LORD JUSTICE LEVESON
Yes, Mr Jay.
Today's witness is the Right Honourable Jeremy Hunt, please. MR JEREMY RICHARD STREYNSHAM HUNT (sworn) Questions by MR JAY
Your full name, please?
A. Jeremy Richard Streynsham Hunt.
Q. Thank you. You provided us with a witness statement dated 4 May this year. It has three annexes, the standard statement of truth. Is this your formal evidence to the Inquiry?
A. Yes, it is.
Q. In terms of your career, Mr Hunt, you have been a Member of Parliament since 2005, Shadow CMS and then, since 11 May 2010, Secretary of State for Culture, Olympics, Media and Sport; is that correct?
A. That's correct.
LORD JUSTICE LEVESON
Mr Hunt, as I've said to everybody else, thank you very much for the effort that has clearly been put into the statement and all the exhibits. I'm grateful to you, and of course the assistance you've received from your staff.
A. Thank you, sir.
Your approach generally to media ownership, you cover these in paragraphs 3 and 4 of your statement at 05597. Is there anything you wish to add to that?
Q. You helpfully explain your reserve functions under the relevant legislation in relation to media plurality. This is paragraphs 8 to 14. Dr Cable gave us a similar explanation, and there are no specific points which arise. You draw attention to the relevant guidance and the public interest test, which is under section 58 of the Act. When did you first become acquainted with that, Mr Hunt?
A. I think I only really became acquainted with it when the powers were transferred to me from the Department of Business on 21 December.
Q. Thank you. Can I deal with your period in opposition, first of all. Your personal website said at one stage: "Like all good Conservatives, Hunt is a cheerleader for Rupert Murdoch's contribution to the health of British television." So that presumably represented and perhaps still represents your view; is that correct?
A. I would say it's not correct, and perhaps I could also correct the impression that that statement gave, which Mr Smith also corrected in his evidence. I have a section on my website which is really there for the benefit of my constituents, where I put up press articles that have been about me, so that people can see what I'm up to. That was a comment by a journalist from Broadcast magazine, but it's not how I would describe myself.
Q. So why did you put it up on your website then, if it didn't represent your view?
A. Well, I think it's helpful to my constituents to put up all the comments about me, positive or negative. There are comment sections on my website where constituents themselves put up comments, positive or negative.
Q. Okay. We know from material which Mr Rupert Murdoch provided to us this is his exhibit KRM 40, it's in the PROP file at page 01962 that you had two meetings with Mr James Murdoch in opposition, on 12 October 2009 and 12 February 2010. Hopefully that will come up on your screen. It's not available in the various files you have. One of the agenda items, according to Mr James Murdoch, was reform of Ofcom. Can you remember what, if at all, was discussed on that occasion?
A. Not particularly. I think James Murdoch has a general hostility to Ofcom and the BBC, and he may have said that the burden of regulation from Ofcom was too onerous, that sort of general tenor. My focus in both those meetings were my two policy priorities, which were superfast broadband and local TV, and I was unable to excite much interest in him in those two areas.
Q. But did he try and excite interest in you on the issue of reform of Ofcom?
A. I think, apart from sort of generally expressing a view that the broadcasting market was too heavily regulated, I don't think we got into much more substantive discussions than that.
Q. Had you read by that stage his MacTaggart lecture, which was delivered on 28 August 2009?
A. Yes, I had.
Q. Did you share the views and opinions expressed in that lecture?
A. There were some things that he talked about which I thought were very important. He talked about the importance of having independent commercially viable media operators as a very important element of plurality of news provision, and I completely agree with that. There were other things that I disagree with. I disagree with the general thrust of his views on the BBC, in particular his description of the BBC as state-sponsored journalism, and the suggestion that the BBC is an arm of the state, whereas my experience of the BBC has always been and is that it operates very effectively at arm's length from the government, even though its funding mechanism comes through my department.
Q. Did you share his views as to the licence fee, in particular at one stage I think it may have been Conservative Party policy to top slice the licence fee?
A. Generally speaking, I didn't share his view on the licence fee. I think James Murdoch thinks the licence fee is wrong full stop. He describes it as an intervention in the market, whereas I believe that the BBC is a benchmark for quality in broadcasting in this country and indeed all over the word, and the licence fee is a critical part in making that possible. With respect to top slicing, that's the sort of principle that other broadcasters should be able to bid for a share of the licence fee, that was a policy option that we floated in opposition. I think I floated it as a particular option in the spring of 2008, but we never adopted it as a policy.
Q. Okay. I think in July 2009 you travelled to New York to see executives of News Corporation; is that correct?
A. I believe it was September 2009, but yes, and I didn't travel to New York to see executives of News Corporation. I went to New York because I wanted to do some research into local television and America has the most developed local television market in the world, but I was offered to meet executives at News Corporation, and I thought that was a good thing to do while I was there.
Q. Did those include Mr James Murdoch or not, can you recall?
A. No, they didn't.
Q. We know he was working in London at the time. Can I ask you this, though: did you discuss anything else, other than local television?
A. We had more general discussions about broadcasting. News Corporation have never been particularly interested in local television in the UK, so they weren't particularly interested in talking about that to me, although they were happy to talk about their experience of local television in the US. That was my primary purpose. They talked about I think one of the things we talked about was the impartiality rules, which we have here under the Broadcasting Code, which they don't have in the US, so we had some discussion about that.
Q. Okay. In May 2010 there was another meeting it's more accurately described, I think, as you say in annex B, 05624, as an evening reception and dinner, James Murdoch and others from News Corporation. Rupert Murdoch was also present for part of the event. Can you remember the date?
A. I can't remember the date off the top of my head, but I think it was after I'd become Culture Secretary.
Q. I think that was the occasion where it was said you were hiding behind a tree to avoid being spotted by a Wall Street journalist. Is that correct or not?
A. No. What actually happened was I went to a dinner which I think was hosted by the master of UCL, it wasn't a private dinner with James Murdoch, and on my way to the dinner, I spotted a large group of media journalists and I thought this is not the time to have an impromptu interview, so I moved to a different part of the quadrangle.
Q. There may or may not have been trees; is that right?
A. There may or may not have been trees.
LORD JUSTICE LEVESON
All right, I think we've moved on.
Yes, I am. 5 June 2010, which was the day the bid was announced, Mr Hunt. When did you first learn that the bid was in the offing, as it were?
A. I don't think I knew about the bid until getting a call from Mr Murdoch on the day that it was announced.
Q. You don't think so or you're sure you didn't know about the bid before?
A. Well, I'm yes, I'm I'll say I'm sure, because I don't recall any conversation or knowledge about it, and I think it was complete news to me, so I am sure. I can't be, you know, completely certain that at no stage ever was it ever mentioned to me that one day they might buy the rest of it, but for the avoidance of doubt, I don't believe I was ever told at any stage that they had any concrete plans.
Q. Because presumably it was your judgment, knowing the company, that that was one of their aspirations in due course to acquire the remaining publicly owned shares in BSkyB; is that correct?
A. No. I would have thought they had lots of different aspirations and commercial ambitions, and I would have thought they would be focusing on the growth of BSkyB. I wouldn't have particularly thought that the purchase of those shares was a corporate objective.
Q. But on the occasion that Mr Murdoch called you, you deal with it in paragraph 29 of your statement, are we to deduce that you indicated broad sympathy to the proposed acquisition at that stage?
A. I don't remember exactly what I said, but I would imagine that I did. I also made a comment to the Financial Times. My view was that the Murdochs controlled BSkyB, they only had a 39 per cent shareholding, but I think most people felt that they controlled the company. James Murdoch was the chairman of BSkyB. And so I didn't think that there was a significant change in plurality represented by them purchasing the shares that they didn't own.
Q. Do you think he phoned you to ascertain your view or for some other reason?
A. I think he phoned me as a courtesy. I do remember him saying that he was calling me and Vince Cable. Vince Cable, obviously, is the person who had responsibility for the decision, and me as the Secretary of State responsible for the media sector.
Q. Did he say to you that he'd already spoken to Dr Cable or not?
A. I think he did, yes.
Q. So he had spoken to Dr Cable before speaking to you, is that the sequence of events?
A. He definitely mentioned talking to Dr Cable. Whether he said, "I am calling Dr Cable", or whether he said, "I've called Dr Cable", I can't remember.
Q. Your general thinking at the time, paragraph 28 of your statement, 05602, you say: "I have always been open about the fact that I was broadly sympathetic to the proposed acquisition prior to taking responsibility for it." So that was your thinking then. Whether it changed, of course, we will discuss. There was another meeting, I think towards the end of June, which is mentioned both in your annex B and in a Guardian piece which is under tab 13 of your bundle, which I think took place on 28 June. Do you remember that?
A. I don't have the Guardian piece in front of me, but yes, it did take place on 28 June.
Q. Was it the case that there were no officials present and no written agenda or briefing?
A. Yes. I was told by my officials that it was entirely proper to have meetings where there were officials present who took minutes, and meetings where there weren't officials present and minutes weren't taken and it was entirely my discretion and I had that meeting with Mr Murdoch. I also had meetings with other officials, with the chairman of the BBC Trust, the head of ITV and a number of other people when I'd just become Secretary of State.
Q. Do you believe that the BSkyB bid was discussed on that occasion?
A. I would be very surprised if it wasn't discussed, because obviously it would have been top of Mr Murdoch's mind. I don't remember any particular discussions. I remember my rather unsuccessful attempts to excite him about superfast broadband and local TV, which continued to be unsuccessful.
Q. There was another meeting at the Conservative Party conference in that year in October 2010. We see that from annex B again at 05626. This time it was Rebekah Brooks and Frederic Michel. Can you recall whether the BSkyB bid was discussed on that occasion?
A. Yes, it was.
Q. Was Mr Smith present on that occasion?
A. I believe he was.
Q. Can you remember anything about the content of the discussion which might assist us?
A. As I remember, I think they expressed some concern that they weren't getting a sympathetic hearing from Vince Cable, but not much more than that.
Q. What response if any did you give to that concern?
A. I would have said that my own view broadly speaking was that I didn't think there was a plurality issue, so I would have probably expressed some surprise that Vince Cable may have thought there was more of a problem.
Q. How well did you know Mr Michel by that point? Of course we're October 2010.
A. Well, I knew Mr I mean, I didn't know Mr Michel particularly well full stop. I'd, you know, probably had a few coffees with him in my time in opposition, as I would have met representatives from all media companies when I was Shadow Culture Secretary. I got to know him a little bit better because of the fact that that year we both had children born coincidentally in the same hospital on pretty much the same night, and by chance we bumped into each other in the maternity ward, but our families never socialised together, we never socialised together.
Q. Thank you. If I can move forward now in time to October, we know that on 7 October 2010 this is page 07905, in the second of the supplementary bundles, under tab SS.Aa.
A. Which bundle is this, Mr Jay?
Q. Second supplementary bundle.
A. If I don't need to see it, I'm happy to carry on.
LORD JUSTICE LEVESON
I'd prefer that you had these documents in front of you, if you don't mind.
A. Right, I have supplementary folder 2. I think that's probably the one. That's it.
If it's tabbed in the same way, you'll find a tab SS.Aa. It's the first document under that tab, 07905.
A. No. Sorry, will it be on the screen now, Mr Jay?
A. Right, I can see it.
Q. We can see that you were sent in fact to know exactly what you were sent we have to turn over the page, but I'm sure you would accept what I say about this a briefing document, which was addressed to you, which relates, I think, to the plurality aspects of the bid. We know it was sent by Mr Michel to Mr Smith, and then Mr Smith forwarded it to you. That's demonstrated by 07905. Mr Smith's observation was: "Obviously strictly commercially confidential but very interesting." And your comment appears to be: "Very powerful actually." So it follows that plainly you considered this document and were expressing a positive view about it. Is that fair?
A. Yes. I think the document confirmed the view that I already had that I didn't think there was a major plurality issue with this acquisition.
Q. Did you know at the time that Mr Smith had obtained this from Mr Michel?
A. I knew that he'd obtained it from News Corp. I don't know if I knew that it had come from Mr Michel.
Q. Did you deduce that he probably obtained it from Mr Michel?
A. I would think that would be an intelligent guess to have made, if I'd been interested in who the precise person was. I mean, his role part of his role was liaison with external interest groups and stakeholders, and so he would have sourced information from lots of different people, but it wouldn't have been a surprise to me.
