(9.30 am)
LORD JUSTICE LEVESON
Good morning. Just before we start, Mr Jay, as we are looking at the BSkyB bid, could you help me: although I feel that I have a fairly good understanding of what a quasi-judicial process looks like, could you just focus my attention on the test I think it's contained within the Enterprise Act that the Secretary of State responsible for making the decision would have to consider?
MR JAY
Yes. Sir, the relevant time in relation to DCMS, we're considering the possibility of a referral to the Competition Commission. The position is different in relation to BIS at the anterior stage. But at Mr Hunt's stage, as it were, he has a discretion whether or not to refer, if in his reasonable opinion, a relevant public interest consideration arises, and the relevant public interest consideration for the purposes of this case is that specified under section 58(2)(b) of the Enterprise Act 2002 as amended, at least it's the primary one, and that relates to: "The need for the extent that it's reasonable and practicable as sufficient plurality of use in newspapers in each markets, the newspapers in the United Kingdom part of the United Kingdom is specified in this section." So that is the sole issue which the Secretary of State is bound by statute to consider for this purpose. As for quasi-judicial, I'm not going to say any more about that save to mention the relevant appearance of bias cases arising under common law in article 63 of the convention which is all very well known.
LORD JUSTICE LEVESON
Yes, well, I'm familiar with those, but I must confess that that particular provision of the Enterprise Act had I don't say escaped my attention; not previously been brought to my attention, in a different context that is. Right. MR ADAM SMITH (continued) Questions by MR JAY (continued)
MR JAY
Mr Smith, I think we'd reached section 46 of your statement last night and you'd explained it hadn't been explained to you how the quasi-judicial capacity issue might impact upon your contact with News Corp, and paragraph 51 of your statement, so we're clear about it, also makes it clear that as you hadn't received any specific instruction. You approached the matter in the same way that you did in other projects with which you'd been involved. Do you see that?
A. Yes, I do.
Q. The other projects, of course, are general policy projects and so you regarded this in exactly the same light; is that correct?
A. That's correct.
Q. In terms of your formal or the formal meetings within the department where the bid was considered, you itemised those at paragraph 8 of your statement at 09040. I don't think it's necessary to deal with those matters, but these are interdepartmental meetings where the bid, as one might expect, is discussed generally, legal advice is taken, and detailed consideration is given to the merits of the issue in terms of the statutory test I have just itemised; is that correct?
A. It is, and I think it also includes the meetings that Mr Hunt had with News Corporation as well.
Q. Thank you. Those two meetings were on 6 and 20 January 2011 and they are well minuted.
A. Yes.
Q. Paragraph 49 of your statement, 09042, you refer to more informal contacts, and you refer to the relevant officials and, of course, to the relevant lawyers. You say: "For example, they would come to my office to let me know about how matters were progressing. They would also ask me if I could assist in resolving any sticky points." They would also seek your advice on non-legal issues, which you would describe as presentational advice. It's the last sentence: you would advise them of News Corp's positions on the issues, which you would have learnt from the contact you received from Mr Michel. Would or did they know that News Corp's position was derived from your contact with Mr Michel or not?
A. Well, I believe so, because I would have said, "I have heard from News Corp that or, "Fred has told me that they think this". For instance, when News Corp were pushing for the Ofcom report not to be published, I mentioned that that was what they were pushing for, but obviously we'd already said that we were going to publish it.
Q. So the department knew that you were in contact with News Corp, and the department knew that your point of contact was Mr Michel. Was it as simple as that?
A. Yes. Yes.
Q. Out of interest, were you in contact with anybody else at News Corp?
A. I wasn't, no.
Q. So was Mr Michel's first or last name mentioned in this specific context as being the person with whom you had been speaking?
A. Oh yes, yes.
Q. In terms of the layout of the office, we heard some mention of that yesterday. When you were speaking to Mr Michel on the phone, was it always on your mobile phone or was it sometimes on the office landline, as it were?
