gupta lawyer's letter to biznews

8/19/2019 Gupta Lawyer's Letter to BizNews

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1753395_7

PRIVATE AND CONFIDENTIALBizNewsMedia Centre1st Floor, Johannesburg Stock Exchange1 Exchange SquareSandtonJohannesburg

By email: [email protected]

Our Ref: RA/AM/SA/HH/kr/O0072/001

9 March 2016

URGENTNOT FOR PUBLICATION

Dear Sirs

The Gupta Family and Oakbay Investments

We act for Mr Atul Gupta and Oakbay Investments (our “clients”).

We write in relation to an article titled “Busted: Guptas gifted Zuma son his stake 3weeks before stinky Optimum deal ” which was published online by Mr Alec Hogg ofBizNews on 7 March 2016 and can be accessed on your website via the followingURL: http://www.biznews.com/sa-investing/2016/03/07/busted-guptas-gifted-zuma-son-his-stake-3-weeks-before-stinky-optimum-deal/ (the “Article”).

We also write in relation to a further piece by Mr Alec Hogg titled “What “State

Capture?” Gupta, Zuma defend friendship as “normal business”” which waspublished on your website on 9 March 2016 and is available via the following URL:https://www.biznews.com/leadership/2016/03/09/what-state-capture-gupta-zuma-defend-friendship-as-normal-business/ (the “Second Article”) (together, the “Articles”)

The Article not only republishes an earlier article written by Franz Wild and PaulBurkhadt for Bloomberg, but wholly adopts and further embellishes the allegationstherein. You will of course be aware that pursuant to the ‘repetition rule’ it is nodefence to an action in defamation for you to argue that you were only repeating


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what someone else had published.1 As such, you will be separately liable for

republishing the false and defamatory allegations contained in the Bloomberg article,as well as the defamatory allegations made directly by Mr Hogg in both Articles.

The Article, both expressly and impliedly, makes a number of serious allegationsabout our clients, including the following:

(1) Our clients have acted improperly and corruptly in order to acquire theOptimum coal mine by:

(a) interfering with Glencore’s negotiations with the State-owned utility,Eskom (“Eskom”) in order to collapse the proposed deal between the

two parties; and(b) exploiting their political connections to ensure that they were successful

in acquiring the Optimum mine;

(2) Our clients have, through Tegeta Exploration & Resources (“Tegeta”),transferred shares to Mr Duduzane Zuma through Mabengela Investments(“Mabengela”) ahead of the Optimum acquisition in order to improperly benefitPresident Zuma financially and, by extension, ensure his support for theOptimum deal.

The Second Article goes even further in alleging that our clients are part of a“network of patronage, cronyism and corruption” and are using their friendship withPresident Zuma and his family to improperly extract public sector opportunities,thereby engaging in “State Capture ”.

(the “Allegations”).

The Allegations are not only extremely serious but are entirely false and grosslydefamatory of our clients, such that they would be likely to cause substantial damageto our clients’ reputations. It is unequivocally denied that our clients have engaged inany improper or corrupt practices in order to acquire Optimum from Glencore, nor

have they sought to financially benefit President Zuma or any senior members ofGovernment through this transaction. Further, our clients have in no way used theirfriendship with President Zuma or Duduzane Zuma to extract State opportunities, aswe make clear below. In this regard, we note that you have neither provided norreferred to any evidence to substantiate your position.

1 See Tsedu v Lekota (715/07) [2009] ZASCA 11 (17 March 2009)


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Malice / Fault

In respect of the Article, it is clear that you were made aware (not least from thecontent of the Bloomberg article which references ‘e-mailed response to questions ’)that our clients had put Mr Wild on notice of the falsity of (1) the allegations regardingthe extent of Mr Zwane’s involvement in discussions relating to the acquisition ofOptimum, and (2) the allegation that our clients had allowed senior members ofGovernment to improperly benefit from or influence the Optimum deal. Such noticeshould have alerted you to the fact that the veracity of the Bloomberg article was, atthe very least, in doubt and yet, no attempt was made by you to verify the informationor seek our clients’ comment. Similarly, at no point did Mr Hogg approach our clientsin respect of the Second Article.

As such, you have intentionally and negligently republished the Allegationsmaliciously, knowing that they are untrue or with recklessness as to their truth, inorder to create a sensationalist news story where one simply does not exist. As such,the Articles have been published unlawfully and with fault.

Further, as regards the Article, the fact that the Bloomberg article buries a quote fromour clients at the end of that article is entirely insufficient to offer any balance to theBizNews Article and would certainly not correct the false impression given to theordinary reader that our clients have acted improperly and corruptly.

