Sunday Times Business Times article questionable?

Author: Kwanele Sibanda

Publish: 27 August 2009

In an article in the Sunday Times Business Times on 23 August 2009, 'Questions over Moneyweb price fall', reporter Jim Jones raised a number of issues that appeared to be without substantiation. In answering themediaonline's questions, Moneyweb CEO Alec Hogg said that in almost three decades of his experience in journalism, Jones’s article ranked as “the most blatant example of a major media outlet being abused to pursue a writer’s personal agenda”. Is Jones – and the Sunday Times Business Times – guilty of the issues raised by Hogg?

1. Can you reveal what is behind the drop in your share price from around 50c to 33c?

Hogg: Since November 2007, Moneyweb's shares have traded sporadically on the JSE at prices of between 50c and 58c. On July 29^th this year, in a single trade worth R310, a Moneyweb shareholder sold 1 000 shares owned in the company at a price of 31c. As the brokerage and other costs come to around R150 per trade, the transaction was most likely the result of a shareholder clearing out a small holding in their portfolio. Between that trade at 31c and last Friday's deal at 37c, less than 20 000 shares (0.003% of the equity) changed hands in a handful of deals worth a total R7 278. To use such a tiny dealing in a listed as the basis for a major article in the Sunday Times is mischievous.

2. What do you make of Jones' contention that the other media owners have not seen much of a drop despite the poor performances of many of their products?

It is ridiculous to draw comparisons between Moneyweb, a small, developing business founded from scratch just over a decade ago and, for instance, the thousand-times larger Naspers, especially when this is done because of large share price movements on tiny trades. On average, R330m worth of Naspers shares trade daily. The value of the shares traded in Moneyweb over the month before Sunday's article would not even pay for one tenth of a percent of the dealing costs of a day's trade in Naspers.

3. Is there really a "comparatively large single block of shares" looking for a home?

No. This is one of many figments of the imagination of the article's writer, designed purely to damage our business's reputation. Some 80% of Moneyweb's equity is owned between our BEE partner Isingqi, my ex-wife Louise and myself. We three are long-term holders. A further 15% is owned by founding shareholder Jonathan Beare, Investec Asset Management and Allan Gray. None of them are sellers either. There is no large block of shares outside of these shareholders. The other 5% of the equity is spread between 500 or so smaller investors, many of whom participated in our pre-listing share offer back in 1999.

4. Are the comments relating to the Isingqi acquisition and the source of those shares and heftier salary and dividend payouts correct?

The transaction with Isingqi was struck at a small premium to the market price at the time and explained to shareholders in detail. To keep the dilution of shareholders to a minimum, my ex-wife and I agreed to sell under 10% of our shareholding as part of the transaction. Although asked, we were not prepared to sell any more of our shares.

My salary is set by the board's Remuneration Committee and voted on by shareholders at the company's Annual General Meeting. It is the intention of the Remuneration Committee to get my salary to market-related levels after years of salary sacrifice in building the company I founded. Interestingly, although very liveable now, it is still below what I was paid over a decade back in my last pre-Moneyweb job.

In the financial results for the year to end March, it was communicated to shareholders that the board of Moneyweb maintained last year's dividend to reflect the improved operating performance, the company's strong balance sheet and its excellent growth prospects. Last year's results were distorted by the one-off financial impact caused by the costs of settling a law suit brought in London by a Russian businessman for articles written by the former Russian correspondent of Mineweb.

5. Does your agreement with Isingqi allow them a seat on the board and/or other opportunities to influence your board?

Lindikhaya Sipoyo, a director whose counsel is greatly valued, represents Isingqi on the Moneyweb board. Apart from regular verbal and e-mailed communication, directors are fully informed of the company's progress through quarterly board meetings and detailed monthly management reports.

6. Overall, Jones paints a picture without any commentary from you, fellow board directors, Isingqi, or any staff members or analysts. Are you aware of any approaches made for comment before the article was published?

