Ivan Pillay vs.

Sunday Times
Ruling by the Press Ombudsman and a Panel of Adjudicators
16 December 2015
This ruling is based on the written submissions of Mr Ivan Pillay (acting on his own
behalf), and those of Susan Smuts, legal editor of the Sunday Times newspaper, as well
as on a hearing held on 1 December 2015 in Johannesburg. Adv Muhamed Husain
represented Pillay and Adv Eric van den Berg, with Smuts, the publication. The members
of the Panel of Adjudicators who assisted the Ombudsman were Fanie Groenewald (press
representative) and Carol Mohlala (public representative).
Pillay was employed by the SA Revenue Service (SARS) from April 1999 to May 2015.
He served in various capacities, including as the general manager for the enforcement
division, the chief officer for strategy, enablement and enforcement, as deputy
commissioner; and he has also acted as commissioner.
He complains about a series of texts published in Sunday Times of 4 October 2015,
headlined:
Call to probe Pravin Gordhan over SARS spy saga KPMG report confirms our
story piles pressure on ex-finance minister (front-page article, running over to
page 2);
Bid to keep report under wraps (front-page side-bar); and
Keep shady doings in SARS out in the open (editorial on page 16).
Notes: The stories, and the complaint, are about the establishment of an investigative unit
which Sunday Times termed a rogue unit. This unit had several names, a matter which
is of no material interest to this finding. The panel therefore uses the word unit to refer
to one or more of them.
Mr Johan van Loggerenberg, also a former employee of SARS, complained about the
same matter. The hearing accommodated both Pillay and Van Loggerenberg. Their
complaints largely overflow, and it is possible that a minor aspect not included in one of
their complaints is ascribed to the other person. The panel believes that this is immaterial,
inter alia also as Husain represented both complainants.
The panel suggests that its findings regarding Pillay and Van Loggerenberg may be read
in conjunction with one another.

Earlier stories; other issues

At the hearing it was argued that the articles in dispute should not be seen in isolation
from others dating back to 10 August 2014, because the:
editor linked these stories in the editorial comment;
newspaper referred to the matter as our story that had been confirmed and
vindicated (referring to earlier stories); and
essence of the allegations made, mirrored allegations published earlier.
The panel explained that it could not accept complaints about the earlier stories, as these
were way out of time. However, the members undertook to take cognizance of the
content of those articles for the sake of context and understanding of the stories currently
in dispute.
All the parties accepted this decision.
Leading up to the October 4 stories, it was alleged that the Sunday Times inaccurately
reported that:
the unit was unlawfully or illegally formed despite the fact that the Labour
Court found on 8 December 2014 (in a ruling on an application brought by Pillay
against his suspension) that the Minister of Finance at the time, Mr Trevor
Manuel, and the then Commissioner of SARS, Mr Pravin Gordhan, had approved
the creation of the unit in 2007 (the latter was said to be on record that the unit
was legally established and functioned in support of the SARS mandate with great
success);
SARS have denied the existence of the unit with nothing to substantiate such a
statement and despite various media reports to the contrary, and despite a
reference in a book, published in 2012, which referred to the unit, attributed it to
SARS, and stated its purpose;
the unit bugged people and specifically the home of Mr Jacob Zuma (before he
became President), that the unit infiltrated politicians as bodyguards, that it was
admitted to be a rogue unit, that it spied on taxpayers, and that spy ware in
excess of R500-million had been bought all without any proof;
the unit had something to do with the deaths of former SARS officials; and
slush funds in excess of R500-million were available for the units use.
This list is seemingly endless but the picture is clear enough.
The panel allowed the following issues to be tabled, for the sake of the complete picture,
without the intention of taking it into account for the purposes of this finding:
Pearlie Jouberts sworn affidavit, in which she alleges that Sunday Times was
involved in practices she believed to be unethical and immoral (specifically
regarding the matter with which the complaint is dealing). She stated that she had
resigned from the newspaper because of that. The panel is of the view that this
matter is relevant for background and context however, we note that this
affidavit has not been tested in court, and therefore we are not taking its contents
into account for this finding;
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The accusation that the then editor-in-chief, Phylicia Oppelt, had been used from
2013 onwards by her former husband (Mr Rudolf Mastenbroek) who, it is
claimed, instigated many of the storylines that have since appeared in the Sunday
Times. This is not a matter for the panel to decide (even if Mastenbroek, as a
source, had a vested interest in the matter). The panel has no way of establishing
whether the claim is true and if it is, whether or not Mastenbroeks information
was correct; and
Pillay was constrained in responding to the merits of all the allegations contained
in the Sunday Times reports by statutory provisions and other agreements
containing blanket bans on his ability to disclose taxpayer information and
organisational information, and by his lack of access to SARS records that is his
problem, not that of the newspaper.

The reportage of other publications, allegedly with an alternative narrative, was not
tabled. Such reporting cannot serve as a yardstick for determining the truth or otherwise
of an allegation. Issues related to Mr Ronnie Kasrils could also not be entertained, as
these fell outside the scope of the complaint.
Also, this finding will take only the bare essentials into account as far as Gordhan is
concerned he has lodged his own complaint, and the Ombudsman will deal separately
with those matters.
Lastly, Pillay goes to great lengths to explain that the investigation processes prior to the
KPMG report (see below) were flawed and that he never had an opportunity to put his
side of the case. Again, this falls outside the panels mandate as its one and only objective
is to adjudicate the reportage by the newspaper and not that of any board or
investigative committee.

