ProEthics vs GroundUp
Complaint 32161
Ruling by the Deputy Press Ombud
Date of publication:
18 February 2025
Headline of publication:
“SIU applies to extend lottery corruption probe”
Link: https://groundup.org.za/article/siu-applies-to-extend-its-mandate-to-investigate-lottery-corruption/
Author: Raymond Joseph
Particulars
1. A complaint was lodged 3 March 2025 by Dr Janette Minnaar on behalf of her company ProEthics. The complaint was directed at Bizcommunity, which published the report on 19 February. However, the article was first published by GroundUp, and the Public Advocate accordingly engaged GroundUp on the matter. The complaint also included:
1.1. a company profile;
1.2. a 2023 press statement in response to an earlier report;
1.3. another report published on GroundUp on 15 April 2024 which dealt with the company;
1.4. the article that is the subject of the complaint.
2. The Public Advocate sent the complaint to GroundUp on 25 March 2025 and a response to the complaint was received on 26 March 2025 from GroundUp editor Nathan Geffen, including some of the documents referred to in compiling its report. These were
2.1. A reference letter from the National Lotteries Commission (NLC) for the company;
2.2. A note from the acting NLC commissioner suspending further dealings with ProEthics;
2.3. A list pf payments made by NLC to ProEthics; and
2.4. A report on irregular expenditure at the NLC commissioned by the Department of Trade Industry and Competition and conducted by TSU Investigations.
3. The complainant provided a response on 17 April, with several appendices. These were:
3.1. Two letters from National Treasury disagreeing with adverse findings by the Auditor General against the NLC;
3.2. Email correspondence between ProEthics and the SA Reserve Bank about training to be provided by the company, that was ultimately cancelled because of negative coverage.
4. The respondents responded on 22 April, objecting to several aspects of the 17 April submission by the complainant. They objected to firstly, a reference to possible legal action, as this would normally cause the Press Council process to be put on hold pending resolution; secondly, what it regarded as a defamatory reference to the author of the article; and finally, the fact that the response was marked confidential. The respondents also said new matters were introduced in the complaint and said they should be given a right to respond to those.
5. The complainant then amended her response on 30 April, removing the claims against the author, stating clearly there is no intention of taking legal action and removing the marking of the submission as confidential.
6. On 9 May, the respondents sent through a brief emailed further response to the complainant’s submission.
7. On 12 May, a final response to the respondents’ note was submitted to the office of the Public Advocate.
8. I have taken into account the various submissions filed in this matter.
The article
9. The article that is the subject of the complaint reports on a request by the Special Investigating Unit (SIU) to extend the scope of an investigation into the NLC, past its original end date in 2020 and also to include issues in the procurement of services. The report quotes the Department of Justice as confirming that the request has been made and is being dealt with, and says that a new board and management at the NLC are co-operating with the SIU.
10. The report then provides some background to the development, in the course of which ProEthics is mentioned.
11. The few lines at the centre of this complaint are worth quoting in full. They read:
ProEthics, which advised the NLC on ethics when the organisation was overwhelmed by rampant corruption, was also used to launder payments to service providers. The NLC paid ProEthics over R28.4-million. The company, in turn, said it paid other service providers on the NLC’s instructions — including a R1.7-million payment for a flash mob that never happened.
12. It should be noted that this wording is as it appeared originally. The reference to the R1.7 million payment for a flash mob was removed by GroundUp on realising it should not have been linked to ProEthics, as further set out below.
The complaint
13. The complaint is that the article infringes several clauses of the Press Code, namely Clauses 1.1, 1.2, 1.3, 1.4, 1.7 and 3.3.1. Though it is not always clear which clause is related to which element of the complaint, it is clear that the complainant argues simply that the article is inaccurate in several respects. It is unclear in which respect information may have been obtained illegally, dishonestly or unfairly (as per Clause 1.4). The reference to Clause 3.3 relates to an alleged failure to display adequate consideration for possible damage to reputation, arising out the reputational damage the company has sustained.
14. The following will deal with the elements of the complaint as they emerge from the various documents.
Complaint: Inaccurate reporting
Arguments
15. The complaint highlights three respects in which the reference to ProEthics is false:
15.1. The amounts mentioned are greatly overstated. The company says the amount of R28.4m is an exaggeration, and that it received not even 10% of that amount.
15.2. The reference to the money having been laundered is false, as all money received came from the NLC, not an illicit source.
15.3. The company has no knowledge of the flash mob referred to.
16. In its first response, GroundUp concedes the third point, adding it has already corrected the error and apologised to ProEthics for the mistake.
17. On the amounts involved, the respondents provide documents supporting the figure of R28.4m, and argue the reporting did not say this money was for ProEthics itself. Instead, the accusation is that most of the money was paid across to other companies.
18. On the use of the expression “laundering payments”, the respondents argue that the term is justified. They explain at length that ProEthics paid other suppliers much of the money received from the NLC, at the behest of the NLC. The scheme was intended to circumvent the NLC’s own procurement rules and is therefore “the very essence of a laundering scheme”. The respondents also argue that the arrangement is confirmed by the complainant’s statement that most of the money was paid onwards.
19. In response, the complainant notes the respondents’ admission that an error was made in regard to the reference to a flash mob, arguing it illustrates inadequate care with regard to checking facts.
