Somewhere over the rainbow: the media, the enemy

No Fear No Favour No Child abuse........ JUST JUSTICE........



RANJENI MUNUSAMY                                                           SOUTH AFRICA        31 MAY 2913    02:31

This is Child Protection Week, but it might just as well have been Blame the Media week. It is becoming a common refrain to accuse the media for projecting events in South Africa negatively, as has been witnessed this week in relation to the troubles in Cosatu, the image of the National Prosecuting Authority and the crisis in the mining industry that is badly impacting the entire country. Even the Gupta family believes that the media is on its case, not because they violated national security, but because of a racist agenda. So it seems the answer to South Africa’s problems: let's get a pair of rose-tinted glasses for every journalist. By RANJENI MUNUSAMY.

A high-profile businessman recently held a meeting with President Jacob Zuma at the presidential residence in Pretoria while the Guptagate scandal was playing out. A television set was on in the room and the news bulletin was reporting the latest developments around the landing of a planeload of wedding guests at Waterkloof Air Force Base.

The businessman felt awkward but was intrigued to see Zuma’s reaction. He says the president raised his eyes to the television as the news item came on and watched it intently. As the item concluded, the businessman says Zuma clucked his tongue and said “Hayi but the media!”

This is a fascinating and rare insight into what Zuma saw as the problem with the matter. While the brazen abuse of the military facility by the family and the failure of the government machinery to stop it from happening shocked the country, it is intriguing that the president’s default reaction was to deride the media reporting of the issue.

But this was just one person’s version of what he experienced and the public does not have the benefit of any direct interaction with Zuma on the issue to be able to gauge his overall reaction. All there has been was a passing line in an SABC interview with the president early on in the saga when Zuma cautioned that the matter should be handled carefully so as not to jeopardise South Africa’s relations with India. And then there was the media statement by Zuma’s spokesman Mac Maharaj following the release of the investigation report by directors-general condemning the use of the president’s name to secure the landing rights.

But the businessman’s account of the president’s reaction to the Guptagate scandal is consistent with how the ANC and its alliance partners generally perceive media reporting on current affairs. There is a perception that the media has a surreptitious agenda to project the government and the three alliance partners, the ANC, the SACP and Cosatu, in a negative light.

While the SACP general secretary Blade Nzimande is perhaps the most vocal proponent of this view, labelling journalists as “professional cynics” and “prophets of doom” driving a “neo-liberal agenda”, there is now a growing tendency in the alliance and in government to cast the media as unpatriotic, purveyors of negative sentiment and instigators of problems. The irony is that many of these statements are made to the media in press conferences with the expectation that this specific condemnation be reported by the journalists, rather than what they find newsworthy.

On Sunday, the National Union of Mineworkers (NUM) held a media briefing to report on the outcome of its central committee meeting last week. The NUM has been in the news frequently in the past year due to turbulence in the mining industry, its epic battles with the Association of Mineworkers and Construction Union (AMCU), and its dramatic losses in membership. The NUM is also a chief protagonist in the leadership battle playing out in Cosatu. Despite the nature of the news being negative in the terrain the NUM operates in – strikes, retrenchments, violence and intense wage negotiations – the union is convinced that the media has a deliberate agenda to project it in a negative light.

The NUM media statement on Sunday read as follows: “The CC noted with grave concern inaccurate reporting by the media; the lack of investigation and ethical media conduct is disturbing. The media seems hell-bent on distorting events in the mining industry to serve a particular interest and have written the obituary of the NUM.”

This week Cosatu held a highly anticipated central executive committee (CEC) meeting to decide on the fate of its general secretary Zwelinzima Vavi following accusations from some affiliate unions that he was involved in impropriety and fraud. Despite leaders in the affiliate unions and the national leadership feeding the media cycle from last year on the internal battles and the crusade to remove Vavi from his position, Cosatu came out of its stalled CEC meeting and lashed the media for reporting on the federation’s troubles.

In a bizarre about-face, Cosatu claimed its leadership was united and that the factional battles and skirmishes during the meeting were all a media fabrication.

“The media and their sources together want to try to divide and weaken the federation, and to set the agenda for COSATU meetings. They failed this week and we are determined that they will never succeed,” Cosatu said in a media briefing on Wednesday.

On the same day, Justice and Constitutional Development Minister Jeff Radebe was briefing the media on the work of his department ahead of his budget speech in Parliament. The media was naturally interested in what the minister had to say on the performance of the National Prosecuting Authority in light of its recent bad run of bungled prosecutions and resultant public outrage. As reported in Daily Maverick, Radebe became defensive when interrogated by journalists on the NPA’s recent controversies.

“I am satisfied that they are doing a good job,” Radebe said, saying the high conviction rate and jail overcrowding were evidence of this. But he lost his cool with a journalist who said this argument was “nonsensical”.

Radebe hit back: “I don’t think you know what you’re talking about. So the nonsense you’re talking about is with you, not with the system!”

Later during the debate on the justice department’s budget, Radebe’s deputy Andries Nel was more forthright about his views on the media. Bemoaning the lack of positive coverage of the department and sketching a number of stories which he thought were newsworthy, Nel said: “Regrettably, honourable members, your chances of reading about these stories are negligible – the news is either simply too good to be profitable or too fundamentally at odds with the preconceived notions of the prophets of doom.

