Business secretary tells Leveson inquiry that he and several colleagues were ‘under siege from a well-organised operation’
Vince Cable has told the Leveson inquiry that Rupert Murdoch’s News Corporation made “veiled threats” that if he did not approve the company’s BSkyB takeover his Liberal Democrat party would be “done over” by its newspapers.
The business secretary – who was responsible for adjudicating on the Sky bid in its early stages – said that he had heard about the company’s apparently aggressive stance “directly and indirectly from colleagues”, who he did not name.
Cable added that he thought “somebody used the phrase ‘done over’ by the News International press” and that “I took those things seriously.”
He said that he believed that the threats emerged “in conversation” between Lib Dem colleagues and News Corp lobbyist Frédéric Michel, adding “but I can’t be absolutely certain”.
Pressed by Robert Jay QC, counsel to the inquiry, if Michel’s name was “expressly mentioned to you” by, Cable said that “it was at that stage, yes indeed”.
The cabinet minister said that he told by “one individual” that Michel had said this “but he told me in confidence and I don’t want to breach that confidence”.
He added that he refused to be intimidated by these veiled threats in his handling of the News Corp/BSkyB deal.
Cable said he believed News Corp were trying to get him stripped off his role by proving political bias.
“News Corp representatives were trying to build up a case that it was politically motivated and were doing this by systematically going around my colleagues maybe seeking their views or putting words in their mouths,” he said.
At the end of nearly three hours of scrutiny, Cable was challenged about his claims by Rhodri Davies, counsel for News International. The minister said he had no record of the meeting with the person who told him about Michel’s alleged remarks, and he refused to name the individual concerned. Cable said the conversation happened “in the period after I made the intervention notice” on 4 November 2010 and 21 December, when he was stripped of responsibility for the bid.
Replying, Davies said “without knowing who is supposed to have been threatened and when it’s extremely difficult for Mr Michel or anyone else to respond to the allegation”. Cable agreed and said “I’m trying to explain the context” in which he made is “war on Murdoch” comments. “I’m not seeking to build up a case against Mr Michel,” Cable added.
Cable, who was stripped of his responsibilities for the £8bn takeover bid after being secretly recorded by the Daily Telegraph saying he had “declared war” on Rupert Murdoch in December 2010, told the inquiry he made this comment partly because of a “near riot” outside his constituency office at the time.
In his witness statement, Cable said it was also made in the context of “reports coming back to me of how News Corporation representatives had been approaching several of my Liberal Democrat colleagues in a way I judged to be inappropriate”.
“The reports suggested that News Corporation representatives were either trying to influence my views or seeking material which might be used to challenge any adverse ruling I might make, following the completion of the Ofcom report. These colleagues expressed some alarm about whether this whole affair was going to lead to retribution against the Liberal Democrats through News International newspapers,” he added.
“This added a sense of being under siege from a well-organised operation. Coming from a party that had hitherto been at best ignored by News International, this was a new and somewhat unsettling experience. I could not help contrast this behaviour with that of other parties to the case who were content to make written submissions or other cases (like Northern & Shell).”
Cable said he did not dispute any of the remarks attributed to him in the Daily Telegraph undercover recording operation on 21 December 2010. “I did offload on them [the undercover Telegraph reporters] a lot of pent up feelings, not just about BSkyB but about my colleagues in government and a variety of other issues in language that I wouldn’t normally use.”
Cable also told the inquiry that Rupert and James Murdoch exercised “disproportionate political influence” through their newspapers but denied he let this affect his view of News Corp’s takeover bid for BSkyB.
He revealed in his witness statement that he thought the leaders of the major parties had grown too close to News Corp.
In his witness statement, Cable said: “I believed that the Murdochs’ political influence exercised through their newspapers had become disproportionate.
“The accusation that leading political figures in the Conservative party and the Labour party had offered disproportionate access to the Murdochs was widely made as was … that both parties had shown excessive deference to their views (as expressed through News International papers).”
Asked by Robert Jay QC, counsel to the inquiry, whether his view on the Murdochs were a factor in his quasi-judicial role overseeing the proposed BSkyB/News Corp merger, Cable replied: “It most definitely wasn’t.”
“I wasn’t submitting this evidence because it was relevant to the decision,” he said. “I was expressing an opinion which is loosely based on observing what was happening in political life and what had happened in my 12 years in parliament.
“My views about this company were actually quite nuanced. There was disproportionate influence and I thought the leaders of the main parties had got too close to them.”
Cable said he was initially advised by his officials that an intervention the News Corp bid was unlikely to be appropriate because it was already a 39.1% shareholder in BSkyB.
The business secretary said he felt “from the outset” that such a view “seemed to clash with basic common sense … the argument that 39% represented control [of BSkyB] seemed to be a very weak argument. When I first heard the argument, I challenged it.”
Cable told the inquiry: “There were a couple of respects in which a 100% owned BSkyB would have presented a problem for plurality. One was that it simply reduced arithmetically the number of outlets under different owners.
“But I think the other argument is that once there was 100% ownership it would have been possible for the new owners to replace the management who in turn would have influenced the choice of editors and in those two different ways plurality could be affected.”
Cable was advised that the possibility of News Corp challenging any intervention in the bid “cannot be ruled out but it is more likely that they will not challenge a decision by the secretary of state to intervene”.
He was also told: “On the other hand there is a real possibility of BT or some other party challenging a decision not to intervene. The chances of a decision not to intervene being successfully challenged are higher than the chances of the opposite decision being successfully challenged.”
Asked why he had canvassed the views of Lib Dem MPs such as Don Foster on News Corp’s Sky bid, when it was supposed to be a quasi-judicial decision, Cable said he did not have a background in media policy and wanted to understand the context around legislation such as the 2003 Communications Act which impacted on his decision.
“I felt it would help to have a background briefing particularly Don Foster who had been our media spokesman for a number of years. I wasn’t seeking their opinion on whether the merger was good or bad or I should intervene,” Cable added.
He said he did not discuss the bid with either of his Lib Dem colleagues, Simon Hughes or Chris Huhne, nor with his ad hoc advisory body, the Business Advisory Group headed by Lib Dem peer Lord Oakeshott.
The business secretary said he had the view that takeovers in general “reduced shareholder value” and said he was “sceptical” of takeover activity.
He added that there were a number of people who wanted to discuss the bid with him, including James Murdoch, “but I always maintained the view that I could not discuss it further”.
Cable said he believed a change in ownership could have “quite wide ramifications” because BSkyB, through Sky News, was an “independent news generator which wasn’t just important in itself but provided news to commercial radio and Channel 5”.
Earlier, Cable said he had prior experience of a “quasi-judicial” role during his years as a city councillor in Glasgow in the early 1970s, likening it to “riding two horses at once”.
Of the quasi-judicial role, Cable said: “The key phrase is that an intervention decision must be taken with an independent mind. An independent mind doesn’t mean a blank mind. Most people in public life have views, opinions … the requirement on me and people in this position is to set those on one side.”
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