JACQUES PAUW'S "SOURCES" DILEMMA

Dear Jacques,

          Congratulations on your brilliant coup. There can’t be many expose` stories that have got into book form based on the words of so many people who readers will never be able to identify.

          I was surprised that after South Africa’s biggest newspaper “sources” scandal you were still able to find a publisher to take you on because your book is absolutely littered with them.

          Hardly a page goes by in your 328 page The President’s Keepers without one of your anonymous “sources"popping up with some startling revelation or other. Alright, not all of them are that startling because they have already appeared in print elsewhere. But for those who don’t know, it makes for a riveting read.

          Your co-author Google must have been a great help because I see that slotted in between your firsthand interviews with your “sources” you have lifted the work of numerous other scribes. They evidently beat you to it by digging up the dirt on many of the characters in your book while you were sidetracked cooking for your restaurant and looking after guests at your guesthouse in Riebeek-Kasteel, wherever that is.

          You even listed them and told us “I have relied heavily on the published works of some of the country’s most distinguished journalists.” Not a bad way to start.

          Three not so distinguished ones got a terribly tongue lashing. They were involved in those disgraceful Sunday Times South African Revenue Service(SARS) “rogue unit” lies, which resulted in a whole page retraction that must have been some kind of record. You accused Piet Rampedi, Stephan Hofstatter and Mzilikazi wa Africa of “helping Zuma’s keepers to destroy the finest law enforcement institution in the country.” I gather you were referring to SARS, which up to that stage had been doing a first class job.

Pauw's three unwise men - Hofstatter, Rampedi & Wa Africa

You added that they “contributing greatly to ending the careers of dedicated civil servants,” which enabled the much maligned current SARS boss Tom Moyane to “break the tax collector.” And it was “a burden they will carry for a long time.”

In that Sunday Times apology the new Editor Bongani Siqoko wrote that one of the reasons why they got their stories so wrong was that “we overly relied on our sources.” Evidently this was too close to the bone for you because your version left out the reference to “sources.”

Your book told us merely that he told his readers that “today we admit to you that we got some things wrong.”

If the sins you credited those journos with were correct I would have expected their newspaper careers to be over, at the very least on the Sunday Times or any of the publications in the same group. 

Rampedi joined a rival paper the Sunday Independent as its senior investigative reporter. Wa Africa is still doing investigations on the Sunday Times and Hofstatter is playing a similar role on the Business Day and the Financial Mail, which like the Sunday Times are owned by the Tiso Blackstar Group (formerly Times Media).

Is it that you were not believed or that a very weak line was taken by the employers of these reporters, who were kept on or taken on in much the same way as our Government departments do with their bad eggs? Ironically these publications would no doubt be quick to castigate our rulers for the same sort of thing.

I see that when you joined Eusebius McKaiser on Radio 702 to discuss your book Hofstatter was also there and the controversial subject of “sources” came up again. You attacked him for his poor reporting on the “rogue unit” story. He retorted with the lame excuses that he was not the lead reporter on the expose` and he did not have time to check his “sources.”

In case anybody thought that the investigations of all those writers you listed were all you relied upon, you assured us that the “vast bulk of my information” came from officials and the like who spoke to you “on condition of anonymity.” Like all good journalists you told us that they will forever “remain anonymous.” You said you “honour their courage for putting their jobs on the line by divulging the dirty secrets of Jacobs Zuma’s keepers to me.”

          What’s courageous about hiding behind a “sources” shield?  How could they possibly have put their jobs on the line if nobody knew who they were?

          It wasn’t by any chance a member of your “sources” team in the State Security Agency who started that huge promotion ball rolling by announcing that they would have your guts for garters, as they used to say when I was at school, if you and your publisher Tafelberg didn’t withdraw the book immediately?

          Let’s face it you can’t buy that kind of publicity.

          They seem to have been a bit slow in following through with their threats. I suppose it takes time to trace all those “sources” of yours.

