Hack Attack (43 page)

And by good chance, on the very day that Coulson appeared at Glasgow High Court, somebody had leaked to the
Daily Telegraph
the fact that the Crown Prosecution Service had reviewed the evidence collected by John Yates’s staff officer, Detective Superintendent Dean Haydon, and concluded that it provided no basis for charging anybody with any offence. No surprise considering he had been told not to look at the best of the evidence.

News International were holding their line. And why would they do anything else? They had never had to obey the rules which bound the little people. I was beginning to wonder when we would ever break through. And then we did.

*   *   *

Mark Thomson told me that he had lodged a detailed account of Sienna Miller’s case with the High Court. That was a public document. It took a small amount of sweat and hassle but on 14 December, the court handed over the twenty-page ‘particulars of claim’ which Thomson had prepared with his barrister, Hugh Tomlinson QC, on her behalf.

Thomson’s hints had been correct. He had done an enormous amount of work, analysing Sienna Miller’s itemised phone bills, forcing the police to hand over records of calls made by Mulcaire, linking them to Mulcaire’s hacking notes, cross-referring them to
News of the World
stories, extracting data from Sienna Miller’s phone company, linking that back to Mulcaire’s notes. The resulting document was powerful.

First and most important, it disclosed the name which had been written by Mulcaire in the top left-hand corners of the notes which he had made as he hacked Sienna Miller’s phone – Ian, ‘which the claimant infers to be Ian Edmondson’, as the legal document put it. That was strong. After Ross Hindley, Neville Thurlbeck and Greg Miskiw, this was the fourth
News of the World
journalist to be firmly implicated in activity which was supposed to have involved only the rogue Clive Goodman. And this was the current assistant editor (news), who had been in post for six years.

Second, it disclosed the sheer scale of the operation against Miller. She had feared somebody was listening to her phone and changed it twice, but Mulcaire had pursued her, blagging his way to her new numbers as well as the account number, PIN code and password for all three. And then he had blagged similar details for nine other numbers used by those close to her – for her mother; her former partners Archie Keswick and Jude Law; Keswick’s girlfriend; Law’s assistant; and three numbers belonging to her publicist Ciara Parkes.

Third, it claimed that the hacking of Miller was part of a wider scheme, hatched early in 2005, when Mulcaire had agreed to use ‘electronic intelligence and eavesdropping’ to supply the paper with daily transcripts of the messages of a list of named targets from the worlds of politics, royalty and entertainment.

The damage to the
News of the World
’s defences was catastrophic. And it was just as bad for Scotland Yard. They had been sitting on all this evidence for more than four years. Why had they never warned Sienna Miller or any of the other victims around her? Why had they never interviewed Ian Edmondson? Why had they not passed this paperwork to the Crown Prosecution Service? Why had they not done anything about it even in the last three months when John Yates’s staff officer was conducting a new inquiry?

The castle wall was quaking.

11. The biggest deal in the world

Based on interviews with government ministers, officials and advisers; with sources in News Corp and other news organisations; and on sworn evidence and internal documents, emails and texts from the Leveson Inquiry.

On the afternoon of Tuesday 18 May 2010, a week after David Cameron became prime minister, a chauffeur-driven car prowled across the wide tarmac of Horse Guards Parade in Whitehall, central London, to deliver a visitor to the side alley which leads to the back of 10 Downing Street.

Over the previous seven days, various senior politicians and foreign leaders had arrived with some fanfare at the front of the building, waving at the photographers and stepping through the famous black door. This visitor had been asked to avoid the watching eyes of the media. This was an important visit – the first official meeting between the new prime minister and a person who held no government post – but it was secret. This was Rupert Murdoch coming for tea, to give the Conservative leader a chance to thank him for his support during the election campaign. As he came in from the side alley, he was greeted by one of Cameron’s closest advisers, Andy Coulson.

