Bantu Holomisa and his party, the United Democratic Movement (UDM) have suffered a humbling loss in the Constitutional Court after it denied their appeal against a high court interim interdict. 

And now, the injured party — the company behind the controversial purchase of a majority stake in SAA — will proceed with its defamation case against both.

The case has a wider significance because the Constitutional Court found that Holomisa’s parliamentary privilege did not extend to making unfounded and defamatory allegations. 

The matter was brought by parties involved in the Takatso Consortium’s purchase of a 51% stake in the state airline. Takatso’s investors include Harith General Partners (“Harith”), Tshepo Mahloele (Harith’s CEO and the founder of the Lebashe Investment Group, which owns Arena Holdings) and airline industry heavyweight Gidon Novick, the founder of Kulula and newly launched carrier Lift. Novick has been named as the consortium’s CEO.

Open letters

On 31 May 2018, Holomisa published an open letter to President Cyril Ramaphosa on the UDM’s website, titled “The Public Investment Corporation, the Government Employee Pension Fund and Suspected Corruption; a Scandal Bigger than the Gupta-Family’s State Capture”. In it, he accused Harith and Lebashe of corruption, saying they appeared to be the same company “dressed up differently” to fleece the Public Investment Corporation (PIC). He called them “locusts”, who were engaged in deals more corrupt than those of the Guptas’ State Capture period.

The PIC is a state-owned investment vehicle and asset management company, whose public sector clients include the Government Employees Pension Fund (GEPF) and Unemployment Insurance Fund.

The UDM had raised questions about Lebashe’s involvement with the PIC, and its relationship with Harith and the Pan-African Infrastructure Development Fund. Holomisa’s letter claimed more than R8-billion of the GEPF’s money had been invested in the fund.

A month later, on 26 June 2018, another letter titled “Unmasking Harith and Lebashe’s Alleged Fleecing of the Public Investment Corporation” was delivered to Ramaphosa’s office, and published on the UDM’s website and Holomisa’s Twitter account, which was presented in strong terms: “BREAKING: State capture of a different kind as the ultra-rich elite allegedly plunder [the Public Investment Corporation] through companies Lebashe & Harith. Read more on this nauseating tale on udm.org.za”.

He also conducted numerous interviews with the media, in which he repeated his assertions.

‘Unfounded and vexatious’

Harith and Lebashe called the allegations “unfounded and vexatious”. The companies and the other respondents — Warren Wheatley (director and chief investment officer of Lebashe), Mahloele and Jabulani Moleketi (SA’s former deputy finance minister, non-executive director of Lebashe and chairperson of Harith) turned to the Pretoria High Court in June 2018 to stop Holomisa and his party, saying they had no valid reason to make such defamatory allegations, which had caused them irreparable financial harm. They said they worked in an industry that was extremely sensitive to perceptions of integrity and trustworthiness.

On 16 July 2018, the Pretoria High Court granted an interim interdict, pending defamation action, which gagged Holomisa and the UDM. They were ordered to remove and delete the allegations from the party’s website and from his personal Twitter account.

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But the UDM and Holomisa, who claimed they were merely exposing corruption in the use of public funds, contended that the letter to Ramaphosa was in the public interest, so they took the matter to the Supreme Court of Appeal, which struck their appeal off its roll on the grounds that it was interim and therefore not appealable, and then turned to the Constitutional Court.

Holomisa has repeatedly questioned the deal. On 11 June 2021, in a post on the UDM website, he asked how a R3-billion cash injection from Takatso could “suddenly” save the airline from certain death, adding that the deal stank “to high heaven” of corruption.

Mpati commission of inquiry

The UDM leader did, at that point, have some independent support. The Mpati commission of inquiry into allegations of corruption at the PIC called for an investigation into Harith when its report was released on 12 March 2020. The report noted that the PIC created two funds and a senior employee, Mahloele, had become the CEO of Harith. 

The report found that the company managed the funds “at significantly high fees”. It said the earnings and incentive schemes provided “rich rewards” for those selected by the PIC to fulfil these roles, confirming that PIC directors and employees used their positions for personal gain and/or to benefit. It also found an “arm’s length” loan from the PIC was not done at arm’s length.

On 21 June 2021, Holomisa told the  Mail & Guardian that because of the commission’s negative findings against Harith, the UDM would launch a court application to set aside the sale. 

The Mpati findings have yet to be implemented as the PIC has still not investigated the company.

Harith, meanwhile, said it believed the PIC commission had erred in its findings and “demonstrated a lack of understanding of the complexities of the private equity industry”.

Costs order

On Friday, 23 September 2022, Harith celebrated the Constitutional Court’s dismissal of Holomisa and the UDM’s appeal against the interdict. The applicants were also slapped with a costs order.

In a statement, Harith said the judgment “ultimately ruled, save for one technical point, against UDM leader Holomisa’s appeal to set aside an interim interdict barring him from making defamatory statements about Harith. This confirms the stance previously taken by the courts in that politicians, and particularly Holomisa in this case, cannot make and disseminate defamatory statements in the public under the protection of parliamentary privilege”. 

The court furthermore found that the applicants were not entitled to “wantonly defame” the respondents under the pretext that they were executing a constitutional duty.

“In the same breath, in my opinion, it was not for the public benefit to publish the unverified defamatory information. When a public figure plainly defames members of the public while admitting that he or she does not know the truth of what he or she says, his or her right to freedom of expression may justifiably be limited. In the premises, the applicants failed to discharge the onus which rested on them to lay a basis for the defence that the allegations were true and in the public interest.”

Harith said it had maintained its position and integrity throughout this process by opposing Holomisa’s applications before the high court, the Supreme Court of Appeal and the Constitutional Court.

Damages

On Friday, Harith’s CEO Sipho Makhubela said they would now focus on taking legal action against the UDM and Holomisa for damages: “It is critical that politicians are held to account for their actions when they attack businesses and individuals without any factual basis, and we are confident the defamation case will achieve this. Harith will continue to vigorously defend its reputation in this regard.

“This legal victory belongs to our stakeholders, investors and employees who stood with us in the past challenging few years — believing in our bona fides as good corporate citizens going about our business activities with integrity and within the prescripts of the law. We look forward to focusing on our important work of investing in the development of Africa’s infrastructure, unimpeded by politicians’ agendas.”

When asked about the Mpati Commission findings, a Harith spokesperson said its board had instituted an independent inquiry into itself and found its processes, governance structures and founding documents to be in compliance with the law. “The Harith leadership team is engaging the PIC and GEPF as per the recommendations of the Mpati Commission to bring this matter to its finality.” BM/DM