The complaint in a nutshell

Pillays complaint comprises of 30 pages. What follows is a cryptic synopsis of this
documentation.
He namely:
questions the legitimacy and standing of a report by auditing firm KPMG he
says that the newspaper was too reliant on its findings without questioning its
methods and legality, and the publication indeed needed to query the mere
existence of such a report (which could have been falsified);
complains that the articles falsely insinuated or alleged that he, and some of his
sub-ordinates, were guilty of a number of misdemeanours, unlawful actions and
general misconduct such as that he had:
o tried to conceal the units existence;
o misled official enquiries into it;
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o bribed a former SARS official, Andr Janse van Rensburg, aka Skollie, not
to divulge the existence of the unit or its activities;
o issued instructions for SARS to break into the house of Mr Jacob Zuma
and plant bugging devices in order to spy on him;
o been fraudulently favoured with a pension pay-out from SARS;
o been employed irregularly or fraudulently by the previous Commissioner
and Minister of Finance in that his contract of employment was extended
on several occasions;
o allowed his personal or political considerations to interfere with his
administration of tax and customs law; and
o established the unit illegally (as, he says, Gordhan declared the units
establishment to be legal, it was unfair and inaccurate to call it a rogue
unit.)
He also complains that the newspaper was not justified in stating that the KPMG report
had vindicated its reportage.
More specifically, he complains that the:
editorial made several incorrect or misleading statements;
journalists did not:
o make any attempt to verify the allegations in the KPMG document;
o afford him reasonable time to respond to the allegations, and did not
reflect most of his response to the journalist;
o obtain its information legally, honestly and fairly;
newspaper was not in pursuit of public interest, but rather was motivated by nonprofessional and personal considerations (conflict of interests); and

texts violated his rights to dignity and reputation with some dire consequences
for his ability to earn a livelihood and causing distress to his family, friends and
former colleagues.

The texts
All the articles (except the editorial), were written by Piet Rampedi, Mzilikazi wa Afrika
and Stephan Hofstatter.
The front-page story said former Finance Minister Pravin Gordhan should face a probe
into whether he knew that a rogue unit at SARS had been spying on taxpayers.
Reportedly, this was a recommendation in a KPMG report submitted to SARS
commissioner Tom Moyane. The newspaper story stated that this confirmed its earlier
reports that the unit had been engaged in unlawful interception of communication.

The report, seen by Sunday Times reporters, reveals that SARS blew more than R106million in taxpayers money running a covert and rogue-intelligence unit that spied on
South Africans, and then repeatedly lied about its existence to the public.
The article also stated the KPMG report said that SARS needed to engage the Office of
the Public Protector and apologise for misleading it.
The journalists reported, SARS officials under the tenure of former SARS deputy
commissioner Ivan Pillay told the public protector the rogue unit did not exist. [This]
constitutes possible criminal liability to mislead the Office of the Public Protector, the
report says.
With reference to Pillay and the unit, the journalists quoted the KPMG report as saying
that:
it had reported to him (Pillay) during the entire life span of its existence;
it had operated outside the normal controls, protocols and over-sight structures of
SARS;
agents of the unit had been referred to as ghost employees;
agents had unlawfully intercepted communications of taxpayers;
agents had unlawfully monitored, recorded and transcribed recordings at National
Prosecuting Authority offices on his (Pillays) instructions; and
he (Pillay) had established the unit at the time Gordhan had been commissioner of
SARS.
The side-bar stated that strong lobbying was taking place behind the scenes to classify
as top secret the explosive KPMG report exposing shenanigans at SARS. Two
sources reportedly told the newspaper that Deputy Finance Minister Mcebisi Jonas had
been leading a campaign to have the report classified. One source said the move was a
bid to save SARSs reputation and protect key former officials including Pillay.
[Sunday Times] reporters have had sight of the damning, 139-page KPMG report which
details the rogue units unlawful activities between 2006, when it was established, and
[2014], when it was shut down.
The editorial said the newspapers continued reporting on the existence of a rogue unit
were corroborated from three independent quarters a report by Adv Muzi Sikhakhane,
an advisory board under the leadership of retired judge Frank Kroon, and now a report by
auditing firm KPMG. All three have been unequivocal about their findings that former
deputy commissioner Ivan Pillay should be held accountable for establishing an unlawful
unit that operated with intelligence functions.