“Those in the media who want to tell these stories, and they are there, are afraid to do so for fear of being branded as stooges of government who are not truly independent,” Nel said.

On Thursday, Zuma addressed a hastily convened media conference to talk up the economy on the back of poor first-quarter growth data and to calm fears around volatility in the mining industry. After outlining interventions to support the mining industry, Zuma said South Africa should enhance its strengths, including tourism.

During a brief question session, Zuma was asked whether South Africa would not have a greater number of tourists if it had fewer scandals. Zuma’s response was that South Africa had a “good story to tell” and that the incidents of police brutality and corruption were due to “openness”. Incidents of police violence and brutality were far more frequent under Apartheid, Zuma said.

Rather than committing to deal with these problems which had a negative impact on the image of the country, Zuma rather used the benchmark of Apartheid to measure current incidents against. As the media briefing concluded, a chuckling Zuma said to the journalists: “Just report nicely about South Africa.”

Although this was said in jest, the import of Zuma’s message on Thursday was that the media would help the economy along if it were more positive in its reporting of South Africa. Of course the president cannot be faulted for wanting his country to be portrayed in more glowing terms and is rightly worried about the economy. But it is not the media’s responsibility to fix the economy. It is Zuma and his Cabinet’s duty to do so, as well as business and labour.

It is quite easy to confuse patriotism and sunshine journalism. One is the love of your country, the other is deliberately swaying the story to project the subject in a positive light. Although everyone in South Africa’s political leadership claim they support a free and unrestrained media, it would appear from recent utterances that some of them would prefer a less critical, probing media. But reporting on scandals does not make the media unpatriotic, much to the contrary these are in the public interest.

What is unpatriotic are politicians abusing their office and stealing public money, and public officials deliberately misleading the public.

Some of the statements about the media are now veering from criticism to outright hostility and blame for the stories they report. The approach is shortsighted and disregards the real source of the problems besetting the country. A compliant and sycophantic media does not make a country prosper; if it did, Zimbabwe would be the most thriving state on the continent. The secret of success is good and clean leadership in all spheres in society.

Clearly, South Africa does not have that. DM

DAILY MAVERICK

COMMENTS BY SONNY

CHILD PROTECTION SHOULD INCLUDE EDUCATION AND HEALTH.

South Africa is nothing but a tainted rainbow - Discoloured and disfigured!

APART FROM CORRUPTION, NEPOTISM, TRIBALISM AND ARROGANCE, NOTHING

HAS BEEN ACHIEVED SINCE 1994 - 2013.

TODAY FRIDAY 31 MAY 2013 ITS PROTESTS AGAINST ILLEGAL e-TOLLS......

SUBURBIA IS ON FIRE.......

YES, THE ECONOMY IS IN TATTERS!

Kleinfontein invaded by black politicians with black BMWs, ambulance and… (photos)

No Fear No Favours No Blatant hand-outs...................

 May 29, 2013 - News, South Africa - Tagged: BMW, Kleinfontein, muncipality, Pretoria, South Africa, visit - no comments

The Afrikaner settlement of Kleinfontein was invaded by a posse of black politicians, mostly driving black taxpayer-funded BMWs today. They also brought a fire truck and an ambulance. The last time an “outing” like this to Kleinfontein from the Gauteng legislature came with a budget of R270 000. Wonder if they have Louis Roederer Cristal and caviar en route, all the mostly white middle-class taxpayer’s expense of course?

Here are the first photos of the event.

Show of force: the posse driving into Kleinfontein

More all-black BWMs to come and intimidate an alleged all-white, all-Afrikaner enclave

Taxpayers' money on display in the form of black cars from the Black Forest... err, in Germany, that racist white country

Our cars are worth more than your whole decrepit settlement, they seem to be saying

In case the discussion gets heated, they have brought the fire brigade to douse the flames... And an ambulance, in case any overweight politician has cardiovascular problems

Blue lights for VIPs, Zimabwe-style

Hermès bags anyone...? Dress your best when inspecting some middle-class Afrikaners doing their own menial labour

An inconvenient truth vs. Cosatu’s wonderful world of make-believe

No Fear No Favour No Enemies in congress........



 RANJENI MUNUSAMY           SOUTH AFRICA            30 MAY 2013    01:27

Cosatu has conjured up a cosy little parallel universe in which its leadership is united, where general secretary Zwelinzima Vavi is still its champion and faces no accusations of impropriety, and where the media is the main offender, “working overtime” to attack it. On Planet Earth, though, the reality is somewhat different from the picture they presented at a media briefing on Wednesday. Even though they blotted out the heated factional clashes that brought this week’s central executive committee to a premature end, Cosatu’s make-believe version simply makes no sense whatsoever. By RANJENI MUNUSAMY.

Had Cosatu’s media briefing on Wednesday not taken place in the very room where its central executive committee (CEC) was supposed to be meeting, at the time they were still meant to be in session, perhaps the fairy-tale they presented would have been more believable. The scheduled three-day CEC meeting had a full agenda, including discussing Cosatu’s position on the National Development Plan, e-tolling, labour law amendments, the Protection of State Information Bill and preparations for an alliance economic summit in July.

