The Leveson Inquiry, which started as a public inquiry into press ethics after the phone-hacking scandal erupted last summer, has now turned into a trial of the British government and its apparently cozy connections with Rupert Murdoch’s News Corp. as it launched the biggest media bid in British history—the takeover of the country’s most lucrative broadcaster, BSkyB.
On the stand in London Thursday was Jeremy Hunt, the culture secretary who was supposed to be overseeing the contentious $16 billion bid in an impartial “quasi-judicial” role. That role had been taken from the business minister, Vince Cable, who was caught by undercover reporters in December 2010 revealing that he was “at war” with the Murdochs over the bid.
If Cable was sacked from oversight because he was biased against News Corp, Hunt conceded a bias in another way—he was sympathetic toward the bid. The inquiry has also revealed extensive contacts between a News Corp. lobbyist and Hunt’s trusted special advisor, Adam Smith. Over 1000 emails, texts, and phone calls were exchanged between Hunt’s office and News Corp. during the bid process, but hardly any contacts with the media coalition of the Guardian, Daily Telegraph, Daily Mail, BBC and Channel 4 who opposed the takeover.
Smith resigned as Hunt’s adviser in April once the level of “inappropriate” contact was revealed, but the Parliamentary furor did not die down. Hunt’s opposite number, Labour Party front-bencher Harriet Harman, called for his resignation: under the ministerial code, she reasoned, Hunt was responsible for his aide. But Hunt is a close ally of the prime minister, and David Cameron declared that he should be allowed his day in court before any other ministerial investigations are launched.
It has been a wavering, uncertain performance today as Hunt explained how he was unaware of what “quasi-judicial” meant until late December 2010, when he was handed control of the process. The counsel to the inquiry, Robert Jay, put together a sequence of phone calls, emails and texts that effectively showed a constant interchange between senior ministers and the top echelons of News Corp. during this time. Though Hunt’s legal advisers told him not to meet with James Murdoch, for instance, Hunt spoke to him on the phone, and though he was advised not to lobby in favor of the bid, Hunt immediately wrote a passionate memo to Cameron doing exactly that. Hours before he took over the bid, Hunt texted James Murdoch following news that the European competition commission had decided not to investigate the bid: "Great and congrats on Brussels, just Ofcom to go."
However, it’s not just the judgment of the culture secretary that is at stake. New text message evidence today revealed just how intimately the Chancellor of the Exchequer, George Osborne, who is one of Cameron’s closest allies, was involved in the bid. As soon as Cable was revealed to be “at war” with the Murdochs in December 2010, Hunt texted Osborne complaining of the “acute bias” of the business minister. Fifty minutes later, when the remit to oversee the bid was awarded to Hunt, Osborne replied, “I hope you like the solution!”
Osborne has not yet been called to the inquiry, though Cameron is expected to appear in two weeks’ time. Given today’s evidence, it seems likely that Osborne will have to appear soon as well. The questioning then turned to the relationship between Hunt, his special adviser Adam Smith, and the News Corp. lobbyist Frederic Michel, who was in contact up to five times a day with Smith throughout the first half of 2011, until News Corp.’s bid was finally dropped in the wake of the hacking scandal.
Smith provided a running commentary on the government’s thinking about the bid, providing tip-offs about ministerial statements, and often seeking ammunition to demolish the arguments of its opponents. Hunt accepted he was exceptionally close to his aide, who had worked for him in opposition for six years. “I doubt there is a minister who worked more closely with a special adviser than I did with Adam Smith," he said. He also conceded that Smith knew his thinking, but denied that in any of Smith’s encouraging comments to News Corp. Smith was “speaking for me.” Hunt was on stronger ground when he explained how he decided not to refer the bid to the Competition Commission in return for “Undertakings in Lieu,” which would protect plurality by spinning off Sky News into a separate company. This incurred the wrath of James Murdoch, who according to Hunt, “didn’t think he should spin off Sky News at all [...] this was going to cost him hundreds of millions of pounds more.” Hunt also sought various means to strengthen the independence of the news operation.
While the Leveson Inquiry is not accusatorial, and only seeks to establish the facts, the forensic accumulation of detail about Hunt’s office and its closeness to one side of the contentious bid is likely to weaken the culture secretary’s position further still. The calls for his resignation will continue, and he will have to answer in Parliament questions beyond the remit of the Leveson Inquiry. Did he break the ministerial code by not supervising his special advisor? Did he mislead Parliament when he denied he had ever lobbied in favor of the BSkyB bid? And was he being completely transparent when he told the House of Commons he had no direct contact with News Corp.?