          It would be great if you could let us into the secret as to what you plan to do if the Government or one of the many rogues you have maligned eventually decides to go to court.

          By relying on so many “sources,” whose identity you say you will never reveal, aren’t you inviting a defamation action against you and your publisher? The enemies you made will surely be saying to themselves: “He can’t have any other more substantial evidence against us if he is relying on so many anonymous people, otherwise he would have produced it without resorting to them.”
          Another problem you have is that hearsay evidence is not allowed in our courts.

          If the worst comes to the worst will you be telling a judge that your “sources” that you need to prove the truth of your allegations have either died, emigrated or are too ill to attending the hearing.          

          Whatever you do they are going to take some explaining unless you can persuade them to come into the open. Nobody, as far as I know, has yet managed to win a court case with faceless witnesses.         

          While you are waiting to see what happens how about this for an idea.

          As you have clearly made a fortune out of Zuma why not reward all those loyal “sources” of yours by inviting them to a really posh New Year’s Eve shindig where they won’t have to worry about being recognised because it will be - a masked ball.

          Best of luck,

          Regards,

          Jon, the Poor Man’s Press Ombudsman

P.S. Jacques I’m sorry I can’t reveal what my “sources” have told me.  I’ve been sworn to secrecy.

See: journalism's real disgrace

JOURNALISM'S REAL DISGRACE - AND IT'S NOT QUESTIONING JACQUES PAUW'S SOURCES

Dear Newspaper readers, 

Jacques Pauw

          The Times editorial describes the Sunday Independent Editor Steven Motale’s attempts to expose Jacques Pauw’s "sources" for his book The President’s Keepers as a “disgrace to journalism.”

          Journalists have increasingly based stories on anonymous “sources,” which may or may not be real. A glaring example of how dicey this can be was the Sunday Times’ expose` about the so called rogue unit in the South African Revenue Service which was followed by a whole page apology (lotto journalism). As part of this possible, eating humble pie newspaper record, the Editor Bongani Siqoko admitted that one of the reasons they got things wrong was that they "overly relied on our sources." And that paper is in the same stable as The Times. 
            Let’s face it by attributing disclosures to so called “sources” a story can be made far more sensational than it actually is. So it’s hardly a disgrace to question their validity in Pauw’s book which has a very liberal sprinkling of them.

          The big problem arises when the words of these ghost contacts have to be substantiated in court. Will a person, who was not prepared to have his name publicly associated with an expose` of this kind, change his mind when it comes to a sensational court case, where he can be cross-examined and possibly be caught out in a lie?

          And if in defence of a story you have to make all kinds of excuses as to why your “sources” cannot come to give evidence that speaks for itself.

          Relying on “sources” to attack the reputation of the well healed can be a very risky business unless you have other much more concrete evidence to back them up.  Then it can be argued that if this other evidence it so good, why do you need to fortify it with quotes that can as likely as not be made up?

          Another problem is that journalists are never supposed to reveal the identity of their “sources” for their protection and some have actually gone to prison for this.
         Cynics might say that noble gestures of this kind are not to shield any helpful contact, but the reputation of the journalist himself, who could hardly confess to having no source at all.

          Newspaper journalism is very much going for the big one; the glory of having the splash that leads the front page, so the temptation is always there to sensationalise without the necessary facts. And that’s where untraceable “sources” can be very handy. 

          It’s one of those situations where in theory nobody but the journalist himself will ever know the truth, because it can’t be proved one way or the other.     

          It’s clear that the "disgraceful" aspect of what Motale’s paper did was that it questioned the work of a journalist. Heaven forbid that journalists eat journalists; it’s just not done old boy, certainly not in very parochial South Africa.

          If that book had been written by a non-journalist it would have been fair game.

          The Time’s editor Andrew Trench and all the other critical journalists in South Africa have been silent for years while the The Citizen, a Johannesburg based daily tabloid distributed nationally, has been aiding and abetting shysters to rip off poor and uneducated blacks with advertisements that even its editor agreed were not believable.
          They are all about "doctors" who can enlarge penises in five minute; win you the lottos and so on.