A. I'm pretty certain it was nearly always on the mobile phone. I mean, there may have been a handful of phone calls, I can't quite remember, but certainly sort of 95 per cent at least would have been on the mobile.
Q. The data I provided yesterday, the number of text messages and calls, they were all derived from what your mobile and Mr Michel's mobile provide to us. There's no evidence of anything else in relation to a landline, but I suppose that would be theoretically possible to ascertain, but it seems no point, in the light of what you've just told us. Would officials have been able to overhear your conversations? How might it have proceeded?
A. That would have been unlikely, just because they wouldn't have been in the office. The special advisers' office was myself, the other special adviser and our private secretary, so it would have been I can't think of a single occasion when they would have overheard me speaking to Mr Michel, no.
Q. No. You mention Mr Michel's name in the context of discussions with departmental officials. What about discussions with Mr Hunt, if there were any? Did you mention his name in that context as well or not?
A. I can't remember whether I specifically did but I would have thought, on the odd occasion that I did mention to Mr Hunt, on one of the issues that I thought was worthy of his attention, I would, I think, almost certainly have said, "Fred's told me X, Y or Z."
Q. Did he know that you were in contact with Mr Michel or not?
A. Did Mr Hunt?
Q. Yes.
A. I believe so.
Q. Well, "I believe so"; do you know or not?
A. I think he did, yes. I mean, I would have mentioned it, so
Q. You say in paragraph 50 again, you use the word "believe" in the third line: "I believe that Mr Hunt [and then others] were all generally aware of my activities from a combination of the discussions at our meetings and our more informal contact." So are you adhering to the word "believe" or not?
A. I think in certain individual circumstances I know that they know I was, because some officials asked me to speak to him about certain issues or said, "Have you heard from Fred about I think that particular example was about the redactions of some documents. So and I would have, like I say, sort of in discussion, mentioned it, so I am pretty certain that they knew. In fact, I am certain in some cases.
Q. Indeed, there are documents which we're going to come to fairly soon which tie in with what you've just said.
LORD JUSTICE LEVESON
What you're saying is that, in relation to the generality, namely that you spoke to Mr Michel, there was awareness but you can't say in relation to any specific detail; is that the position?
A. I can say in a couple of circumstances where I know, which I think I can either talk about now or if, Mr Jay, you wanted to
LORD JUSTICE LEVESON
Mr Jay will come to it.
A. I suppose what I would say is that they generally knew I was in touch. On some certain issues they certainly knew, but I don't think they knew the volume or extent.
MR JAY
Thank you. The general point is made again in paragraph 51, isn't it, Mr Smith, about what the general understanding was and indeed what your style and approach was? Can I ask you, please, about the first sentence of paragraph 52, though? You say you received no specific instructions as to whether or not there were any limits to the type of information which you could provide. Are you intending to state there or imply that there were, in fact, no limits to the type of information you could provide, or if there were such limitation, what were they?
A. I wasn't necessarily aware of any particular limits other than and I think when we come on to some of the emails, obviously, a lot of what I said to Mr Michel, he had already been told at official meetings or through correspondence, so it was sort of reconfirming what they had already been told, and I suppose I took my sort of lead from that, really.
Q. What about wider considerations of confidentiality? Did you feel constrained by those?
A. Yes, I would use my judgment on those particular issues, but as I, sort of, detail in my statement previously, it wasn't uncommon to give advance notice of certain statements, but I would use my judgment on what to say and what not to say, yes.
Q. Certainly. Your statement makes it clear later on that you felt at one point, or maybe at more than one point, you were being bombarded by information from Mr Michel. Is that correct?
A. Yes. He sent me quite a substantial amount of correspondence that was going on between News Corporation and Ofcom and the OFT and obviously he was in touch a lot.
Q. So you felt that you were more the recipient of information than the provider of it; is that correct?
A. Yes.
Q. But did you not feel that here was a I can put it in these terms skilled public relations operator, as it were, that he would want to try and extract information from you?