This was a sociable time for Murdoch’s men and women. On the following weekend, down at the Hay literary festival on the Welsh borders, his executives from BSkyB entertained three Conservative MPs and five members of the new Conservative Cabinet, including the new junior minister responsible for the media, Ed Vaizey. They also entertained one former Labour minister, Tessa Jowell, who pointedly asked Vaizey if his private office knew that he was accepting hospitality from BSkyB while holding a brief for government policy on the media. Vaizey, according to one witness, ‘went a bit pale’.

Very soon, Murdoch’s UK chief executive, Rebekah Brooks, was a guest at the prime minister’s official rural retreat at Chequers, forty miles north of London. His editor at the
Sun
, Dominic Mohan, became the first editor to be allowed in to meet Cameron; his editor at
The Times
, James Harding, was the second; his editor at the
News of the World
, Colin Myler, was the first Sunday newspaper editor.

It is a rule of life in the power elite that there is no such thing as a purely social act.

The following month, on 15 June 2010, James Murdoch confirmed the rumours that had been bouncing around the media world for months when he announced the biggest deal in the history of his father’s global corporation: News Corp would buy the entire remaining shareholding of BSkyB, to go with the 39% which they already owned. This was big. With an opening offer of 675p a share, which rose eventually to 850p, News Corp had set aside £8.2 billion for this one project. Thomson Reuters, who specialise in financial data, rated it as the year’s most expensive single cross-border deal, not just in the UK but anywhere in the world.

News Corp had spent more than two years nursing their plan, gathering cash and waiting for the right political moment to make their move. That moment had arrived, albeit with an unforeseen complication. The election on 6 May had seen the Conservatives win the most seats, but not enough to have an outright majority in the House of Commons. For five days, Gordon Brown had remained in post while he and Cameron separately attempted to link up with the Liberal Democrats, whose seats now held the balance of power. Finally, with the
Sun
baying for Brown’s blood and accusing him of being a squatter in No. 10, Cameron had won the day and formed a coalition government with the Lib Dems.

Now, with the unpredictable Brown ousted, News Corp were ready. For Rupert Murdoch, this was a chance to take complete control of the richest broadcaster in Britain, with an annual income of £5.9 billion, compared to the BBC’s £4.8 billion, with all that that meant for his commercial power. It was a chance, too, for him to become not only the biggest newspaper player in the country but also the dominant broadcaster, one of only three TV news providers (along with the BBC and ITN), one of only two radio news providers (along with the BBC) and the giant of pay TV with 67% of viewers, with all that that meant for his political power. More than that, it was a chance to use BSkyB’s massive operating profit, then running at £855 million a year, to borrow even more money and to take over one of the few remaining global media groups which was still bigger than his. Time Warner or Disney were the favoured targets. Then, finally, nearly sixty years after Rupert Murdoch inherited his father’s share of a single newspaper in Adelaide, News Corp would be the biggest media business in the world. As if to mark his rise into the final heights, the mogul had recently baptised his daughter, Grace, in the Holy Land waters of the River Jordan, with his guests, including Tony Blair, all dressed in white. If all went well, the deal would be done in time for his eightieth birthday in March 2011.

For James Murdoch, however, there was an extra attraction. If News Corp controlled BSkyB, its cash flow would make it the company’s biggest single earner, tilting the balance of power from New York to London, from father to son. According to two News Corp sources, Rupert Murdoch knew very well that the bid was another round in James’s power-grab but thought that he could control him. That illusion was quickly shattered when James upset News Corp’s plans to run the bid from New York by giving the job to Deutsche Bank in London before his father had made a move. ‘We were left at the gate,’ according to one senior executive in New York.

However, to seal the deal, the Murdochs first had to do what they least liked doing: they had to handle the media regulators, particularly the hated Ofcom. News Corp was armed with the weapons of passive power: a special relationship with government, based on the privilege of access and the advantage of fear. It also had problems: all the irritations of democracy and a great many silent enemies.

On 15 June, James Murdoch telephoned the new Secretary of State for business, Vince Cable, to give him formal notice of the bid. Cable was potentially a problem. He had never been part of the plan – a Liberal Democrat with whom News Corp had no relationship, thrust into government by the need to form the coalition. Worse, Cable was clever and one of the few British politicians who genuinely understood the world of high finance. Worse still, he had a track record of tough and outspoken criticism for capitalists who abused their power. It would be up to Cable to decide whether to refer the bid to Ofcom.