          Surely this silence is a much bigger “disgrace to journalism” than questioning Pauw’s book which only directly affects wealthy politicians and their associates.

          By coincidence Steven Motale had just become editor of The Citizen, before moving on to the Sunday Independent, when I wrote my first post about these money spinners that bring in an estimated R40 000 a day in the smalls section of that paper. Although he conceded they were not believable he said he thought the paper should still carry them with a “caution”.

          I would not have expected him to be able to dictate advertising policy to the Caxton Group, the owners of this paper. Money evidently overrode morality when it came to these advertisements.

          My first post The Citizen Aladdin’s cave of unbelievable adverts (unbelieveable) appeared early in 2013. After that I tried to get the South African Editor’s Forum, the Advertising Standards Authority and the since disbanded Print and Digital Media organisation of which both Caxton and Times Media were members to put pressure on The Citizen to get it to stop carrying these ads, but I got no joy from any of these pillars of rectitude.

          I had obviously hit the bullseye dead centre because after promoting this post on Twitter I was blocked by The Citizen. It has a circulation of 70 000 mostly black readers many of whom believe in this mumbo jumbo that is punted in theses ads.

          It has a checkered history having been founded in 1976 by the National Party apartheid government with money from a secret government slush fund to promote the party among English speakers. In 1998 it was bought by the Caxton Group, publishers of newspapers and magazines as well as being the country’s largest commercial printers.

          Terry Moolman its co-founder is the Group’s CEO.

          So Andrew Trench how about dealing with this real disgrace to South Africa’s newspapers in the next editorial in The Times. That might just achieve something far more beneficial than attacking another editor for legitimately questioning the validity

of the “sources” in Jacques Pauw’s sensational book The President’s Keepers.

          Regards,

          Jon, the Poor Man’s Press Ombudsman, who has always believed that if an informant is not prepared to stand up and be counted, he or she should not be given the protection of a “sources” label in any newspaper story. He must also emphasise that he hasn’t a clue whether or not Pauw’s “sources” are genuine. For that we have to rely on his impeccable reputation as an investigative journalist of long standing. What Jon has written here about “sources” are his general observations about this kind of reporting and don’t refer to any particular person.

P.S. My sources tell me that there is not a chance in hell that any South African newspaper journalist will criticise The Citizen for what it is doing. It could just affect their future job prospects in a very small market.

      

DOES THIS ON-LINE SHOCKER MEAN YOU NOW NEED A LAWYER JUST TO BUY A NEWSPAPER?

Dear Newspaper Readers,

          Having not previously bought an on-line newspaper I didn’t realise that this is an area of technology that has taken us forward on the onehand and back to goodness knows where on the other.

          For years my subscriptions entitled me to get real copies of the Sunday Times and its daily sister paper The Times delivered to my house. I don’t recall having to abide by any Terms and Conditions before I place my order. In any event this would have futile because I could have gone out and bought them without agreeing to anything.

          Now in the name of progress The Times is about to go on-line. That is the only way to keep it alive by eliminating expensive printing, delivery and other costs. Hardly surprisingly they want me to sign up for the on-line version.

          That’s when I discovered that the Tiso Blackstar Group, the owners of The Times, has put a new twist on that old adage: “The customer is always right.” Readers are expected to abide by almost book length Terms and Conditions to ensure that they remain “always right.”

If they step out of line a section of Clause 14 has this ominous warning as to what will happen: “Any costs, including legal costs on attorney and own client scale plus VAT incurred by the owner (The Times) arising out of your use of this website content or breach of the terms and conditions will be borne by you.”

        Just to see what’s happening in other parts of the newspaper world I checked with the New York Times. And its digital subscriptions have much the same Terms and Conditions as The Times, which indicates that this is probably standard practice among all on-line papers.

The Times ones are under the heading: “Terms and conditions. The fine print for Times Live and the Sunday Times readers.”