A. I'm sure that's what he was trying to do, yes.
Q. Were you aware of that at the time?
A. Yes.
Q. Because, in truth, he would be more interested to find out what you were thinking, your department was thinking, really, than providing information to you, because he could provide all that information, in any event, through official channels. Did you see that at the time?
A. Yes, and actually a lot of the information that he sent me I did nothing with.
Q. Of course, you weren't that concerned with the detail of the advice and opinion coming out from Ofcom and the OFT. You were more concerned with the process and managing the relationship with News Corp; is that right?
A. Yes. I didn't have a role in, quite rightly, formulating what Ofcom and the OFT were going to advise Mr Hunt.
Q. Okay. You say in paragraph 54 that other members of the department had contact with News Corp and/or Mr Michel, and you start to list those on page 09043. I think we're going to take these as read, Mr Smith, because you've correctly set out what appears in the relevant documents, but we are going to alight on a few additional documents and expand one of them. Do you see at the bottom of the page, 54.6, that paragraph?
A. Yes.
Q. There's reference to a communication on 27 January 2011. I'm not sure that this is even on our system yet. This is additional material which came to us, I think, on Wednesday, but frankly I'm losing track of the days, but in any event it's quite recently. You were forwarded an email from within the department, and it says this: "Adam [this is on 27 January] any views how much we can sensibly tell Fred?" Obviously, Mr Michel had spoken to someone within the department, I think, in fact, it was Mr Zeff: "I would have thought we can say formally writing to OFT and Ofcom today, meeting with both on Monday to discuss process and timetable. Meetings with News Corp will follow on from this. Everyone is keen to expedite this but impossible to talk about firm deadlines at this stage. Anything more feels like a hostage to fortune, especially any reference to the two weeks." Now, the two weeks had come out of an internal discussion, had it?
A. I think so, yes. I think that was the idea, that was the deadline that Mr Hunt wanted to set Ofcom and the OFT, but I can't remember if that's definitely certain.
Q. It's clear from this email that they knew, the department knew, that you were a point of contact with Mr Michel, otherwise there's no point sending the email to you.
A. Yes.
Q. You replied back: "Looks fine to me. I'm happy with us being as open as we can. He's been pushing me quite hard, and if they want to see the OFT ASAP, I would outline the below and perhaps say we'll know more about when that will happen after the meeting on Monday." So a message then presumably did go back to Mr Michel along those lines, did it?
A. Yes, I assume so.
Q. Thank you. There's another email on the next page of your statement, 09044, paragraph 54.7. The document itself is page 10049. It's an email of 1 March from Mr Zeff to the departmental lawyers and you're copied in. So I think it's in an email additional to the one you've set out: "Seems fine to me. Fred Michel rang me about this issue this morning." So that's Mr Michel speaking to Mr Zeff. "I said that although no decisions have been taken in advance of receiving the reports I expected the Secretary of State's strong inclination would be to publish all the reports in the interests of transparency, although we would obviously consider any genuinely substantive concerns from News Corp about the need for confidentiality." Then you said: "Fine with me. I've also reiterated that Jeremy's start point is to publish pretty much everything unless there's a good reason not to." When you say "I've also reiterated", to whom had you reiterated?
A. To Mr Michel. I was responding to the point that Mr Zeff had said, "Fred Michel rang me this morning", so I was saying I had also reiterated to Mr Michel.
Q. Thank you. At 54.8, there's a typographical error, isn't there, as to the date? It's 2 March 2011.
A. Oh yes, sorry.
Q. Nothing turns on that. You've set out the substance of the email about News Corp have asked for copies of the document. The request came from Mr Michel, did it?
A. I'm not sure. I don't know. Quite possibly. I am not sure that it was me that sent that email, so I think it was an official that sent it, saying that News Corp had asked.
