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PRIVATE AND CONFIDENTIAL

BizNews
Media Centre
1st Floor, Johannesburg Stock Exchange
1 Exchange Square
Sandton
Johannesburg
By email: alec@biznews.com
Our Ref:

RA/AM/SA/HH/kr/O0072/001

9 March 2016
URGENT
NOT FOR PUBLICATION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 3
weeks before stinky Optimum deal which was published online by Mr Alec Hogg of
BizNews on 7 March 2016 and can be accessed on your website via the following
URL: http://www.biznews.com/sa-investing/2016/03/07/busted-guptas-gifted-zumason-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 was
published 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-zumadefend-friendship-as-normal-business/ (the Second Article) (together, the Articles)
The Article not only republishes an earlier article written by Franz Wild and Paul
Burkhadt for Bloomberg, but wholly adopts and further embellishes the allegations
therein. You will of course be aware that pursuant to the repetition rule it is no
defence 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 allegations
about our clients, including the following:
(1) Our clients have acted improperly and corruptly in order to acquire the
Optimum coal mine by:
(a) interfering with Glencores 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
transferred shares to Mr Duduzane
(Mabengela) ahead of the Optimum
President Zuma financially and, by
Optimum deal.

Exploration & Resources (Tegeta),


Zuma through Mabengela Investments
acquisition in order to improperly benefit
extension, ensure his support for the

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 with
President 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 grossly
defamatory of our clients, such that they would be likely to cause substantial damage
to our clients reputations. It is unequivocally denied that our clients have engaged in
any improper or corrupt practices in order to acquire Optimum from Glencore, nor
have they sought to financially benefit President Zuma or any senior members of
Government through this transaction. Further, our clients have in no way used their
friendship with President Zuma or Duduzane Zuma to extract State opportunities, as
we make clear below. In this regard, we note that you have neither provided nor
referred to any evidence to substantiate your position.

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

Malice / Fault
In respect of the Article, it is clear that you were made aware (not least from the
content 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 regarding
the extent of Mr Zwanes involvement in discussions relating to the acquisition of
Optimum, and (2) the allegation that our clients had allowed senior members of
Government to improperly benefit from or influence the Optimum deal. Such notice
should have alerted you to the fact that the veracity of the Bloomberg article was, at
the very least, in doubt and yet, no attempt was made by you to verify the information
or seek our clients comment. Similarly, at no point did Mr Hogg approach our clients
in respect of the Second Article.
As such, you have intentionally and negligently republished the Allegations
maliciously, knowing that they are untrue or with recklessness as to their truth, in
order 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 from
our clients at the end of that article is entirely insufficient to offer any balance to the
BizNews Article and would certainly not correct the false impression given to the
ordinary reader that our clients have acted improperly and corruptly.
Disconcertingly, we also understand that your employees have, in fact, actively
sought to stifle and discourage the publication of any corrective comments or
clarifications by our clients or their employees. In this regard we note the following
actions and comments made on behalf of BizNews in response to attempts by our
clients, post-publication, to make factual corrections and/or put their side across:
(1) On or around 4 March 2016, our clients employees, Himanshu Tanwar and
Aurrell Phumelo, tried to post a comment correcting inaccuracies contained in
the 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 you
are 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 for
his decision to remove the comment.
Furthermore, having reviewed many of the other contentious comments
posted on BizNews in response to the above article, it is simply untenable for
you to argue that such stringent measures were exercised in respect of other
posters on the comments board, particularly those who supported the article.
As such, it seems that comments from our clients have been the subject of
deliberate and unfair suppression.

(2) On 2 March 2016, our clients, through their employee Mr Tanwar, attempted to
post a comment in respect of an article titled Guptas file urgent interdict
against EFF following Malemas threats. The comment was rejected by the
moderator, even though the opinion was put forward in a professional, lawful
manner, 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 to
the fact that his comments were being relegated to the bottom of the
comments board, when other comments that seemingly supported the article
were being prioritised. Mr Hoggs response to this was Please stop bothering
me with trivial issues. We are doing nothing different. Please engage with
Discus. No details on how our clients may engage with Discus were
provided.
Such censorship cannot, by any standards, be deemed fair or in the public interest. It
also appears that it is your standard practice to wilfully disregard any factual
evidence that contradicts your agenda-driven, one-sided journalism. This can in no
way be considered truthful, fair and/or balanced reporting as required under the Code
of 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 Glencores negotiations with Eskom in relation to
the fine imposed on Optimum, as you have alleged. The fine is a matter that arose
between Eskom and Glencore/Optimum and had nothing whatsoever to do with our
clients.
As you are aware, Optimum have disputed the fine. Naturally, our clients will inherit
this position upon takeover of Optimum and will need to conduct the necessary
investigations to determine how the fine arose, determine what steps were taken to
negotiate 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, lossmaking asset, and the composition of the acquiring vehicle, as evidence of
inappropriate state asset capture, when the only other alternative for Optimum was
bankruptcy. Had this transaction not taken place, Optimum would have ceased to
exist and several thousand jobs would have been lost. This is significant when one