          Even here like thousands of other firms Blackstar refers to them as being in “in the fine print.” Businesses have been doing it like this for ages because they are clearly embarrassed to have to tell you, the consumer, something that is clearly not in your interests. So they put them in the “fine print” as if they are hoping you won’t notice them until after the deal has been done.

          Here are some of the gems from the totally one sided T&Cs mine field that readers are expect to watch their step in for the privilege of paying for The Times on-line.

          “If you accept these T&Cs you acknowledge that the owner may at any time impose additional T&Cs. If you do not agree to these you will not be allowed to use this website and you must immediately delete all copies in your possession.”

          Presumably Blackstar’s Gestapo will be standing by to hack into your affairs to makes sure this is complied with. 

          And what’s more it’s “your responsibility to familiarise yourself with any amended T&Cs on each occasion that you make use of this website.” So once you log on you must do some exhaustive research to protect yourself before you even start reading the latest edition of the paper you are paying for.

          You are given a link to enable you to download the Electronic Communications Act and it emphasises that “it’s your responsibility to ensure the copy downloaded is the most recent version.”

          In the interests of that free speech newspapers are always promoting “you agree that the owner shall be entitled, in its sole discretion and for any reason, to prohibit you from participating in any discussion in any of the forums.”

          Then there are the sexy forbidden acts. “You are not allowed to perform any act that is not fair use within the scope of the permitted use, which has not been expressly approved by the owner in writing. The prohibited acts include (but are not limited to) modifying, distributing, commercialising, exploiting or altering the website or website content or incorporating any part of the website content in any work or publication.”

          So if you are not very careful you might perform a forbidden act that you haven’t even been told about.

          It seems that when this paper goes on-line nobody will be allowed to quote extracts of it on places like my blog, Twitter and Facebook etc without first getting “the owner’s prior written approval.”

          That sounds like a pretty long winded procedure. “Requests for approval must be submitted to the TimesLive editorial team.” Even then don’t think the answer will be an automatic “Yes” because the T&Cs tell us “The owner is entitled, in its sole discretion, to withhold or grant consent. The owner may also impose any conditions on any consent that is granted.”

          Will this mean that in some cases a Blackstar board meeting will have to be convened to consider some of the more serious requests and the firm’s legal team will have to sanction the final approval?

          Just in case a reader might get any ideas about circumventing the terms of this onerous agreement it says “no relaxation or indulgence that the owner may grant you will be deemed to be a waiver of any of the owner’s rights in these terms and conditions or in law.”

          So there you have it. Oh I almost forgot this pompous screed that is the very antithesis of good journalism applies to “any person who uses any part of the website.” And once you have read the T&Cs “your use of the website constitutes acceptance of the terms and conditions.”

          Now you need to consult a lawyer before you buy something that used to be as simple as handing your money over a counter or to a street vender. The latest technology might be a boon to the production of newspapers but it’s certainly treating the paying customers with the utmost suspicion as if they’re all crooks.

          Who wants to have to worry about Big Brother looking over your shoulder, with an army of expensive lawyers waiting to pounce every time you go on-line to read a paper?

          Regards

          Jon, the Poor Man’s Press Ombudsman, who learns something every day about the way newspapers unashamedly do the kind of thing that they will enthusiastically attack others in print for doing.

P.S. Does this absurdity comply with South Africa’s Consumer Act? Just asking, or perhaps the Act hasn’t kept pace with this development. Should I have got permission in triplicate for quoting parts of these T&Cs in this post, or can I now expect the full might of Blackstar’s legal team to descend on me running up huge legal costs which will ensure that I never again have enough money to buy a newspaper on-line or anywhere else?

P.P.S. In June 2011 I wrote a post praising Capitec, South Africa’s youngest bank. What had it done? It had its T&C’s ceremoniously torn up in a TV advertisement. No wonder it has won all kinds of awards for being such a good bank and its share price is in the stratosphere, while most of the other banks have hardly got off the ground (trail blazers).