Q. Yes. It was a lawyer, actually. It's page 10054.
A. So it may well have been either Mr Michel or News Corporation's lawyers.
Q. At 10053, there's another email of 2 March from a departmental official to the lawyer. You're copied in on it. This is the evening before the news is going to be broken at, as it happens, 7.30 the following morning on 3 March. You'll remember that. The email is relevant because it ties in with one of Mr Michel's emails which came out the following morning. If you look at 10053, there's various information there as to the decisions the Secretary of State had made as to timetable. Do you recall that
A. Yes, I do.
Q. There's other evidence of contact. In this same file at 09865, it comes up on the screen. Has it arrived yet, Mr Smith?
A. Not yet, I'm afraid. (Pause) Yes, it's here now.
Q. What had happened is that you had received a note or a critique of this Enders' note or analysis of the UILs that had been sent to you by Mr Michel. We know that because it's page 09522. No need to turn that one up. You forwarded that to Mr Hunt, we can see that from 09865, which is the page on the screen, and then you set out at the top of the page, in an email to Mr Hunt, News Corp's initial reaction. Was that initial reaction Mr Michel's reaction or someone else's reaction?
A. That was Mr Michel's. He I essentially copied and pasted that. So when it says "my initial reaction", that's Mr Michel's. I had copied and pasted that from an email from Mr Michel, which also, as it says at the bottom, attached examples of other undertakings in lieu, which I don't believe I forwarded to Mr Hunt.
Q. Did Mr Hunt know that Mr Michel was the source of this initial reaction or not?
A. I don't know for certain that he knew that. I would imagine that he would have guessed that that's where I'd got it from, but I don't know for certain.
LORD JUSTICE LEVESON
It has to be News Corp, not only because of the first four words, but also because the first bullet point speaks about "we" in the context of BSkyB, doesn't it?
MR JAY
Oh yes. You remember during the course of yesterday's evidence there was reference to News Corp's rebuttal of the Slaughter May document, which was on 24 March. There was going to be a meeting, indeed there was a meeting with the coalition on 24 March. Mr Michel's team had prepared a table, which set out the Slaughter May view and rebuttal of it.
A. Yes.
Q. Mr Michel provided that to you. Do you know whether you provided that rebuttal to Mr Hunt or not?
A. I didn't, no.
Q. You didn't.
A. I was fairly certain that Mr Hunt was aware of News Corp's position, so didn't really need to see that amount of detail, and the meeting was for him to listen to the other parties, so I didn't see the need.
Q. So he was aware of News Corp's position because it had been publicly stated or some other reason?
A. Yes, and they'd obviously made representations regarding the Ofcom report and they'd obviously also, by that stage, offered undertakings in lieu, so he would have been aware of what News Corporation thought of those undertakings from the discussions that he had with them.
Q. In paragraph 57 of your statement, we're back to 09044, you say: "The emails also demonstrate that other key members of the department were aware of the nature of the contact which I was receiving from Mr Michel." We looked at the key ones, haven't we? At no time did any individual express concern about the level of your involvement or provide any guidance?
A. Yes.
Q. What we're going to do now, Mr Smith, is look at some the most important documents in KRM 18 and see where we are on those, and also at key moments identify whether there was any discussion with anyone else pursuant to any conversation you had with Mr Michel. We're not going to look at every single one, otherwise it's going to take too long. We're going to cross-reference this with your witness statement, because you set out your case in relation to each document there very clearly, don't you?
A. Yes.
Q. Probably we can start at 01667. This is in the PROP file, because we're back to KRM 18. Do you have this in front of you?
A. I have, yes.
Q. You remember this one. This is the legal advice not to meet with Mr Murdoch today because it's a judicial process, not a policy one. Did you understand that distinction at the time?
A. Yes, I believe I would have done. I think that was probably the first time that we'd discussed quasi-judicial in one way or another.
Q. Can you assist with the last sentence of the first paragraph: "Jeremy is very frustrated about it, but the Permanent Secretary has now also been involved." Do you have any knowledge of that or not?