20. Further, the complainant quotes a definition of money laundering as “the illegal practice of making proceeds obtained through criminal activities, such as the trafficking of illegal drugs, corruption, ransom demands, and human trafficking, appear to have been obtained from legitimate commercial activities and sources (from an article by Cliffe Dekker).” The term cannot reasonably be used for the arrangement between ProEthics and the NLC, the complainant says.
21. At some length, the complainant outlines the arrangement it had with the NLC. Having been appointed properly to a panel of service providers, it executed various projects, sometimes together with other service providers identified by the NLC. ProEthics acted as a project manager on behalf of the NLC and cannot be held responsible for any breaches of procurement regulations at the NLC.
22. The complainant argues that GroundUp deliberately tried to mislead their readers to think that ProEthics kept the entire sum of R28.4m.
23. Furthermore, the complainant adds the company was prevented from discussing the matter when contacted by Joseph as they were bound by a confidentiality clause in their agreement with the NLC.
24. Having been given an opportunity to respond to what they felt was new material, the respondents argue that the term “launder” does not require evidence of criminal money laundering but is justified by the way in which payments were made on behalf of the NLC.
25. In a final response from the complainant, ProEthics says there is no substantial difference between laundering of payments and laundering of money, and point to both terms being used similarly in GroundUp articles. They further say the allegations are not supported by any official agency or investigation.
Discussion
26. The claim about the flash mob has been admitted as an error and corrected by GroundUp.
27. There is sufficient support for the figure of R28.4m as having been paid by the NLC to ProEthics.
28. What remains in dispute is whether the report suggests that the amount was solely for the benefit of ProEthics. The relevant section of the paragraph reads: “The NLC paid ProEthics over R28.4-million. The company, in turn, said it paid other service providers on the NLC’s instructions.” It seems very clear that Proethics did not keep the full amount, but paid others.
29. Though other aspects of the arrangement between ProEthics and the NLC may be in dispute, it is common cause that the company paid other service providers on instruction by the NLC. But can this be described as money laundering, or payment laundering?
30. Undoubtedly, the use of the term laundering implies criminality. Money laundering is defined in SA law as “an activity which has or is likely to have the effect of concealing or disguising the nature, source, location, disposition or movement of the proceeds of unlawful activities or any interest which anyone has in such … ”. (Financial Intelligence Centre Act, 2001 (Act No 38 of 2001)).
31. Similar definitions can be found in dictionaries and elsewhere (See eg https://www.collinsdictionary.com/dictionary/english/money-laundering#google_vignette ; https://www.investopedia.com/terms/m/moneylaundering.asp ; https://www.fiu-nederland.nl/en/home/what-is-money-laundering/ ) These definitions uniformly describe the “cleaning” of money earned through criminal activity – “dirty” money – in order to obscure its origins.
32. It is not material whether the reference is to “money” or to “payment” laundering, and GroundUp has used both terms.
33. In this case, the GroundUp report makes the claim that payments were made through ProEthics in an attempt to circumvent official procurement processes, which would certainly be improper. Crucially, however, no accusation has been made that the money amounted to the proceeds of crime, whose origins needed to be hidden. It has also not been established that ProEthics knew there was an improper attempt to bypass NLC rules. The furthest GroundUp goes is to say they should have known better.
34. GroundUp extends the term to describe the scheme it outlines. However, the ordinary reader would understand it in the narrower way, as outlined above: an effort to hide the origins of the proceeds of crime.
35. Under the circumstances, the use of the term laundering is not justified.
Finding
36. I find that the article breached Clause 1.2 of the Press Code by describing the actions of the complainant as “payment laundering”.
Complaint: Harm to reputation
Arguments
37. The complainant argues its reputation has been unjustly tarnished, having received queries from clients and lost business as a result of the reporting.
38. The respondents rely largely on the factual basis for the points made in the paragraph.
39. The complainant also says that the use of emotive language is prejudicial, pointing to the description of the company as having “advised the NLC on ethics when the organisation was overwhelmed by rampant corruption”.
40. The respondents describe this as a factual statement.
Discussion
41. It seems a fair statement to describe the NLC as having been overwhelmed by corruption. Extensive media reporting, official inquiries, including by the SIU, and actions by the new leadership at the NLC bear out the interpretation. ProEthics has to carry the responsibility for its association with the NLC at that time.
Finding
42. I find that the article was not in breach of Clause 3.3 of the Press Code by taking insufficient care of the reputation of the complainant.
Other issues
43. Several other claims have been made in the complaint, as well as in the responses. However, the only question before me is whether the specific published report that is the subject of the complaint is in breach of any element of the Press Code.
Ruling
44. I find that the article breached Clause 1.2 of the Press Code by describing the actions of the complainant as “payment laundering”.
45. The complaints of other breaches are dismissed.
46. I direct the publication to correct the phrasing in the article published on GroundUp on February 18 to remove the reference to payment laundering and replace it with a more accurate term.
47. The change should be linked to a footnote to the article, noting that the change was made in accordance with this ruling, and linking to the full decision on the Press Council website. The Press Council’s logo must be published with the footnote.
48. The publication must also publish a separate, short article on its homepage, with a headline including “Correction” and “ProEthics”, explaining the correction to the article (with a link to the updated article), in accordance with the Deputy Press Ombud’s ruling.
49. The corrected article, footnote and homepage correction must be approved by the Deputy Press Ombud prior publication.
50. I direct the publication to share this ruling with all other outlets that published the article with a request to comply.
Appeal
51. The 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
Franz Krüger, Deputy Press Ombud
18 June 2025