The complaint in more detail

Legitimacy, standing of the KPMG report

Pillay questions the validity and credibility of the KPMG report, adding that he doubts
whether the Sunday Times had in fact relied on that report, inter alia because:
none of the articles averred that the newspaper had verified with KPMG whether
or not the information in question emanated from its report;
Moyane was on record as telling a Parliamentary committee that the
investigations by KPMG were yet to be completed;
a report cannot come to a finding (read: the determination of a factual question)
that still had to be investigated;
the KPMG report was supposed to be based on forensic investigation. But how
can someones motives or intentions be deciphered from documents only, without
interviewing the concerned persons?
if partisan political considerations were at play on his part, why were these not
taken into account regarding all people of similar political persuasion, rather than
a single individual? and
how are the terms of reference for the KPMG investigation framed so as to
investigate partisan political considerations?
He continues to argue this point, saying that a forensic report would:
o contain the terms of reference for its investigation, which would reveal
what KPMG had set about to investigate and the manner in which they
went about discharging their instructions. This would enable the reader to
evaluate any of the findings against the original intention of the
investigation;
o reveal the evidence the investigators relied on and how they weighed the
evidence availed to them and the rationale for placing reliance on certain
evidence against other facts;
o indicate whether the affected individuals were interviewed/interrogated or
not; and
o indicate whether it was a final or an interim draft and whether certain
issues remained to be tested and what evidence would be required to prove
certain hypotheses.
None of [these are] revealed in the Sunday Times articles. Are journalists and
newspapers in general not to be bound by such standards? These are questions that must
be posed because the whole tenor of the articles on 4 October 2015 is to express a
vindication for the narrative that the Sunday Times had published since August 2014, he
argues.
Pillay concludes that the newspaper was too reliant on the findings, without questioning
methods and legality and that the newspaper had to demonstrate that it did indeed rely
on a forensic report from KPMG.

He says in the week prior to publication Sunday Times met with an anonymous source,
who was in the pay of SARS, and the journalist was shown pieces of paper supposedly
containing findings of a KPMG forensic investigation.
However, the journalist made no effort to determine the authenticity of the document, to
corroborate whether it did indeed constitute the findings of a KPMG forensic
investigation, and made no attempt to determine the veracity of the claims made in these
pieces of paper. Instead, Sunday Times takes these allegations, and presents them to the
public as is, verbatim, and attribute them to KPMG.
He says the newspaper made no effort to ascertain whether any of these findings could
be attributed to the unit or to him knowing full well that they represented only the side
of a destructive faction hailing from SARS.
If Sunday Times did rely on the KPMG report, there were good reasons for the
newspaper to doubt its accuracy in light of the information that was at its disposal. (The
reasons for this statement are irrelevant, as the panel will set out below.)
Therefore, the repetition of this allegation on 4 October 2015 is not founded in fact or
reasonable supposition. On the contrary, it is a deliberate distortion of SARS internal
documents.
Smuts replies that all the articles were based on a report prepared by KPMG; the
articles merely repeated the findings contained in this document which in any event
largely agreed with the findings by Sikhakhane and Kroon.
She says that Rampedi obtained access to the report. The reason the newspaper
submitted the summary and not the full report to the panel is because only eight copies
of the full KPMG report were made. Each copy was watermarked with a number.
Each number designated the person who received that particular copy. [The journalist
was therefore unable to take a copy with him as this would have identified his source.]
Our source listed the findings and recommendations of the report in a document for our
reporter, and then allowed [Rampedi] to verify that each item in the summary was
properly made, as well as to peruse the entire document. We also had sight of the
preparatory memo from SARS lawyers to KPMG.
She submits that the summary was accurate, and that it was reasonable to report on the
KPMG document as it was the latest in a long line of developments and investigations
into SARS and its rogue unit.
In his reply to the above response by the newspaper, Pillay says he does not believe that
the Sunday Times has convincingly demonstrated that they relied on an authentic KPMG
report the verification asserted by Smuts is no proof that the newspaper has satisfied

even itself that it was dealing with an authentic report from KPMG. We are asked to take
their sources word for it.
He argues that, even if the newspaper had reasonable grounds to rely on a purported
KPMG report, the Press Code enjoins them to verify it when there is reason for doubt.
Their response does not dispute my contention that they had enough information at their
disposal, and more information that was publically available, to doubt the findings of
the so-called KPMG report. They were not diligent in processing that information. I did
not ask the Sunday Times to independently verify all such reports as they contend.
Pillay concludes that the newspapers response to his complaint is in line with its
intention of exposing the rot within SARS while he has not been found guilty of
misconduct or unlawful action by any independent tribunal or forum. Therefore, it is
improper for the Sunday Times to make a judgment of this nature on me. This is
especially true in this case where their reportage is manifestly untrue and is driven by
malicious intent.

