Murdoch’s Inside Track

The Leveson Inquiry Brings to Light More Ties Between Murdoch and Cameron

Counsel for the Leveson Inquiry pores over 1,000 exchanges between News Corp. and David Cameron’s culture minister regarding the media giant’s proposed control of BSkyB, further illuminating the cozy relationship between Murdoch’s empire and the conservative government, Peter Jukes reports.

05.24.12 10:55 PM ET

Had the judge of the BSkyB bid already made up his mind?

The hacking scandal that has already led to 50 arrests, the resignation of senior police officers, and News Corp. executives is now threatening the survival of a British government minister and posing more awkward questions for Prime Minister David Cameron about his cozy relationship with the Murdoch empire.

A month ago, in his written evidence to the Leveson Inquiry, Rupert Murdoch revealed more than 160 pages of emails from News Corp.’s senior lobbyist, Frederic Michel, to Adam Smith, special adviser to Culture Minister Jeremy Hunt, who was supposed to be acting in an impartial “quasi-judicial” role while overseeing News Corp.’s $16 billion for the remaining 61 percent share in the British satellite broadcaster BSkyB last year. Smith resigned as a result of the “inappropriate” contact with Michel, temporarily drawing the heat from his boss. Today both Michel and Smith were quizzed under oath by counsel to the Leveson Inquiry, Robert Jay.

It was another tense day in Court 73 as Jay analyzed the emails with both men, this time backed up with supporting evidence from phone-call data, texts, and logs of meetings. The volume of interaction alone was newsworthy—1,000 texts exchanged by Hunt’s office with News Corp.—while the coalition of media companies opposed to the bid (including the BBC, The Guardian, The Daily Telegraph and the Daily Mail) had virtually no contact with the department as it tried to judge a merger that would have radically changed the landscape of British broadcasting.

Fred Michel, a convivial Frenchman whose child was born in the same hospital on the same day as Jeremy Hunt’s, had been dismissed as a fantasist over the levels of contact he claimed to have with the minister. Though he had conceded in previous written evidence that the emails purporting to show contact with Jeremy Hunt had actually been in conversations with his adviser, Adam Smith, it emerged under cross-examination that some of this contact was actually directly with Hunt. Michel congratulated the culture minister for his performance in the House of Commons answering questions on the bid, to which Hunt replied, “Merci. Large drink tonight." Michel also congratulated Hunt on his performance during an interview about the bid on a BBC TV politics show. "Hopefully when consultation over we can have a coffee like the old days," Hunt replied.

Robert Jay called the regular email, calls, and texts from Hunt’s office a “running commentary” for News Corp. The exchanges became even more intense and numerous the night before Hunt told the House of Commons he was of a mind to accept the bid. One of the most potentially damaging emails revealed that Smith sent Michel advance notice of Hunt’s decision at 3:25 a.m. the night before it was announced to Parliament. This was market-sensitive information and has reportedly drawn the interests of Britain’s financial regulator, the FSA. Adam Smith has denied this interpretation of the email, and took the stand late in the afternoon.

At first the 30-year-old adviser, who has worked for Jeremy Hunt for six years, looked like he would provide a stonewall defense for his former boss. Praised as “loyal” and “dedicated to his minister” by internal evaluations, Smith said he wasn’t briefed about the quasi-judicial elements of the process and thought the rules of impartiality related only to the minister himself. The interrogation was so detailed that it will continue into an extended session tomorrow during a unique Friday sitting for the inquiry. Under pressure, Smith conceded that Jeremy Hunt had been “favorable” to New Corp’s. bid when evidence was revealed that could be fatal to Jeremy Hunt, and deeply damaging for the prime minister.

The evidence was a draft memorandum written by Hunt to Cameron, only weeks before the culture minister took over the bid. Hunt’s memo, which was read aloud in court but hasn’t been released, explained that "James Murdoch is pretty furious with Vince's referral to Ofcom …” (Vince Cable was the business minister then overseeing the process, and Ofcom is Britain’s broadcast regulator.) Hunt then went on to explain how James wanted to emulate his father and the relocation of his four national newspaper titles to Wapping in the 1980s, which revolutionized Fleet Street: “The U.K. has the chance to lead the way on this as we did in the ’80s with the Wapping move, but if we block it our media sector will suffer for years. In the end I am sure sensible controls can be put into any merger to ensure there is plurality, but I think it would be totally wrong to cave into the Mark Thompson/Channel 4/Guardian line that this represents a substantial change of control given that we all know Sky is controlled by News Corp. now anyway.”

A few weeks later, in December 2010, Vince Cable would be stripped of responsibility of the bid after expressing an anti-Murdoch bias to some undercover reporters, and the task given to Hunt. Various commentators, including Murdoch’s former Sunday Times editor Andrew Neil, have pointed out the anomaly. “So Cameron removed Cable from BSkyB process because biased against Murdoch bid,” he tweeted. “And replaced him with Hunt, who was in favor.” When the allegations of back-door lobbying first emerged last month, Jeremy Hunt declared in Parliament: “I made absolutely no interventions seeking to influence a quasi-judicial decision that was at that time the responsibility of the secretary of state for business.” That claim is now looking more tenuous. As the campaigning Labour M.P. Chris Bryant told The Daily Beast: “Adam Smith was acting as a buffer for Jeremy Hunt, and Jeremy Hunt was acting as a buffer for David Cameron. They confused the public interest with a private interest. Someone has to go.”

While they directly threaten the future of Jeremy Hunt, these new revelations now question the judgment of the prime minister himself, who was delivered written evidence of Hunt’s enthusiasm for the bid. With so many other links between David Cameron and senior News Corp. figures, including his friendship with Rebekah Brooks (who was charged with conspiracy to pervert the course of justice last week), and his former communications director, Andy Coulson (arrested on suspicion of phone hacking and bribing public officials while serving as editor of the Murdoch-owned News of the World), the Leveson Inquiry continues to cause more headaches at 10 Downing Street.