A. I'm afraid I don't really, no.
Q. We know from the core records that you spoke to Mr Michel that day twice, once for one minute and the second time for six minutes. I suppose the question is: did you communicate Mr Hunt's frustration and the fact of the Permanent Secretary's involvement to Mr Michel?
A. I certainly don't remember doing so. I may well have phoned Mr Michel to say that, unfortunately, Mr Hunt could no longer meet Mr Murdoch, but I don't think I would have put it like that and I don't remember putting it like that.
Q. Were you aware at that stage of the advice being passed around the department as to whether it was appropriate for Mr Hunt to speak to Dr Cable, for example, about the bid?
A. I didn't remember it until I saw it in the bundle of documents. I don't know that I saw it at the time or not, but I would have probably been generally aware of it, yes.
Q. Was the position simply this, that Mr Hunt was concerned about the way the bid might be going in the hands of Dr Cable and that you knew he was frustrated because he wanted to speak to Dr Cable and involve him at a policy level on the merits of the bid more widely? Is that your understanding?
A. Not really, because I think the frustration, if there was any here, was more about Mr Hunt wanting to talk to Mr Murdoch about the bid and the broadband and local TV and all sorts of other issues. I'm not sure that that frustration relates to Mr Cable, but I don't know myself.
Q. You're right to say the frustration arguably goes out in two directions. It certainly here is relating to an inability to speak to Mr Murdoch, that's precisely correct, but more widely was there a similar frustration about the legal constraint on him speaking to Dr Cable?
A. I don't particularly recall him being that frustrated about it, no.
Q. Okay. Can you help with the second paragraph about the reference to the advice? The way that reads is that's Mr Michel's advice. Do you see that, Mr Smith?
A. Yes.
Q. I suppose the question is: did you express a view which is consistent with Mr Michel's advice?
A. I may well have said that the advice that Jeremy has received is that he should not meet Mr Murdoch, so I may well have been, sort of, you know, explaining that to him, yes.
Q. But what about the bit which follows: "You could have a chat with him on his mobile which is completely fine." Did you say that that was appropriate?
A. I don't remember saying so, no.
Q. Then: "I will liaise with his team privately as well." Did you make that clear to Mr Michel that that could happen?
A. I would have said that I may well have said that he could stay in contact with me and the officials. I think the word I don't think I would have said "privately".
Q. "Privately" may just be an inference, but I'm sure it's not an adverb that you yourself employed, is it
A. No, no.
Q. because you wanted to be open and transparent, after all?
A. I think it was either before or after this that Mr Michel did send me some briefing notes on actually, I think this was after.
Q. Can we move forward now to 31 December? 01684, I think it is, the email at the top of the page.
A. Yes.
Q. Maybe we should look sorry, Mr Smith at the previous email, 01683, although you weren't party, were you, to the conversation Mr Michel had with the department because that was a conversation with Mr Hunt directly on Christmas Eve; do you remember that?
A. Yes, I believe so.
Q. Did you have a discussion with Mr Hunt after that conversation or not?
A. I think it would have probably been unlikely, given that it was Christmas Eve. I can't remember speaking to him and by that stage I think I was back with my family.
Q. On 01684, this is now New Year's Eve, there's no evidence of a conversation sorry, no evidence of a telephone conversation between you and Mr Michel. Were you off work that day, as it happens, or not?
A. Yes, I was, yes.
Q. The report itself, do you know when it was received within the office?
A. Well, I'd only found out when I came back in the new year that Ofcom had delivered it on the 31st. I don't know to who or at what time, because, as I say, I wasn't there.
Q. Okay. Can we move on now to 01687, which is 10 January? Allow you to get your bearings on this one. The phone records show three telephone calls totalling 27 minutes, 55 seconds, Mr Smith. Do you remember anything about those calls?
A. I don't particularly. I mean, my memory's sort of been prompted by looking at this email, but I didn't really remember it beforehand.
