Rupert Murdoch's News Corp. Scandal

04.24.12

New Emails Revealed as James Murdoch Takes the Stand at the Leveson Inquiry

The special adviser to Culture Secretary Jeremy Hunt resigned after a new cache of salacious emails was revealed as James Murdoch took the stand on day one of the Leveson Inquiry. Peter Jukes and Mike Giglio on the Murdoch mystery and the government official caught in the middle.

Even before Tuesday’s session at the Leveson Inquiry, there was a buzz of anticipation that something important was going to happen. Rupert Murdoch has regularly tweeted that he would fight back against his enemies since News Corp. was engulfed in a storm of allegations about criminality and anti-competitive behavior last summer. He is due to take the stand tomorrow.

But Tuesday was the day for his son, James Murdoch, to be in the spotlight of the court. Well briefed and articulate, James was a much less likely source of new revelations than his less PR-trained father. But before James begun his testimony Tuesday, rumors were rife (mainly from those close to News Corp.) that some major revelation would be made that could be deeply damaging to the Conservative-led government, who have been regularly accused by their opponents of having a too-cozy relationship with Murdoch’s News International.

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James Murdoch faces the Leveson Inquiry

When the revelations arrived, they came from an unexpected quarter—and had nothing to do with phone hacking, or the email chain James was sent saying it was “rife” at the now-shuttered News of the World. Instead, a new potentially explosive email chain emerged, which touched a completely different subject: News Corp’s vast $16 billion bid for the remaining 61 percent of the nation’s dominant pay-TV broadcaster, BSkyB.

When this bid emerged soon after David Cameron became prime minister after the 2010 election, it caused consternation among commercial rivals, as News. Corp already dominated the newspaper market in the U.K.

The 163 pages of emails that were presented on Tuesday detail News Corp.’s bid for BSkyB and are written by Frederic Michel, the European director of public affairs for News Corp., and mainly describe the progress of the bid to his boss, James Murdoch, before it was dropped in the wake of the phone-hacking scandal.

There was an audible gasp from the usually subdued lawyers when one of these emails to James on Jan. 24, 2011, claims: “Managed to get some infos [sic] on the plans for tomorrow (although absolutely illegal … ).” James retorted that the last line was joke.

Many of the emails contain replies from a special adviser to the Culture Minister Jeremy Hunt named Adam Smith, who was supposed to be overseeing the takeover process in a quasi-judicial role. Others claim to relay messages direct from the minister himself. His predecessor, the Liberal Democrat Business Minister Vince Cable, was sacked from oversight from the bid because he was caught on a covert camera by undercover reporters saying he was “at war with Rupert Murdoch” over the bid.

In the Royal Courts of Justice this afternoon, counsel for the inquiry, Robert Jay, QC, put it to James Murdoch that these emails were evidence of confidential information being shared with the company. There was an audible gasp from the usually subdued lawyers present when one of these emails to James on Jan. 24, 2011, claims, “Managed to get some infos [sic] on the plans for tomorrow (although absolutely illegal … ).” James retorted that the last line was joke.

However, it is not James who is the focus of interest now. The emails were subsequently published on the inquiry’s website, and would appear to compromise the culture minister’s claims of impartiality.

In a separate witness statement, Frederic Michel, a News Corp. executive, asserted that not all of the contacts he made with Jeremy Hunt were direct, but however they were relayed, they still display a back channel of commercially sensitive and confidential information from the government to News Corp.

Michel updates James Murdoch in various emails about the role of Jeremy Hunt, writing: “Just spoke to JH ... He debriefed on his meeting with the media coalition ... will be meeting media coalition tomorrow. I ran [JH] through our key arguments this evening and we will do another briefing in the morning.”

The lobbying process seems to have worked, as Michel wrote in another email: “We seem to have been able to weaken most of the arguments of the complainants and Labour,” a January 2011 email reads.

The examples from Michel’s sent-box are continuous: “JH ... will expose the politicisation by Labour of a regulatory/legal process.” Another reads: “the media coalition looks completely demoralised.”

When things get stalled in February 2011, Michel writes to James Murdoch: “JH just texted that he can’t interfere with the process but can give us more time to sort things out.” In March, James Murdoch was tipped off about a ministerial statement, once again via email: “Formal statement by JH is scheduled for 15:00. Just been confirmed. Tory backbenchers have now been lined up to ask JH questions which will allow him to reinforce safeguards.” When the takeover was delayed because of objections from regulators? In May, Michel tells James that Hunt “said he might give you call in the coming days. He understands our frustration on the process.”

Then, in early June 2011, Michel tells his boss that Jeremy Hunt was on the warpath because of delays and “causing a lot of chaos and moaning from people at DCMS on our behalf.”

By late June, the bid was getting bogged down in negotiations about the independence of Sky News, and relations with News Corp. and the Culture Ministry hit a testy note. Michel plaintively asks the special adviser at the DCMS: “By the way, does that mean you and Jeremy will not be coming to Take That [a popular British vocal group] on 4th of July.”

The fourth of July 2011 was the day the story that News of the World had hacked Milly Dowler’s phone was first broken by The Guardian. Within a week, the News of the World would be shuttered and News Corp. had withdrawn its bid.

As Claire Enders of Enders Analysis told The Daily Beast: “In James Murdoch’s universe, his business advocacy is absolutely justified, even the scorched earth tactics of many of his subordinates. He has an incredible and strange loyalty to what he himself calls ‘the family.’”  Enders says that it was always absolutely clear that the Conservatives supported the bid but finds it “absolutely extraordinary that this scandal about phone hacking has ended up a political crisis for Jeremy Hunt who somehow landed in the hot seat.”

After the first day of the Leveson Inquiry, Jeremy Hunt’s career is still in the balance. The Labour Party leader, Ed Miliband, has called for his resignation, however David Cameron has declared Hunt has his “full confidence.” Hunt claims he has a robust defense to give the Leveson Inquiry himself. Conservative M.P.s seem reluctant to stand up for the minister in public, but until they find some kind of email or text directly from Hunt to News Corp., he is likely to remain in office. The questions over the Conservatives’ proximity to News International will also remain.

This is only the first of three days of testimony from the Murdochs. Rupert is set to take the stand on Wednesday and Thursday, and since the revelations about these emails was known before to News Corp. insiders, it would suggest Rupert has determined to cause maximum damage to the government that rejected his bid and subjected him to the media limelight.

The coalition government is suffering its worst crisis since the election, with poll ratings collapsing, and a series of policy mistakes, often gleefully highlighted by the papers of News International, and others.

If this was a concerted attack on Cameron, and his close ally Jeremy Hunt, then they are sticking by each other, and though bruised, are not down. We wait to see if Murdoch senior has a knockout blow in the next two days.