Stories: Guilty of several misdemeanours

Pillay complains that the articles falsely insinuated or alleged, among other things, that he
(and some of his sub-ordinates) was guilty of a number of misdemeanors, unlawful
actions and general misconduct.
He also complains that the articles falsely insinuated or alleged that he, and some of his
sub-ordinates, were guilty of a number of misdemeanours, unlawful actions and general
misconduct such as that he had:
o tried to conceal the units existence;
o misled official enquiries into it;
o bribed a former SARS official, Andr Janse van Rensburg aka Skollie, not
to divulge the existence of the unit or its activities;
o issued instructions for SARS to break into the house of Mr Jacob Zuma
and plant bugging devices in order to spy on him;
o fraudulently been favoured with a pension pay-out from SARS;
o irregularly or fraudulently been employed by the previous Commissioner
and Minister of Finance in that his contract of employment was extended
on several occasions;
o allowed his personal or political considerations to interfere with his
administration of tax and customs law; and
o established the unit illegally (as, he says, Gordhan declared the units
establishment to be legal, it was unfair and inaccurate to call it a rogue
unit).
The concealing of the units existence: Pillay submitted to the panel a set of minutes of
the meeting between SARS and the State Security Agency (SSA) which disclosed the
existence of the unit, its members and all the investigations for which it had been
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responsible. He says this was reported in the media, which stated that the creation of the
unit had been done with state approval.
Initially, he requested from the Minister of Finance the services of a retired judge to lead
an independent inquiry into Van Loggerenbergs conduct. When this did not materialise,
he appointed Mr Muzi Sikhakhane SC. This report has since been published, following an
instruction from Judge Kroon of the SARS Advisory Board.
At about the same time, the Minister of State Security instructed the Inspector-General of
Intelligence Services (IGI) to investigate whether there had been irregular activities in SA
Airways (SAA), following some media reports to this effect. Pillay says he co-operated
with this investigation as well.
After he received the Sikhakhane report, he presented the Commissioner with a critique
of that document. It is a matter of public record that he stated the panel had erred in
matters of fact and law.
He adds that he also instructed SARS to compile a detailed rebuttal of the rumours to
brief the media and an MP (Mr Dion George), who had queried SARS in this regard.
This document openly acknowledged the existence of the [unit]and explained its
mandate and function in no uncertain terms.
From this, he argues:
He would not have instituted an independent investigation if he wanted to conceal
the existence of the unit; and
The fact that the panel reached conclusions with which he did not agree, attests
that he did not interfere in their proceedings.
If the Sunday Times is to be believed, he has concealed the existence of the unit
by disclosing it to the newspaper.
The Public Protector: It is untrue that he concealed the existence of the unit from the
Public Protector. Therefore, it is a deliberate falsehood to insinuate or allege that I had
hidden the existence of the unit from the Public Protector. Furthermore, I believe it
impugns the professional integrity of all the SARS officials that were involved.
Pillay denies that he bribed Skollie the latter and SARS parted ways by means of a
mutual separation agreement, and none of it was under-handed. This was fully
documented in the memorandum he had sent to a previous SARS Commissioner, Mr
Oupa Magashula, and the final decision in this regard did not lie with him (Pillay).
He also complains that the allegation about the unit breaking into Zumas house (under
his instructions) and planting bugging devices to spy on him is pure fiction. This
allegation is so far from the truth that it must be regarded as pure fiction.
He concludes, [I]t can hardly be asserted that the existence of the unit was a secret or
that I have not taken seriously the allegations of misconduct on the part of its members. It
9