Mr Jones did not approach me, any member of the Moneyweb board, our staff members or our legal counsel for comment before writing his article. It is not as though he doesn't know how to - as a former employee of our company, he possesses all the relevant contact details of these parties.

7. Is Moneyweb BEE compliant at shareholder and management level?

The Isingqi shareholding is just under 30%. Although appointed on merit, two members of the six-person board of Moneyweb Holdings are from previously disadvantaged communities. Over one third of Moneyweb's staff compliment comprise PDIs, a number of whom hold key positions in our flat corporate structure. As a small company, we are justifiably proud of the development role we play. For instance, our small internship programme provided the training and grounding for the senior (Black) media consultants at both Eskom and Transnet.

8. We understand that Jones had a relationship with Moneyweb in the past. Can you comment?

Mr Jones' company, PJ News Services, was employed by Moneyweb Holdings for roughly two years. The contract was terminated in mid 2006. The parting was not amicable. This is well known in media circles.

Subsequent to his departure, Moneyweb discovered that over a period of two years - both during his time with the company and for six months thereafter - Mr Jones had directed Canadian-based Infomine.com to illegally make payments of funds due to Moneyweb into Mr Jones' Mauritius bank account. Around $20 000 (over R200 000 at the time) was misappropriated by him. After Moneyweb threatened to lay criminal charges of fraud and theft, Mr Jones repaid all the money.

9. Can you refute his comments on your editorial policy?

This is best done by visiting www.moneyweb.co.za and judging for yourself.

A key part of the company's strategy has been to invest heavily in editorial content. Since inception in 1998, Moneyweb has employed the largest internet-focused team of financial journalists in South African media. It's full time team members include veterans like Barry Sergeant, David Carte, Andries van Zyl and Jackie Cameron; Fulbright scholar Felicity Duncan; James Myburgh, who holds a doctorate from Oxford University; and award winning rising stars Denise Mhlanga and Julius Cobbett.

The company recently added six of South Africa's best writers as weekly columnists (Denis Beckett, Jeremy Gordin, David Bullard, Sipho Ngcobo, Gill Moodie and Michael Waddacor) to further bolster its unique offering. Moneyweb draws on wire service content from Reuters, Sapa and, to a lesser extent, Bloomberg to ensure its audience is fully apprised of commoditised news. Its core content, however, is produced exclusively for the website by full time staff and commissioned freelancers.

10. Any other comments?

In almost three decades in journalism, Mr Jones's article ranks for me the most blatant example of a major media outlet being abused to pursue a writer's personal agenda.

It would be inconceivable for, say, the SABC to permit its news bulletins to be hijacked with lies about a community radio station compiled by a disgruntled former employee. Yet this, in effect, is what the Sunday Times has done by publishing Mr Jones's falsehoods against Moneyweb without any comment from us.

Through their audiences, media companies are entrusted with considerable power; the greater this power, the greater their duty to use it responsibly. We are appalled at the blatant abuse of the trust that millions of readers place in the Sunday Times - more so because the newspaper has, without any factual base, used its enormous power to damage an independent participant in the same business sector.

Moneyweb and its BEE partner Isingqi are reserving all their legal rights in the matter. In the light of Mr Jones's unfortunate history with Moneyweb, his conflict of interest is obvious. As the Sunday Times editors must be aware, Mr Jones left Moneyweb under a cloud -sSo at the very least, before publishing his damaging, false and outrageous allegations, the newspaper should have offered Moneyweb a Right of Reply.

Note: This response will also be sent to Avusa's newly appointed public editor, Thabo Leshilo, in the anticipation that the newspaper will agree to run it in full, at the top of Page Six in Business Times, where Mr Jones's slander appeared. It is also hoped that in the interests of fully informing its readers, the Sunday Times will commit to covering Moneyweb's future sets of financial results, including those for the period to end September 2009, to be published in early November.