Hack Attack (44 page)

News Corp turned up the temperature. The owner of the
Daily Mail
, Lord Rothermere, found himself on the end of an angry phone call from James Murdoch. One of Vince Cable’s fellow Lib Dem MPs, Norman Lamb, had a conversation with Fred Michel which so alarmed him that he immediately wrote a note about it: ‘An extraordinary encounter. FM is very charming … They have been supportive of coalition. But if it goes the wrong way, he is worried about implications. It was brazen. Vince Cable refers case to Ofcom – they turn nasty.’ Michel later told Leveson that, while Lamb may have felt a threat, he had not intended to deliver one. The power of fear.

Fred Michel started trying to find ways to get round Vince Cable’s closed door. He suggested that they ask the editor of
The Times
, James Harding, and the European editor of the
Wall Street Journal
, Patience Wheatcroft, to speak to Cable’s close ally, Lord Oakeshott – a potentially improper abuse of the journalists as political agents. Alternatively, he suggested,
The Times
editor might interview Vince Cable himself and then he – Fred Michel – could ‘pop in at some stage to give him an update’ on the bid. The fact that Cable had made it very clear that this would be a breach of his quasi-judicial role made no apparent difference. At the Conservative Party conference, early in October, Michel and Rebekah Brooks lobbied senior ministers, including Jeremy Hunt, whose office continued to send News Corp signals of encouragement. Rebekah Brooks, staying close to David Cameron, was a guest at his private birthday party on 9 October.

The power of News Corp’s lobbying briefly became public in mid-October as Cameron moved against the Murdochs’ old enemies, Ofcom and the BBC. The government took away 28.2% of Ofcom’s budget for the next four years, nearly a fifth of its staff and some of its most important legal powers. They then froze the BBC’s licence fee for six years, effectively cut its budget by 16%, removed 25% of the funding for its website (which was particularly disliked by News Corp) and made it close most of its magazine business. Both of the Murdochs’ target organisations were deeply weakened.

But there were limits to News Corp’s power. They had no formal deal with Cameron, only their special relationship which allowed them to push hard for what they wanted but which was countered by other pressures. Ofcom lobbied energetically against them, warning that the attack on them was too brazen to be accepted by the public, and succeeded in persuading Cameron not to fulfil his promise to abolish the regulator altogether. James Murdoch had loudly demanded Ofcom’s death and is said to have been furious at Cameron’s compromise.

The BBC had originally been confronted by Jeremy Hunt with the threat of even deeper cuts in their spending, but Hunt had to recognise the popularity of the BBC and had been forced to give ground when he was told that the director general, Mark Thompson, the chair of the BBC Trust, Sir Michael Lyons, and every other member of the trust would resign together in protest if he persisted.

Then Vince Cable moved. The independent lawyer to whom he had gone for specialist advice had given him clear advice that he had the right to intervene and, on the evening of 3 November, he announced that he was asking Ofcom to review the bid for BSkyB on the grounds, as he later told Leveson, that ‘the Murdochs’ political influence had become disproportionate’. Ofcom had to report back by 31 December, and, if they said there was a problem, Cable could then refer the bid to the Competition Commission for an investigation which would be slower, deeper and far more expensive for News Corp to deal with.

Cable received loud support the next day from numerous members of the House of Lords, including the former director general of the BBC, John Birt, who recalled how he had once met a government minister who was due to go to see Rupert Murdoch and ‘I do not exaggerate: the minister was actually shaking at the prospect.’

James Murdoch again was furious. He instructed lawyers to try to sue the government but then dropped the plan. He went to the prime minister at Chequers, and complained bitterly. Soon afterwards, Rebekah Brooks called the executive director of the
Telegraph
, Guy Black, told him he was an ‘arch plotter’, angrily insisted that he must disband the media alliance opposing the bid and claimed that Cameron had told James that the bid would go through. Black checked, found this was not true and resisted the instruction.

James’s troubles were deepened by the fact that he was now effectively at war with his father. After months of vilification, he had succeeded in forcing Gary Ginsberg, the director of communications in New York, to resign. But when James tried to engineer his right-hand man, Matthew Anderson, into Ginsberg’s position, his father angrily blocked him.