can also not be asserted that this is information that would be obscured to the Sunday
Times specifically.
Pillay says these allegations have been a subject of various investigations since 2010. He
attests that Gordhan has declared the units establishment to have been legal, and objects
to the use of the term rogue unit.
He adds that, on 5 December 2014, Moyane stated that the Sikhakhane report was the
cause of his suspension which was set aside by Judge Basson thirteen days later. Pillay
says the Judge noted that:
in 2007 the Minister of Finance (and not Pillay) had established the unit after a
recommendation by the Commissioner; and
the Sikhakhane panel had made no adverse findings against him.
All of the above means, he argues, that the Sunday Times did not take care to report news
truthfully, accurately and fairly (as required by Section 2.1 of the Press Code).
Smuts points the panel to the following sections of the summary of the KPMG report
to motivate the newspapers case on several counts (which largely speak for
themselves):
1.2.1: Under the guidance of Pillay, a covert and rogue intelligence unit in
contravention of the rule of law was established in SARS;
1.2.10: The unit operated outside the normal controls, protocols and oversight
structures. Members of the unit were inter alia referred to as ghost employees;
1.2.11: The unit engaged in unlawful interception of communications:
1.2.12: On instructions of Pillay, the unit unlawfully monitored, intercepted
communication, recorded and transcribed recordings at the National
Prosecuting Authority (hereafter referred to as the NPA) offices. The SARS
intelligence gathering exercise at the NPA was known as Operation Sunday
Evenings and was aimed at gathering intelligence in the criminal investigation
of the late Mr Jackie Selebi The reports, transcription and recordings were
handed to Pillay for his consideration;
1.2.16: Pertinent members of SARS misled the State Security, the Public
Protector and the general public with regard to the existence of the rogue and
covert unit;
1.5.4: As a result of the conduct of Pillay and Magashula, SARS incurred
wasteful and fruitless expenditure for the sum of R3 063 937.68 in respect of
the settlement concluded with Janse van Rensburg;
at 2.2.1: In the light of the activities of Mr Pillay during the aforesaid period, it
may as well be that the reduction of interest was done unlawfully and
influenced by partisan political consideration;
2.4.1: SARS should consider instituting criminal proceedings with regard to
fraudulent circumstances surrounding the approval of Pillay's contract wherein
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the Minister of Finance (Gordhan), at the time approved a three year period but
the period was mysteriously changed to five years. The criminal proceedings
should be levelled against Pillay and Magashula; and
2.8.3: SARS needs to engage the office of the Public Protector and apologise
for misleading her office. It constitutes possible criminal liability to mislead the
office of the Public Protector. (As Pillay was at all relevant times the deputy or
acting commissioner of SARS, the officials who lied about the existence of the
unit did so under his tenure.)
To this, she adds that the stories did not state that Pillay had concealed the existence of
the unit and/or had misled official inquiries into it. We did state that the report found
that SARS officials under his tenure did We note that in this instance and many
others, Pillays complaint is couched in imprecise or misleading language which would
tend to suggest that we stated the facts in a more prejudicial way than we did.
The important point, the legal editor argues, is that SARS had never acknowledged the
existence of an unlawful unit, or a unit engaging in unlawful activity. The rogue unit
was hiding in plain sight behind a faade of licit purpose.
She notes that Section 54 of the Sikhakhane report made it clear that the existence of
the unit was not volunteered to them until it was revealed in the media. It is clear that
the people involved in the rogue unit were at pains to conceal its existence/its
purpose/its activities, especially to the extent that these were unlawful There would
be no controversy over a legitimately established unit that fulfilled its purpose lawfully.
However, one that was illegitimately established, or one that was legitimately
established but later went rogue, would be a different matter.
The legal editor also contends that the article did not name Pillay as having paid a
bribe to Skollie. She adds that the accusation of bribery against Pillay was made by
SARS itself, in a letter of demand sent to him on 26 January 2015. In the letter, she
says Pillay is accused of paying a bribe after he had facilitated an approval for the
payment under the pretext of a settlement as his retirement package in a bid to
silence the employee from divulging the illegal and covert activities of the unit.
She also notes that the newspaper previously reported this and Pillay declined to
comment for that story and did not contest the report at the time.
On the Zuma matter, Smuts says that the story referred to a previous article in which it
was stated that members of the unit broke into his house and planted listening devices.
We did not state or imply that this was done on Mr Pillays instruction, as he claims in
his complaint. We didnt say it in the story about bugging Zumas house either.
She also denies that the word fraud or fraudulent was used in the stories. She says,
However, we did report on KPMGs findings regarding the approval of Mr Pillays
contract after his retirement from SARS. We rely on [several sections in the summary
for this].
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She adds that the story did not state that the existence of the unit had been concealed
from the Commissioner of SARS at the time. We accordingly do not intend to deal
with this complaint
Lastly, Smuts states that Pillay was indeed employed irregularly or fraudulently by the
previous Commissioner and Minister of Finance in that his contract of employment
was extended on several occasions before it expired.
Pillay replies that the panel will find the attempts by Sunday Times to distance itself from
its stories (by claiming that it did not accuse him specifically of misleading inquiries into
the unit) to be disingenuous and facile. If all the articles regarding [the unit] and me are
read together, they have the cumulative effect in the mind of the reader of finding fault
with my conduct.

Vindicated
Husain said at the hearing that the stories omitted material information to justify the
statement that the KPMG report had vindicated the Sunday Times reportage.
He also listed some issues which, he said, should have been reported to render the
necessary balance and fairness to the articles. It is necessary to list all of these in order to
determine whether this part of the complaint holds water. He says the newspaper reported
that the unit had:
been formed illegally;
bugged people, and especially Zuma;
broken into Zumas house;
infiltrated politicians;
spied on taxpayers;
operated a brothel;
something to do with the deaths of former SARS officials, Messrs Nkadimeng
and Radebe;
the unit had slush funds in excess of R500-million;
owned, used and bought spy ware in excess of R500-million;
used CCTV to spy on Mr Radebe;
spied on Radebe, Zuma and Jackie Selebi;
intercepted taxpayers communications;
operated front companies; and
been involved in underhanded, unlawful or illegal taxpayer settlements.
Pillay adds to this list the allegation that SARS denied the existence of the unit.
He concludes that very little of the our story that pertains to him is covered by the
alleged KPMG report.
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Smuts says that not all of these issues were covered in the KPMG report (which is why
the stories did not include them), and denies that the statement in dispute was
unjustified.
To the extent that Pillay takes issue with the findings by KPMG, or indeed with those
of other bodies that have investigated him and/or the rogue unit, she submits that the
proper course of action would be to challenge those investigations.
To attack us for reporting on investigations into vital organs of state such as SARS
when such matters have an unassailable public interest is a classic case of shooting
the messenger.

Editorial: Misleading statements

The editorial stated the newspapers articles were corroborated from three different
sources Sikhakhane, an advisory board under the leadership of retired judge Frank
Kroon, and the KPMG report, which all said that [P]illay should be held accountable for
establishing an unlawful unit that operated with intelligence functions.
Pillay says that Sikhakhane did not:
make any finding against him;
state that the unit had investigated Zuma (unlawfully or not);
state which taxpayers communications were monitored or intercepted (on the
contrary, par. 186.3 says that [a]lthough Van Loggerenberg was indeed intimately
involved in the functioning of and later management of the [so-called rogue
unit], there is no direct evidence linking him to any illegal interception of
conversations ofanytaxpayer;
investigate him in relation to his employment or pension (this goes for the SARS
Advisory Board as well); and
investigate matters related to Skollies departure from SARS (the newspaper
accused him of bribing Skollie to keep quiet), and neither did the SARS
Advisory Board.

