Sometimes half a dozen confidential texts and emails a day would fly back and forth between the Media Secretary’s Cockspur Street office just off Trafalgar Square and the News Corporation team promoting the takeover bid for BSkyB.
It was a remarkable level of apparent intimacy with Jeremy Hunt, the minister who from January 2011 had the power to decide the bid’s fate and who was supposed to be not simply neutral but ‘quasi-judicial’ in his role.
On the eve of one key government announcement in March 2011, Frederic Michel, the chief lobbyist for James Murdoch, who was leading the News Corp bid, emailed his boss excitedly at 3am with his latest account of Jeremy Hunt’s thinking: “Urgent. JH decision … He is minded to accept … and will release around 7.30am to the market.”
In what could be one of the most damning exchanges, Michel wrote of Hunt: “He said we would get there in the end and he shared our objectives.”
What made this busy back channel particularly remarkable was that the Media Secretary was constantly claiming no such relationship existed. Hunt told the Commons on 30 June: “I am deciding this deal on a quasi-judicial basis. I have not met Rupert Murdoch or James Murdoch in recent weeks, and all the meetings I have had with them have been minuted and done through official channels.”
It appears Hunt was being economical with the truth. Robert Jay, the Leveson inquiry’s QC, publicly questioned yesterday whether Hunt had upheld his “quasi-judicial” role, during what he suggested was a ‘surreptitious’ pattern of ‘covert interactions’ with James Murdoch.
The details of what appears to be Hunt’s collusion with one party would have certainly startled his immediate predecessor, Vince Cable. The Liberal Democrat business secretary was humiliatingly stripped of responsibility for the bid for alleged lack of objectivity, after a Telegraph ‘sting’ found him saying he had ‘declared war’ on Murdoch. David Cameron condemned this attitude as ‘totally unacceptable and inappropriate’.
Cable and his own advisers had nevertheless kept strictly away from contact with the parties warring over the bid. One of these advisers, Giles Wilkes, had told News Corp’s lobbyist: “I’m sure we’re both interested in staying within the bounds of proper conduct.”
It will now be up to Cameron and the cabinet secretary, Sir Jeremy Heywood, to decide whether Hunt failed to stay within such bounds. The lengthy record of emails, texts and phone calls released yesterday appears to reveal a secret communications channel between Hunt and Murdoch, devoted to pushing through “Project Rubicon” – as NewsCorp named their bid for BSkyB – and giving Murdoch what he wanted.
James Murdoch conceded openly to Leveson: “The company’s representatives were speaking to Mr Hunt and/or Mr Hunt’s advisers in the course of the proposed offer.” He described it as ‘active public affairs engagement’ and said Michel was ‘a liaison with policymakers’. He maintained he was simply trying to get a decision on a proper legal basis.
The evidence comes largely from Michel’s correspondence, which the Murdochs have now made public. Michel sent regular reports to James Murdoch describing his alleged contacts with Hunt.
Michel has told the Leveson inquiry that his messages that habitually referred to conversations with Hunt were, in truth, conversations with Hunt’s staff, commonly his special adviser, Adam Smith.
However, in a number of cases, the language used in the emails suggests strongly that Michel was speaking to Hunt himself. For instance, on 24 December 2010, the lobbyist reported to his boss: “Just spoke to JH. Said he was very happy for me to be the point of contact with him/Adam on behalf of JRM [James Murdoch] going forward.”
Michel’s activities, if the evidence is to be believed, would seem to give the lie to any claims of fairness between News Corp and the opponents of the bid. According to Michel, Hunt agreed a proposal, which he discussed in advance with News Corp, to get their bid successfully past official regulators. Hunt indicated his intention to accept, after a period of negotiation, an ‘undertaking in lieu, or UIL, which would see News Corp shift Sky News to a separate company.
The growing scandal over phone-hacking forced Cameron’s press adviser, the former News of the World editor Andy Coulson, to resign on 21 January 2011. But Hunt remained optimistic, according to the emails, that he could deliver a result.
“He [Hunt] still wants to stick to the following plan,” Michel wrote on 23 January 2011 “… His view is that once he announces publicly he has a strong UIL, it’s almost game over for the opposition … He very specifically said he was keen to get to the same outcome and wanted JRM to understand he needs to build some political cover on the process.” (JRM refers to James Murdoch.)