Q. But from within News Corporation, the main point of contact from Mr Smith's perspective was Mr Michel, so it's not a massive deduction, is it, to state that the source must have been Mr Michel?
A. I agree. It's not a massive deduction.
Q. Did anyone other than Mr Smith know that you'd received this?
A. I don't believe so. Nor do I believe I would have made a secret of it.
Q. We know from other material that it went to your personal email account. Is anything to be inferred from that?
A. No, that is the only email account I use.
Q. So you don't have an email account within the department; is that correct?
A. No, my departmental email gets looked after by my private office, and if there's anything they need to show me from that, they show me, but the only email account that I use is my personal one.
Q. So most of the contact we have, perhaps all of it, from Mr Smith by email is obviously to your personal email account; is that the correct position?
A. That's correct.
Q. There are also some text messages at about this time which are relevant, Mr Hunt. If you go to the section of this same file called TT, and look at 08147.
Q. And we start, please, with the message timed at 19.25 on 2 November 2010. This is from Mr Michel to you: "Just sent Adam our digital numbers." Can you assist us as to what that might relate?
A. This is on 2 November?
Q. It is, yes.
A. Yes. I don't think I can, actually. I'm not sure what their digital numbers would have been.
Q. Okay. On 9 November, the message is: "Can you meet James tomorrow morning for a catch-up? Would be good. Even early morning." And then there's an email which relates to the organisation of it, but on 12 November at 19.25, FM to JH: "James and I will see you Monday at 6.45." And you text back immediately: "Great."
Q. So this is going to be Monday, 15 November, I believe. You then got some legal advice on 12 November, and that's to be found in the main file of documents, which is the primary evidence under tab 3, page 04248. We've seen this before in another place with Mr Stephens. He's also exhibited it. If you go to tab 3, I hope you'll be able to turn up this advice. It's dated 12 November.
A. Could you give me the page number again?
Q. Yes, 13573 no, 04248. Sorry, I gave the correct number first time. It's in two places in our files, I gave the incorrect one. 04248.
Q. It's directed to you personally. We know it's dated 12 November. You wanted to know what powers you had in relation to media mergers generally. The recommendation is: "There is no role in the process for the DCMS so we would recommend that you do not have any external discussions on the BSkyB media merger nor write to Secretary of State BIS about it. If you want to contribute, you could write a letter stating facts backed up with evidence however this carries with it risks." The reason being, in the middle of the page: "Secretary of State BIS is performing a quasi-judicial role as the statutory decision-maker." So the advice was twofold, first of all not to have any external discussions. Did you interpret that as not to have discussions with someone like Mr Murdoch about the bid?
A. The advice I was asking was what was my locus to express an opinion that might be taken into consideration by Dr Cable in making his quasi-judicial decision, and the advice I got was that essentially I didn't have a locus of intervention and I shouldn't intervene, so I interpreted that advice to mean that I shouldn't have any contact with anyone if that was part of a process that was going to be making an intervention with Dr Cable, because that might threaten the judicial robustness of Dr Cable's solution. I didn't interpret it to mean that I couldn't be in touch with people in the industry that I was responsible for and understand the issues around a merger that was the biggest merger the media industry had ever seen and on which thousands of jobs depended. In fact, I thought it was my duty to understand the issues around that merger and to be well across them.
Q. We'll come back to that second point fairly shortly. If you look at the second page of this note, 04249, you'll see that legal advisers have cleared the note and it was copied to the Minister of State and to the Permanent Secretary. It was also copied to the special advisers. Did you discuss its content with Mr Smith, do you think?
A. I don't recall a conversation, but it's quite possible.
Q. Did you indicate to him your frustration, if you had it, about the content of this note?
A. I think I had a concern about the situation where we had this very important, very significant merger in my sector where, as I had said, I didn't think there was a particular problem with it but the organisation concerned said that they did feel that they were encountering a number of obstacles, and so I wanted to be absolutely proper about the way I approached this because I recognised that it was another department's decision. This was probably the first time that I heard the phrase quasi-judicial or had some kind of exposure to what the implications of quasi-judicial meant, and we had a meeting in the diary initially and I decided to cancel that meeting not because I thought it was wrong to have contact with News Corporation, but because I thought they were probably wanting to have the meeting with me that Vince Cable had refused to have with them, and that therefore to have that meeting would be to create a parallel process where another government department is getting involved in the process in a way that might not be seen to be appropriate.
Q. But wasn't the logic exactly the same, that the reason why Dr Cable shouldn't be meeting with people like Mr Murdoch would be exactly the same reason why you should not be meeting people like Mr Murdoch, if I can put it in those terms. Do you accept that?
A. No. First of all, I don't know and I didn't know whether Dr Cable was being advised whether or not he should meet Mr Murdoch. That would obviously be his judgment and his legal advice. My perspective as Secretary of State responsible for the media sector was that I thought I had an absolute duty to be across the most important issue in that industry.
Q. You asked for the matter to be further considered, if I can put it in these terms, at 04250, which is the next page: "SoS has noted the advice and asked to see the results of Jonathan's request to the legal advisers as soon as possible." The legal advice came on 19 November. We've seen it before with Mr Stephens. It starts at 04254, and the conclusion at 04256 at paragraph 16 was: "Whilst there is nothing legally which precludes the Secretary of State CMS from making representations to the Secretary of State BIS to inform the latter's decision as to whether to refer the public interest considerations in this merger to the Competition Commission, it would be unwise to do so." Did you accept that advice?
A. Yes. I don't know if I saw this longer version of the advice or not, but I did accept it.
Q. On 7
LORD JUSTICE LEVESON
Just before you go on to the 7th, that advice contains within it a description of this concept of quasi-judicial decision: "By this, we mean a decision which is not driven by policy concerns, and has to be taken on the facts before the decision maker. It is not a Cabinet decision, and no collective Cabinet responsibility applies. Similarly, a decision on a planning application, or an application for a harbour revision order will be characterised as quasi-judicial decisions." Did you have that understanding by this stage of the exercise that Dr Cable was involved in?
A. I don't think I did. I don't actually recall seeing this longer version of the advice. I do recall the advice that I received on 12 November. Obviously I did become extremely familiar with what quasi-judicial meant.
The email which the legal director sent on 7 December at 04257 says: "Thanks, I appreciate that the advice is not what JS [that's obviously the Permanent Secretary] and possibly JH wanted to hear." Is that a correct deduction?
A. I think it probably is a correct deduction in terms of myself. I don't know about the Permanent Secretary.
Q. The next stage is what happened on 15 November in relation to the meeting which had been organised with Mr Murdoch. You have referred to it, but we have separate evidence of it in the file KRM 18, which contains, as you know, various emails largely from Mr Michel back up to his superiors. It's page PROP and then the last five numbers are 01667.
Q. It's Mr Michel to Mr Murdoch: "Jeremy tried to call you. He has received very strong legal advice not to meet us today as the current process is treated as a judicial one (not a policy one) and any meeting could be referred to and jeopardise the entire process." Is that an accurate statement of what Mr Michel was told by someone?
A. I don't believe I spoke to Mr Michel, so I couldn't tell you if it was an accurate statement or not.
Q. I think the evidence was that it was Mr Smith who spoke to Mr Michel on this occasion, but it's whether Mr Smith has correctly understood what the very strong legal advice was, which was that the meeting in effect had to be called off because this was a judicial process, as he puts it. Is that broadly speaking correct in your view?
A. It may well have been the case that Mr Smith had seen the advice that I'd received on 12 November and we had decided well, we did decide that the meeting shouldn't go ahead, so it's possible that there was a discussion between Mr Michel and Mr Smith, but that's obviously something that they would have to say whether it happened or not.
Q. Is Mr Smith correct when he says that you're very frustrated about it?
A. I may have been frustrated. I was worried about a bid in my sector that could potentially mean that thousands more jobs would be created, and the main protagonist was concerned about the process they were having to go through, so I may well have been worried.
Q. The next paragraph sets out what Mr Michel's advice was: not to meet him today as it would be counter-productive for everyone, but you could have a chat with him on his mobile which is completely fine, and I will liaise with his team privately as well." We know that there was a telephone call between you and Mr Murdoch that day. Was it by mobile phone?
A. I believe it was, yes.
Q. Was it your view that that was appropriate?
A. Yes. As I mentioned earlier, it was always made clear to me by my officials that it was entirely appropriate and proper to have contact with stakeholders at which officials were present and minutes were taken, and contact at which officials weren't present and minutes weren't taken, that was at my discretion, and so I felt in this situation I didn't want to get involved in the quasi-judicial process and I thought that was the intention of the meeting that News Corp wanted, but I thought it was entirely appropriate to hear what a big player in my industry was saying about a particular situation. Indeed, I thought that was my duty to do so. I should perhaps say sort of in parentheses, if I may, Mr Jay, that I think having been through the BSkyB bid and the process that I've been through, I would take a different view about the presence of officials in conversations that a Culture Secretary has with media proprietors. I just wanted to be efficient and I thought it was really a question of whether you wanted someone present to take minutes, but given the massive number of conspiracy theories that abound, I think actually going forward I would always want to have officials present and taking notes.
Q. If a meeting is inappropriate, as this might tend to suggest, why is a telephone call appropriate?
A. Well, I didn't see the telephone call as a replacement for the meeting. My interpretation of the advice was that I should not involve myself in a quasi-judicial process that's being run by another Secretary of State, and that that was the purpose of the meeting that was requested by News Corp and that's why that wasn't appropriate. But I think it would have been perfectly appropriate to have had a meeting with News Corp with officials present taking notes setting out the ground rules. You know, "Jeremy Hunt cannot involve himself in Vince Cable's media plurality decision and we can't discuss the rights and wrongs of that, but he's Secretary of State for the media so he can hear if you've got other concerns or concerns about process or anything else you want to express, he can hear them, but he can't involve himself or make representations with respect to that decision."
Q. But what was discussed on the phone, then, Mr Hunt?
A. I just heard Mr Murdoch out, and basically heard what he had to say about what was on his mind at that time.
Q. But what you heard on the phone is exactly the same thing as you would have heard had there been a face-to-face meeting, isn't that right?
A. Well, it depends, because I think, as I say, if he had wanted to have a face-to-face meeting in which he expressed the arguments as to why he believed that there was no media plurality decision, that was something to be decided by Dr Cable, and I think if we'd had a face-to-face meeting, we'd have said, "Look, this is something that's being considered quasi-judicially by another Secretary of State and we can't involve ourselves in that".
Q. Did you say that to Mr Murdoch during the course of the call, do you think?
A. I think it's likely that we explained it, because we were you know, we'd cancelled the meeting, which we know from some of his evidence that he used some quite colourful language to express his frustration about.
Q. The only evidence we have as to what was discussed is in the file of text messages, which is supplementary bundle volume 2, tab TT, 01847. A text timed at 15.49 on 16 November. Mr Michel to you. Do you see that one?
Q. "Thanks for the call with James today, greatly appreciated. Will work with Adam to make sure we can send you helpful arguments. Warm regards, Fred." And your reply almost immediately is: "Pleasure." We can see that?
Q. So it's reasonable to suppose that the call was successful to the extent that some reassurance was given by you to Mr Murdoch insofar as you could give it. Is that fair?
A. Well, I wouldn't have given him any reassurance about the media plurality decision that Vince Cable was taking because that was not my that was not anything I could get involved with, and I would have made that clear to him, so I probably gave him a sympathetic hearing, but I wouldn't have said that I can get involved in that decision because I had taken and accepted the advice that I couldn't.
Q. The third sentence of the text: "Will work with Adam to make sure we can send you helpful arguments." That indicates that you well knew that Mr Smith and Mr Michel were working quite closely by this stage as your point of contact with News Corporation, is that fair?
A. It's fair, but Mr Smith was my point of contact with pretty much every external state holder during my period in both opposition and as Culture Secretary.
Q. You also knew that News Corp would be intending to send you, in their words, "helpful arguments", didn't you?
A. Well, I suppose it's rather like Mr Smith said in his evidence: if someone offers you to send something send you something, you acknowledge it, but I don't believe I'd have asked for it.
Q. Okay. We move forward a few days to a private memorandum which went through a couple of drafts. It's in this self-same file, the second supplementary bundle, SS.Aa. The first draft, I think, is you can confirm this 07909. This is an email you send to Mr Smith timed at 13.14 hours on 19 November 2010. First of all, so we know where we are with this, Mr Hunt, if you go forward a couple of pages I think we see the second draft and then the final version is the same as the second draft but slightly differently formatted. Is that a correct deduction I've made, first of all?
