PIC voiced 'concern' about running of Independent Media

The Public Investment Corporation (PIC) met Tiso Blackstar Group in 2016, asking for help with Independent Media as it was “concerned about the running of the company”.

This was revealed in a statement issued on Wednesday by Tiso Blackstar Group management in response to a column written by Independent Media executive chairman Dr Iqbal Survé‚ published by various Independent Media publications and titled "The hypocrisy and lies of Business Day".

“While it is not the preference of Tiso Blackstar Group to engage in litigation by correspondence‚ the column is littered with gross inaccuracies‚ blatant lies and defamatory statements, which call for a response particularly as‚ in the age of fake news‚ malicious falsehood is often perceived as the truth‚” said the statement.

Tiso Blackstar Group management also issued a public challenge to Survé to publish audited financial statements of Independent Media for the past three years and demonstrate that the company was not technically insolvent.

In the column‚ Survé claimed Tiso Blackstar Group had “surreptitiously approached the shareholders of Independent Media‚ including the PIC‚ on many occasions to try to consolidate the newspapers of the two businesses”.

“This is false. The PIC met Tiso Blackstar Group in 2016, asking for help with Independent Media as it was understandably concerned about the running of the company‚ was encountering difficulty in obtaining financial information from Survé, and had growing concerns about the ever-dwindling prospect of being repaid amounts loaned to Survé to fund his acquisition of Independent Media‚” said the statement.

“A meeting was set up by the PIC for Tiso Blackstar Group to meet Survé at the Maslow Hotel on September 29 2016. This meeting traversed how Tiso Blackstar Group could potentially help the PIC‚ including but not limited to us assuming management control of the titles owned by Independent Media. The meeting was unproductive‚ Survé was obstructive and the PIC's concerns were exacerbated‚” said the statement.

Read the full statement below:

Tiso Blackstar Group response to Iqbal Survé

Tiso Blackstar Group has taken note of a column by Iqbal Survé‚ executive chairman of the Sekunjalo Group‚ which was recently published by various Independent Media publications and online. While it is not the preference of Tiso Blackstar Group to engage in litigation by correspondence‚ the column is littered with gross inaccuracies‚ blatant lies and defamatory statements, which call for a response particularly as‚ in the age of fake news‚ malicious falsehood is often perceived as the truth.

Survé’s meandering diatribe against Tiso Blackstar Group publications like Business Day and a number of our leading journalists defies belief. He plumbs the depths by degenerating into the cesspool of hate speech by comparing the legitimate reporting of Business Day‚ South Africa’s most respected business publication‚ to a “Goebbels strategy”. Goebbels was a Nazi politician and Reich minister of propaganda of Nazi Germany‚ a close associate and devoted follower of Adolf Hitler and known for his virulent anti-Semitism, which extended to advocating for the extermination of the Jewish people.

It is also deeply ironic that Survé makes numerous references to the press code in his column despite the fact that his media group has turned its back on the co-regulatory Press Council to which the rest of the industry belongs and which holds all member publications to account in terms of our industry’s professional code.

Tiso Blackstar Group further underlines our commitment to freedom of expression and editorial independence, which we believe stands in stark contrast to current practices at Independent Media.

Tiso Blackstar Group and Independent Media

Survé claims Tiso Blackstar Group “has surreptitiously approached the shareholders of Independent Media‚ including the PIC‚ on many occasions to try to consolidate the newspapers of the two businesses”.

This is false. The PIC met Tiso Blackstar Group in 2016, asking for help with Independent Media as it was understandably concerned about the running of the company‚ was encountering difficulty in obtaining financial information from Survé and had growing concerns about the ever-dwindling prospect of being repaid amounts loaned to Survé to fund his acquisition of Independent Media.

A meeting was set up by the PIC for Tiso Blackstar Group to meet Survé at the Maslow Hotel on September 29 2016. This meeting traversed how Tiso Blackstar Group could potentially help the PIC‚ including but not limited to us assuming management control of the titles owned by Independent Media.

The meeting was unproductive‚ Survé was obstructive and the PIC's concerns were exacerbated.

Tiso Blackstar Group shareholder value

Survé’s claims about Tiso management and journalists overseeing the destruction of shareholder value‚ including an alleged PIC loss of R7bn, betrays his self-serving ignorance of the history of Tiso Blackstar Group and its predecessor companies.

The PIC hasn’t lost R7bn. There is no basis in fact for this statement. The Tiso Blackstar market capitalisation was at a maximum of R4bn in 2015. The PIC sold down its shareholding from 14.8% to 11.6%, which was a historical shareholding related to when Avusa‚ a predecessor company‚ had existed. When Tiso Blackstar took executive positions at Times Media Group, the price was R7 per share. It increased to R20 per share and Tiso Blackstar bought the remaining shares that it didn’t own at R24 per share. In short‚ Survé’s understanding of the history of Tiso Blackstar and its forerunners is simply wrong.

Tiso Blackstar Group's earnings – as our publicly available results show – have grown consistently since 2015‚ particularly in its media division. Clearly Survé and his team have neither reviewed them nor looked at our history or‚ more likely‚ are disingenuously misleading the market. We are not in financial trouble and we don’t need consolidation to survive.

In sharp contrast, Survé took over a very profitable business that is now loss-making and it appears he still owes the full purchase price plus interest to the PIC and the Chinese consortium that funded the transaction.

Here are the facts. In 2012, Independent News and Media disclosed in its last financial results before the completed 2013 transaction that saw its South African operation sold to Survé’s consortium that the enterprise had delivered an operating profit of €27m (about R300m) and an operating margin of 14.6%.