The following day, an email sent at 3.21pm shows Murdoch being supplied with the wording of Hunt’s crucial, and market-sensitive, official statement, due to be delivered the next day.
“Confidential: managed to get some infos [sic] on the plans for tomorrow (although absolutely illegal!). Press statement at 7.30am … Lots of legal issues around the statement so he has tried to get a version which helps us … JH will announce … that he wishes to look at any undertakings that have the potential to prevent the potential threats of media plurality.”
Hunt had limited room for manoeuvre. He had gained control of the bid only after Cable had already called in the media regulator, Ofcom, to start a rigid legal process. And he was dealing with a man who, as the evidence submitted to the Leveson inquiry shows, was powerfully connected.
Murdoch’s team had already been in contact with the chancellor, George Osborne, and his special adviser, Rupert Harrison, to try to get the Treasury to pile pressure on Cable.
Hunt had previously told Murdoch that he backed his bid. But he had also received “very strong legal advice” that it would be improper for him to meet Murdoch during this period. According to the Michel emails to James Murdoch, the solution to the problem was simple: “You could have a chat with him [Hunt] on his mobile.”
James Murdoch responded in an email, the inquiry heard: “You must be fucking joking. I will text him and find a time.”
When Hunt was put in charge of the bid, on 21 December, Murdoch phoned him again immediately, as he now admits. A couple of days later, Murdoch lobbied Cameron about the bid. The two were together at the then News International chief executive Rebekah Brooks’s Christmas lunch in Oxfordshire and although the prime minister has never admitted it before, Murdoch now testifies: “I recall speaking briefly to the prime minister … about the proposal.”
Under questioning yesterday , Murdoch said he merely told Cameron he hoped the handling of the BSkyB deal would be ‘appropriate and judicial’ in a short, ‘side’ conversation.
The following day back in London, Michel texted Hunt, according to his own witness statement.
He then emailed Murdoch to explain how a back channel was being set up via Hunt’s chief of staff, Adam Smith, to enable Hunt and Murdoch to communicate privately.
Reporting the suggestion of “JH” that Michel should be the point of contact between Hunt and Murdoch, he said “JH” had stressed that it was “very important to avoid giving ‘the anti’ any opportunity to attack the fairness of the process and fine to liaise at that political level”.
Extraordinarily, when Ofcom reported that the takeover might be against the public interest, Hunt’s team appears to have asked News Corp’s team to help him undermine their findings.
Michel wrote: “Spoke to Hunt. He made again a plea to try and find as many legal errors as we can in the Ofcom report and propose some strong and ‘impactful’ remedies … Would welcomed [sic] other opeds [comment articles] like [Mark] Littlewood or [David] Elstein in coming days.”
Littlewood, the director general of the Institute of Economic Affairs, issued a statement supporting BSkyB’s bid two weeks later and blogged for the Spectator a month later. Elstein, a former Sky executive, wrote two comment articles for the Open Democracy website supporting the bid.
A coalition of other newspapers, including the Guardian, were campaigning against the bid and made representations to Hunt’s department, drafted by lawyers Slaughter & May. What the opposition alliance did not realise, however, was that Hunt’s office was feeding information back to News Corp about the activities of their rivals.
Hunt was due to meet the coalition, but shortly before he did so, Michel emailed: “JH confidential please read. JH would welcome our critical views on the Slaughter & May submission to help him forge his arguments.”
Following the formal meeting, Michel wrote: “… [JH] debriefed on his meeting with the media coalition. In a nutshell: they looked miserable … and know they have lost the battle.”
Hunt and his team insisted to an apparently irritated Murdoch that all Ofcom’s objections to the proposed safeguards could be overcome by making a few concessions. Matters came to a head on 9 February when Michel texted to Adam Smith in Hunt’s office: “Bad news from Ofcom. We need to talk”, and Smith texted back: “Will call asap.”
That evening, Michel emailed James: “As agreed on the call, I have managed to get JH quickly before he went in to see Swan Lake and have further chat. He really feels this Ofcom letter is the ultimate weapon for them to block the deal. It’s the last throw of the dice for Ed [Richards, of Ofcom] …. He… shares our frustration – ‘we all know what Ofcom’s intentions are and have been from the start on this’ … it might be a price worth paying to get a green light in 2 weeks.