There was another round of friction over a bizarre project to spend $30 million on a poultry and cattle business in Western Australia. Rupert was backing it because the business belonged to an old friend and ally, Ken Cowley. In the beginning James also backed it: he is politically green around the edges and planned to turn the land into forest, to sell carbon credits to improve the company’s environmental record. His father’s advisers derided what they called the ‘chicken farm’ and, when finally James recognised that the project was a non-starter, he agreed to go to his father to urge him to abandon it. Told of this, the older man refused to see him. ‘Fuck James,’ he said, according to one of his closest advisers.

Two sources who were close to the Murdochs say that at around this time, the feud between the two men became so bad that advisers from both camps persuaded them to hold a summit meeting. This idea itself rapidly became part of the dispute. They say Rupert reluctantly agreed to a meeting but said James must come to him in New York. James also agreed to meet – but insisted that his father come to his HQ, in London. The advisers moved in like a flock of nannies dealing with kids fighting over a toy and are said to have finally succeeded in persuading the two men to meet in the middle – literally in the middle, of the Atlantic. In the Azores.

So it was, according to the two sources, that the old man and the young pretender flew in to the remote islands from their respective encampments, and the old mogul took charge and dictated his terms: ‘You’re coming to New York. Nobody else is going to run Europe and Asia. It’s being disbanded. And if you don’t agree, you’re fired.’ James, they say, decided he had overplayed his hand and agreed to be simultaneously promoted and brought to heel, accepting that in the following year, he would be given the new title of deputy chief operating officer and that he would move to his father’s side in Manhattan.

Meanwhile, New York executives noticed ‘a smiley man’ who suddenly started turning up at some of their meetings, sitting, observing, noting and saying nothing. This proved to be a family therapist, hired to attempt to disentangle the emotional knots which bound together Rupert Murdoch and his children.

There was one other problem bubbling in the background: the hacking scandal. By sheer fluke of timing, at the same time as Vince Cable called in Ofcom in November 2010, Mr Justice Vos in the High Court was ordering News International, the police, and Glenn Mulcaire to disclose more and more material. This ran into a potentially significant problem. For several years, the IT department at News International had been warning that their servers were overloaded and suggesting that a mass of old emails must be deleted from the company’s vast electronic archive. From December 2007, some 9 million messages were purged in batches as part of scheduled maintenance. In 2009, it was agreed that there would be a major clear-out of hardware and software in the autumn of 2010 when News International were due to move into their new office in Thomas More Square, known internally as TMS.

Then the policy shifted. Some tens months before the move to TMS, on 20 November 2009, an internal email recorded that ‘the senior executives are looking to introduce a more aggressive purging policy’. This message went on to list the aims of the policy, which included: ‘To eliminate in a consistent manner across NI (subject to compliance with legal and regulatory requirements) emails that could be unhelpful in the context of future litigation in which an NI company is a defendant.’ This was written four months after the
Guardian
’s story about Gordon Taylor, while Max Clifford was still suing the company for hacking his phone and insisting that he would flush the truth out into the open.

In the event, nothing was done to delete the emails, although by the following spring, May 2010, it had been agreed that when they moved to TMS in the autumn, News International would clear out all emails which had been sent or received before December 2007. Again, this decision flowed from a genuine need to unblock the company’s sagging computer system, but, if it were put into effect, the result would be to obliterate the email records covering the entire period of Mulcaire’s employment and the efforts to deal with him and Goodman leading up to their jailing in January 2007.

Nothing was deleted at that point, but the policy shifted again. In August 2010 as the move to TMS approached, Rebekah Brooks, as chief executive, asked for the deletion to cover a further two years. ‘Everyone needs to know that anything before January 2010 will not be kept,’ she wrote. When the IT department queried the new date, she wrote: ‘Yes to Jan 2010. Clean sweep.’ One internal email suggests that she had discussed this with James Murdoch: ‘Rebekah… adamant on Jan 2010 and has discussed it with JRM who wants to draw a line as per 2010.’ This would not appear to have had any potential impact on the time frame in which the High Court was then interested.