A. I think so, probably, yes.
Q. Can we be clear about the first draft, which is 07909. Is that something you drafted, which you asked Mr Smith to look at, or is it a first draft Mr Smith prepared for you?
A. I generally draft my own notes to the Prime Minister, so I would imagine that I drafted this.
Q. You asked him to check it for typos and to format it nicely, but we'll see what if anything happened to it: "James Murdoch is pretty furious at Vince's referral to Ofcom." That's what you learnt on 16 November during that phone call; is that right?
Q. "He doesn't think he will get a fair hearing from Ofcom. I am privately concerned about this because News Corp are very litigious and we could end in the wrong place not just politically but also in terms of media policy." What did you mean by "the wrong place not just politically"?
A. Well, I think I took that phrase out of the final draft, so the first point I'd make is that that wasn't my primary concern. But I would imagine that I was saying that, you know, we're a party that believes in the free market, in supporting enterprising companies, in government bureaucracy not getting in the way of companies that want to expand and backing people who take risks, and I think that I felt that the approach the government was taking felt inconsistent with that.
Q. Wasn't there also a question, though, that you would be in confrontation, or might be, with News Corp, which could place the Conservative Party at least in the wrong place politically? Was that not an aspect of this?
A. I don't believe so. I didn't give it a huge amount of thought, but I think that on a situation like this, you know, the politics actually in the sense that you're talking about are actually very complex, because you had one Conservative-supporting newspaper group that was very strongly in favour of the bid and you had two Conservative-supporting newspaper groups that were very strongly against the bid. I'm not sure I don't think there's any political win in any possible outcome, as far as a Conservative-led government is concerned.
Q. In terms of the media policy, which you then go on to explain in this, it would be fair to say that you were favouring the bid; is that correct?
A. As you can tell from the note, I could see I mean, my perspective on the media industry is that I am a very, very passionate supporter in having a free and vibrant press, and I actually think we have one of the freest and most vibrant media industries and press in the world, and I think it's very good for our democracy, and I had a concern and I have a concern, actually, that the model of the newspaper industry is not financially viable in the long term because of technology changes, and because of that I saw this bid and the potential of this bid as an opportunity to help modernise the industry so that it could carry on playing that sort of free and vibrant role.
Q. So for all the reasons you've given, you were supportive of the bid; is that correct?
A. I was sympathetic of the bid. The reason I hesitate slightly on the word "supportive", because I wasn't you know, apart from informing the Prime Minister of my views, I wasn't actually going out and doing anything about it.
Q. We can see from the last paragraph: "What next? Ofcom will issue their report saying whether it needs to go to the Competition Commission by 31 December. Much of what we do will be constrained by the absolute necessity to respect due process at every stage." So you'd fully taken on board the note of 12 November, where that point was made. Then you say: "But I think that you, I, Vince and the DPM should meet to discuss our response to potential different scenarios. May I arrange such a meeting?" So you were seeking a high level policy meeting to discuss wider media policy considerations, weren't you?
A. What I felt was that there was a very big issue that was going to affect an industry sector that I was responsible for, a very important industry sector, and I thought that it would be appropriate to have a meeting to discuss policy and not the quasi-judicial decision that Vince Cable was taking. I do now understand a lot more about quasi-judicial positions, it's probably pretty much engraved on my brain because we've been thinking about it so hard, and I think that I now realise that it would not have been possible for Vince Cable to attend such a meeting and he would have been advised not to attend such a meeting.
Q. When we come to the second draft, 07911, which appears to be timed at 16.18, may I understand what had occurred. Was it Mr Smith who had reworked it or was it you who had had second thoughts and sent a second draft?
A. I don't know, but I would imagine possibly either. I may well have had a conversation with Mr Smith in that time.
Q. There isn't a third possibility, but you're not sure whether it was Mr Smith's hand which we see here in terms of the amendments or whether it was your further cogitations; is that right?
A. Well, I think
LORD JUSTICE LEVESON
It is an email from Mr Hunt to Mr Smith.
A. Yes, I think it is, so I imagine it's me having rethought it, is the answer, because he then replies at 16.30: "Much happier with this version." I think that probably suggests that I made the changes.
The changes you made, you removed the reference to "not just politically", you shortened it. Arguably you beefed up the second paragraph where you say: I think it would be totally wrong to cave in to the coalition, I paraphrase, as this "represents a substantial change of control given that we all know Sky is controlled by News Corp now anyway." That statement of opinion is a clear opinion, isn't it, in favour of the bid, would you agree?
A. Yes, I'm expressing my view, but I'm also recognising, because I talk about due process, that this is not a decision for either me or for the Prime Minister.
Q. The final paragraph is slightly changed. It's no longer respecting due process, the language is "has to be decided at arm's length", but the sense is fairly similar, isn't it?
Q. So you believed that this memorandum was probably the subject of private discussion between you and Mr Smith, is that correct?
Q. So Mr Smith self-evidently knew your view on this critical issue, didn't he?
Q. We know from one document I didn't take Mr Smith to, it's in his diary, at 09203, that on 6 December it appears that he had a meeting with Mr Michel in the SpAds' room, which is room 202. First of all, are you able to assist us, is that the SpAds' room?
A. The SpAds' room I know, but I don't know what number it is.
Q. Did you know at the time that Mr Smith and Mr Michel had met at DCMS?
A. I don't think so.
Q. You don't think so or you're sure?
A. Well, you're asking me did I know at the time. I have no recollection of being told the meeting happened. Mr Smith wouldn't tell me, as a matter of course, who he was meeting. I mean, he met lots of people from different industry sectors.
Q. You were aware generally what Mr Smith was doing on your behalf at this time, weren't you?
A. Mr Smith's job was to be a contact point with all outside industry stakeholders, so he spent a lot of time talking to people from many different companies.
Q. Okay. I move forward then to 21 December 2010 and some text messages, first of all. If you go to the TT part of this file, please, Mr Hunt, it's page 08155. We need to go through this quite carefully. We can see that at 12.46 in the afternoon on that day you sent a text to Mr James Murdoch: "Sorry to miss ur call. Am on my mobile now Jeremy." Mr James Murdoch, six minutes later, texts you back: "Have to run into next thing. Are you free anything after two fifteen? I can shuffle after this." And then you fix on a time at about 4 pm. So first of all, by 12.46, were you aware of if I can put it in these terms the remarks which Dr Cable was recorded as having made on 3 December?
A. I don't believe I was, because I think those remarks broke in the early afternoon.
Q. So the purpose of the call then, if it wasn't related to those remarks, was related to what?
A. Well, I don't think that I I'm trying to piece together what might have happened that day, but because I sent him a text that said "Sorry to miss ur call", I'm presuming that he tried to call me and I had a missed call on my mobile and so I sent him a text back. I may have tried to call him back and not got a response and sent him a text back.
Q. We certainly know that by 12.57, a few minutes later, you were aware that DG in Brussels had, as it were, allowed the competition aspect of the bid to go through, because you send a text message to Mr Murdoch: "Great and congrats on Brussels, just Ofcom to go!"
Q. Would you agree that that is conveying a somewhat positive view on where the process had reached?
Q. But you think at that point you were unaware of the Dr Cable furore, if I can so describe it?
A. I think we could probably find out as a matter of fact when the furore broke, but as I say, I don't believe it broke until the afternoon.
Q. The best evidence we have as to the timing, but it's not conclusive, if you turn back through the bundle at tab SS.B, it's going to be page 08089.
Q. Your other special adviser, Sue Beeby, sends you an emailed timed at 15.50 on 21 December.
Q. Setting out what she describes as Vince's comments. I'm not sure whether this is the full transcript, it doesn't really matter. So certainly at the latest by 15.50 and possibly earlier you got to hear about the furore; is that correct?
A. Yes. I don't know when I opened that email, but I would imagine I usually do open my emails fairly promptly.
LORD JUSTICE LEVESON
The probability is you'd heard slightly earlier, because her email to you is: "Here are Vince's comments." So this isn't telling you actually something quite odd has happened you ought to know about, so it may be you'd had some sort of conversation.
A. I think that's likely, yes.
At about 4 pm, I think it was shortly after but we'll see from other evidence the exact time, you had a conversation with Mr Murdoch. Do you remember what was discussed?
A. Yes. We discussed Vince's comments. So I did know at that stage.
Q. The next relevant document is 08107, which is under tab SS.E, which is a not sure whether it's an email or a text. Probably an email, Mr Hunt.
A. Probably an email because it says Gmail at the top.
Q. Sorry, you're right. 16.10, so it's after the call you had with Mr Murdoch on this afternoon, 21 December, to Mr Coulson: "Could we chat about this? Am seriously worried Vince will do real damage to coalition with his comments That speaks for itself, but the question is did you have a chat with Mr Coulson?
A. I don't think I did talk to him, no.
LORD JUSTICE LEVESON
I'm sorry, could we just go back so that I understand. You chatted to Mr Murdoch at 4 o'clock. What was that conversation?
A. That was Mr Murdoch expressing his concern that there was bias in the process, the quasi-judicial process, because of what Dr Cable had said, and I think my email to Andy Coulson and text message to George Osborne were my response to Mr Murdoch's call.
LORD JUSTICE LEVESON
Do you remember what you said to Mr Murdoch in response?
A. I think I I think we know it wasn't a long conversation because the call was at 4 o'clock and within ten minutes I was already sending an email, but I think he was just saying he was totally horrified that this seemed to show well, I used the phrase I think in a text to Mr Osborne of "acute bias" and I suspect that was the phrase that he used to me.
The relevant texts to Mr Osborne are under the TT file at 08159. You sent him two texts timed at 16.08; is that right?
Q. The first one says: "Cld we chat about Murdoch Sky bid? I am seriously worried we are going to screw this up. Jeremy." And then at the same time you sent another text: "Just been called by James M. His lawyers are meeting now and saying it calls into question legitimacy of whole process from beginning", and then the phrase you have remembered, "acute bias." The inference is that the call with Mr James Murdoch didn't last very long; is that right?
Q. Did you have any discussions after 16.08 with anybody else you can recall, Mr Hunt, about this issue?
A. I may well have talked about it internally to my officials and special advisers. I imagine it was a sort of hot breaking issue, so I probably talked about it to a few people internally.
Q. Do you think you had any conversation with Number 10 at this stage?
Q. At 16.58, Mr Osborne texts you: "I hope you like the solution!" What was that a reference to?
A. Well, I think his well, first of all I think my text to him was saying basically I'm worried this process doesn't look like it's being run fairly, and his response was saying, "Well, we've got a solution", and I think in between me sending a text to him and me getting that response, at official level we had an inkling that Number 10 were thinking of transferring the responsibility to me as a way of dealing with the issue.
Q. Yes. But you were the solution, and that's what you were being told at 16.58; is that correct?
Q. Can I be clear, though, that when Mr Osborne says, "I hope you like the solution!", does that mean that you already knew what the solution was or was this the revelation of the solution?
A. Well, I think my I think I knew that it was in the offing, but I was worried about that being the solution because I knew that I had publicly made some comments that were sympathetic to the bid and I wasn't sure whether that would mean that I could handle the bid, so I think by that stage we were making sure Number 10 knew about those comments so that they didn't go ahead and announce me and then not knowing about those comments, and then find out that actually I wouldn't be able to do it as a result of those comments.
Q. I think it's clear from that last answer that there were discussions internally involving the Permanent Secretary as to whether any of your public pronouncements might preclude you from acquiring responsibility under the Enterprise Act for this bid; is that correct?
Q. Were you asked, though, about anything which was not in the public domain, but which might embarrass you should it enter the public domain?
Q. Do you feel that such matters should have been volunteered by you?
A. Are you talking about my memo to the Prime Minister?
Q. Well, the memo to the Prime Minister, the conversation with Mr Murdoch and the text message we've looked at about the congratulations for Brussels, just Ofcom to go. It's the accumulation of pieces of evidence. It's that material, Mr Hunt, basically.
A. I think that all that material is entirely consistent with the overall position that I'd taken that I was sympathetic to the bid and I didn't think there was a media plurality issue, I didn't think we should second-guess the regulators and I thought that due process should be followed.
Q. Isn't there a difference, though, between what was stated publicly at interview with the Financial Times and the sort of material we've been looking at? Do you see there as being possibly any difference?