Disconcertingly, we also understand that your employees have, in fact, activelysought to stifle and discourage the publication of any corrective comments orclarifications by our clients or their employees. In this regard we note the followingactions and comments made on behalf of BizNews in response to attempts by ourclients, post-publication, to make factual corrections and/or put their side across:

(1) On or around 4 March 2016, our clients’ employees, Himanshu Tanwar andAurrell Phumelo, tried to post a comment correcting inaccuracies contained inthe article published on 4 March titled “Gupta brothers goings nowhere –Dubai relocation reports false ”. The comment was removed by Mr Hogg. Mr

Tanwar queried why they were removed, to which Mr Hogg replied “Ah so youare a real person working in a real team in Guptaland. Thanks for clarifying .”Mr Hogg made no attempt to provide any proper or reasonable justification forhis decision to remove the comment.

Furthermore, having reviewed many of the other contentious commentsposted on BizNews in response to the above article, it is simply untenable foryou to argue that such stringent measures were exercised in respect of otherposters on the comments board, particularly those who supported the article.As such, it seems that comments from our clients have been the subject ofdeliberate and unfair suppression.


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(2) On 2 March 2016, our clients, through their employee Mr Tanwar, attempted topost a comment in respect of an article titled “Guptas file urgent interdictagainst EFF following Malema’s threats ”. The comment was rejected by themoderator, even though the opinion was put forward in a professional, lawfulmanner, with no infringement of any third party rights. Once again, no proper justification or explanation was provided to our clients for this decision.

(3) On 9 March 2016, Mr Tanwar had once again contacted Mr Hogg in relation tothe fact that his comments were being relegated to the bottom of thecomments board, when other comments that seemingly supported the articlewere being prioritised. Mr Hogg’s response to this was “Please stop bothering

me with trivial issues. We are doing nothing different. Please engage withDiscus ”. No details on how our clients may engage with ‘Discus’ wereprovided.

Such censorship cannot, by any standards, be deemed fair or in the public interest. Italso appears that it is your standard practice to wilfully disregard any factualevidence that contradicts your agenda-driven, one-sided journalism. This can in noway be considered truthful, fair and/or balanced reporting as required under the Codeof Ethics and Conduct for South African Print and Online Media (the “Code”).

We set out our clients’ position in respect of the Allegations below.

The Allegations

Eskom / Optimum acquisition

Our clients in no way interfered with Glencore’s negotiations with Eskom in relation tothe fine imposed on Optimum, as you have alleged. The fine is a matter that arosebetween Eskom and Glencore/Optimum and had nothing whatsoever to do with ourclients.

As you are aware, Optimum have disputed the fine. Naturally, our clients will inheritthis position upon takeover of Optimum and will need to conduct the necessaryinvestigations to determine how the fine arose, determine what steps were taken tonegotiate with Eskom (including the terms of any deals brokered with Eskom), and,pursuant to that enquiry, take a view on their position.

It is, in addition, false and misleading to portray the acquisition of an unlisted, loss-making asset, and the composition of the acquiring vehicle, as evidence ofinappropriate state asset capture, when the only other alternative for Optimum wasbankruptcy. Had this transaction not taken place, Optimum would have ceased toexist and several thousand jobs would have been lost. This is significant when one


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considers that more than 10,000 jobs have been cut in the South African mining

sector since 2015 by the top three mining companies.

Should you wish to continue to allege that our clients have played any role inEskom’s negotiations with Glencore/Optimum or that our clients are engaging in stateasset capture as a result of its acquisition of Optimum, please provide evidence ofthe same so that our clients may properly consider this and respond. In this regardwe further remind you that the onus is on you to prove the truth of any suchAllegations.

Ministerial involvement in the Optimum acquisition

It is entirely false and defamatory to allege that our clients have used their politicalconnections to improperly influence the Optimum acquisition. In particular we notethat you seek to substantiate this Allegation by stating that “Mines MinisterMosebenzi Zwane said in a Feb. 8 interview that he helped complete the deal for theOptimum coal mine when he flew to Switzerland to meet Glencore Chief ExecutiveOfficer Ivan Glasenberg. Zwane said that while he wasn’t favouring Tegeta, hehelped persuade Glencore to sell the operation, which was in bankruptcy protection,to try and save jobs.” As you will be aware from Mr Mosebenzi Zwane’s interview of 8February 2016, he visited Switzerland to meet with Glencore’s Chief ExecutiveOfficer, Ivan Glasenberg, to discuss the sale of Optimum and the potential loss of

thousands of jobs. Mr Zwane was not a party to any negotiations between our clientsand Glencore in respect of Optimum, nor did he influence the deal.

Mr Zwane has said himself that he was “not involved in a transaction of anybody ”. Aswe understand from press reports, Mr Zwane has a policy of engaging withstakeholders to avert crises, specifically job losses. His spokesperson has also said“Minister Zwane has committed himself to ensuring that his office has an open-doorpolicy. This, in part, requires travelling to meet with all stakeholders to presentgovernment’s position on these pertinent matters. He will continue to do so… Nopersonal benefit is accrued from these. The minister and department remaincommitted to delivering on, and upholding, the Batho Pele principles ”.