But the issue not on the formal agenda was the real hot topic: allegations of impropriety against Cosatu general secretary Zwelinzima Vavi. The issue has been bubbling over since Cosatu’s previous CEC meeting at the end of February. The allegations of fraud and corruption against Vavi, particularly pertaining to the sale of Cosatu’s old headquarters in Braamfontein, were raised sharply in that meeting, and as a result it was decided that two facilitators should be brought in to look into the political and organisational functioning of the federation. It was also decided that an auditing firm be appointed to look into Cosatu’s finances.

This week’s CEC meeting was meant to receive reports on all these investigations and then decide on Vavi’s future. In the run-up to the meeting, the federation’s two biggest affiliates, the National Union of Mineworkers (NUM) and the National Union of Metalworkers of South Africa (Numsa) made it clear what the big issue was – and boldly stated their respective positions on the matter. NUM general secretary Frans Baleni said at a media briefing on Sunday that the corruption probe against Vavi should go ahead as all Cosatu leaders should be held accountable for their actions and subjected to the discipline of the federation.

Numsa general secretary Irvin Jim, also briefing the media on Sunday, said his union would “put up a fight” if anyone tried to remove Vavi and they would also reject a vote of no confidence in Vavi’s leadership.

Yet the narrative of Wednesday’s Cosatu media briefing was that Vavi was not under investigation and that there was no question about his status in the federation. While there was acknowledgement of “the dangers of fighting silly small battles against one another” and “some problematic ideological, organisational and administrative issues which arose at the February 2013 CEC meeting” in the media statement, the thrust was that Cosatu is not divided and there were no “fundamental” issues of contention.

So were the general secretaries of Cosatu’s biggest unions lying to the media and the nation on Sunday?

Or perhaps they wrongly assumed what was going to be the issue and things happily turned out differently. So much so that all discussions were concluded and everyone went home a day early.

Possibly, in the parallel universe.

But in Cosatu House this week, the meeting on Monday was marked by fierce exchanges between the factions wanting to have Vavi put on special leave and those backing him. The faction in Vavi’s corner motivated for a special congress in the hope that the delegates representing the mass membership would in turn vote out Cosatu president Sidumo Dlamini. On Tuesday, the meeting stalled as no productive discussions could take place in the hostile atmosphere. One of the issues of contention was Vavi’s tweets, one of which states that it has been three months since he “called on anyone to produce evidence that I or my family benefited in sale or purchase of Cosatu buildings”.

The atmosphere was so heated in the full CEC session on Tuesday that it had to adjourn and the secretaries of all the affiliate unions then met to chart a workable way forward. The decisions taken in this smaller meeting are what gave Cosatu’s national office bearers some substance to present to the media.

According to the media statement read out by Vavi, the two facilitators appointed in February, Petrus Mashishi and Charles Nupen, would discuss the “problematic ideological, organisational and administrative issues” with the affiliate unions presidents and secretaries. It was also agreed an urgent political commission be convened on 6 June to prepare for a bilateral meeting with the SACP, an alliance summit in October and the alliance economic summit in July.

“The CEC emerged united around a resolve that the work of the federation must continue uninterrupted… Our determination to continue to organise and service our members, to grow our numbers, to listen carefully to our members, and to implement our campaigns remains unshaken,” the statement read.

Dlamini said Vavi’s status in Cosatu remained unchanged and he would not be restricted in any way. “There is no question that can arise about any of the leaders here… They have been elected at congress... They are not deterred or embargoed to perform their duties, including the general-secretary of the federation.”

A special resolution adopted by the CEC, however, was what gave up the game.

Why would they adopt a special resolution on “unity and cohesion” if Cosatu had, well, unity and cohesion? And the main issue in the special resolution on unity and cohesion is a forensic audit to determine whether there was any impropriety in relation to the sale of the old Cosatu head office and the purchase and ownership of the new headquarters. So it would stand to reason that is the issue interfering with the “unity and cohesion” of Cosatu.

“The auditors from Sizwe Ntsaluba Gobodo will be handed the file that deals with the background to the sale and purchasing of the building, which forms part of the general secretary’s submission. They will conduct a forensic investigation into the sale and purchase of the buildings based on this file and any other information that may be provided by affiliates. The auditors will conclude their report by the end of June 2013,” the resolution reads.

But even then, the office bearers would not concede in the media briefing that it is in fact Vavi that is under investigation. They contended that the file he will submit to the auditors was Cosatu’s record of the sale and purchase of the buildings, not a personal submission.

But under repeated questioning, Vavi resorted to his line of defence that anyone has evidence of wrongdoing against him, they should “bring it on”.

“I’ve done absolutely nothing wrong as an individual,” Vavi said. “If evidence against me is produced, I will do what I always ask people to do. I will walk. There won’t be a hearing. There won’t be a commission of inquiry.”

Cosatu will convene another CEC by the second week of July to deal with all these outstanding issues.