James Murdoch, however, was sure he was on to a winner. Without irony, he glanced back to his study of ancient history, to the moment when Julius Caesar risked everything to seize absolute power for himself, and decided that the internal code name for the bid should be ‘Project Rubicon’. In Caesar’s case, the politicians who held power in Rome turned and fled when they heard that the mighty general had marched his army across the River Rubicon to attack them. In James Murdoch’s case, he looked down on those who now held power in London and evidently expected an equally easy adventure.

*   *   *

There were two key players on the small team which James Murdoch had assembled in London to pilot the bid: Matthew Anderson, head of communications and strategy, known as Rasputin to some senior executives in New York who openly loathed him as James’s Yes Man; and Fred Michel, head of public affairs, a very English Frenchman, clever and charming, who had settled in the UK to specialise in the lobbying of politicians. From the outset, Vince Cable was hard to handle.

Simply, he refused to have anything to do with them. Following his phone conversation with James Murdoch on 15 June, Cable’s officials warned him that, in deciding how to react to the bid, he was required to act in a ‘quasi-judicial’ role, applying the law without any form of political consideration. Cable duly cancelled his plans to go to News Corp’s annual summer party the next day and closed his door to the Murdochs.

At first, this caused only a little worry to the News Corp camp. James was convinced that Cable could not possibly call in Ofcom and ignored close advisers who implored him to make a public case for the bid. ‘They have no right to review this,’ one adviser recalls him declaring. ‘If they do refer it, we’ll sue them in court.’

For a while, he seemed to be right. Fred Michel bypassed Vince Cable’s closed door by speaking to Cable’s colleagues and officials, reporting back that all seemed well. Indeed, it emerged, Cable’s officials had written Cable a briefing paper which advised that he had no grounds to intervene. James Murdoch visited the new Secretary of State for the media, Jeremy Hunt, who had remained close to News Corp. Hunt was coy about the relationship. On his way to meet James for dinner after a reception in May, he had tried to hide behind a tree to avoid a group of journalists. Now – just as Cameron had met Rupert Murdoch in secret – he chose to meet James without any officials to record a minute. In New York, Rupert Murdoch dined with David Cameron and found him as amiable as ever. Cameron may well have noticed that Murdoch’s Australian newspapers had just engaged in an aggressive campaign which had helped to oust his opposite number in Canberra, Kevin Rudd.

It was early in August when the mood began to change. Vince Cable received a twenty-page brief from Enders Analysis, a specialist media consultancy in London run by a sharp-witted American, Claire Enders. She warned that the bid would not only reduce the number of news owners but would also allow News Corp such a powerful commercial advantage – merging their news operations, outbidding rivals for the rights to sports and films, offering cut-price deals for advertisers – that they could squeeze the life out of other media companies, thus further reducing the number of news owners. She urged him to ask Ofcom to review the bid. Cable – as he later explained to the Leveson Inquiry – began to worry.

By mid-September, with some encouragement from Claire Enders, a group of media organisations had formed a loose alliance to oppose the bid. Fear of retribution from the Murdochs made this difficult. Virgin Media, who had just signed a new deal to swap output with BSkyB, refused to join. Channel 4 nearly joined and then backed out. The BBC joined and then found themselves on the receiving end of such a caterwauling scream of protest from the Murdoch papers, that they backed out. The
Guardian
, the Mirror Group, the
Financial Times
and British Telecom (who were involved with pay TV) all joined the alliance, with the
Mail
and the
Telegraph
nervously agreeing to help as long as they did not have to say anything in public.

Fred Michel began to pick up worrying signals. The
New York Times
had published its big story about phone-hacking, and Tom Watson and other MPs, including some of Vince Cable’s Lib Dem colleagues, were beginning to link the scandal with the BSkyB bid. The new media alliance were sending letters to Cable, who decided to commission an independent lawyer to tell him whether he had the power to bring in Ofcom.