For the avoidance of doubt, no other Government minister, department or employee,however senior, has been involved in our client’s acquisition of Optimum, or a partyto negotiations.

Our clients would further reiterate that ahead of completing the transaction, Optimumwas in business rescue and there were no other credible buyer of the assets. Indeed,the transaction had also been fully approved by all the necessary regulatoryauthorities.


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Share Transfer

The Allegation that our clients, through Tegeta, transferred shares to Mabengela andElgasolve in order to financially benefit President Zuma and influence decision-making, is refuted in the strongest terms. The Allegations are untrue and baseless.Shares were acquired by both Mabengela and Elgasolve to ensure that Tegeta metblack economic empowerment requirements set by Eskom following a supplycontract with Tegeta’s Brakfontein mine. A pre-condition for the contract, whichneeded to be fulfilled within one year, was that Tegeta was majority black owned(50% + 1 share). The sale of shares to Mabengela and Elgasolve ensured thiscondition was met and had nothing to do with Tegeta’s acquisition of Optimum.

Further, whilst our clients make no secret of the fact that Mr Duduzane Zuma is ashareholder of Mabengela, it would be an entirely fanciful and unsubstantiated leapto conclude that any transfer of shares to Mr Duduzane Zuma, as a business partner,would entail a financial benefit to President Zuma and/or influence his policies.

Mr Duduzane Zuma holds no ministerial position and is entitled to be treated thesame as any other businessman. He is not an extension of President Zuma and itcannot possibly be inferred that by doing business with our clients or any otherbusiness people, that President Zuma will benefit.

Should you wish to make such Allegations, we again invite you to provide evidenceof the same.

State Capture

It is, again, false and defamatory to allege that our clients have used their friendshipwith President Zuma and his family to extract State opportunities. In this regard wehighlight that the Gupta family has a 23-year history of strong business performanceand turnaround skills – long before President Zuma came to power. This strongperformance has come almost entirely via successful activity in the private sector,

with less than 1% of the client’s group’s revenue coming from government contracts.Such growth has come in part as a result of sector diversification and has createdover 4,500 jobs for South Africans and contributed over R100+ million in corporatetaxes for 2015. You claim that Andrew England’s Financial Times article highlights“preposterous Gupta claims about their business’s “1%” reliance on the publicsector ”; with respect, he does no such thing. For the record, this figure is entirelyaccurate and our clients stand by their statement on this subject. If you have cogentevidence to contradict these figures please provide our clients with copies of thesame so that they can review and respond.


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You have further provided no factual basis upon which to allege that our clients are in

any way exploiting any political connections to extract public sector opportunities.Again, should you wish to allege that our clients are engaging in such conduct,please provide evidence of the same.

Your conduct

Given the seriousness of the Allegations, it would have been incumbent upon you totake the necessary steps to verify the information and give our clients a reasonableopportunity to respond. No such steps were taken.

Such conduct is wholly inconsistent with the standards set by Code, in particular

under:

Section 1.1: “to take care to report news truthfully, accurately and fairly ”;

Section 1.2: “News shall be presented in context and in a balanced manner,without any intentional or negligent departure from the facts whether bydistortion, exaggeration or misrepresentation, material omissions, orsummarisation ”; and

Section 1.7: “Where there is reason to doubt the accuracy of a report or a sourceand it is practicable to verify the accuracy thereof, it shall be verified. Where ithas not been practicable to verify the accuracy of a report, this shall be stated insuch report.”

In circumstances where our clients were not even contacted, it cannot possibly havebeen deemed reasonable to publish the Articles. Such conduct is further evidencethat you have published with fault.

Next steps

The Articles are clearly defamatory of our clients and lies in stark contrast to the

standards expected from your publication or under the Code. Our clients will take allthe steps necessary to defend their reputation.

Accordingly, please confirm by email to Rachel Atkins([email protected]) and Alexandra McCready([email protected]) by no later than 5pm SAST on 11 March2016 that you will:

1. Remove the online versions of the Articles immediately;


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2. Alert all those to whom you have syndicated the Articles of their inaccuracies

and request that they immediately cease publication of them;

3. Publish an apology in terms to be agreed online and in print;

4. Provide your undertaking that, should you intend to publish any further articleabout our clients, that you will provide our clients through this firm with thedetails of each and every allegation or alleged fact that you propose to publishabout our clients, and evidence in support, and that you will give our clients atleast 4 business days to respond to any such allegations; and

5. Pay our clients’ legal costs.

The manner and speed at which you respond will dictate the way in which our clientsproceed with this matter.

In the meantime, we reserve our clients’ rights in full, including, but not limited to, theright to lodge a complaint with the Press Ombudsman and/or issue legal proceedingsin defamation against you.

Yours faithfully

SCHILLINGS

gupta lawyer's letter to biznews

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