Repeatedly in the media statement and during the briefing, the Cosatu office bearers lashed out at the media for running leaked information exposing the factional battles and projecting Cosatu as being at war with itself. Dlamini, however, acknowledged that the leaks were coming from within Cosatu but claimed that reports of deep divisions and paralysis of the federation were a media fabrication.

But how could the media not report on these issues when they began playing out in the Cosatu national congress in September last year in the full glare of the media? The criticism of Vavi was not unrestrained in those discussions at the congress, and has persisted since.

Cosatu has always wanted to project itself as the moral conscience of the nation, speaking out on corruption, social issues, inequalities in society and consistently calling for clean and good governance. It took the moral high ground in opposing the Protection of State Information Bill because of its restrictions on the media. How does it reconcile this image with wanting to mislead the public on its own state and expecting the media to gag itself not to report on the obvious conflict playing out in the federation?

Cosatu wants to give the impression that it is functioning normally and is not crippled by its problems, when all the processes and stopgap measures it has put in place for the next two months show that it is. In all likelihood, in the run-up to the next meeting in July, there will be a resurgence in the skirmishes, which will again expose the lie.

Cosatu was the one organisation that could be relied on to be transparent, candid and consistent. It has now surrendered that moral high ground. DM

Photo: Cosatu general-secretary Zwelinzima Vavi is seen with the trade union federation's president Sidumo Dlamini (R) at a news conference in Johannesburg on Wednesday, 29 May 2013.Cosatu was briefing media after its central executive committee (CEC) meeting earlier this week. Vavi said the CEC took a special resolution that discussions would continue into alleged corruption in the sale of Cosatu's headquarters, in which he was implicated. Picture: Werner Beukes/SAPA

DAILY MAVERICK

COMMENTS BY SONNY

If Number One and the ANC NEC can get away with a viral Cover-Up, then, so can Zwelinzima Vavi.

At least he has got less to answer for that the Chief himself.

In our opinion VAVI will make a better President of South Africa.

How The New Age acquired the rights to host Pravin’s post-Budget breakfast

No fear No Favour No Golden Finger in the Treasury Till....................



REBECCA DAVIS                                         SOUTH AFRICA   29 MAY 2013      02:30

Don’t expect to turn down a Gupta-owned business and get away with it. That was the lesson learned by the Cape Chamber of Commerce in February this year, when it attempted to run a post-Budget breakfast without the involvement of The New Age. (Spoiler alert: the Guptas’ business wins in the end. But you already knew that.) By REBECCA DAVIS.

The old adage that breakfast is the most important meal of the day has clearly been taken to heart by The New Age. In February, news broke that The New Age’s Business Breakfasts – addressed by prominent government figures – were being funded via millions of rands from state-owned enterprises like Transnet and Eskom. The SABC, meanwhile, was reportedly broadcasting the events free for The New Age.

At the time, Transnet chief executive Brian Molefe was quoted as saying sponsorship of such events involving other media outlets was relatively common. But, he said, other newspapers did not benefit from the free coverage on the national broadcaster. “At Business Day when they do it, they get a sponsorship of R800,000 for a breakfast. But they do not get the coverage The New Age gets through its television time,” Molefe said. Indeed.

Despite the ensuing controversy, the breakfasts have continued merrily. Just last week, Water Affairs Minister Edna Molelwa addressed a New Age Business Breakfast in Cape Town. Parastatals have said that the breakfasts are attractive sponsorship options for them, despite their hefty price-tags (reportedly around R1 million), because of their live broadcasts onMorning Live on SABC2. In October 2012 the Sunday Times first reported that the SABC was broadcasting the 45-minute events for free, despite the fact that the broadcaster normally charges R18,000 for 30 seconds’ exposure on the programme. City Press reported in January that a number of inside sources had confirmed to it that the broadcasts were carried out for free.

At the time, SABC spokesperson Kaizer Kganyago confirmed to City Press that there was an understanding between the SABC and The New Age. “The agreement… is a win-win agreement as we get content that helps us inform the public,” he said.

The New Age has consistently maintained that criticism of  its breakfasts is motivated by jealousy from other media outlets who wish they could replicate their business model. But events around a post-Budget breakfast in February suggest that when The New Age’s dominance over government-related breakfast events is threatened, the newspaper may not be shy to throw its muscle around to get its way.

The Cape Chamber of Commerce (CCC) boasts of being “the oldest member-based business organisation in Africa”, with a mandate to “serve, enable and lead business in the Western Cape”. In December last year, CEO Viola Manuel explained to the Daily Maverick, the CCC was approached by Treasury and asked to manage the traditional post-Budget breakfast, held the morning after the finance minister delivers his speech to the nation. “We were incredibly flattered by the opportunity, and we’re a very competent organisation capable of rising to the challenge,” Manuel said.

Shortly afterwards in December, Manuel says, The New Age got wind of the fact that the CCC had been identified to run the event. New Age managing editor Gary Naidoo subsequently made contact, and spoke to CCC officials suggesting an event partnership. His conditions were not acceptable, Manuel says. “They wanted full branding rights and that didn’t make sense to the chamber, as it was a full opportunity for us to get our brand out there.”