DO NASPERS & THE TISO BLACKSTAR GROUP COME FROM THE SAME "WEASEL" DENIAL SCHOOL?

Dear Readers,

Bob van Dijk

         In his column in the Sunday Times, which is part of the Tiso Blackstar (formerly Times Media) empire, Peter Bruce pointed out how Naspers' CEO Bob van Dijk had conveniently passed the buck when MultiChoice, one of Naspers' subsidiaries, came under fire for its dubious involvement with the Gupta family.

         In the latest South African Gupta scandal to surface MultiChoice, the pay TV business, was supposed to have paid the Guptas millions to become part of its DStv satellite service.

         Asked to comment Van Dijk told Moneyweb that this had nothing to do with Naspers, the giant Afrikaans media group, as it was MultiChoice’s baby.

         He told Moneyweb that as they had more than 100 firms they could not investigate every single issue that arose among them.

         “When you own more than 50% of a company you’re in charge,” Bruce told readers. “You’re responsible and you’re accountable.”

         He described Van Dijk’s “weasel explanation” as giving the impression that “ownership simple implies you get most of the profits and that’s where it ends.”

Koos Bekker is the Chairman of Naspers

         It would be nice if Bruce could draw this column of his to the attention of Andrew Bonamour, Blackstar’s CEO, because in my recent dealings with him I don’t think he is one of the Sunday Time’s keenest readers.

         A post I wrote entitled: “Exposed - the Sunday Time’s love affair with a crook”(exposed) was about how the business section of the paper (Business Times) had continued to employ Jim Jones as a freelance writer for eight years after they knew he was dishonest. By coincidence it was Moneyweb, the online financial publication, that he defrauded of the dollar equivalent of R200 000 while working for it as its Mineweb Editor.

         In compiling this I tried to get both the Editor Bongani Siqoko and Ron Derby who heads Business Times, to undertake never to use Jones again. All I got were read reports and nothing more.

         I then contacted Bonamour and after getting some very strange answers to my questions I sent him a copy of my proposed post(media chief) and he replied: “It’s bizarre that you should drag me into this when I don’t choose columnists, nor do I interfere in ST or any publication. Media accounts for 20% of our business. I had never heard of Jim Jones until you emailed me.

         “You are welcome to run whatever story you like.”

         Is this any different from the “weasel” way Van Dijk handled the MultiChoice inquiries?

         In the same edition of the Sunday Times in which one of Jones’ bylines appeared there was a letter from Dave Harris headed “Sunday Times is no holy cow” in which he warned: “The Sunday Times  always needs to take into account its own fallibility, otherwise it may be the case of people in glass houses throwing stones.”

         It would be nice if Peter Bruce remembered this.

         Regards,

         Jon, the Poor Man’s Press Ombudsman who reveals what the Media Club would prefer you didn’t know.

P.S. Weasel means not only the animal but a “deceitful or treacherous person.”

P.P.S. MultiChoice’s morality was again in the news when the Adverting Standards Authority ordered it to stop promoting shows as “new” when they weren’t. This was hardly necessary as every subscriber knows that new shows on DStv are almost as rare as the nearly extinct Brenton Blue Butterfly.

Should Black be blacked out of the English language because of its derogatory racial connotations?

Dear Readers,

          In a letter to The Times Jackie Thom suggested that in South Africa Black Friday should in future be called “Happy Friday, Bargain Friday or whatever else the public will suggest.”

             She referred to the paper’s Facebook comments that the current name was not appropriate in our country. Somebody, she wrote had suggested White Friday. But her view was that any colour was bound to offend somebody.

          The shopping day after Thanksgiving was dubbed Black Friday in America because so many people caused traffic accidents and even injuries as they fought their way into stores to get the best bargains

          Should we then clean up the English language completely by removing all disparaging Black idioms?

"Happy Friday"

          In his book Of Black Servitude without Slavery - The Unspoken politics of the English language Agwu Ukiwe Okali began a campaign to do just that.

