added that at least two employees had left Eskom after being pressured for “delaying the contract” – by insisting that the coal did not meet specifications. This information was not published, as the newspaper had been unable to verify it ahead of publication.
Smuts adds that the story did include Eskom spokesman Khulu Phasiwe’s comment that four pre-qualification tests were done because of pre-qualification improvement possibilities.
She adds that one source told the newspaper that Tegeta’s coal was rejected due to poor quality, two months after Tegeta began delivering the product. This information was backed up by Koko’s letter, addressed to Tegeta, which the journalist quoted. Koko inter alia wrote, “This is of great concern to Eskom as it now calls into question the exact nature and quality of the coal…in terms of the coal supply agreement.”
The legal editor also says that the article reflected Phasiwe’s response to the effect that the contract had been reinstated after samples of twelve stockpiles, worth R15-million, were taken for a test at the SABS, which found them to be compliant.
My considerations
I note the journalist reported that:
· the fifth test found the quality of Tegeta’s coal to be marginal (“within specifications but risky”), paving the way for the deal to be struck;
· two months later, the coal was rejected due to poor quality, leading to Tegeta’s suspension;
· five days later, this suspension was lifted;
· instead, four experienced Eskom employees involved in the quality control process were suspended;
· Koko bypassed company protocol when he questioned the staff about inconsistencies found in the test results; and
· two laboratories that conducted the tests, SGS SA and Sibonisiwe Labs, were also suspended.
Given the above, I cannot agree with Eskom that the content of the article failed to show how Eskom had bent over backwards to accommodate the Guptas. This, of course, does not mean that I accept it as fact that the corporation had that intention – it only means that I accept that the newspaper acted reasonably in making statements to that effect, given the information at its disposal (as outlined by Smuts’s response above).
Koko
The story said that Koko had “bypassed company protocol when he personally stepped in to question the staff about inconsistencies found in the test results”.
Eskom complains that this allegation was incorrect. Tsholanku says that, while letters of suspension may have been signed by Koko, the actual process was in fact initiated by the Senior General Manager in Primary Energy. In later correspondence to this office, Eskom states that Koko has acted within his delegated authority (a statement that was also reported in the article).
Smuts replies that two sources within Eskom (one at contract management and the other among the suspended four) told the newspaper Koko contacted them without the knowledge of their supervisor and asked them why Tegeta’s coal had been rejected. They then compiled a report, detailing the tests which found that that the coal was not up to standard. The report was sent to their supervisor, who passed it on to Koko.
“We (also) reflected Mr Phasiwe’s comment that Mr Koko acted within his delegated authority,” said Smuts.
My considerations
I note the statement that Koko had bypassed company protocol (by personally stepping in to question members of staff about inconsistencies found in test results) was attributed to sources. Also, Skiti did balance this out with Phasiwe’s comment that Koko had acted within his delegated authority.
The sources were entitled to their opinion, and so was Sunday Times to publish it. The fact that the other side was reported brought the necessary balance to the matter.
Published despite adequate answers
Eskom complains that the newspaper published the story despite receiving “correct” answers to the journalist’s questions.
Smuts submits that Eskom’s responses were properly reflected. “The fact that we did not use every word of the response, or present Eskom’s version as the uncontested truth, is irrelevant. We reflected the relevant portions of the response and discharged our duty in doing so. The public interest in scrutinizing Eskom’s contracts is self-evident.”
My considerations
In order to establish whether this part of the complaint has any leg to stand on, I am reflecting the gist of the questions and answers – to compare them to what was published.
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Q: Can you confirm that the owners of Tegeta complained to Koko directly about the rejection of their company’s coal and that the latter then personally investigated the matter?
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Q: Explain why the contract was reinstated days after Tegeta’s services were suspended.
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Q: In view of the ongoing investigation involving the four staff members, on what basis has the Tegeta contract been reinstated?
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Q: Why were the two laboratories (SGS SA and Sibonisiwe Labs) that conducted the tests suspended from doing further tests?
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Q: How many coal specimens are sent to these two companies for testing each week or month?
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Q: We understand Tegeta has been in talks with Eskom to supply coal since 2011. How many tests were done from then until March 2015 (when Eskom finally signed a supply contract with Tegeta)?
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Q: How much did each of these tests cost?
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Q: On average, how many times does Eskom test and re-test a particular supplier’s coal to determine if it is of suitable quality?
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Q: Several experts and former Eskom employees have questions the signing of the deal with Tegeta, despite it being a new entrant in the coal industry. While we know there is great emphasis on procuring coal from emerging black coal mining companies, do you consider Tegeta to be such a company?
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Q: Can Eskom explain what due diligence was done to ensure a ten-year contract is feasible and to justify the risk in view of the parastatal’s security of supply issues?
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The journalist reported five of the ten questions and answers. I am satisfied that he conveyed those issues adequately and in context, and that they represented the essential issues at stake.
The following were not reported:
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The answers to (the remaining) questions 2, 3 and 5 were so vague and phrased in such general terms that I can hardly fault Sunday Times for not reporting them.
The remaining questions (1 and 4) were not of essential importance to the article.
I therefore agree with the legal editor’s arguments on this issue – the story properly reflected Eskom’s responses; it did not have to report minor issues (especially if the newspaper received vague answers on them); and it certainly did not have to present Eskom’s version as the one and only, uncontested truth.
Refusing a right of reply (after publication)
Eskom complains that the editor refused it a right of reply after Eskom asked her for an opportunity to correct some inaccuracies in the article in question.
My considerations
It is difficult to uphold a complaint of this nature if the newspaper did not believe that it had made any mistakes. Of course, a subject of critical reportage should have a right of reply – but that applies to the story being prepared for publication, and not to “mistakes” to which a publication does not admit.
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 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