The IRR: Dissection of a media slur campaign

CEO Frans Cronje responds to criticism of Coca Cola's sponsorship of its sugar tax research

While I have been away on leave our ideological adversaries in the media attempted to launch a series of attacks on the IRR around work we are conducting on the proposed Sugar Sweetened Beverages (SSB) tax. 

First off the mark was Media24, which published what they called an “exposé” based on the undisputed fact that Coca Cola funded some of our research on the subject. To be clear, there was no ‘exposé’. What Media24 and its News24 website editor Adriaan Basson called an ‘exposé’ was an interview with our media staff. During that interview, we were asked who funded our SSB research, and we answered: “Coca Cola”. On the strength of that answer, Media24 claimed its “exposé”. 

Let us deal with that issue directly, as Media24 was both dishonest and sensationalist in suggesting there had been no disclosure of the funding arrangement. At a meeting I attended early in 2016 it was unanimously agreed that the IRR and Coca Cola had no problem with disclosing their relationship. That is why both parties disclosed it on the spot to journalists who asked about it. This detail was not specifically included in the SSB policy paper for the simple reason that it was not at any stage considered exceptional, noteworthy or controversial; the source of the funding was neither confidential nor influential in determining the scope of the research or the thrust of the findings. It was, in short, a non-issue. In my experience there are funders who for various reasons prefer anonymity, but Coca Cola is ironically not one of them.

What Media24 partly relied on in attempting to exploit the point of non-disclosure is that we would not reveal pricing or other details. This, we think, is fair – and, again, uncontroversial – as the policy-funding field is competitive and we do not want our competitors to know how we finance our work.

It is the equivalent of asking Media24 to reveal in detail the extent to which its newspapers (and associated companies) rely on government funding (or regulatory protections) in order to suggest that it is dependent on the state and needs to take a pro-government line on certain policy matters. We know that Media24 receives extensive state income, both directly and indirectly, though not how much – but we also know that its editorial policies should prevent such funding from influencing the content of its journalism. 

Media24 did not disclose that its own chairwoman, Rachel Jaffa, had tendered through her private consultancy, Econex, to do work on the SSB tax – and found against it. If it was truly concerned about corporate influence over the shaping of public opinion, it should surely have disclosed that information. It also did not disclose that its journalists had been in close contact with anti-SSB tax advocates at the time that it drafted the attack on the IRR.

When my colleague Gwen Ngwenya penned a rebuttal of the Media24 attack, News24 chose not to give that response the same prominence as its original ‘exposé’, choosing instead to conceal it deep in their website. When Ms Ngwenya raised the urgency of the IRR’s response and that it be given equal prominence, she was accused of being aggressive by the News24 editor. 

Next up was news website BizNews, which republished Media24’s article, together with commentary on whether or not it was a coincidence that our views were the same as those of the sugar industry. Of course it was not a coincidence. The IRR knows full well that secondary and backdoor taxes are not a solution to South Africa's fiscal woes, which is why we approached the sugar industry to work on the SSB policy in the first place. 

BizNews, however, chose not to disclose, first, that it has a financial relationship with Media24 via Fin24, and, second, that BizNews had led the media defence of Dr Tim Noakes and his anti-carbohydrate (and sugars) dietary advice. Further, BizNews did not disclose that it did not even bother to conduct an interview with the IRR before publishing its claims. 

Then came the Financial Mail, which suggested that there was an ethical problem in accepting funding from a group likely to be negatively affected by a policy. This is complete nonsense. The IRR has rigorous internal editorial guidelines. Funders have no say at all over policy recommendations or how funding is used. There is an impenetrable Chinese wall between our sales and fundraising staff, and our policy writers and researchers.

The Financial Mail, however, went ahead and printed its incorrect and misguided assertions despite our staff having explained to its editor, ahead of publication, that he had misquoted IRR staff on a number of points. His response was that “that is what you said”, or words to that effect – yet how could this be when IRR staff had made it clear the quotes were wrong? The editor is known to us for having in the past published false and misleading assertions about the work of the IRR. Needless to say, the Financial Mail was silent about this. 

The Financial Mail alleged that the IRR engaged in the SSB tax work knowing what the outcome of its research would be, and approached funders on those grounds. Of course we did. We have extensive experience of secondary taxes and know how they harm economies and delay the structural reforms that are necessary to secure real economic turn-arounds. That is why we approached the sugar industry in the first place. 