          He is a Nigerian, who held prominent positions in the United Nations before taking early retirement to concentrate on his writing and other interests. In the book he refers to the unfortunate global dominance of the English language for the black race.

          “Everyone knows that in English bad things are ‘black’ (black spot, black day and blackmail),” he writes. “By the same token, everyone knows that good things are ‘white’ (white knight, white magic, white lie).”

          He advocates the eradication of what in “effect is a racist mindset.”

          “It’s safe to say that the adjective ‘black’ came

from the natural,” says Indian writer Sandhya Ramesh, who has made a study of etymology.

          There are numerous expressions that include the word “black” but were they based on the colour of Black people or merely just the colour itself. Are Okali and Thom being unduly touchy and reading into this something that is not there? After all there are also ones that reflect badly on whites, although admittedly there are not nearly as many of these as there are black ones. Conversely there are a few that favour blacks like “in the black - not owing any money or making a profit in a business.”

 

          But when one looks at dictionary definitions of the words black and white Okali certainly has a very valid case because in the English language black and white have come to mean more than just a colour. They clearly refer to certain race groups. And these coupled with various characteristics attached to these colours paints blacks in a very unfavourable light.

          Webster’s Thesaurus lists the following under Black: 1. coal black, ebony, etc. 2. dark, murky, etc 3. Often Black. Negro, coloured, dark-skinned, etc. 4. gloomy, grim, etc. 5. sullen, hostile, angry, etc. 6. evil, wicked, bad, etc.

          White is defined as close to perfect. 1. snow-white, etc. 2. bright, light, sunny, etc. 3. white person, Caucasian. 4. optimistic, bright, happy, etc. 5. friendly, warm, pleased, etc. 6. good, moral, honourable, exemplary etc.

          It looks as though Okali and Jackie Thom should start with the dictionary definitions of these two colours and go on from there. But it will take some doing to eradication something so entrenched for centuries.

          Here are samples of the many Black idioms they and others might like to change to add to the ones mentioned by Okali above. Would such a purge also eradicate the disparaging White ones?

Black Market: Illegal trade in suspect goods. Origin: World War II - to describe the buying and selling of stolen military supplies.

Blackball: To ruin a person’s reputation so they become unemployable or get kicked out of an organisation.  17^th Century - a secret ballot system in gentlemen’s clubs and organisations like Freemasonry where a white ball constituted a vote and a black one was the opposite.

Black Sheep: a person behaving badly in a family unlike the other members. 1822 - a black sheep was worthless because its wool could not be dyed.

Black Death: 1823 a modern name for the bubonic plague that swept across Europe from 1347-51.

Black Book: a list of people to be punished. In the 1300’s the Black Book of the Admiralty contained a list of laws and very harsh penalties like drowning, whipping or keel hauling for sleeping on watch.

Get my Book

 White Elephant: something that is useless but costs money to maintain. 17^th Century - white elephants were regarded as holy in Asia and very expensive to keep. If a King became displease with a subject he might give him a white elephant which would ruin him in most cases.

White Feather: sign of cowardice. 18^th Century - a white feather was the symbol for cowardice in Britain and the countries of the Empire. It was used to shame men who did not join the armed forces in time of war. It dates back to cock fighting where birds with white feathers were considered poor contestants.

Whitewash: to hide something unpleasant by making it seem better than it is and in sport where the loser doesn’t score a single point. 1590 - to wash a building with a white liquid which figuratively became “to cover up or conceal.”

White Trash: poor uneducated white people. 1831 - Southern United States where the slaves regarded white servants as “poor white trash.”

White Man’s Disease: used for several decades in American basketball to describe the white man’s inability to jump.

Regards,

Jon, the Black Sheep in my family.

Cape Town's monument to waste - THE PROOF

Dear Patricia de Lille, Mayor of Cape Town,

          In a month or two it will be the usual time, if the last two years are anything to go by, when your Council starts wasting a pot full of money once again on trying to keep the sand in place on top of a rubbish dump closed 32 year ago.