The CCC thus turned down The New Age as a partner. Searching for a media partnership, the CCC held conversations with both the SABC and eTV with regards to broadcasting the event. Discussions progressed quicker with the SABC, however, and the decision was made to opt for the state broadcaster as it had been the vehicle for broadcast of the Budget Breakfast before. Arrangements were thus made with the SABC to broadcast the event on Morning Live.

About a week before the event, with all plans in place, the CCC was called up again by The New Age, requesting an urgent meeting. There, its representatives argued that the newspaper should be involved in the event as it had an established memorandum of understanding with the SABC. But the demands with regards to branding remained too onerous, Manuel says, so the CCC turned The New Age down once more. By this stage, in any case, the CCC had already secured a large corporate sponsor of its own for the event.

Manuel said they left the meeting with the feeling that the New Age representatives were ruthless negotiators. “We felt The New Age was definitely putting pressure on the SABC,” Manuel said.

This feeling proved prescient. The day after the meeting with The New Age, Manuel says the CCC was contacted by the SABC: the broadcaster would not be covering the event any longer. Instead, it would cover a New Age event.

“It was too late to contact another broadcaster,” Manuel said. “Our hand had been forced. And we had to ensure that we could still deliver a quality event to our members and the Treasury.” In order to retain the SABC coverage of the event, the CCC had to agree to bring on board The New Age as an event partner. The CCC’s existing event sponsor indicated that it did not want to join the association with The New Age, so the CCC insisted that The New Age compensate the CCC for the loss of the sponsor, which it eventually did.

The event ended up going off well, although some changes to planning were necessitated by the very late allocation of VIP places to The New Age. Manuel says that a “few” CCC members pulled out of the event when they learned of The New Age’s involvement.

Looking back on the events leading up to the breakfast now, Manuel says lessons have been learned.

“It’s not the way we do business,” she said simply. “We have separate operating manuals, so to speak.”

When the Daily Maverick contacted SABC spokesperson Kaizer Kganyago for comment on the matter, Kganyago described the CCC’s version of events as a “misrepresentation”.

“It was pointed out to the Cape Chamber of Commerce that the Budget Breakfast was already part of the schedule for the SABC/TNA breakfast,” Kganyago said. “An offer was made to the CCC to share the platform. Initially the CCC declined the offer and requested that they have a separate broadcast. They later accepted. Nobody pressured the CCC into partaking in the broadcast. They were free to decline.”

He added: “As to any pressure being asserted on the SABC, that is absurd since the SABC and TNA have a contractual agreement.”

The CCC begs to differ. Chief operating officer Bronwen Kausch said: “We knew about the memorandum of understanding [between the SABC and The New Age], but we were adamant that we were not partnering with The New Age. [With that stated] we went back to SABC and offered them the chance to cover the event. After much debate, their news department accepted.”

She says that naturally the event wanted to secure the widest possible national coverage for Minister Gordhan, hence the CCC’s eventual acceptance. “The net result is that we took the pragmatic approach.”

Kausch says that the CCC never disputed that The New Age and the SABC have a contractual agreement. “We merely noted that the SABC news team had assured us they wanted to cover the minister’s speech at our event – we can only surmise, and hope, that this was based on newsworthiness. They then made the decision to cover an alternative The New Age event, which would not have had the minister in attendance, had we not decided to partner with The New Age.”

Ultimately, Kausch takes a sanguine approach. “However unpleasant the experience, we moved ahead, ensured we delivered an event that covered some very important information and met the expectations of both our members and Treasury,” she said.

The Daily Maverick asked The New Age CEO Nazeem Howa whether the CCC’s version of events was factually accurate. He neither confirmed nor denied this. “From The New Age’s perspective, the joint business briefing went well and we are hoping to host similar events with the Cape Chamber of Commerce in future,” Howa told the Daily Maverick via email. “It would be a strange situation if the leadership of a business organisation as prominent as the Cape Chamber of Commerce would be susceptible to bullying as you claim.”

Howa included in his email some back-and-forth email correspondence between The New Age and the CCC “to illustrate the amicable nature of the relationship running up to the event”.

The emails hardly amount to the exoneration Howa suggests, however. They cover the period after the CCC had agreed to take on The New Age as a partner for the event in order to avoid losing SABC coverage. The emails are primarily concerned with the CCC’s insistence that The New Age should cover the costs incurred if  its event sponsor should pull out as a result of The New Age’s arrival on the scene (as indeed transpired). This is only fair, one email records, as the CCC has “done all the event management and stakeholder engagement. At this point there is very little for The New Age to do and therefore you will have very little material contribution.”

Howa also implied that the Daily Maverick was behaving unethically in covering this story.

“We find it interesting that this matter has only come to light now, three months after the event,” he wrote. “It brings into question the motives of your source as well as that of Daily Maverick for taking up an issue so long after the event. The Press Code requires publications to be contemporaneous in their coverage of events.”

(This story, of course, does not cover an event, but a series of actions that took place in its preparation, a subtlety that may have been lost on Mr Howa. In any case, if TNA’s CEO were right, we would all have to stop reporting on the Arms Deal, Spy Tapes and many other stories. - Ed)

It would seem that the CCC would have little motivation for misrepresenting the events leading up to the breakfast, unlike the SABC and The New Age. If so, a number of troubling questions are raised by the story. What exactly is in the memorandum of understanding between the state broadcaster and The New Age, and who is pulling whose strings? Does The New Age own EVERY morning live breakfast event in South Africa that is to be broadcast on the SABC?