Q. Can we be clear which parts of this you might dispute. First of all, if we look at the tone now the same point is going to arise on tone, I imagine, throughout do you have a comment on the tone?
A. Well, I think things words like "making a plea" and those, kind of, sort of, more, I suppose, positive, in a sense, for News Corp sort of tone, I don't believe that I would have phrased things like that. I mean, I can understand in this particular email, for instance, that we may well have had a conversation about the issues that Mr Hunt had raised with Mr Richards, but in actual fact, the minutes of the 6 January meeting that Mr Hunt had with News Corporation, Mr Hunt actually set out the issues that he was going to ask for more information from Ofcom for to Mr Murdoch.
Q. Yes.
A. So we may well have discussed or I may well have confirmed that yes he did indeed mention those things that he mentioned to Mr Murdoch when they met, sufficiency of plurality being one of those. So I think I probably, in that conversation, did confirm that, you know, the information that Mr Hunt had already said to Mr Murdoch, but I don't recognise the and the plea to find as many legal errors, again, when Mr Hunt wrote to Mr Murdoch with a copy of the Ofcom report, he invited comment and representations on that, so he had asked for their views on it. I wouldn't have put that as a plea for such
Q. I think Mr Michel rowed back from the word "plea" when he gave his evidence yesterday. Can I ask you about the middle of that email? You see the reference to: "He understands the cost of a CC referral and the potential damage for the bid." Are you likely to have said that?
A. No, I wouldn't have thought so. If Mr Michel had said there would be a cost, I may have just acknowledged that he'd said it, but I wouldn't myself have said, "There's a cost".
Q. The potential damage for the bid? You don't think you said that?
A. I don't believe so, no.
Q. But wasn't it obvious that there was an attendant cost on the CC referral and the delay could damage the bid and that was a concern within the department which you either reiterated or stated to Mr Michel? Would you agree with that?
A. I don't think the department was bothered about cost to the bid, no.
Q. Or the potential damage for the bid?
A. No, no. The department didn't mind one way or another.
Q. I think it's clear then that that particular sentence you dispute quite strongly, Mr Smith; is that correct?
A. Yes. I don't remember saying that and I didn't think that was the position that the department had.
Q. The reference to Mr Richards there is
LORD JUSTICE LEVESON
Well, I am not sure that quite addresses Mr Jay's question, Mr Smith. You may say, "I don't remember saying something and I don't think that was the position", but going back in your mind to the occasion, is there any circumstance that you can visualise where you might have said something like this?
A. Well, as I say, if Mr Michel had sort of said, "Obviously, you know there's a cost to the bid and it might damage it", then I may have said, "I acknowledge that, I understand that", but that wouldn't have been me saying, "I agree and therefore the department is also worried about the damage or the cost".
LORD JUSTICE LEVESON
Yes. Might you have given him advice to mention it in their documentation?
A. Not specifically. I mean, I'm fairly sure they would have mentioned it anyway.
LORD JUSTICE LEVESON
Yes, all right.
MR JAY
The interdepartmental meetings you had put Mr Hunt out of the picture for the time being there must have been discussion more widely about the consequences of the bid being referred to the Competition Commission, Mr Smith, isn't that right?
A. I'm sure that we discussed I'm not sure that we did really discuss what the consequences were, because the consequences of a referral to the Competition Commission weren't consequences for the department. I mean, we weren't they would obviously have consequences for News Corporation, but I don't know that we would have spent much time discussing what those may or may not have been. I can't remember doing so, anyway. It would seem unlikely.
Q. Actually, it would seem rather likely, because, although you might have wanted I'm sure you would have wanted to keep the issue narrowly to that specified in the Enterprise Act, we understand that, the department would surely have had a wider policy view as to the ramifications of certain consequences, wouldn't it? It would have been unthinkable that it didn't.
A. But a referral to the Competition Commission was just one part of that process. I am not sure that there were policy ramifications that would have followed that. I mean, by this stage, Mr Hunt had said he was minded to refer it to the Competition Commission and had told News Corp as much.