          Here’s the proof that what has been done up to now at Witsands, not far from Cape Point, has been a dismal failure. Tragically this hasn’t prevented your officials from repeating the same expensive mistake ad nauseam and that’s why I am appealing to you once again to step in and stop it.

          It has already cost the Council something like R6 million over the last 11 years with the worst examples being during 2016 – 2017 when the spending went through the roof. I am sure you have read all my other posts on this subject so you can easily go back to them if you want to refresh your memory about exactly what has been going on.

          Here are my latest pictures which show once again what a failure the very costly nets have been when it comes to keeping the sand in place.

May 2016 - Rubbish exposed after twice being covered with
sand and having nets erected on it

April 2017 - Nets erected again this time right on top of the 
rubbish whereas on all previous occasions sand was dumped 
on top of it before the nets were erected

Nov 2017 - Rubbish being exposed in the same place as shown
in the previous pictures. Will soon be back to square one
as it was in May 2016

          The next set of pictures show what happened to the bed of the stream that was dug out for the water that never appeared.

May 2017 - The place where the stream was in 2016 was dug
out with a bulldozer even though there was no sign of water
 running. This is the view looking towards the mountain.

                                 

Nov 2017 - The sand blown by the wind has completed filled 

                       in what the bulldozer dug out.

       Here's one that shows how much rubbish is now exposed on another part of the site. It's another glaring example of how your Council's expensive management of this old dump has been a complete failure.

Nov 2017                                                                                     

         These pictures show conclusively how ratepayers money has been blown away. And I have more equally graphic examples that illustrate that there is probably more exposed rubbish on this 19 ha site now than there has been for some years.
         Regards,

         Jon, a Consumer Watchdog hoping against hope that you will at last do the right thing by putting a stop to this terrible waste.

P.S. See also: Blacks in disgusting conditions ; Money wasting department ;
Millions blown away ; Scandalous money dumping

Even with its impressive brain power BIG BUSINESS never learns not to do the dirty on its own customers

Dear Readers,

Save's Hyper director Ebrahim Kajee
Picture The Times

          The South African arm of Smeg, the Italian manufacturer of multicoloured kitchen and other appliances has just been revealed as a price fixer, a practice outlawed almost 50 years ago.

          Caught out it agreed to pay the Competition Commission a fine of R100 000.  This was certainly not a proud addition to its colourful history.

          As an investigative reporter on the Business Times (part of the Johannesburg based Sunday Times) my expose` resulted in the country’s first price fixing conviction way back in 1975.  Yet, as Smeg has proved, companies are still at it to the detriment of consumers and the firms like Smeg that have their names tarnished by this type of greed.

          In 1975 Hampo Trading a subsidiary of Premier Milling was fined R300 by a Johannesburg Regional Magistrate for price fixing on the accessories it sells with its Japanese made Pentax cameras. The fines have certainly inflated since then. My impression was that the magistrate was overawed by the occasion by restricting the conviction to the accessories because he said the law did not apply to the cameras as they were patented.

          The authorities had clearly been very lax in policing this type of illegal activity because price fixing was rife in those days. This was the first conviction under a five year old law that stipulated that “any agreement, understanding, business practice or method of trading which is calculated to have the effect of compelling or inducing a reseller to observe a specified resale price is unlawful.”

          Hampo had told its retailers that it must not grant discounts of more than 10% off its suggested retail price. And it warned in a circular that “those who do not observe our pricing conditions will not be supplied at all.”

          At the time I obtained irrefutable evidence that manufacturers and supplies of anything from cameras, mattresses, furniture, electrical appliances, toiletries and pantyhose either would not supply discounters or stopped supplying any retailer that did not abide by their pricing structure.

          Pick n Pay’s chief buyer at the time phoned some firms in my presence and asked for stock. The head of the firm that was the agent for a well known brand of men’s toiletries didn’t mince matters when he said Pick n Pay could not be supplied because they did not allow their toiletries to be discounted. He couldn’t afford to antagonise chemists and some other big chain stores by allowing Pick n Pay to cut the price.  