A. I don't think there's a substantive difference because substantively my position in all those communications is the same: I, broadly speaking, had the view that BSkyB was already controlled by the Murdochs so I didn't think there was a change in plurality, but I believed that due process had to be respected, so I do not think there's a particular difference.
Q. Would you have sent that text message of congratulations after 16.58 that afternoon? This is the text: "Great and congrats on Brussels, just Ofcom to go!"
A. No, I don't think I would have sent that text. But actually, I don't think that I had been appointed at 16.58. I think that they were still I think that it was being mooted as a possible solution then, but I don't think there had been a final decision.
Q. When do you think the final decision was taken?
A. When the Prime Minister got legal advice that it would be okay for me to take responsibility for the quasi-judicial process.
Q. Approximately when was it that evening, do you think?
A. An hour or so later.
Q. So if we move the time forward an hour, I think it's clear you wouldn't have sent that text message to Mr Murdoch after you had formally acquired responsibility; is that correct?
A. Um, yes.
Q. But doesn't it follow from that answer that this is something that you should have volunteered for consideration by the lawyers as to whether you were the right person?
A. I don't believe so, because I don't think there's anything substantively different in my texts to Mr Murdoch. It just shows that I was broadly sympathetic to the bid and that was the issue that was being considered by government lawyers.
Q. To put it bluntly, Mr Hunt, Dr Cable had just lost the role through the appearance of bias in one direction. Doesn't it emerge from a fair reading of this text that you shouldn't acquire the role for the equal and opposite reason?
A. No, because, as I understand it, the point about a quasi-judicial role is not that you acquire a responsibility for a quasi-judicial decision with your brain wiped clean. The point about a quasi-judicial role is that you set aside any views that you have and you decide objectively on the basis of, in this case, media plurality and not on the policy considerations that had been my preoccupation to that point.
Q. Your text message went beyond the wider policy considerations. Arguably it went into the merits of the issue. When one couples it with the memorandum you sent to the Prime Minister, you were setting out a clear position, I'm sure it was defeasible, but a clear position as to where you stood in relation to this bid. Would you not agree?
A. I wouldn't agree, no. I think I was expressing my sympathy for the fact that I thought this bid could be very important in terms of the UK media sector. I was giving a view that I'd expressed publicly that I didn't think that there was a plurality concern and I was also talking about due process, but the moment that I was given responsibility, I think my suitability in the role, if I can put it this way, is demonstrated by the actions I took when I did take responsibility for the role, because I believe I did totally set aside all those sympathies. Indeed, I set up a process explicitly to make sure that I couldn't express any of those sympathies or use any of those sympathies to inform my decision.
Q. There was some legal advice, we know, from tab SS.E, again from the legal director within your department, timed at 17.30. It's 08108. We've seen it before with Mr Stephens. Have you found that one, Mr Hunt?
A. Yes, I have.
Q. It's clear looking at this that this is a reference to your Financial Times interview, isn't it?
Q. But to nothing else, would you agree with that?
Q. And it's that that you forwarded to Mr Edward Llewellyn at Downing Street; is that correct?
A. Yes. I don't know if I personally forwarded it, but we made sure that Downing Street was aware of that.
Q. It looks as if it's come from your email to Mr Llewellyn at the top there, do you see that?
A. I haven't got that, but if it did, then I sent it.
Q. Given all the flurry of activity that day and the expression of private view which that activity evidences, don't you feel that that should have been placed into the melting pot for consideration?
A. No, because I don't think there was anything different in the private view to what I'd expressed publicly.
Q. It was consistent but it was additional in the sense that in quantitative terms there's more of it, and in qualitative terms we can see that you've expressed a view about the bid itself. Do you see that?
A. Well, I am not a lawyer, but I would say that I don't think there is a substantive difference. I think that it was widely known that I was broadly sympathetic to the bid and I'd said so, and I'd also talked about my belief that due process was extremely important and that was the substantive issue that had to be considered.
Q. Was it your view that adherence to due process and the taking of independent advice at all material times would, as it were, cure any perception of bias which might have arisen?
A. Well, the two are separate. Adherence to due process didn't require me to seek independent advice every time I had to make a critical decision. That was my choice to do that. One of the reasons I did that was precisely because I had expressed these public sympathies for the bid and so I wanted the public to know that I was approaching this completely even-handedly, and so I believe that the best discipline for that would be when there was a critical decision, that at the same time as I announced that decision, I would publish the independent advice that I had received. I wouldn't be bound by that independent advice, but if I wanted to differ from that independent advice, I would have to give a pretty good reason as to why I was differing from it, and I thought that was the best way of giving people confidence that I was approaching this decision totally impartially, which indeed I was.
Q. Because by approaching it in that way, you would also protect yourself and your department from judicial review proceedings, which is presumably what you were advised; is that right?
A. I certainly wanted it to be a legally robust decision, but I didn't have to seek independent advice, for example, on the suitability of the UILs in order to protect myself from judicial review. There's absolutely no legal requirement to seek that independent advice. But I think it was more about persuading the public that I was approaching the process fairly.
Q. Do you think that the decision to transfer to you was made over hastily without proper regard to whether you were truly the right person to undertake this sensitive and difficult task?
A. I don't believe so, no. The Prime Minister asked for legal advice, he got it from the government lawyers, and he made his decision accordingly.
Q. We know that the decision had been made in principle by 16.58, subject to any legal advice. The final decision was made within about an hour of that. The Cable comments as it were broke earlier that afternoon. I know it was four days before Christmas, but it was made quickly, wasn't it?
A. Well, I think the situation demanded the government acted quickly because it was a very important merger decision. There was a very serious issue created by Dr Cable's comments, which I'm sure he would acknowledge, so I think it was absolutely right the Prime Minister acted decisively.
Q. It's also right that there shouldn't be delay because the greater the delay, the greater the uncertainty, and the higher the risk that the bid might not go through. Is that correct?
A. That wasn't the preoccupation of any of us. Our concern was to make sure that there was a proper, fair process. That was the government's responsibility.
Q. But as an underlying or background consideration, a delay would create uncertainty, which might imperil the bid. Do you accept that as a proposition of common sense?
A. I mean, you know, obviously any delay might imperil the bid, but that wasn't the priority. I don't even think that was a consideration. As far as the Prime Minister was concerned, he had a problem because one of his Cabinet ministers had made comments that meant that it was not going to be appropriate for him to continue being responsible for the bid, so he needed to find another Cabinet Minister who could take on those responsibilities, so that was a government responsibility to solve that problem.
Q. We know there was a meeting the following day when BIS officials came to DCMS to advise as to where they were in relation to the process and to bequeath the bid, as it were. There's some evidence as to that. Under this same file in tab INB, you'll find, I hope, at page 07896 a briefing note.
Q. Which I think is a briefing note which comes from BIS, but if it doesn't, could you assist us?
A. I'm afraid I don't know who it comes from, but it may be a composite note that was done by BIS and my own officials.
Q. The only reference to the process is the first bullet point: "The DCMS Secretary of State will now take the decision. Legally, it is important he does so on the merits of the case, ie it is not a collective Cabinet decision, and it is important to avoid any appearance of his independence being compromised." But there's no other explanation, is there, of what the quasi-judicial process entails, would you agree?
A. No. Just looking through it, I can't see anything else.
Q. Mr Stephens exhibited an email on 22 December which also recorded the advice, at least from the DCMS perspective. It's page 13583.
A. In the same file?
Q. No. I'm not sure you have it, unfortunately. Mr Stephens when he gave his evidence referred us to it. It is quite short. It's going to come up on the screen.
A. It's on the screen, yes.
LORD JUSTICE LEVESON
It's on the screen.
It's timed at 17.44. We know the meeting was in the afternoon. The first bullet point: "BIS officials outlined the Secretary of State's role in the process and the various legal considerations." So it looks as if that was a reference to the quasi-judicial aspect of the decision?
Q. Do you think that term was used on that occasion?
A. I'm sure it was.
Q. I think it's clear that you yourself had not previously exercised a quasi-judicial function, had you?
Q. Your witness statement at paragraph 35 and following deals with your understanding of what this function amounted to. It's paragraph 36, really. Our page 05603. You set aside your personal views, make your decision objectively and impartially on the evidence
A. Sorry, which page are we, Mr Jay?
Q. It's your paragraph 36, page 05603.
Q. "I should not be biased or make the decision on party political grounds. It should be a case-specific decision taken with reference to the issue of plurality and not on other policy considerations and you take it alone.
Q. Paragraph 37: "Unlike a judge, whilst I needed to be careful, I was not incommunicado and continued to exercise my duties as Secretary of State And that obviously entailed appearing in Parliament. The third full sentence of this paragraph: "They involved frequent interactions with many people both supporting and opposing the bid." So you felt that your quasi-judicial role allowed you to undertake frequent interactions; is that correct?
A. No. What I felt was that in terms of the decision I took, the quasi-judicial role meant that I had to be fair to both sides. So we had to be very careful in terms of treating each side equally. That didn't mean the same amount of meetings with each side, because at certain moments in the bid process it was going to be necessary to have more meetings, principally because News Corp decided to go the UIL route and there was a period of negotiation of the contents of the UILs, but what I'm really saying in paragraph 37 is that because of my other duties as Secretary of State, I was going to be bumping into people who had views on the bid. I think during that period I spoke at the Oxford Media Convention where the whole media world would be gathered and I gave a speech and answered questions and there would have been coffee afterwards, and so there would have been but they were brief interactions, and I interpreted that to mean there might be a casual comment about the bid, but they weren't part of my consultation process.
Q. So putting aside de minimis interactions, which you've just discussed, can we see if this works, that any communication you had would have to be transparent, preferably documented within the Parliament and if necessary placed in the public domain if need arose. Would you agree with that formulation?
A. I would agree with that formulation with respect to anything that was material to my decision.
Q. Or anything which was material to the process by which your decision was taken, would you agree with that?
A. No. I think what I interpreted my interpretation of quasi-judicial, I think, you know, obviously having completed this process, one learns lessons, and I'm not saying I would necessarily make exactly the same interpretation now, but my interpretation at the time was that what was important was that the decision was impartial, unbiased, and that I decided it on the basis of the evidence in front of me, and so that was where the transparency was important, but if there was something that was, you know, a trivial not trivial, that's the wrong word, but it wouldn't necessarily apply to every single matter of process.
Q. We can put to one side minimal interactions, certainly, but can I be clear, would such interactions have to be through official channels?
A. All the interactions which related to the decision that I was going to take would be through official channels, but as I explained there, if I bumped into someone in a lift or gave a courteous reply to a text message, I didn't think that was off limits.
Q. Yes. Putting those to one side, we're talking about matters of greater substance, but are we agreed that those interactions would have to be through official channels?
A. Any formal interactions with respect to my decision, yes.
Q. And official channels included Mr Smith, didn't they?
Q. And you were aware that he was, as it were, your channel out to News Corp in the personification of Mr Michel; is that correct?
A. Well, I think it's important to be clear about what we mean by "channel". I didn't see Mr Smith in this process as being someone who would be telling me what News Corp thought or telling News Corp what I thought. I saw him as a point of contact, an official point of contact in the process, so that News Corp had someone that they could call if they had concerns about the process, and someone who was there to you know, I mean the situation in which we inherited responsibility for a bid was one in which News Corp felt they had not been fairly treated, and so I wanted to make sure that there was someone there who could answer questions about how the process was going in a helpful way.
Q. Any communication between Mr Michel and Mr Smith would be no different, would it, to communication between Mr Michel and you, because Mr Smith was your agent. Do you agree with that?
A. Not in this process. I think sometimes special advisers have a role which is about speaking for their boss, but in this situation Mr Smith's role was a different one. He was a point of contact in a very complex process, and there to advise News Corp about the questions they had about the process and I think also to reassure them that the process was fair.
Q. What express instructions, if any, was Mr Smith given as to what his special role was?
A. Well, he was present at all the meetings where we had advice from lawyers and officials in the department, so he heard that advice, and it was understood that he would be a point of contact for News Corp in the process.
Q. But what express instructions was he given as to the role he would undertake?
A. I don't think he was given any express instructions other than how I've described it.
Q. So in terms of the discharge of the function which had been allocated to him, your evidence is he would work that out from what he heard at meetings; is that correct?