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 in
Eskoms negotiations with Glencore/Optimum or that our clients are engaging in state
asset capture as a result of its acquisition of Optimum, please provide evidence of
the same so that our clients may properly consider this and respond. In this regard
we further remind you that the onus is on you to prove the truth of any such
Allegations.
Ministerial involvement in the Optimum acquisition
It is entirely false and defamatory to allege that our clients have used their political
connections to improperly influence the Optimum acquisition. In particular we note
that you seek to substantiate this Allegation by stating that Mines Minister
Mosebenzi Zwane said in a Feb. 8 interview that he helped complete the deal for the
Optimum coal mine when he flew to Switzerland to meet Glencore Chief Executive
Officer Ivan Glasenberg. Zwane said that while he wasnt favouring Tegeta, he
helped persuade Glencore to sell the operation, which was in bankruptcy protection,
to try and save jobs. As you will be aware from Mr Mosebenzi Zwanes interview of 8
February 2016, he visited Switzerland to meet with Glencores Chief Executive
Officer, 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 clients
and 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. As
we understand from press reports, Mr Zwane has a policy of engaging with
stakeholders to avert crises, specifically job losses. His spokesperson has also said
Minister Zwane has committed himself to ensuring that his office has an open-door
policy. This, in part, requires travelling to meet with all stakeholders to present
governments position on these pertinent matters. He will continue to do so No
personal benefit is accrued from these. The minister and department remain
committed 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 clients acquisition of Optimum, or a party
to negotiations.
Our clients would further reiterate that ahead of completing the transaction, Optimum
was 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 regulatory
authorities.

Share Transfer
The Allegation that our clients, through Tegeta, transferred shares to Mabengela and
Elgasolve in order to financially benefit President Zuma and influence decisionmaking, is refuted in the strongest terms. The Allegations are untrue and baseless.
Shares were acquired by both Mabengela and Elgasolve to ensure that Tegeta met
black economic empowerment requirements set by Eskom following a supply
contract with Tegetas Brakfontein mine. A pre-condition for the contract, which
needed 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 this
condition was met and had nothing to do with Tegetas acquisition of Optimum.
Further, whilst our clients make no secret of the fact that Mr Duduzane Zuma is a
shareholder of Mabengela, it would be an entirely fanciful and unsubstantiated leap
to 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 the
same as any other businessman. He is not an extension of President Zuma and it
cannot possibly be inferred that by doing business with our clients or any other
business people, that President Zuma will benefit.
Should you wish to make such Allegations, we again invite you to provide evidence
of the same.
State Capture
It is, again, false and defamatory to allege that our clients have used their friendship
with President Zuma and his family to extract State opportunities. In this regard we
highlight that the Gupta family has a 23-year history of strong business performance
and turnaround skills long before President Zuma came to power. This strong
performance has come almost entirely via successful activity in the private sector,
with less than 1% of the clients groups revenue coming from government contracts.
Such growth has come in part as a result of sector diversification and has created
over 4,500 jobs for South Africans and contributed over R100+ million in corporate
taxes for 2015. You claim that Andrew Englands Financial Times article highlights
preposterous Gupta claims about their businesss 1% reliance on the public
sector; with respect, he does no such thing. For the record, this figure is entirely
accurate and our clients stand by their statement on this subject. If you have cogent
evidence to contradict these figures please provide our clients with copies of the
same so that they can review and respond.

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 to
take the necessary steps to verify the information and give our clients a reasonable
opportunity 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 by
distortion, exaggeration or misrepresentation, material omissions, or
summarisation; and
Section 1.7: Where there is reason to doubt the accuracy of a report or a source
and it is practicable to verify the accuracy thereof, it shall be verified. Where it
has not been practicable to verify the accuracy of a report, this shall be stated in
such report.
In circumstances where our clients were not even contacted, it cannot possibly have
been deemed reasonable to publish the Articles. Such conduct is further evidence
that 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 all
the steps necessary to defend their reputation.
Accordingly,
please
confirm
by
email
to
Rachel
Atkins
(Rachel.Atkins@schillings.co.uk)
and
Alexandra
McCready
(Alexandra.McCready@schillings.co.uk) by no later than 5pm SAST on 11 March
2016 that you will:
1. Remove the online versions of the Articles immediately;

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 article
about our clients, that you will provide our clients through this firm with the
details of each and every allegation or alleged fact that you propose to publish
about our clients, and evidence in support, and that you will give our clients at
least 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 clients
proceed with this matter.
In the meantime, we reserve our clients rights in full, including, but not limited to, the
right to lodge a complaint with the Press Ombudsman and/or issue legal proceedings
in defamation against you.
Yours faithfully

SCHILLINGS