The New Age is owned by a family who are unafraid to leverage their wealth and political connections to get their way. Does their newspaper operate according to the same memo? What do you think? DM

Photo: Finance Minister Pravin Gordhan delivers his Budget speech at Parliament in Cape Town, Wednesday, 27 February 2013. Picture: GCIS/SAPA

DAILY MAVERICK

COMMENTS BY SONNY

CORRUPTION IS EASY - TAKE ADVANTAGE OF A CORRUPT THIEF!

IS THE ANC CORRUPT TO ITS CORE?


THE ANSWER IS OBVIOUS!

Financial statements reveal R2.2bn loss for Sharemax investors

SPECIAL INVESTIGATIONS

Author: Julius Cobbett|
29 May 2013 03:44
Financial statements reveal R2.2bn loss for Sharemax investors
ART


Download the financial statements Nova Group’s directors wouldn’t make public.

JOHANNESBURG –
Financial statements for Nova Property Group show that investors who bought Sharemax products have lost R2.2bn. Nova is the company that owns all the properties that used to belong to investors in the various Sharemax property syndication companies. Nova was formed as a result of a ‘Section 311’ rescue scheme which received court sanction in January last year.

As Moneyweb has previously reported, these financial statements have been hard to come by. Moneyweb is aware of several debenture holders whose requests to Nova for financial statements have simply been ignored.

It is difficult to understand why Nova’s directors, Dominique Haese, Connie Myburgh, Dirk Koekemoer and Rudi Badenhorst, have been so unhelpful. After all, Nova Property Group is a public company. Its financial statements ought to be available to anyone who requests them. Why not simply e-mail them to investors, or make them available for download on the Internet?

Moneyweb made two separate requests for Nova’s financials to the disclosure division of the Companies and Intellectual Property Commission (CIPC). In both instances CIPC replied that there were no financials on record.

This prompted Moneyweb to ask CIPC spokesman Sizwile Makhubu if his organisation was concerned that no financial statements had been filed for this multibillion rand public company.

Makhubu investigated the matter and discovered that Nova’s financial statements had in fact been filed. He apologised for the mistake. Makhubu said the documents had been filed electronically. He says: “There are instances when electronic documents are not physically printed and filed.”

Makhubu provided Moneyweb with Nova Group financial statements for the period ended February 29, 2012. Investors and other interested parties can download them here.

One of the most interesting nuggets of information to be found in the financial statements is a R35m loan from Sharemax Investments to Nova. The loan is “unsecured, bears interest at rates determined from time to time, with no fixed terms of repayment”. It is unclear how this loan came about. Sharemax Investments is currently under business rescue.

The financial statements also provide some reasonably clear information about the debentures that have been issued to investors. Under the old Sharemax structure, about 33 000 investors were owed a total amount of R4.35bn by the various syndication companies. Under the Section 311 scheme, they were offered a choice of either shares or debentures, which would replace their claims against the syndication companies. It seems the vast majority chose debentures.

The values of the new debentures are linked to the “fair market values” of the relevant properties. Valuations for the properties were performed by DP Cohen, of DP Cohen Consulting.

For example, investors in the Rivonia Square property syndication were previously owed R258m. However, the Nova financial statements show that its subsidiary company, which owns the Rivonia property, was only valued at R113m. This means that investors in that syndication have suffered a paper loss of R145m.

In total, the new debentures were valued at R2.1bn at 29 February 2012. Thus, the investors had lost R2.2bn, or half of what they originally invested.

The financial statements also address the controversial issue of ownership of the two largest Sharemax-promoted shopping mall developments, Zambezi and the huge, unfinished Villa. Nova’s subsidiary companies currently own 50% of Zambezi and 30% of The Villa. However, the financial statements value the properties as if the subsidiary companies owned 100% of Zambezi and 80% of The Villa. A note in the financial statements refers to settlement agreements whereby Nova’s subsidiary companies would take ownership a further 50% of Zambezi and a further 50% of The Villa. These settlements came at a price: Provisions were made to pay Zambezi’s developer, Capicol, a settlement amount of R158m, and The Villa’s developer, Capicol 1, a settlement amount of R350m.

This version of ownership is strongly disputed by Capicol and Capicol 1. For more, see: Ownership of multimillion rand Pretoria shopping malls disputed. The financial statements note that “disputes and substantial litigation is ongoing” with Capicol and Capicol 1.

Valuations and cash flow questioned

Forensic accountant and longtime Sharemax critic Andre Prakke questions the valuations of the development properties. These properties are valued at R311m, and comprise Whale Rock Residential Estate, Mont Rouge Residential Estate, Stonewood Country Estate, Berg & Dal Residential Estate, Sharemax Waterfall Estate, Country View Retirement Village , Theresapark Retirement Village and Steenbok Crossing.

These developments are disclosed as “inventory”. Says Prakke: “The valuations of development properties are based on cost as if Nova is a fish and chip shop. No revaluations have been done and the values are grossly over-stated.”