The Sagarmatha prospectus from earlier this year‚ commencing on page 120‚ provides the financial statements for Sekunjalo Independent Media, which represents Sekunjalo’s controlling equity investment in Independent Media.

There are four important highlights:

1. This entity had negative equity value of R393.8-million at FY2016. This appears from the balance sheet (page 122) and in Survé’s own director's statement on page 120.
2. In FY 2016 this entity sustained an operating loss of R319.3m and a loss before tax of R548m (page 123).
3. Note 13 on page 145 lists loans from: Interacom Investment Holdings Limited, which in Independent Media’s own publications identified the shareholders as China International Television and the China Africa Development Fund; the Government Employees Pension Fund; and the South African Textiles and Clothing Workers' Union‚ which aggregated to more than R2bn – and‚ in most cases‚ 50% of the loans were due for repayment to the lending parties by August 2018.
4. Despite this dismal picture, the entity had R1.19bn on the balance sheet attached to goodwill and intangible assets, which cannot be justified or defended for such a loss-making business. When these are removed, the negative tangible equity value is enormous.

Our challenge to Survé

So today we issue a public challenge to Survé and an opportunity to silence his critics‚ not with innuendo‚ misrepresentations‚ blatant lies and inflammatory accusation‚ but with facts.

We challenge Survé to:

1. publish audited financial statements of Independent Media for the last three years so the performance that Survé claims is a matter of fact and of public record‚ and not conjecture‚ can be measured;
2. demonstrate through objective and irrefutable evidence how the entities connected to him have repaid the loans due in August 2018‚ particularly since the loans from the Government Employees Pension Fund make this an issue of pressing public interest, particularly in the context of the looming PIC commission of inquiry;
3. demonstrate through objective and irrefutable evidence that the company he purchased in 2013 has the same assets today; and
4. demonstrate through objective and irrefutable evidence that the company he purchased, which was profitable at that time, is not technically insolvent today.

If our reporting on the above is found to be incorrect following a substantive and verifiable response from yourself, we will issue an apology.

Tackling corporate crime

Survé’s suggestion that Tiso Blackstar Group titles have dealt with major corporate scandals like Steinhoff’s collapse with “kid gloves” is simply ludicrous.

Our publications‚ specifically Business Day and the Financial Mail‚ have led the coverage of Steinhoff. Financial Mail editor Rob Rose has been at the forefront of this reporting and is the author of an explosive book called Steinheist, which is due to be published shortly.

Our work speaks for itself. Examples include this cover story that the FM lead with in December 2017, or this collection of the Steinhoff Files that includes articles by most of our leading journalists.

South African Post Office and double standards

Survé’s further claim that Tiso Blackstar Group publications have reported with a “deferential attitude” on the South African Post Office (Sapo) and his suggestion that it would be different if a black executive headed the institution are laughable.

We have reported extensively on the Post Office and the mess it is in. One of our leading journalists‚ Business Day’s Carol Paton‚ has over the past six months written three news stories on the Post Office that highlighted its backlog in mail delivery of 38m items and its failure to clear this backlog by the promised deadline of September 30. There was also a report on proposed changes to the Banks Act, which will make it possible for the Post Office to apply for a banking licence.

No other newsroom bothered to report on the mountain of undelivered mail at the Post Office. She also wrote a three-part series commissioned by Business Day editor Lukanyo Mnyanda in which she analysed the turnaround strategy of chief executive Mark Barnes.

The pieces examined the business strategy put in place by Barnes but concluded that the Post Office remained loss-making and the turnaround had not been successful.

Our coverage of corporate malfeasance and the business sector in general is extensive and by far the most comprehensive of any coverage in SA. It makes no distinction between black and white leadership or ownership and holds all to the same standards‚ as shown by our publications’ coverage of Steinhoff and Resilient, among many others.

Making it about race

Survé’s claim that white managers and journalists at the Tiso Blackstar Group are remunerated differently to their black colleagues is a deliberate lie. We have a small executive management team in our media division, which is majority black and is certainly not underpaid relative to white colleagues in the group.

Our title editors‚ of which only one of nine is white‚ are well paid both in terms of internal and external comparisons. Journalists are paid according to their experience‚ quality and contribution without racial or other bias.

The PIC

Survé claims: “Another example of outright manipulation occurred as recently as yesterday when Carol Paton of Business Day deliberately misled her readers by suggesting that the commission of inquiry into the PIC includes Ayo and Sagarmatha. This is a blatant lie.”

The terms of reference of the commission of inquiry state specifically that the commission will probe: “Whether any alleged impropriety regarding investment decisions by the PIC in media reports in 2017 and 2018 contravened any legislation‚ PIC policy or contractual obligations and resulted in any undue benefit for any PIC director‚ or employee or any associate or family member of any PIC director or employee at the time.”

The Ayo transaction was concluded with the PIC's support, and the PIC’s proposed and agreed private placement in Sagarmatha were all among the “media reports in 2017 and 2018”.

The Sunday Times

If there is anything to appreciate from Survé’s rambling column, it is his acknowledgment of the courage of the Sunday Times editor Bongani Siqoko, who has led his team in apologising and putting right a period of journalistic failures under previous editors and previous management. In doing so, Siqoko has the full support of Tiso Blackstar Group management and its board to do what is correct under these circumstances.

If Survé‚ meanwhile‚ believes our journalists have done wrong, then he should pursue a complaint at the press ombudsman through the Press Council.

We await Survé's substantive response hereto with eager anticipation.

Tiso Blackstar Management