There is a great degree of hypocrisy at play here, as all three media entities fail to disclose their financial relationships with funders. In the case of Media24, those relationships extend all the way to China through Nasper’s holding in Tencent. That should not be a problem given the conventional separation of interests between editors and financiers. The hypocrisy is that those same editors deny that such principled separation of interests could or ever would exist in non-profit policy groups.

In effect, what all three news outlets have done is to say that the government is correct in claiming that the private sector media cannot be trusted. On what grounds will they now defend themselves when the securocrats and censors and enemies of free speech come for them? If funding must necessarily determine content, then Media24 has essentially admitted it is a Chinese propaganda front. 

But the funding argument is in any event no more than a red herring, as in all three cases no serious attempt was made to engage with the content of our SSB work or the arguments we raise against the tax. The reason is that our arguments are unassailable. The tax is a VAT increase by stealth and a most ineffective public healthcare intervention. Even if our critics were to insist (wrongly) that our arguments were made at the behest of the sugar industry, they would still have to counter those arguments and show them to be wrong. The most telling outcome of this whole saga is that not one critic has been able to do so. 

To an outsider this may all seem a bit of a spat, but the consequences have been serious. Much of our hard work in convincing private-sector companies to raise their policy concerns in public, confident that they would get a fair hearing, has been undone. The business press gripes that few companies will talk about policy in public – yet, after Media24’s performance in this case, can any CEO really trust that an important policy matter will be handled with due seriousness and not be turned into tabloid sensationalism? We will remain privy to some of those, now private, negotiations and will advise both the private sector and the government, but the contents of that advice will not always appear in public.

Is this a result the business press in South Africa can be proud of, that it was so immature and sensationalist in its handling of a profoundly complex policy problem that it effectively cut off its own access to policy research? Would it not have been better to report instead on the contents of the SSB tax and the arguments for and against it?

A secondary consequence is that, should the Minister of Finance not back off from the SSB tax, we anticipate retrenchment proceedings across the sugar industry – a costly risk identified by our research. Again, the pursuit of sensation in place of real analysis stands to further harm the economy. When people lose their jobs, and South Africa loses investment, what will the media say? They cannot say they were not warned; on the contrary, they chose to disregard the warnings. 

A third consequence is that as long as it remains focused on the SSB tax, South Africa will not develop effective means to counter obesity. Our original SSB paper suggested a range of ways to do so. But you may not know what those are, as Media24 was, again, driven more by sensationalism than by conveying useful concepts to its readers. 

The truth is that my colleagues produced some exceptional work, some of the best, globally, on why SSB taxes are a bad idea, and, related to that, how to best deal with the scourge of obesity. That work was the single most influential counter to how the finance ministry was planning to introduce a stealthy VAT increase. The public would never have heard those arguments were it not for our research, and that research would not have been affordable without our project funders.

What people outside our sector might not understand is that there was also nowhere else to go for such funding as the development funding community is biased in favour of leftist and statist causes. To ask them to fund such work would have been pointless, as they would see it as advantaging the private sector. Our critics knew this, and, by making an issue of our private-sector funding, they were actually engaged in having all our SSB funding cut off. 

What is it that allowed some journalists and editors in the business press to get so out of touch with a serious policy matter? The best we can come up with is that what lies at the heart of the attacks on the IRR is ideology. Many journalists make no bones of their opposition to the IRR's liberal philosophy, and the fact that it is one of very few organisations that stands up for entrepreneurs, private sector risk-takers, and companies who risk their shareholders’ capital to help build the South African economy.

We would like nothing more than for our ideological opponents to take us on on the strengths and content of our arguments. Challenge our ideas and policy proposals by all means. But when our arguments prove robust do not then turn to slurs and sensationalism to counter the influence we have on South Africa. It is a curious phenomenon, but those with experience of the media know that South Africa's business media contain some of the fiercest ideological opponents of free markets and the private sector. 

Have no doubt they all know how strict the IRR's internal ethical controls are – we have been around for a long time and are well known. I do not believe that any of them could look me in the eye and say they have the slightest doubt that IRR conclusions are the sole preserve of the IRR. They also knew what the consequences of their aspersions would be for us; we would suffer financial harm. It was a calculated attack, sure to cause harm, and it did.

One of the reasons the South African economy is in such trouble is that the private sector is regularly denounced, insulted, disparaged and assailed when it warns against hostile and counter-productive policy. When it tries to explain its side it is silenced in exactly the manner the saga set out above attests to so well. At the IRR we want to give investors a voice so that their concerns may be heard and responded to. We are the only non-profit group in the country to do that at scale and in public. 

Frans Cronje is the CEO of the South African Institute of Race Relations. A shortened version of this article appeared on News24.