The financial statements only provide information for one month’s trading, because the properties were acquired on February 1, 2012. A further issue highlighted by Prakke, is that the properties only received rental income of R11m in this month. However, operating expenses, excluding depreciation, came to R10m, and finance costs, including payments to debenture holders, amounted to R5m.

Says Prakke: “The result is that this group is not generating enough operating cash to pay for expenses. They will have to borrow money at some stage to pay for day to day expenses, unless occupancy and rental income increases drastically.”

Thus, it is not surprising to read in the latest Nova Group communication, dated 27 April, 2013, that it had borrowed money. Investors were informed that an undisclosed amount of funding had been obtained from one of South Africa’s “leading commercial banks”. They were also informed that the funding had been obtained on “favourable terms”.

Prakke says that his comments do not reflect in any way on the audit performed by auditors BDO South Africa.

On Monday a copy of this article was e-mailed to all Nova Directors with the invitation to correct possible factual errors and offer comment before 5pm the following day. No response was received from any director.

The table below compares the values of the original Sharemax syndication companies with the relevant Nova debentures at 29 February 2012:

Sharemax syndications vs Nova debentures
Name

Location

Syndication value

Value in 2012

% decline

financial statements

INCOME PROJECTS

148 Leeuwport

Boksburg

R 9 700 000

R 5 679 539

-41%

Centurion Hazel

Centurion

R 6 140 000

R 5 860 347

-5%

Oxford Gate

Durbanville

R 28 000 000

R 21 976 348

-22%

The Village Mall

Nelspruit

R 29 400 000

R 27 689 974

-6%

Witbank Highveld

Witbank

R 100 900 000

R 88 485 933

-12%

Tarentaal Centre

Nelspruit

R 31 000 000

R 29 954 077

-3%

Magalieskruin

Pretoria

R 29 900 000

R 23 530 753

-21%

Flora Centre

Florida

R 118 500 000

R 117 327 860

-1%

Silverwater Crossing

Pretoria

R 75 000 000

R 68 408 427

-9%

Waterglen Shopping Centre

Pretoria

R 80 000 000

R 68 506 629

-14%

Carletonwille Shopping Centre

Carletonville

R 38 400 000

R 33 420 151

-13%

Shopmakers Village

Johannesburg & Virginia

R 50 000 000

R 34 498 826

-31%

Benoni Hyper

Benoni

R 102 000 000

R 81 435 035

-20%

De Marionette Centre

Secunda & Meyersdal

R 86 000 000

R 73 405 961

-15%

Athlone Park Shopping Centre

Amanzimtoti and Potchefstroom

R 93 700 000

R 50 456 578

-46%

Range View Shopping Centre

Dalpark

R 30 000 000

R 16 402 710

-45%

Parkside Plaza

Bromhof and Secunda

R 72 500 000

R 63 285 127

-13%

Liberty Mall

Welkom

R 200 600 000

R 120 226 031

-40%

Rivonia Square

Rivonia

R 258 000 000

R 113 272 115

-56%

Nelspruit Hyper

Nelspruit

R 64 200 000

R 55 045 952

-14%

GROWTH PROJECTS

Whale Rock Residential Estate

Margate

R 12 200 000

R 2

-100%

Mont Rouge Residential Estate

Hartebeesport

R 31 700 000

R 18 553 679

-41%

Stonewood Country Estate

Dullstroom

R 41 900 000

R 14 500 000

-65%

Berg en Dal Residential Estate

Heidelberg

R 48 900 000

R 29 849 389

-39%

Sharemax Waterfall Estate

Rustenburg

R 114 900 000

R 87 000 000

-24%

Sharemax Bay Estate

Hartebeesport

R 61 000 000

R 42 006 831

-31%

Country View Retirement Village

Montana

R 83 200 000

R 54 475 245

-35%

Theresapark Retirement Village

Theresapark

R 47 440 000

R 28 538 826

-40%

Steenbok Crossing

Limpopo

R 20 900 000

R 11 551 924

-45%

SHAREMAX PLATINUM

Lydenburg Shopping Centre

Lydenberg

R 13 000 000

R 10 754 112

-17%

Dainfern Shopping Centre

Dainfern

R 16 300 000

R 1

-100%

HUGE PROJECTS

Zambezi Retail Park

Pretoria

R 756 000 000

R 234 645 951

-69%

The Villa Retail Park

Pretoria

R 1 590 000 000

R 498 102 553

-69%

Total

R 4 341 380 000

R 2 128 846 886


-SPECIAL INVESTIGATIONS

Author: Julius Cobbett
22 May 2013 12:39
Auditors should have known about Sharemax irregularity – Ombud
ART


Irregularity reported too late to protect investors.

JOHANNESBURG –
Auditors for Sharemax should have known an irregularity was taking place. This is one of the findings in the latest determination by the Ombud for Financial Services Providers (Fais Ombud) Noluntu Bam against a financial adviser who sold Sharemax products.

The determination orders the adviser, as well as four Sharemax directors, to repay a 73 year-old pensioner the R490 000 she invested in Zambezi Retail Park, Sharemax’s second-largest syndication. This is the second determination that has found Sharemax’s directors liable for an investor’s loss. The directors are: Dominique Haese, Gert Goosen, Willie Botha and Andre Brand.

