Leveson inquiry hears culture secretary had urged PM to support BSkyB takeover before he was appointed to oversee bid
Downing Street has been drawn further into the argument over News Corporation’s bid to take over BSkyB after it emerged that David Cameron appointed the culture secretary, Jeremy Hunt, to oversee the bid even though Hunt had directly lobbied him to resist the Murdoch company’s rivals, including the BBC and the Guardian.
Hunt undertook his lobbying in November 2010, two months before Cameron appointed him to succeed the business secretary, Vince Cable, who had been revealed to have “declared war” on the Murdoch empire. Hunt claimed broadcasting would suffer for years if the bid did not go ahead.
Labour was pointing out on Thursday night that in late December 2010 it had written to the cabinet secretary, Lord O’Donnell, asking him not to appoint Hunt to oversee the bid, owing to his perceived bias.
O’Donnell replied to the then shadow business secretary, John Denham: “The prime minister specifically asked me whether there was any legal impediment to moving it to Mr Hunt. I took advice from lawyers, and in providing advice that there was no such impediment I was of course aware of the former statements from Mr Hunt which you cite. I am satisfied that those statements do not amount to a pre-judgment of the case in question.”
He added in evidence to the Leveson inquiry: “I think the legal question as it was put to me was: do those ministers’ comments amount to a pre-judgment of the issue? And that’s where the lawyers were clear that it didn’t.”
It is now likely that Cameron, when he gives evidence to the inquiry next month, will be asked why he did not disclose the Hunt memo to O’Donnell, and whether he thinks he should have.
No 10 will argue that he “did not sit on the memo with knowledge”, and that O’Donnell was only looking at Hunt’s public statements. It was also being suggested that O’Donnell was anyway not making his ruling primarily on the basis of Hunt’s previous statements, but how he would behave in the future, and whether he had the capacity to be neutral.
But it is also likely that O’Donnell will himself be asked by Leveson whether, in coming to a judgment on Hunt’s suitability to judge the bid, he should have been informed of Hunt’s lobbying of No 10, and whether it would have changed his view.
O’Donnell has already given wide ranging evidence to the Leveson inquiry once, but was only superficially pressed on this issue.
Hunt’s officials argued on Thursday that the memo does not show a bias or a prejudgment, as Hunt explicitly says the bid should only go ahead subject to competition considerations, and this was a legitimate position to adopt.
Hunt’s allies added that, in a prior Financial Times interview on 16 June, Hunt had been much more explicit in his view that plurality issues did not arise because News Corp already owned 39.1% of BSkyB. He told the FT: “It does seem to me that News Corp do control Sky already so it is not clear to me that in terms of media plurality there is a substantive change, but I do not want to second guess what regulators might decide.”
Downing Street sources claim the memo released at Leveson was far more caveated than these previous public media remarks. It was also suggested that the cabinet secretary, Sir Jeremy Heywood, also takes this view. Downing Street said the memo makes clear that “it would be totally wrong for the government to get involved in a competition issue which has to be decided at arm’s length”.
Labour pointed out that Hunt had told parliament he had “made absolutely no interventions seeking to influence a quasi-judicial decision that was at the time the responsibility of the secretary of state for business”.
Hunt and his permanent secretary, Jonathan Stephens, are facing questions over the extent to which they briefed Adam Smith, Hunt’s special adviser, on how to handle contacts with News Corp when handling a decision of a quasi-judicial nature.
O’Donnell told the inquiry this month that the minister or the permanent secretary should specify this was a different quality of decision and in particular “you should make sure that the same information is passed on all parties in a case. This is not least to protect against a future judicial review”. Smith admitted he spoke far more regularly to News Corp, and there is no parallel traffic with those opposed to the bid.
The News Corp lobbyist Frédéric Michel washed his hands of Hunt’s behaviour, saying of his contacts: “If anyone from Hunt’s office thought this inappropriate they would have told me. It’s not for me to say how Hunt’s office should work.”
Culture department sources claimed the contacts were tilted in one direction as News Corp was the organisation fighting to keep the bid on track, and trying to persuade the government that its assurances of editorial independence for BSkyB were genuine. There was no need to talk as much to those opposed to the bid.
If Stephens declares it was the responsibility of Hunt to control the contacts of his special adviser, and that he did not, then Hunt may prima facie be in breach of the ministerial code. Cameron has been resisting referring any such breaches of the code to the independent adviser on the code, Sir Alex Allan, at least until this wave of hearings has ended.