Another one in the same type of business said he could “never permit” any price cutting of his product because it could cause his firm an enormous amount of trouble.

          Apart from Hampo trading I named six other firms that were clearly in the business of price fixing, but no action was ever taken against them to my knowledge. I haven’t identified them in this post because I don’t know whether or not they still fix prices. In all probability they don’t because they would have been out of business by now.

          The Competition Commission that I rate as possibly the best Government department has really been making up for what was not done in my day as a newspaper investigator.  

          The impressive way it has been tackling the furniture removal firms (dishonesty) recalled another of my Sunday Times investigations all those years ago. Companies that have been having a collusion field day for decades are now finally being made to pay serious money for breaking the law.

The Commission also fined South Ocean Electric Wire Company R13-million after it admitted price fixing and collusive tendering between 2003 and 2012. And what was possible a record was the R98-million Tiger Consumer Brands had to pay for fixing bread prices in the Western Cape from 1994 to 2006.

Smeg was nailed because Save, an eight supermarket family business based in Pietermaritzburg, had the guts to take a stand by reporting it for price fixing when Smeg tried to stop it unduly cutting the price of Smeg’s products.

          Three years ago a Hirsch's customer complained that it was selling a Smeg gas stove for R17 999 when Save’s Hyper price was R14 999. Then, according to reports, Hirsch's took this up with Smeg.

          Hirsch's is another family business founded with R900 by Allan and Margaret Hirsch in a tiny showroom in Durban in 1979. It now has 17 appliance and furniture stores all over the country making it a lot bigger than Save, which is confined to the Northern KwaZulu Natal area.

          Smeg told Save to cease rocking the boat by selling its products at such low prices that they were upsetting its other retail customers. When Save refused to comply Smeg stopped supplying its main store a Pietermaritzburg Hyper.

          Save took this up with the Competition Commission and that’s when the fine was imposed and Smeg was ordered to lift its supply ban on Save, which had lasted for almost two years.

          A Commission spokesperson commended Save for its stand against Smeg.

                       Dolce & Gabbana might be great creators but they 
                                 lack a sense of humour (bananas).

          In an email I told Margaret Hirsch her firm’s Chief Operations Executive that the reports could have given the impression that Hirsch's use its buying power to stop competition that under cut it.

          She replied that before she commented she would rather get her attorney to do this as it was a “sensitive issue.”

          Meanwhile her Chief Executive Officer husband Allan told me in an email exactly what happened and it was clear that Hirsch's never tried to stop Save selling Smeg because it was cutting the price so drastically.

          Smeg was contacted to find out if it was giving any special deals to retailers which Hirsch's would obviously have liked to be part of.

          “The bottom line is we buy a gas stove from Smeg at R14 600 plus VAT,” Allan said. “We add 8% and we sell it for R17 999. Save was selling it for R14 999 including VAT. That’s why we queried it with Smeg as we were unsure how they could retail it at R3 000 below our price at R1859 odd below our cost.

The Hirsch's first team

          “Smeg advised there was no special deal and they would speak to Save.”

          What happened hasn’t put Hirsch's off Smeg. “We are trading very well with it,” he said. “Our customers love it and we love it.”

          On the phone he told me that Save’s main business was in grocers and every now and again they had these very special deals like the Smeg one on which they would not have made any profit.

          I then emailed his wife saying: “Not to worry. Save your attorney’s fees. Your husband spoke to me and he cleared up everything as far as I’m concerned.”

          Regards,

          Jon, who has been a Consumer Watchdog since before the Boer War so he knows a little bit about the subject.

P.S. The Save Group was founded by Moosa Noorgat in 1987. And apart from sorting out price fixers its charitable side lived up to its Save name by giving R100 000 worth of grocery vouchers last year to help feed the 82 children at the Salvation Army home in Pietermaritzburg. The previous year it donated R2 500 monthly. Smeg might like to do something like this instead of harassing its customers or wasting money on a fine.