Smuts argues that the newspaper had to face unbridled criticism from many quarters. It
is therefore understandable that it expressed the view that it had been vindicated.
She says the texts in dispute did not deal with the Sikhakhane report. The only specific
reference to that report was in the editorial, where it was stated: Yet even as we
continued to report on the existence of the rogue unit, our articles were being
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corroborated from three independent quarters a report bySikhakhane, an advisory

board under the leadership of retired judge Frank Kroon and now a report by auditing
firm KPMG. All three have been unequivocal about their findings that former deputy
commissioner Ivan Pillay should be held accountable for establishing an unlawful unit
that operated with intelligence functions.
The legal editor points out that the Sikhakhane report (at paragraph 188) said that the
unit was set up unlawfully, that it may have abused its power and resources by
engaging in activities that reside in other government agencies and which it had no
lawful authority to perform, and that there was prima facie evidence that the activities
of the unit may have included rogue behaviour that had the potential to damage the
reputation of SARS as an organ of state.
Although not a formal finding, the Sikhakhane report did accept that the unit was set
up and led by Skollie under the management and guidance of Mr Pillay (at paragraph
75.4). We accept that the Sikhakhane report did not make a formal finding that Mr
Pillay should be held accountable for the establishment of the unit. The Kroon report
would be in a similar position. However, the consequence of the Sikhakhane report was
that Mr Pillay lost his job for that reason. With the exception of this error, we deny that
our story was a misrepresentation of the facts. The various reports all confirm the
central theme of our stories, namely that a rogue unit was set up, and that Mr Pillay
was involved from the start.
She concludes, All three (Sikhakhane, KPMG and Kroon) have been unequivocal
about their findings that former deputy commissioner Ivan Pillay should be held
accountable for establishing an unlawful unit that operated with intelligence
functions.

No proper verification
Article 2.4 of the Press Codes states, Where there is reason to doubt the accuracy of a
report 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.
Pillay complains that the newspaper never verified any of the information leaked to it.
Whenever they received facts that contradicted their chosen narrative, the Sunday Times
has either ignored such facts in whole or distorted it.
He adds that at no point did the journalists properly verify the veracity of the allegations
made against him he argues that they should have verified the information with the
Auditor General or alternatively, stated that verification was unsuccessful.
Smuts denies that the newspaper was under any obligation to verify the contents of the
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report (which was in the public interest) with Pillay. What his right was, was to be
heard by those panels, she argues.
She adds that it is unreasonable to expect the newspaper to verify the KPMG report. If
we were required to independently verify all such reports then very few of these would
see the light of day. KPMG is an international auditing firm with a good reputation. It
is reasonable to report on its findings. We would have done so even if the findings were
contrary to our previous reports. This is because the investigation dealt with an
ongoing matter of vital public interest.
She also rejects Pillays claim that at no point did the newspaper verify its information
that was published, and that the publication ignored or distorted facts which
contradicted its narrative. Throughout the period of reporting we have repeated
asked for facts that supported the narrative of Mr Pillay and his colleagues, but none
have been forthcoming. The stories we published about the rogue unit were the result
of extensive research, Smuts attests.
The panel agrees with Smuts it would create an untenable situation if the press was
expected to verify the contents of a report such as this one.

No proper right of reply

Pillay complains that the newspaper did not afford him reasonable time to respond to the
allegations made against him.
He says he received a query from Hofstatter on the morning of Saturday, 3 October 2015,
with a deadline for response at 14:00 on the same day. He made it clear to the journalist
that the time allowed to respond was not reasonable; he also did not have a copy of the
KPMG report.
[I] dont have a copy of the report. I was not approached for comment to any query by
the KPMG investigators, nor had I, prior to the request from the Sunday Times, been
presented with allegations from the KPMG report to answer.
He argues that the allegations against him are serious [a]nd considering that I was
unaware of the contents of the KPMG report prior to the query from the Sunday Times,
and considering that I am precluded from making public comments about my
employment and activities by SARS it would seem only natural for a publication like the
Sunday Times to afford me a reasonable opportunity to offer as full an answer as I can.
That it failed to do so, should elicit concern on the Press Councils part.
Pillay states that the following statements in the story were not put to him for comment:
the unit operated outside the normal controls, protocols and oversight structures of
SARS;
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agents of the unit were referred to as ghost employees;

agents unlawfully intercepted communications of taxpayers; and
agents unlawfully monitored, recorded and transcribed recordings of the National
Prosecuting Authority.