“He can’t instruct his officials to get back to Ofcom as he is not supposed to be aware we have received the letter and its content … He feels … we should look at the longer-term view. He asked whether we would be prepared to negotiate at all … I told him he had to stand for something ultimately … and show he had some backbone. He said he couldn’t ignore Ofcom, he had brought them into this OFT [Office of Fair Trading] process to get some cover and in public debate he would get absolutely killed if he did such a thing.”
On 11 February, Michel sent Murdoch a warning originating from Hunt’s office: “JH called: he now knows what Ofcom and OFT will send him tonight. Both will recommend he refers to CC [Competition Commission] … JH doesn’t want this to go to the CC … JH believes it would kill the deal.”
Michel told the inquiry that he sometimes used “JH” as a shorthand term for dealings with Smith and Hunt’s other advisers: “It was my understanding that when they told me something, it was always on behalf of the minister and having conferred with him.”
This claim is supported to an extent by the email traffic. Smith at one point refers to “what Jeremy and I have told you”. At another point Michel explicitly asks him to consult Hunt and get the answer to a question. But much of the language is that of a more direct relationship.
In April last year, as talks with Ofcom about the details of the bid safeguards continued, two News of the World journalists were arrested in the reopened police-hacking inquiry. This led to further anxious discussions on the Hunt back channel.
Michel emailed Murdoch on 13 April: “Catch up with JH … debriefed him on the NoW [News of the World] issues … There is no question that NoW will not play any part in his decision … He managed to avoid a massive backlash against the deal despite attempts by [John] Prescott and other Labour figures. Given the current onslaught in the media … there will be a strategic decision to make for the government as to the day it will choose to clear the deal. We know it will clear it. We just need to push them strongly now to announce it as early as possible.”
Six days later, Hunt’s chief of staff texted Michel: “I’ve got JH meeting officials on it this afternoon to push ahead quicker. Will let you know how we get on.”
By May, the Murdoch camp clearly feared their former ally in the cabinet was getting cold feet. Michel wrote: “We might want to use a call from JRM to JH to put further pressure on or raise some alarm bells.”
On 29 May, Michel complained to Smith: “It does seem the timetable you outlined to me is slipping away massively and we might want to consider our options… Seems that Ed Richards has been given very much a free ride on this and is doing his best to delay.”
The Hunt camp tried to reassure Murdoch. On 3 June, Michel reported: “JH confidential. Had conversations with him today. Blame game going on regarding the delay. He … is politically very keen to get this done as quickly as possible … also asked whether there were any other news which could conflict with the process in the coming weeks, and asked me to keep him informed privately [ie NI] … I have painted to him what could happen … and what it would mean for him and his department to be openly accused of not providing us process etc. He believes there will be overall green light given by everyone by end of next week.”
Michel texted Adam Smith: “James is not making any more commercial concessions … might even exit the process if consultation doesn’t take place next week. Very serious.”
He then told Murdoch: “As discussed, I just had very strong conversation with JH and explained we had now no intention of engaging further in any more commercial negotiations with OFT or Ofcom … I insisted he needed to get a grip … I also floated the threat that … we could decide at any moment to withdraw … JH repeated he was definitely keen to see this through as quickly as possible.”
The mood only improved when Hunt announced a green light to the proposals on 30 June, subject to one final short period of formal consultation due to end on 8 July. The Rubicon seemed on the verge of being crossed at last. Michel emailed Hunt’s adviser early that morning: “Just showed to Rupert! Great statement … !”
Hunt spent the day batting off parliamentary attacks from Labour politicians, and Michel texted: “Think we are in a good place, no?” Smith texted back: “Very, yes. Jeremy happy.”
Just four days later, however, the Guardian revealed that the News of the World had hacked Milly Dowler’s mobile phone. In a tumultuous week, Rupert Murdoch shut down the paper, and Cameron set up the wide-ranging Leveson inquiry.
By 11 July last year, the Sky bid had collapsed. The Murdochs, father and son, have been ordered into the Leveson witness box and forced this week to explain the backstairs lobbying. As a result, both James Murdoch, who tried to ram through the Sky project, and Hunt, the cabinet minister who tried to help him, seem to have ended up in what is very far from a good place.