Bam’s determination, dated May 16, takes particular aim at auditing firm, ACT Audit Solutions. This firm has since changed its name and is now known as Advoca Auditing.

Bam states that the auditors failed to report an irregularity timeously to the regulatory body, the Independent Regulatory Board for Auditors (IRBA).

The irregularity in question was the release of investors’ money out of an attorney’s trust account before they had taken transfer of their property. This happened in Sharemax’s two largest syndications, Zambezi and The Villa, and left them in a very precarious position.

Prospectuses for Zambezi and The Villa stated that investors’ funds would remain in the attorney’s trust account until immovable properties were transferred.

ACT Solutions did alert IRBA to this irregularity. But it did so on November 5, 2010. By then Sharemax’s troubles were well known. The irregularity reported served little purpose in protecting investors.

By the time ACT reported the irregularity, Zambezi and the Villa had already raised R2.3bn from investors. The first Zambezi prospectus had been registered three years earlier, on November 15, 2007.

In her determination, Bam notes that her office sent ACT Audit Solutions a letter which asked a number of important questions. An extract of this letter, together with ACT’s lawyer’s response, can be read in the determination.

Bam says it is of concern to her office that ACT does not state when the irregularity was discovered. Nor does it give detail as to the circumstances that led to the discovery.

“The auditors must have known that the investors’ funds were being used to fund the building of the mall and that interest payments, of 12%, to the investors also came from their own funds,” writes Bam.

She concludes: “The auditors, ACT now known as Advoca, failed to report the irregular transaction to IRBA timeously. They ought to have known that investors’ funds were being paid before transfer had taken place. At all times they had access to that information. Also, they ought to have known that this money was ultimately lent to developers who borrowed the money and used the same funds to pay 14% interest back to Sharemax.”

Asked by Moneyweb to comment, Advoca managing director Jacques van der Merwe says: “In response to the determination made by the FAIS Ombud we are satisfied that we answered their enquiries directed to us sufficiently. We did not receive any further enquiries from them after our detailed response on any issues now raised in the determination. We are therefore not going to deal with the issue in the electronic media.”

This is not the only controversy faced by ACT. Moneyweb has previously reported on how the firm changed its mind on a clean audit it gave Sharemax-promoted Flora Centre. ACT only changed its mind after it was notified by IRBA that a complaint had been laid against it relating to the Flora Centre financial statements. For a detailed analysis of these financial statements, see Inside Sharemax’s “magic”.

Copy and paste mistake

Once ACT reported its irregularity to IRBA, Sharemax was invited to respond. Says ACT: “Sharemax’s response was that no reportable irregularity took place as the prospectuses contained a common mistake (the provision that funds could only be transferred after registration of transfer of the property to the property investment companies) which recurred as a result of a bona fide “copy and paste” mistake during drafting of the prospectuses. Sharemax argued that the prospectuses should be rectified.”

Bam says it appears that Sharemax is claiming that there was a mere ‘copy and paste’ error in the prospectus. “This is disingenuous and against the probabilities,” says Bam. “This is a material term of the contract between Sharemax and the investors. Most investors would not have participated if their funds did not enjoy the protection of an attorney’s trust account. This simply cannot be swept under the carpet as a ‘copy and paste’ error. Equally it is far too late to even consider a rectification of the prospectus, large numbers of investors already parted with their funds.”

Bam continues: “The information received by this office is that [Sharemax] representatives specifically told investors that their money will remain in the attorney’s trust account and will only be paid out upon registration of the transfer of the property. The investors were told to pay their money only to and directly into the attorney’s trust account. There the money will be safe.”

Bam also notes that her office is in possession of promotional pamphlets produced and distributed by Sharemax. The pamphlets state: “Investment funds are paid into the trust account of Weavind & Weavind attorneys (established in 1905), which falls under the protection and insurance of the Law Society of South Africa, until the property is ready for transfer into the investors’ names.”

Says Bam: “This statement is consistent with the representations made in the prospectus and its purpose is to assure investors that their funds enjoyed protection. On [Sharemax and its directors’] own version they knew, at the time of producing this pamphlet, that they were wilfully and deliberately misleading members of the public as they equally knew that this protection offered in the prospectus and in this pamphlet was merely a ‘cut and paste error’ and that the prospectus was subject to rectification. The pamphlet was distributed in 2010.”

Furthermore, Bam says that after every investment was made, each investor received a letter from Sharemax. The letter states: “…your investment is deposited into Weavind & Weavind’s trust account, and is kept there until the investment amount is processed and the property is transferred. After this your shares are issued to you as described in the prospectus.”

Bam says these letters were still being written to investors after the “mistake” was discovered.

“The only reasonable conclusion to be drawn from this conduct is that the second to seventh respondents were involved in a scheme calculated to defraud members of the public.”

Topics: FAIS OMBUD, NOLUNTU BAM, SHAREMAX, ZAMBEZI RETAIL PARK, DOMINIQUE HAESE, GERT GOOSEN, WILLIE BOTHA, ANDRE BRAND, THE VILLA, ACT AUDIT SOLUTIONS, ADVOCA AUDITING
--
---