Had they been, he argues, he would have explained those issues satisfactorily.
Smuts admits that the newspaper gave Pillay little time to respond because it only got
access to the summary of the KPMG report late in the week and needed to verify its
contents before it were ready to approach the parties concerned. While we accept this
is not ideal, we were operating on severe time constraints ourselves and the issues
traversed were not new to Mr Pillay. We amply reflected his response to our queries. If
Mr Pillay is precluded by SARS from defending himself properly, the blame for that
can hardly be laid at our door.
Pillay replies that the panel cannot possibly find that the newspaper gave him a
reasonable opportunity to respond to its queries.
The panels considerations
Hofstatter asked Pillay the following questions about the KPMG report:
It confirms the Kroon / Sikhakhane findings that the unit was unlawful, engaged
in unlawful acts of spying, including intercepting of communications, using spy
equipment;
The unit was formed under your guidance; its agents reported to you at all times,
you were aware of its capabilities at all times, you instructed your agents to
engage in illegal spying, including the NPA offices;
You appointed Sridharan Seseven and Yolisa Piekie irregularly, bribed Skollie
with an irregular settlement, unlawfully reduced taxpayers bills for partisal
political considerations and irregularly received a R1.2m early pension payout,
for which you should be criminally charged;
You intervened irregularly in a tax dispute between Gavin Varejes and Gary
Porritt.
The panel gives the newspaper the benefit of the doubt as to the question whether the
journalist gave Pillay a reasonable time to respond the fact is that he did find the time to
respond to all the questions.
However, Hofstatters failure to make a summary of the KPMG report available to him
was not fair to Pillay.

Information not obtained legally, honestly, fairly

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Article 1.1 of the Press Code states, [N]ews should be obtained legally, honestly and
fairly, unless public interest dictates otherwise.
The complaint is that the journalists have not obtained their information legally, honestly
and fairly.
Pillay says that the newspaper violated this provision in at least two instances in its
stories. Chapter Six of the Tax Administration Act of 2012 makes it illegal to disclose
taxpayer information and what is termed SARS confidential information. SARS
confidential information includes employment details of SARS officials.
He adds that sometime in October 2014, the newspaper sent a query regarding his
pension payout and the resulting penalty. This query was based on a document illegally
leaked from SARS. I resisted the temptation at that time to take legal action as it would
have seemed as if a senior government official was attempting to clamp down on media
freedom. The procedure that had been followed was explained to the journalist.
Smuts replies that the newspaper obtained the report legally, honestly and fairly. We
also rely on public interest to protect our disclosure of the information concerned.
The panels considerations
The matter did not get much attention at the hearing. Be that as it may, the Press Code
does allow publications to obtain their information illegally if there is no other way to
obtain the data and the matter is in the public interest (Section 1.1 of the Code).

Non-professional, personal considerations

Section 3.1 of the Press Code states, The press shall not allow commercial, political,
personal or other non-professional considerations to influence or slant reporting.
Conflicts of interest must be avoided, as well as arrangements or practices that could lead
audiences to doubt the press's independence and professionalism.
Pillay complains that the Sunday Times reportage was not in pursuit of public interest
but, rather, was motivated by non-professional and personal considerations he says he
has a good reason to believe that the newspaper did not rely on the purported report from
KPMG, as they claim.
Pillay complains that that the newspaper had an ulterior motive Personal or other nonprofessional considerations have influenced and slanted the reporting about the [unit] and
me.

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Because the panel has no means of deciding if Rampedi was misled by his source, or if
he deliberately misled the public, his newspaper, as well as this office, we are not in a
position to argue this point.

Dignity, reputation violated

Pillay complains that his right to privacy, dignity and reputation was violated, and that it
could not have been justified.
Smuts submits that it was not the stories that impaired Pillays dignity and reputation,
but rather his own conduct.

The panels main considerations

The reportage as a whole essentially stands or falls with the validity of the KPMG
report, and therefore also with its summary.
The newspaper is adamant that both these documents are genuine, and even provides the
panel with a photograph of the cover page of the report itself. This is headlined, South
African Revenue Service Report on Allegations of Irregularities and Misconduct
KPMG Services Proprietary Limited. It is dated 3 September 2015.
The panel notes that the articles consistently refer to this document as a report, and not
a draft report.
However, on 14 December Deputy Finance Minister Mcebisi Jonas was (rightly or
wrongly) reported as saying that the document being referred to was still a draft and that
there was no final report as yet. (Van Loggerenberg brought this matter to the panels
attention but we, of course, knew about it already.)
We then asked the newspaper for comment on this issue.
Van den Berg says it is unusual for a party to seek to supplement its submissions after a
hearing has been concluded. However, if the panel decides to take this matter into
consideration, his instructions are to state that Van Loggerenberg has misquoted what was
said at the press conference. He states that the report exists and questions Van
Loggerenbergs motives for alerting the panel to what was said at the press conference.
He explains: The (newspapers) investigative units sources confirm that the KPMG
have handed over the final report. A draft was sent to the Commissioner and SARS
attorneys commented on the draft. A final report was prepared taking into account the
comments in the SARS lawyers letter. Thereafter eight copies of the report were
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prepared each one clearly watermarked and the recipients including (sic) the Minister of
Finance and his deputy. From a KPMG perspective it appears to be final and was sent to
SARS and Treasury some time ago.
Whether or not Van Loggerenberg has misquoted Jonas is not important. What is, is what
the latter in fact said.
These were the Deputy Ministers words on this matter:
The KPMG report remains a draft. There is no final report and there is a process of responding
to all the issuesthat they have raised both in terms of the content and the structure of the
report and what to do with the report in any case. That process is going on. Until that process is
finalised and has been signed off by both clients, which is SARS and Treasury, we cant actually
have a final report.
It is unthinkable for this panel to simply ignore these words whether our action in this
regard is unusual or not.
To clear up this matter once and for all, the Ombudsman then asked KPMG itself whether
the report had already been released or not. I was told on good authority that there were
six draft reports, and that the copy that was leaked to Sunday Times was among the
earlier ones. Also, that the final report has not been released yet.
Based on this, the panel has to accept that the report with which Sunday Times worked
was a draft, and therefore that no statement contained in that draft was final. Furthermore,
not only could these findings have been changed, but there is no reason to assume that
even the final findings would have been accepted by SARS (or Treasury).
This means that not only was the content of the stories inaccurate, misleading and unfair,
but the conclusions in both the editorial and the sub-headline of the main story (namely
that the newspapers reportage prior to the release of the report had been validated)
cannot be correct or were, at best, premature.
The only conclusion that the panel can come to is that the newspapers reportage has
unnecessarily tarnished Pillays dignity and reputation.
The panel has to stress that what was contained in the summary may (or may not) turn
out to be correct at some later stage but we are convinced that the newspaper was not
justified to present those findings as the true version of KPMGs final report at the time
of publication.
This leaves only two options regarding Rampedi, who is adamant that he saw the report
either he was misled by his source, or he deliberately misled the public, his newspaper,
as well as this office.
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The panel is not in a position to determine which of these two possibilities is true, and we
leave it to the newspaper to take up this matter with the reporter.