Q. Did you give him any instructions as to what not to do?
A. No. As I say, he heard in the way that I heard all the things that we needed to be careful about.
Q. His ordinary function as special adviser was to represent you and to communicate your view, is that not correct?
A. That is one of the things that special advisers do, but that isn't that isn't the only thing they do. A lot of the things that special advisers do is they are a contact point for industry stakeholders, they are understanding policy issues, and giving me advice as to what policy I should have with respect to a particular issue that's bubbled to the surface, so they have a number of different functions.
Q. Yes, but in their interactions with third parties, they are representing you, aren't they?
A. I think they would be seen by third parties as someone who had a good understanding of what I thought.
Q. But they would be expected to communicate your view and no one else's, would you agree with that?
A. Well, I think they because they worked closely with ministers, and I doubt there's a minister who worked more closely with a special adviser than I worked with Adam Smith, I really did work very closely with him for the best part of six years, I think it was a given that he would know what I thought on different issues. I don't think that's quite the same as speaking for me, which is a different thing, but I think people would have expected him to know my views.
Q. Yes, he knew your thinking on any significant issue. That was part of his job. He would acquire that through his familiarity with working with you. Would you agree that he's not just able, but also politically astute?
A. I think he's politically astute, but I wouldn't have said amongst the different type of characters that we have at Westminster Adam was one of the more political ones. I would say he was politically fairly neutral. I mean, I for me, Adam's primary role I had certain policy priorities and, you know, superfast broadband is just by way of an example, and Adam knew what I wanted to do and I only had the time to have one meeting a week on superfast broadband, but I wanted things to be happening every day, so Adam would be someone who could go to other meetings behind the scenes with officials and they knew that he would know what I was thinking and they could get more details. I might have said something in a meeting that was just one sentence and he might be able to elaborate on that because he knew me well. That was, I think, his main role.
Q. You appreciated that your departmental lawyers were in contact with their opposite numbers, as it were in News Corp and BSkyB. You also appreciated that your officials were in contact, but Mr Smith's role specifically was to be the point of contact with Mr Michel. Is that agreed?
A. No, I don't think that was how it was decided. I think Mr Smith's role was to be a point of contact amongst a number of official points of contact, but I do not think we said, "Adam, you're going to look after Mr Michel." I don't think we had that kind of conversation.
Q. But in terms of who was going to look after Mr Michel in the ordinary course of things, that would be Mr Smith because that's what he'd been doing before 21 December, would you agree?
A. It's certainly true that Mr Smith would be the person that Mr Michel would naturally want to contact.
Q. And the text message which Mr Michel sent you on Christmas Eve under the TT file, page 08147, states you probably remember this one: "Hi, James has asked me to be the point of contact with you and Adam throughout the process on his behalf."
Q. So that's making it clear what role Mr Smith might be attaining. And then your reply is: "Thanks Fred. All contact with me now needs to be through official channels until decision made." But in context that means that "for these purposes Mr Smith is my official channel", would you agree?
A. I wasn't specifying that it had to be Mr Smith. I was saying that all contact had to be go through the official machinery of which Mr Smith was a part.
LORD JUSTICE LEVESON
Is that convenient? Mr Hunt, we take a break to give the shorthand writer a rest, but just before we do, if I just ask one question: it was abundantly clear to you, wasn't it, that enormous care had to be exercised? One of the things in the note from BIS was a reference to the fact that the Secretary of State for BERR the decision to intervene in the Lloyds HBOS merger was judicially reviewed on the basis that his discretion had been fettered by comments by the Chancellor, so great sensitivity around all these decisions?
A. Absolutely right.
LORD JUSTICE LEVESON
Yes. All right, we'll just take a few minutes. (11.29 am) (A short break) (11.39 am)
Mr Hunt, why involve a special adviser at all in this quasi-judicial process?
A. Well, he was an absolutely key and trusted aide. He is highly intelligent, highly able, and I believed that he would have a very positive role to contribute in terms of making sure that the process was run robustly and in the right way generally. He's a very talented person and he's amongst the officials who are closest to me, so it would have been quite a natural thing; indeed, I think as Mr Stephens said, entirely proper and appropriate for special advisers to be involved in decisions that their ministers or issues that are very important to their ministers.
Q. In paragraph 38 of your statement you make it clear that the most important way you could demonstrate objectivity in your decision-making was to commission independent advice, and of course you had a panoply of expert advice within the department and you had legal advice, but why have this extra layer of contact between a special adviser and, to put it bluntly, a lobbyist?
A. There wasn't an extra layer of contact. Adam Smith's role was to be an official point of contact. It was absolutely essential in a process like that that there should be someone who News Corp would be able to contact at the department if they had questions about process, and it was agreed Adam Smith would be an appropriate person to do that.
Q. But it was an extra layer in the sense that the lawyers and the department would be the primary layer of formal contact, they could provide detail as to process, as to timetable, but this was superadded. This was Mr Smith in contact, with your agreement, with News Corp's lobbyist. Why was that appropriate?
A. I don't accept that it was an additional layer. We set up Mr Smith to be one of a number of points of contact. The context of our approach on this was that we had inherited responsibility for a deal where we believed we were at serious risk of judicial review by News Corporation over the way that the government had handled the bid, and I was absolutely determined to make sure that it was an open and transparent process and a process that was fair to them. It had to be fair to everyone, but the context that we inherited responsibility for the bid was a question mark over whether the government was being fair to them. So I said we want to be open and transparent and we do want to have points of contact for News Corporation, and Mr Smith was one of those.
Q. In what way were Mr Smith's contacts open and transparent, given that they could never have emerged had there not been this Inquiry or, heaven forbid, a judicial review application against the department when the department would have been obliged to have disclosed them?
A. Mr Smith's contacts in that respect were, in terms of what they were not the content of the contact but in terms of the fact of the contact was no different to contact by Mr Zeff, one of my departmental officials, who also had text message exchanges with Mr Michel and email exchanges with Mr Michel, so the fact of his contact wasn't different.
Q. Wasn't there at least a risk that in the absence of an express instruction or warning as to what he couldn't do, Mr Smith would as it were revert to the default position, which was to act as your representative?
A. I didn't believe there was a risk of that because Mr Smith is extremely able, bright. He's dedicated, he's hard-working, and he was new to the process as I was new to it and he was party to all the advice that I was hearing and he was hearing.
Q. You were, of course, aware that Mr Michel was an extremely effective lobbyist, weren't you?
A. I think we are all aware of that now.
Q. You were aware of that at the time, weren't you, from your interactions with him?
A. I just thought he was, you know, a public affairs specialist at News Corporation.
Q. Yes, but the job of such an individual is to be charming, charismatic, try and push doors open, frankly to be pushy. Are we agreed about that?
A. I think different organisations do their lobbying in different ways, and he was certainly a character. I didn't mark him out as being more effective or less effective than people representing organisations that I've come across.
Q. Didn't you think he's someone whose personal text messages to you were evidence of a degree of pushiness?
A. There was a bit of pushiness, yes, I think that was apparent, and you can probably sense my responses were often sort of one word. I do as a point of principle always try and reply to text messages as a courtesy, but they got pretty brief.
Q. Didn't you see risks here in relation to Mr Smith that he was the point of contact with Mr Michel, Mr Michel wasn't exactly one who would push back, he would push forward, you were exposing him to danger, weren't you?
A. We didn't see any risks at the time. The reason that we didn't was because we didn't predict this barrage of contact from Mr Michel. We thought he was perhaps a little pushy, yes, I suppose we would have said that he was at that end of the spectrum, but we weren't expecting 542 text messages to Mr Smith, including, I think to my total astonishment, I think it was 35 text messages in just two days at one point in the process, and however many, 140 or so, phone calls. I think when you do the analysis, and it's slightly back of the envelope analysis, Mr Michel looks like he was trying to contact Mr Smith about five times every working day, which is an extraordinary amount of contact, and we didn't anticipate that at all.
Q. Was Mr Smith given equivalent instructions to be the point of contact with lobbyists, public relations experts, whoever, for the coalition?
A. He would have fulfilled that role as being a point of contact for the department, but for large parts of the process it was only appropriate to have contact with News Corporation, and so the vast majority of his contact would have been with News Corporation.
Q. Do you accept that Mr Smith interpreted his role, at the very least, to reassure News Corp during the process?
A. Yes. I think they had felt that they had not been fairly treated by the government, and we all wanted to reassure them that they were going to get no favours, but they were going to be fairly treated.
Q. What other value then was Mr Smith adding?
A. Well, he was adding immense value to me as a special adviser in lots of other policy areas. I mean, we were doing lots of other things at the same time as this bid was happening, but for the bid process this was what he was doing.
Q. But his role was to keep News Corp reassured, some would say happy, during a process which became increasingly protracted and difficult. Is that not fair?
A. Well, it was certainly to keep them on board with the fairness of the process, yes.
Q. Why not to keep them on board overall, since you had a concern that the wheels might fall off if there were excessive delay?
A. I didn't have that concern. I was responsible for a quasi-judicial process. I had put aside my policy priorities in this area. I'd actually put them aside willingly because of course it's important that the media industry is successful, but media plurality is a much, much higher order decision. It's about the health of the democracy and it's about making sure that many generations of Brits go on to be able to choose their own destiny. It was a very, very important decision so that was my priority.
Q. Do you feel, looking back on this, that Mr Smith reasonably drew the inference that you would wish him to communicate to your private view to Mr Michel?
A. I don't believe he did communicate any private views to Mr Michel. I think the views of mine that he will have communicated to Mr Michel were views that I had expressed in meetings with News Corp, and anyway, my private view was the same as my public view: I needed to make a decision about plurality. That was the decision and it needed to be done objectively and impartially and that was what I did.
Q. In that sense, you had two private views. You had the private view that you needed to undertake the process according to law, but at the same time you had a private view, see the memorandum to the Prime Minister of 19 November, which was favourable to this particular view. It's that private view to which I'm referring. Do you see that, Mr Hunt?
A. But I set that private view aside, I knew that I couldn't make this decision on the basis of that private view, and I had a view that I felt more passionately the more I thought about the decision about plurality that actually a decision about plurality is a public interest decision. It's an absolutely fundamental and important decision. Far, far more important than even something as important as the commercial viability of the UK media industry, and that was my focus.
Q. Okay, we may come back to that issue, but can we deal now fairly economically, Mr Hunt, with the way the bid was handled in terms of process after 22 December? You set out a general narrative in your witness statement in paragraph 39 and following. The key messages we can read are that you took expert advice at all material times, you went further than the statute strictly speaking required although you had power under the statute to obtain advice from Ofcom and the OFT on the UILs, which is what you did. When the UILs were put out for consultation first on 3 March, then consideration was given subsequently to revision, following advice from Ofcom. Then finally, at the end of June the second version of the UILs were put out for short consultation, a period closing on 8 July. That's the broad message. But the detail is to be found in annex A, which is under tab 2. May we spend just a little time looking at the highlights because I'm sure you would wish to bring the points out, but I've been able to cross-reference this with three lever-arch files of detail and everything you say here is factually correct, so we're not going to look at underlying material. 0 December 2010, you received advice from the OFT, which was to the effect that you had jurisdiction to make a reference to the CC. That was a limited decision under the 2002 order. Then the following day, more importantly, you received advice from Ofcom on the plurality issue, and their advice was this is paragraph 1.57 at 04385 that there was a need for a fuller review by the Competition Commission. Is that correct?
Q. There are two documents we should look at. There was a meeting on 6 January 2011 with representatives of News Corp.
Q. That is in the bundle of primary materials under tab 18. The Inquiry has seen this document before. It's page 04536. May we note in relation to this meeting, once you've found it in the bundle, who was present?
Q. We can see who was present. Mr Smith was there, amongst others on your side, and Mr Michel was there on behalf of News Corp.
Q. When you had a meeting with the coalition on 24 March 2011, their public relations advisers, who I think were Weber Shandwick
A. Weber Shandwick.
Q. They weren't invited, were they?
A. Mr Michel was an employee of News Corp, so he had a role as Mr Murdoch's aide, and that's why it was appropriate for him to be there.
Q. But the coalition's public relations advisers then were independent contractors and you felt that that made a material difference; is that the argument?
A. I don't think it was my decision, but that was the decision that was communicated to them.
Q. The message you put across on this occasion was that the Ofcom advice was that there should be a reference to the CC. You were considering the matter but were likely to conclude, given the low threshold, that that's what would happen, but the possibility of accepting undertakings in lieu of a referral were mentioned at this meeting. Do you see that?