Still, there was little action, apart from the purging of some 1.1 million emails that August as a result of a disk failure corrupting the data. While the move to TMS was taking place, it so happened that Mark Thomson was moving forward with Sienna Miller’s case. On 6 September, he wrote to News International to ask them ‘please to confirm by return that you will preserve all the documents in your possession relating to our client’s private life’. Three days later, on 9 September, an internal email from the IT department recorded: ‘There is a senior NI management requirement to delete this data as quickly as possible but it needs to be done within commercial boundaries.’ On 30 September, a contractor working for News International deleted all emails dated up to the end of 2004, a total of some 4.5 million messages. This covered a significant part of the period when Mulcaire was hacking, but it is not clear that this destroyed any messages relating to Sienna Miller: her private life became a central focus for the
News of the World
during the following year, 2005. Only 1.5 million of these messages were eventually recovered by police.

By October, with hacking victims pushing hard in the High Court, there was some anxiety within the company. On 7 October, Brooks emailed the company’s commercial lawyer, Jon Chapman: ‘How are we doing with TMS email deletion policy?’ Chapman forwarded this to an IT executive, adding his own thoughts: ‘Should I go and see [sic] now and get fired – would be a shame for you to go so soon?!!! Do you reckon you can add some telling IT arguments to back up my legal ones.’ Two days later, Chapman wrote again to the IT executive that, ‘given the current interest in the
NoW
2005/6 voicemail interception matter’, they should preserve the email archive of any current employee who had been working for the paper at that time. He went on to add, ‘from an abundance of caution’, that this should include any messages between Andy Coulson and seven named individuals including Alex Marunchak, Greg Miskiw and Neville Thurlbeck.

Giving evidence years later, Brooks said that she had approved the preservation of emails which might be related to the hacking and that, when earlier she had given the order for a ‘clean sweep’, she had not intended that to include anything which might be linked to the hacking. The policy of email deletion remained unchanged as the hacking cases moved through the High Court. Separately, in October 2010, as the move to TMS took place, the company destroyed all of its journalists’ old computers, including that of Ian Edmondson, who had been named by Mark Thomson in his letter to News International the preceding month.

In court, News International challenged Mr Justice Vos’s orders for disclosure, claiming falsely that their archive held emails for only six months, but the wall of concealment which had stood for four years was clearly beginning to leak. Sources close to James Murdoch say he was increasingly anxious to complete the BSkyB deal quickly.

His team began a frantic new round of lobbying, with limited success. Fred Michel persuaded the Scottish First Minister, Alex Salmond, to tell newspapers in Scotland that the bid was important to protect jobs. But when Michel tried once more to breach the quasi-judicial boundary and get James through Cable’s door, he was rebuffed by Cable’s special adviser, Giles Wilkes, with the memorable line that a meeting would be acceptable ‘when a Google of Vince Cable, News International and Sky doesn’t turn anything up’. Michel tried to get James in to see one of Cable’s most senior colleagues, the chief secretary to the Treasury, Danny Alexander, and was locked out again. Even Jeremy Hunt had trouble seeing them.

In spite of everybody else’s caution, Hunt agreed to meet James to discuss the bid. However, his own departmental lawyers then gave him ‘strong legal advice’ that he should not do so, because of the quasi-judicial boundary around the subject. When Fred Michel texted the news to his boss, James replied: ‘You must be fucking joking.’ James then exchanged texts with Hunt, who – in spite of the legal advice – then agreed to talk to him on the phone. He agreed to do this on 15 November, and to do so on their mobiles, which would not be monitored by officials with the result that – as with their meeting in January – there would be no record of what they said. (Lord Justice Leveson later concluded that this kind of ‘off the record’ contact was ‘corrosive to public trust and confidence’.) That phone call evidently had the desired effect on Hunt, who went back to his departmental lawyers to ask if he could ‘make representations’ to Cable. Four days later, on 19 November, the lawyers told him that it would be ‘unwise’ to do so. That did not stop Hunt.