Finding
Sunday Times, in its articles, presented a draft finding was later changed by KPMG or
may even be rejected by SARS as a final finding. This was inaccurate, misleading and
unfair. It is in breach of Section 2.1 of the Press Code that states, The press shall take
care to report news truthfully, accurately and fairly.
The newspaper is also in breach of Section 4.7 of the Press Code: The press shall
exercise care and consideration in matters involving dignity and reputation. The dignity
or reputation of an individual should be overridden only by a legitimate public interest
and in the following circumstances:
4.7.1: The facts reported are true or substantially true; or
4.7.2: The article amounts to fair comment based on facts that are adequately
referred to and that are true or substantially true; or
4.7.4: It was reasonable for the article to be published because it was prepared in
accordance with acceptable principles of journalistic conduct and in the public
interest. (The reporting in the front-page article was not prepared in accordance
with acceptable principles of journalistic conduct)
The subheading was comment. Sect. 7.2 states, Comment by the press shall be presented
in such manner that it appears clearly that it is comment. This was not so in this case.
The newspaper should have provided Pillay with a copy of the summary of the KPMG
report without which it was unfair to expect him to comment meaningfully on that
document. This was in breach of Section 2.5 of the Press Code that says, A publication
shall seek the views of the subject of critical reportage in advance of publication (The
implication, of course, is that such a request should include all material aspects of the
matter.)
As indicated earlier, the newspaper was not justified to present those findings as the
true version of KPMGs final report at the time of publication.
In light of the panels finding on the status of the so-called KMPG report, it also finds
that the editorial comment was not based on facts that were true or substantially true
(Sect. 4.7.2) or truly stated (Sect. 7.2). Thus, it was not fair comment.
The following parts of the complaint are dismissed, namely that the newspaper did not:
verify the information contained in the document at its disposal;
give Pillay reasonable time to respond; and

obtain its information legally, honestly and fairly.

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There is no finding regarding the complaint that the newspaper was motivated by nonprofessional and personal considerations (conflict of interests).

Seriousness of breaches
Under the headline Hierarchy of sanctions, Section 8 of our Complaints Procedures
distinguishes between minor breaches (Tier 1), serious breaches (Tier 2) and serious
misconduct (Tier 3).
The breaches of the Press Code as indicated above are all Tier 2 offences.

Sanction
Sunday Times is directed to unconditionally:
retract all the texts which are in dispute (the stories as well as the editorial);
apologise to Pillay for:
o not having provided him with a copy of the summary;
o unnecessarily tarnishing his dignity and reputation.
Sunday Times is directed to publish prominently, on page 1, above the fold, a kicker with
the words apology or apologises, together with Pillays name, which refers to the full
apology in the text that should be published on page 2 above the fold. This text should
include a reference to all the allegations made in the texts which are in dispute.
The text, which should be approved by the panel, should end with the sentence, Visit
www.presscouncil.org.za for the full finding.
The headline should reflect the content of the text. A heading such as Matter of Fact, or
something similar, is not acceptable.
If the articles appeared on the newspapers website, the text should be published there as
well.
Section 5.5 of the Complaints Procedures reads: At the conclusion of a hearing, and
after a Panel has reached a decision, both parties shall be entitled to address the Panel,
personally or in writing, on sanctions and where appropriate mitigation.
Either party may do so within three working days of receipt of this decision. Please note
that this is not an application for leave to appeal that is a separate process, as explained
below.

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Appeal
Our Complaints Procedures lay down that within seven working days of receipt of this
decision, either party may apply for leave to appeal to the Chairperson of the SA Press
Appeals Panel, Judge Bernard Ngoepe, fully setting out the grounds of appeal. He can be
contacted at Khanyim@ombudsman.org.za.
Fanie Groenewald (press representative)
Carol Mohlala (public representative)
Johan Retief (Press Ombudsman)

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