A. Yes. They weren't mentioned by us. What actually happened, to my recollection, was that I arrived back in the office on 5 January, I believe, that year, and I had this introductory meeting with News Corp and I said that I had read the Ofcom report, basically accepted it, I was going to refer it to the Competition Commission. The process was that we sent them a letter saying that we were minded to refer it to the Competition Commission because they are an adversely affected party. They then had the opportunity to make representations back, and so that was what I told them. I don't think they had seen the Ofcom report at that point so we let them see the Ofcom report and make representations back, but they knew that I basically planned to refer it to the Competition Commission.
Q. We know that the first version of the UILs were sent to you as early as 18 January, but before then I should make reference to a meeting you had with Mr Ed Richards of Ofcom on 10 January which is under tab 24.
LORD JUSTICE LEVESON
Just before we do, if we just go through because I think it may be important to see the sense of this. You opened this meeting on 6 January, and you spoke about a fair and legally robust process, that you were minded to send to the Competition Commission. You identified the timeframe for them to respond. Then they came back to say they had concerns about the analysis and they wanted to explore remedies. And then you said there were areas where you wanted to seek clarification of the Ofcom report; is that right?
LORD JUSTICE LEVESON
And you were going to share both the questions and the answers, and then they responded to that?
The meeting with Mr Richards is under tab 24 at page 04553. Its purpose was to seek clarification on aspects of the report, and you asked five specific questions of Mr Richards, as we can see from this.
Q. Mr Smith was present. You said under item 3: "He had agreed to provide News Corp with the minutes of today's meeting with Ofcom, Ofcom would be able to agree the minutes in advance." Do you happen to know when the minutes became available? This is relevant to one of the emails in KRM 18.
A. I don't.
Q. Okay. The next meeting is the one of 20 January, which is item 31 in this bundle at page 04626. The same personnel who attend, save I think that this time junior counsel is present, just before he took silk, actually.
Q. But by then you'd got the UILs in, perhaps not in draft, in final form, and your opening remarks were that you were still minded to refer. You acknowledged they had supplied UILs "aimed at addressing any potential impact on the sufficiency of plurality from the proposed merger. The legal framework was clear that undertakings were permissible at this stage So you had received advice internally to that effect presumably, Mr Hunt; is that right?
A. Well, what had happened at that stage was that we had, if you like, concluded the first part of the process, which is that I had said that I was minded to refer it to the Competition Commission, I had a duty to consult News Corp. They had given me their objections to the Ofcom report. I had also spoken to Ed Richards and asked him some questions that had arisen in my mind about the report, but I was after that process, I had still decided that it met the low threshold necessary for referral to the Competition Commission. So that was my decision. Then they said in fact, they indicated on 6 January in their meeting that were that to be the case, they would want to offer undertakings, so we had an inkling, and I was advised that I had a duty under public law to consider any undertakings, if I thought they were merited consideration. And I think on 18 January, I don't think we were sent the UILs in final form, but they may have been the final form that News Corp wanted, but really that was just to give us an indication of what the undertakings were, and they were a pretty big offer. I mean, they were basically saying this was a decision I had about news plurality, and they were saying that they would exclude the one news organisation that's part of BSkyB from the whole deal. So prima facie, it seemed to be an offer that I needed to consider, and I was also advised that I was obliged to consider it as a public law duty, so we then had that meeting.
Q. You also received advice which News Corp had obtained from Lord Pannick Queen's Counsel, which was precisely to the same effect, namely that you did have not merely the power but a public law duty to consider any substantial UIL offers to remedy at this stage. That was sent to you at about this time, wasn't it?
A. Yes. There were two additional points that I think it's worth mentioning. The first is that News Corp in their submission objecting to the Ofcom report said that I did have the option to not to refer it to the Competition Commission and I would have to do that by challenging certain assumptions that were made in the Ofcom report that they thought were not fair, and I rejected that advice. Then the second thing, which doesn't come out in the minutes because civil servants
LORD JUSTICE LEVESON
It's not advice, you rejected the submission.
A. I rejected the submission; correct. I rejected their legal view that that was a way that I could proceed. And then the second significant thing that happened at that meeting, so we got into a situation where they had put in this very substantial undertaking, which is to remove the one news organisation that's part of BSkyB from the whole bid, so I thought, you know, this does merit serious consideration, this could potentially address plurality concerns because they're just going to leave Sky News exactly as it was, that was the sort of gist of it. But then I decided to do something else, which I wasn't required to do, which Mr Murdoch was very cross about. In fact, I would describe that meeting as, you know, a very difficult meeting in terms of the tone of the meeting, because I said I will consider these undertakings, but I'm going to get independent advice not just from one regulator, but two. The Enterprise Act allows me, if I want to, to get advice from the Office of Fair Trading and I said I was going to exercise that right. It says nothing about going to Ofcom, but I said I was going to ask for Ofcom's independent advice as well. This was not welcome to Mr Murdoch, because, as you'll see from some of his exchanges, he considered Ofcom to be an organisation that was hostile to the interests of News Corp, but I thought it was very important to do so because it was Ofcom who had said in their report delivered on 31 December that they had plurality concerns, and they listed in a lot of detail in a very thorough report I didn't agree with every word, but they listed in a lot of detail what their plurality concerns were, and I thought it was very important to test these UILs against the experts who had told me that they did have plurality concerns with the original shape of the deal. Now, from Mr Murdoch's point of view, he considered that was tantamount to wanting to kill the deal, because he believed that Ofcom would use every mechanism at their disposal you see a sense of this from some of Mr Michel's comments about Ofcom. So that was the first thing. Then the second thing which was very important was and this was a concern that was regularly raised by opponents of the bid, even at this early stage, because we got lots of letters from Slaughter May acting for the media coalition was that they should be financially viable, because it was all very well to spin off Sky News, but if in fact in practical terms it was totally dependent on News Corp for its single biggest contract and its revenue, then in practical terms it wouldn't be independent of News Corp, they might be able to exercise some editorial control. So I thought financial and commercial viability was incredibly important, and plurality considerations were very important, and that was, I think, the moment when I put in place two processes to make sure that every decision I had I was in possession of expert advice and was going to be able to decide it on a totally impartial and unbiased basis.
Yes. The final version of the UILs came through on 24 January. OFT and Ofcom were commissioned to provide advice the following day. The advice came back on 11 February, as annex A demonstrates, and they had concerns, Ofcom in particular, in four key areas, which you identify on page 05619, the entry there for 15 February. Some of those areas you've mentioned, but one important one was that the board of the new company would need to be independently chaired.
Q. In other words, it wouldn't be Mr James Murdoch?
A. That was a very, very significant thing for Mr Murdoch. I mean, you know, News Corporation thinks that one of its primary functions is what it says on the tin, is news. He first of all didn't think he should have to spin off Sky News at all because he didn't believe there was a plurality issue with the original proposal, and this was going to cost him hundreds of millions of pounds more; but secondly, he was at the time chairman of BSkyB, and that included being chairman of Sky News, and he thought he would he wanted to continue to be chairman. I think that was pretty important to him. And Ofcom did not want that, and so they so that was then presented to me. There were other things that Ofcom there were other concerns. There was a concern that they wanted to have very strict measures in place to stop News Corporation buying additional shares above 39 per cent. James Murdoch was very concerned, for example, that a commercial rival would come in and purchase the other 61 per cent of the shares and that might mean that he lost control of Sky News forever, and so there was a concession there that there was a dispute. This was presented to me, and I wrote to James Murdoch with all the outstanding areas of disagreement between himself, Ofcom and the OFT, and I gave him 24 hours to back down on every single one of them. So I said, you know, I support Ofcom, I support the OFT, and if we're going to accept these UILs, we're going to consider them and start the consultation, I need to know that you will back down. I think I sent that on 15 February.
Q. You did, and within your 24-hour deadline on 16 February they came back with further revisions to the UILs which met the four concerns, or which at least purported to. You sought further advice from Ofcom and OFT on that. The advice came back on 1 March and that advice was generally speaking that the plurality concerns were now met. Is that fair?
A. Yes. In fact, I think I had legal advice as early as 14 February that in principle I could accept the UILs if I wanted to and allow the deal to go through, but Ofcom and the OFT still had these concerns, and I said I want to get to the bottom of these concerns and I want them to be addressed, and so we didn't get the final advice from Ofcom until just before 3 March.
Q. After overnight work on 2 and 3 March, which we know about from material in KRM 18 when the UILs were tweaked and more importantly redactions were made to them on grounds of commercial sensitivity, you gave an announcement to Parliament that you were minded to accept the UILs on 3 March, but that there was going to be a public consultation, which would expire on 27 March.
A. I think 21 March.
Q. 21 March, pardon me, that's correct. We know what the fruits of that consultation were. There were 40,000 responses. Most of them were hostile to the UILs; is that right?
A. That's correct.
Q. 24 March there was also a meeting with the coalition. You asked Ofcom and the OFT to provide further advice on the carriage and brand licence agreements, but that took a period of time before it arrived. Indeed, it didn't arrive, I think, until 22 June, so there was a period of apparent delay, without seeking to apportion any blame for it, between March and June. Is that the picture?
A. Yes. The reason for that principally was the 40,000 responses that we had. I mean, we had a lot of responses, it was a genuine consultation. We were looking through those responses to see whether there were relevant comments. A lot of the responses were about competition issues, which I wasn't allowed to consider, because I could only look at media plurality issues, but it takes time to go through all those responses and that's what my officials were doing. Then they were discussing with Ofcom and the OFT whether they felt there was substance to any of the points that were raised, and then when they did find there was substance to some of them, they then went back to News Corporation to ask for further safeguards. One of the original in the original UILs, one of the safeguards in terms of editorial independence was that the Broadcasting Code, which includes political impartiality, and there was a big worry about political impartiality being preserved at Sky News if News Corporation owned 100 per cent of it, so the Broadcasting Code was going to be written into the Articles of Association. That was a very significant point. But in the consultation responses, people suggested we should go further than this and so we decided that we would suggest that the Secretary of State had to approve the Articles of Association for the new company. We made the point that there had to be a monitoring trustee who would check that in the process of being spun off the spirit of the undertakings was being observed, and we also insisted on some kind of protection for the new company because we recognised that Sky News gets a lot of cross-marketing on other Sky channels and we wanted to make sure that that continued under the new arrangement. So it was a further strengthening of these UILs in a way that made Sky News massively more independent of James Murdoch than it was then or indeed is now.
Q. Thank you. The advice came back from OFT and Ofcom on 22 June. By 24 June, you'd given some preliminary consideration to it. There's one email I'd like you, Mr Hunt, to look at, please. It's in the file of primary documents under tab 120, page number 05121. I'm afraid it's in the second volume.
A. Is it on the screen, because I can perhaps have a look at it there, because I can't find it
Q. Yes, it's come up. This is from your PPS, isn't it?
Q. So expressing your view. Your two special advisers are copied in. It gives us some flavour of where you are at this time because it may be relevant to one of the KRM 18 documents: "Sorry for keeping you hanging on earlier. SoS has read the covering letters and advice from OFT and Ofcom, but not the amended documents in full yet which he is keen to do Monday so I've scheduled him some time for that. "SoS talked to Jon That's Jon Zeff, of course, who is the lead policy adviser on this, isn't he?
Q. and I briefly on his way out of the building. In principle SoS would like to aim for an announcement on Thursday next week So this is an announcement which would be to Parliament, would it?
Q. subject to giving further thought to Ofcom and OFT's advice and studying the docs in more detail on Monday. He understands the challenges with that specifically in agreeing redacted docs but thinks we should push News Corp to have redactions done for Tues night. He's also not minded to give more than the statutory 7 days for further consultation." These are your preliminary views, which as it happened did not depart much from your final views, once we see what happened on 30 June. The last paragraph has been either cut off or redacted off, it's not altogether clear: "I think you were going to take up with colleague and News the viability of this. If there are any show stoppers [again I can't read what follows] it might be good to discuss at/in the margins of the Monday morning coms meeting." Was the idea that Mr Smith would speak to News about the viability of this?
A. I don't think it was particularly that Mr Smith should, but I think the sense of that is that someone should.
Q. Thank you. On 30 June you make your announcement to Parliament. Because we were only now looking at amended UILs and there had already been a consultation on the first version, the statutory consultation period could be very short, and you indicated that it could close, as it did, on 8 July; is that correct?
A. That's correct, yes.
Q. And you received in that short period of time 156,000 responses. Virtually all were, again, anti, weren't they?
Q. What happened thereafter is well known, but we're going to have to look at underlying documents as well. On 11 July you wrote to OFT and Ofcom asking them whether the responses to the second consultation led them to reconsider any part of their advice, but on that self-same day, News Corp withdrew the UILs
Q. probably with the intention but certainly with the consequence that you then indicated you would refer to the CC and then on 13 July the bid was withdrawn.
Q. In the circumstances of which we're all aware.
Q. That is the formal process. We've taken it quite quickly, in about 20 minutes, but can I give you this opportunity. Is there any aspect, Mr Hunt, that you would like to draw out particularly from this formal process which we haven't, you feel, properly covered?
A. Well, I think the bit that we haven't touched on, which I think is relevant to these considerations, is the way the phone hacking issue was developing, sort of in parallel to decisions about this bid. I sort of think the phone hacking happened, as far as I was concerned, in three stages. The first stage was on 26 January, when Operation Weeting started, so we had a moment there where we were having a proper, full police investigation into these issues and there had been lots of discussion prior to that as to whether this had been investigated properly or not, and Assistant Commissioner Sue Akers was starting that very rigorous process. So my perspective at this point is: this is a police matter. Then, I think, on if I remember rightly, on 8 April, News International announced that phone hacking had gone much more widely than was suggested in the Clive Goodman case and that potentially thousands of people had been affected by it, and what I wanted to know at that stage was: should that impact on my consideration of media plurality? We sought legal advice I think the same day, actually we didn't get it for about ten days, but we sought legal advice about whether phone hacking was relevant. The general advice we'd been getting was: just as I shouldn't allow policy issues to impinge on my decision-making on media plurality, so phone hacking shouldn't impinge on it either. This was an extraneous matter. But the advice we got on 18 April did say that the one way that phone hacking could impinge was if they thought there was an issue of trust, so that accepting undertakings basically meant that you had to be confident that you could trust the people that you were doing a deal with over those undertakings. So at that stage it was a matter about News International. It wasn't a matter that there was any evidence at all that it affected News Corporation executives that we were dealing with. We thought they had a problem with a company that was part of News Corporation group, but there was no evidence, and we didn't think we'd have any legally robust basis to suggest at that stage there was an issue of trust. Then I'm sorry to be a bit lengthy, but I just think it's important to understand why I wrote the final letter that I wrote to Ofcom, because it is you know, I think it's an important indication of the way we approached the bid. Then we had the horrific Milly Dowler revelations on 4 July, which I don't think anyone could not have been touched by, and then a couple of days later News Corporation announced that they were closing the News of the World. That, for me, was a very, very significant moment because then I began to wonder whether there could be a management issue that spread beyond News International to News Corp, and even if it wasn't an issue of trust, even if I accepted that the people that we were negotiating the UILs with, we were doing so in good faith, I asked myself, if they found it necessary to close down a whole newspaper this is a big, big deal for a company like News Corporation is there a corporate governance issue here? Is this a company that actually doesn't have control of what's going on in its own company, even if the management don't know about what's happening? So it was really that and, of course, the fact that there was a plurality issue with a big newspaper being closed down and the fact that Ofcom had been asked to investigate whether BSkyB was a fit and proper licence holder for a broadcasting licence, those came together. So a week after the Milly Dowler revelations I wrote to both Ofcom and the OFT to ask them whether they still stood by the advice they'd given me at the end of June that plurality considerations had been addressed by the UILs as they did then.
LORD JUSTICE LEVESON
Is that advice available? The advice as to the impact of phone hacking?
It's referred to in some of the documents we're going to look at fairly shortly.
LORD JUSTICE LEVESON
As a matter of law, Mr Hunt, what you've said is correct on my understanding, that the intervention notice which Dr Cable promulgated on 4 November 2010 was on one ground only under the Enterprise Act and therefore it could not be appropriate to take into account an extraneous consideration, which is the phone hacking issue. It only could become relevant contingently when the UILs were being considered in the context of whether you could trust the company to be loyal to the UILs. Your view was in April there was insufficient evidence, but your view changed in July, that there might be sufficient evidence. That's really the nub of it, isn't it?
A. Yes. And then I followed the procedure that I'd followed consistently, which was to seek an independent view about that before I took a decision. But just to answer Lord Justice Leveson's point, we didn't get that advice back from Ofcom and the OFT, because in the event the bid was withdrawn just a couple of days after we sent the letter asking Ofcom for that advice.
Q. Mr Hunt, we've looked at the formal process and it's all documented. There is also a process within the department which is evidenced by a range of emails which you've disclosed and there are also some text messages. I'm going to deal with it chronologically, but I have to take it in sections otherwise we're going to be darting around too much material. We've going to look first of all at what the emails might demonstrate and then we're going to look at the text messages, but the emails will be looked at chronologically. The first one is in the second supplementary file under tab IND at page 07747.
Q. 07747, under the tab IND.
Q. We're on 27 January, where we have evidence here that the two-week period which is being referred to in the context of OFT and Ofcom was their advice on the UILs; is that correct?
Q. And we can see that Mr Smith sent an email back to various people indicating that he had a conversation with you about the two weeks. He says: "I agree, Jeremy was pretty clear to me he wanted it done in two weeks unless, having looked at it, they come back with a good reason for needing longer."
LORD JUSTICE LEVESON
I think we just ought to explain what a UIL is, for those who may not be quite as familiar as we've become with this concept. If you refer to the Competition Commission, then there's a complete process that analyses probably at great length all the features surrounding this particular bid, and the idea of an undertaking in lieu, which is what a UIL means, is that the company seeking to acquire says to you, the Secretary of State, "Well, I understand what your concerns are, they are A, B, C, D. We will give you the following undertaking or make the following promises to cope with your concerns, and in that way avoid the complexity, complication, time, all the rest of it, of a referral to the Competition Commission, because if we can make promises that satisfy your concerns, then there won't be a necessity to do it." That's what you were doing, talking about UILs. They were then making promises to you as to how they would organise their affairs, to see whether that coped with the concerns which had been expressed to you through the OFT and Ofcom, and therefore by April your question becomes: well, they're making these promises, but is there a question about whether I should be accepting promises in the light of what is being revealed in another subsidiary of News Corp?
A. That's right.
LORD JUSTICE LEVESON
And that's the concern that gets greater throughout July.
A. That's correct.
LORD JUSTICE LEVESON
Have I correctly understood it?
LORD JUSTICE LEVESON
I thought I had, but just in case it wasn't, that was the point.
Thank you. The next document we're going to look at is under tab SS.Aa at page 07931. Mr Smith forwards to you, if you have it, an email on behalf of Ed Miliband's director of strategy, who is Tom Baldwin. Are you with me on that?
Q. 07931. It was to the effect that Labour spokespeople should avoid linking hacking with the BSkyB bid, to accept ministerial assurances that meetings with Rupert Murdoch are not influencing that process and to ensure that complaints about tapping are made in a personal, not shadow ministerial capacity. And then you emailed back Mr Smith: "Classic!! Something for the dispatch box or to use any time we are accused of being pro-Murdoch." That's a sort of private joke, I suppose, between you and Mr Smith, is it?
A. I don't think it was particularly a private joke. We saw great irony in the fact that first of all we had a process where we weren't being pro-Murdoch, we were actually doing things that James Murdoch was very cross about. At that stage on 2 February, we had said that even though we didn't have to, we were going to go back to Ofcom to ask what they thought about the UILs, and he was pretty furious about that, but at the same time so we're getting these accusations that we were being pro-Murdoch and at the same time the Labour Director of Communications was contacting all Labour front benchers with, you know, the line that you shouldn't link phone hacking and which was obviously something that the Murdochs would welcome.
Q. Wasn't the irony possibly this, that both you and Mr Smith appreciated that privately you were pro-Murdoch, although of course you had to follow a proper legal process which had the appearances of being anti-Murdoch?
A. No. Because we weren't following a process for appearances sake. I mean, I did not know what the independent advice I would get back from Ofcom and the OFT was. If Ofcom had said that the undertakings were not financially viable, I would have taken that very seriously sorry, if OFT had said they weren't financially viable, I would have taken that very seriously. If Ofcom had said that the undertakings didn't meet plurality concerns, I would have taken that very seriously. So we pushed the boat off the pier, but we didn't know where the boat was going to end up, so that was a very it was a very different process to the way I think you've described it, if I may say.
Q. Okay. Under tab SS.B, further forward in the same file, page 08096, now you're communicating with your other special adviser, Sue Beeby, do you see that?
Q. You say: "Both our favourite journalists, Andy Porter and Patrick Foster Who do they work for?
A. I think one worked for the Telegraph and the other for the Times.
Q. have texted me asking for an exclusive on That bit has been redacted out, I'm not exactly sure why. "Could we think of something exclusive we can give each of them either on that or perhaps something around News Corp. Let's chat tomorrow." And then: "Your special adviser has spoken to Mr Foster. I have spoken to Patrick and given him I'm not sure what that is, "exclusive."
LORD JUSTICE LEVESON
Is that something "nothing at all to do with our business"?
"This is on the proviso that he writes a bit about Labour he's happy to do that. Andy will want [then it's all redacted out] before we officially announce it. Shall we chat about this later as it's a bit more sensitive, as is anything on News Corp." I mean, this is an example of no doubt fairly common practice of feeding favourite journalists stories; is that right?
A. I think when you're you know, you're managing your media as either in opposition or in governments, you have a choice. You can sometimes put a story out to everyone, in which case it might not get picked up at all, or you give a journalist an exclusive on the basis that they'll give it a good show. So I think both those two journalists had contacted me asking me if I could give them some kind of an exclusive and I was just passing on that request to Sue Beeby.
Q. Was there any irony then, Mr Hunt, in the use of the term "favourite journalists", or do we read that literally, as they were chosen because they are your favourite journalists?
A. No, I think I was just they are two people that I we knew them both quite well and so I was just I knew them better than I knew many journalists. That was all I was really saying.
Q. Okay. I'll leave that one and go forward in time but backward in the bundle to the 2 March 2011, page 07787, which is under tab IND. The evening of 2 March.
Q. A meeting which you chaired. This is in advance of the announcement you're going to make to the markets first thing in the morning, that's going to be about at 7.30 in the morning, and then later to Parliament. The relevant part of this is the next page. You can help us with this, please, because it may assist us. Do you see the third line: "I would have thought that we could send them [that's the letters to OFT and Ofcom] to News Corp at the same time as we communicate our decision, but grateful for views. They would also like to see a copy of the PN That's the Parliamentary announcement, is it?
A. That's the press notice.
Q. "Could we show them that at the same time (assuming that it is ready by then)?" Does one draw the inference that authorisation was being sought and given to give News Corp advance notice of the announcement which was going to be made by press notice at 7.30 am on 3 March?
A. I believe that it is standard practice when you make an announcement to Parliament about a particular company that they do have notice of that in advance, and I think that was all that was talking about.
Q. Because it's clear that Mr Smith acted on that vis-a-vis Mr Michel, but it's relevant to understand on what basis he might have done so. We can see Mr Smith was copied in on this email.
A. (Nods head).
Q. Back to tab SS.Aa, 8 March now, page 07957. What had happened, Mr Hunt, so that we have our bearings, is on this date Enders had provided a note, a critical one, on the UILs. This was part of the consultation process. That was forwarded to you by Mr Smith, that's clear from the bottom of page 07957, and then Mr Smith, 17 minutes later, also sent you what he described as News Corp's initial reaction to the Enders analysis. Do you see that?
Q. We know from other evidence that News Corp's initial reaction was communicated to Mr Smith by Mr Michel. Did you know that to be the case at the time?
A. I didn't know it to be the case, but I wouldn't have been surprised to know that the News Corp reaction was coming via Mr Michel.
Q. Did he to your recollection have a discussion with you about News Corp's initial reaction or not?
A. Not to my recollection, but it might have happened.
Q. Because throughout this process are we to gain the impression that if an email like this was sent on to you, if it was self-explanatory, then you'd deal with it without a discussion, but if it warranted a discussion, you would in the natural and ordinary course of things have one with Mr Smith?
A. Yes. I think that's probably slightly overstating how closely involved I was in the discussion. I think he kept me informed. I don't actually recall this particular part of the bid in great detail, but if Enders, who are a respected industry analyst, had written with some concerns about the UILs, we would have taken it very seriously and tried to understand if there was substance in them, and as I know Enders, Adam might have wanted to let me know that that was happening and what News Corp's reaction was, but it wasn't really a process that I would be involved in, because essentially because I wanted to structure the process so that I basically no one would believe that I had any kind of discretion, I was following independent advice, giving huge weight to independent advice, and it was really my own discretion for making or to a large part removing my discretion, really the negotiations at this stage were between Ofcom and the OFT and News Corp, so I was being informed of what was going on, but in terms of what the UILs should contain, I think News Corp knew by this stage that I would listen to Ofcom and the OFT, so if they wanted something in as a UIL, if they wanted something excluded as a UIL, it was Ofcom and the OFT that they had to persuade.
Q. Yes, thank you. Can we move to the first file of supplementary material. We're now on 24 March, under tab EX.P, page 07656. 24 March is the date of the meeting you're going to have with the Slaughter May team for the coalition. It was fixed for the afternoon of that date. Do you recall that?
A. Yes. Sorry, what was the page reference?
Q. 07656. This is an email we saw last week, sent by Mr Michel to Mr Smith, which contains what he calls a rebuttal document. If you look on the next page, 07657, you'll see the Slaughter May argument to the left-hand side, and then the News Corp rebuttal on the right-hand side.
Q. Is this a document which was sent to you by Mr Smith, do you believe, in advance of the meeting?
A. Not to my recollection, no. One thing I should say, which is something that didn't really occur to me until I was looking at these documents closely as part of this Inquiry's process, was that it's quite interesting, we had quite regular contact from Slaughter May, and we did right from the start of the process we did actually take into account what they said quite seriously. So when the idea of undertakings was broached in the press, somehow it got out into the press, Slaughter May fired off a letter pretty quickly saying any undertakings would have to be structural and couldn't be behavioural and would have to be financially sustainable and that's a big question as to how you would get them to do that, and that advice we followed. So we did take what they said pretty seriously.
Q. Although Mr Smith in the events which happened was not in contact at all with their public relations advisers, was he?
A. I don't think that's material. What's material is that the points that they were making were being carefully considered.
Q. But there may be a difference, though, between the message and the messenger for these purposes, would you accept that?
A. I think what's important in the process that I was running is that we were being even-handed, we were being open-minded. We were listening to comments from the opponents of the bid, we were listening to what News Corp said, we were wanting to be fair. And, if you like, we had this lock on the process that in the end we were going to get advice from the OFT and Ofcom about the UILs before I made my decision, and it was going to have a lot of impact on that decision.
Q. Okay. May we move forward in time to April 2011 and back to the second supplementary file, tab IND, page 07805.
A. Sorry, just give me a moment. What was the tab again, Mr Jay?
LORD JUSTICE LEVESON
D, pardon me.
Q. I'm sorry to dart around, but I wanted to bring this out chronologically. Page 07805. Look at the bottom of the page once you've found it.
Q. You'll see an email of 18 April. The second bullet point meshes in with what you've told us half an hour ago, namely that you were giving some consideration to the fit and proper person issue in relation to the News Corp/Sky merger, do you see that?
LORD JUSTICE LEVESON
PI, is that public interest?
A. Yes, it is.
LORD JUSTICE LEVESON
In the middle of the page, Rita recalls you as raising two points. The first is: "Are we sure the process is going as fast as it can Secretary of State keen to make decision asap post holidays. I said I thought it was but we'd stay on the case." That's the first point. Possible concern now about the delay, would you accept?
A. Well, I want everything to happen quickly in government, and this had been a process that had been at this stage it had already taken four months, or the best part of, and so I wanted it to happen as briskly as possible. However, whenever I was asked by people who were looking through the consultation responses or by Ofcom and the OFT for more time, I would always give them more time. So I wanted to make sure that everyone involved in the bid was giving it priority amongst the other things they had to do, but having given it that priority, I was happy for them to have as long as they wanted.
Q. Okay. And the other point is, and it's coincident with the point which we've already seen: "Secretary of State wants to make sure we've thoroughly kicked the tyres on scope for invoking the standards limb of the PI test." So we're back to the same point, it's the fit and proper person point, isn't it, which you were as it were testing out for consideration?
A. Well, I wanted to know, because there is a fit and proper person public interest test in the Enterprise Act, and what I wanted to establish was: am I able to invoke that because of the phone hacking considerations? Was I able to invoke that? And I was advised that I wasn't able to do that because you can only invoke a public interest test once. So it could have been invoked by Dr Cable when he invoked the test on media plurality. Obviously he didn't know about the phone hacking at that stage, so that's why he presumably didn't consider that, but we did know about phone hacking now, so that's why I wanted to know whether I was able to invoke it, and I was told I wasn't.
LORD JUSTICE LEVESON
At this stage you're simply asking the question?
12 May now. First volume of the supplementary bundle, tab EX.P, page 07696. This is an email from Mr Michel to Mr Smith. Has it come up? This is further thoughts from Mr Michel to Mr Smith. It's not forwarded to you at the time. What we see at the top of the page refers to the disclosure exercise for this Inquiry. Just what Mr Michel says at the end: "We are keen to start the consultation as quickly as possible because, in any event, the agreements are not subject to the consultation. "Otherwise, we won't be done before mid-June, which will be catastrophic for many important reasons." Do you happen to know what those reasons were?
A. I don't. I obviously didn't see this letter, but I think with the benefit of hindsight we can probably understand what he might have been talking about.
Q. Can you share that with us, please?
A. Actually, I can't see the sentence that you're talking about. I heard you read it out.
LORD JUSTICE LEVESON
It's the last sentence in the email.
A. Oh, right. Well, I think that, looking at Mr Michel's emails in KRM 18, his internal emails, it's very clear that phone hacking was something that was a growing concern to News Corp, and I think they obviously were worried that it might derail this bid, as indeed in the end effectively it did.
LORD JUSTICE LEVESON
I see. It's the pace of the police investigation and the impact on further disclosures that that might generate which might create more trouble; is that the point you're making?
A. I think that they thought that the phone hacking I mean, obviously it was their News International was part of News Corp, so they might have been more aware than we were that there were more and more explosive revelations down the track, as it were, and they were worried about the impact they might have, and I think reading through Mr Michel's internal emails in KRM 18, he constantly says phone hacking is they're not taking account of phone hacking, so we don't need to worry. That was kind of the News Corp internal view. We, looking at it externally, didn't know that this was a volcano that was about to erupt. We just had to look at the evidence of what was emerging in the media. We didn't know that there was worse to come. And we were just taking legal advice at every stage as to whether we should have been intervening on the basis of it.
LORD JUSTICE LEVESON
What, of course, News Corp will have known was that their Management Standards Committee, chaired by Lord Grabiner, was in the process of going through materials and handing such materials as they felt were appropriate to the police; is that right?
Not in May. July.
LORD JUSTICE LEVESON
Thank you very much, I'm happy to be corrected.
If that's your interpretation, Mr Hunt, presumably that's the interpretation Mr Smith received from this at the time from Mr Michel. Are we in agreement?
A. No, because this is not my this is not this is saying that's what my interpretation is now, now I know what was happening with phone hacking. Neither myself nor Mr Smith knew the picture that was about to emerge for phone hacking.
Q. What's rather odd is that Mr Michel is expressing a private thought of some sensitivity to Mr Smith. He's saying rather Delphically: unless it's done by a certain date, it will be catastrophic for many important reasons. One inference might be that Mr Smith will either know what that was or will find out. But wasn't that notion communicated to you, Mr Hunt?
A. It certainly wasn't, and I'd be very surprised if Mr Smith had any idea whatsoever as to what those Delphic reasons might be. I think that News Corp are a very determined company and they're always putting everyone under pressure to do things quickly. I wanted to do things briskly but properly, so I think he would just look at that and say this is just another example of News Corp trying to pile on the pressure.
Q. But didn't you get the general message from Mr Smith that that's precisely what News Corp were doing through Mr Michel, namely piling on the pressure?
A. No, I didn't. I didn't get that impression. You've spoken to Mr Smith. He's a very uncomplaining, decent, hard-working person, and I think he said to you that he saw his job as being a buffer for me, so he saw his job to absorb that pressure. I was very determined as Secretary of State that responsibility for this bid should not derail all the other important things that I had to do in my department, so I think Mr Smith saw himself as being that buffer and that was why he wouldn't have informed me of all these conversations.
Q. One might see that as a buffer he wouldn't inform you of all the conversations but given we are encountering here a period of delay with attendant pressure from News Corp as one might expect, did not the general gist of the message from Mr Michel be imparted to you by Mr Smith, namely they're getting a bit uppity now or words to that effect?
A. It may well have been, and it wouldn't have been any surprise. You know, as a company they want everything done at the speed of light, but I don't remember it being raised with me, if I can put it this way, as a specific issue that I needed to address.
Q. It would just have been part of the background noise which was coming out at this stage, is that fair?
A. If Mr Smith said anything to me at all.
Q. Turn over the page to 07697. This is Mr Michel again to Mr Smith, 29 May.
A. Sorry, I don't have it yet. There we are.
Q. It's been redacted for some reason, the name, but we know from KRM 18 that this is a reference to Ed Richards, okay, so we might as well put his name straight back in. "We are getting some feedback from OFT and MPs that Ed Richards is very much in driving seat on the agreements discussion and meeting JH regularly to update him." Was that factually correct?
A. No. It is true that I met Mr Richards most weeks because I have a meeting about the rollout of superfast broadband and local television which Mr Richards came along to, so I did see Mr Richards regularly. If you're saying obviously for News Corp Ofcom was a bete noir so they would have thoroughly objected to the idea of Ofcom being in the driving seat of anything, but as far as I was concerned actually Ofcom's view was critical. I wanted to know whether Ofcom were satisfied that plurality concerns were being addressed by these undertakings, and so whether you would describe that as them being in the driving seat or not I don't know, but I did certainly attach a lot of weight to what they said.
Q. The third substantive paragraph: "It would be good to understand the state of play as it does seem the timetable you outlined to me is slipping away massively and we might want to consider our options at this stage." So it looks as if Mr Smith had communicated a timetable to Mr Michel and we get some understanding of what that timetable was from the next sentence, would you agree?
Q. And in so doing, Mr Smith was acting within or without his authority, in your view?
A. I think entirely within his authority. He was a contact point about process. We wanted to be open and transparent with News Corp about the process that we were following that involved their company. This was nothing to do with the decision as to whether I was going to accept that the UILs met plurality concerns or not, but to tell News Corp that we were aiming for 24 June, I think, would be absolutely a legitimate part of the process.
Q. Okay. We can move forward in time, I think, to 28 June. I'm afraid we're in the second volume of this supplementary bundle under SS.Aa at page 08008, which is an email from you to Mr Smith.
A. I haven't quite got it on the screen.
Q. The UILs which are being referred to there
LORD JUSTICE LEVESON
It's not there yet. I'll read it: "Hiya. Those new UILs are pretty thorough
A. I have it now, sir.
LORD JUSTICE LEVESON
feels like the world doesn't trust the Murdochs further than they can be thrown! What was the resolution on the issue of Murdoch family members buying shares in Newco? Thx." Can you remember the context of that observation about the Murdochs?
A. I can't remember the exact context. We'd had 40,000 objections to the UILs that Ofcom and the OFT had said satisfied their plurality concerns. I think it's a fairly accurate description of the mood of the country at that time, actually, and, you know, in terms of the Murdoch family members buying shares in Newco, the concern had been expressed that if Sky News was spun off, that a Murdoch family member might buy you know, News Corporation was limited to holding 39 per cent of the shares of Sky News, but a Murdoch family member might purchase some of the other shares in order to, as it were, help the Murdochs gain control of the spun-off Sky News through the back door, and I wanted to be sure that that wasn't going to be possible in terms of the way the UILs were set up.
Q. So this is a remark which one reads entirely straightforwardly, it's your interpretation of what the world at large were saying, and you were reporting that back without irony to Mr Smith; is that right?
Q. Can we move forward to July? We are still in the second supplementary bundle under tab IND, a series now of emails which start at 07822. There are seven of them we're going to look at, or seven pages worth.
LORD JUSTICE LEVESON
Can you do this in five minutes?
Probably best to do it with a clean start.
LORD JUSTICE LEVESON
Then let's break now and we'll resume at 2 o'clock, if that's all right with you, Mr Hunt.
LORD JUSTICE LEVESON
Thank you very much. 2 o'clock. (12.58 pm)