Q. The meeting with Mr Richards then, which was referred to, that was a meeting Mr Hunt, Mr Richards on 10 January; is that right?
A. Yes, that's right.
Q. Do you accept that the information we see in this email must have come from you?
A. I the substance of it, I certainly do. But, as I said earlier, on 6 January when Mr Hunt met with News Corporation, he outlined four areas that he was going to talk to Ofcom about, and in the meeting with Ofcom he then said, "I want to share your answers to these points with News Corporation". So News Corporation would have been aware of the sorts of issues that well, of the specific issues that Mr Hunt was going to talk to Mr Richards about.
Q. Yes, but the what Mr Hunt exactly told Mr Richards and the timing of the provision of that information back to News Corp, that revolved entirely on what you told entirely on what you told Mr Michel on this occasion, would you agree?
A. The information that I would have told him was exactly the same information that they had already been told on 6 January, and the minutes of that meeting do outline the four in fact, there's not as much in if this email is, sort of, at least broadly accurate, Mr Hunt had four quite substantial points that he was going to raise with Ofcom, which he explained to News Corporation, which the minutes of that meeting clearly show that he explained to News Corporation, so
Q. That may be right, but at least you're providing confirmation of what Mr Hunt told Mr Richards, and you're also providing fresh information as to what Mr Richards' position was because you see the sentence: "Ed was adamant that the threshold was very low That, in fact, is correct, as a matter of law. " and referral was the only option." That would be a matter of opinion. But unless you told Mr Michel that, he wouldn't know that, would he?
A. Well, I would have been confirming what Mr Hunt had said, but in the meeting that Mr Hunt had with Ofcom, the minutes of that meeting show that he wanted to share Mr Richards' answers to those questions with News Corporation.
Q. Mm.
A. So, in this sense, that's what I was doing.
LORD JUSTICE LEVESON
Were you present at this meeting with Ofcom?
A. Yes, I was.
LORD JUSTICE LEVESON
Well, would you expect Mr Richards of Ofcom formally to respond? He might chat through the issues, but wouldn't you expect Ofcom formally to write a letter in response so that they have the benefit of a considered opinion rather than just the reaction?
A. They may well have also done that, yes. I can't quite remember whether they did or not, but, as I say, Mr Hunt had been quite clear that he wanted to share the views and the point about what Mr Richards said there. That's just inferred from the Ofcom report, which had said the threshold was low and had said that referral was what their recommendation was, so I don't believe either of those two points weren't already well known to News Corporation.
Q. Let's look at another email, 01692, 23 January. This is the Sunday morning email. We'd ascertained yesterday there was a 17-minute conversation the evening before, the Saturday evening before. Do you remember that, Mr Smith?
A. Yes, I do.
Q. The timetable. The reference to the two weeks. Do you see that as the fifth bullet point?
A. Yes.
Q. That was something that we saw about half an hour ago you weren't going to set out in the email of 27 January. Do you recall that?
A. Yes.
Q. You were providing, as it were, on this occasion it was four days before, of course, 27 January information which you weren't prepared to set out in an email communication, is that fair?
A. I was reconfirming something that Mr Hunt had told News Corporation on 20 January. The minutes of that meeting show that Mr Hunt said that the consultation will be 15 days. So, in actual fact, I was probably slightly out, but I would have been reconfirming that the timetable that Mr Hunt had set out three days previously to my phone call with Mr Michel.
Q. What about the prediction that it would all be done by mid-February? Did you say that?
A. I don't think so, but that sounds sort of like speculation from a sort of chatty conversation with me and Mr Michel. I don't think I would have said as definitively as that.
Q. I'm sure it wouldn't be stated in terms of guarantee, but in terms of speculation, is that something you might have shared with Mr Michel then, Mr Smith?
A. Well, I think it follows naturally from if Mr Hunt is making a statement on 25 January and that there was going to be a 15-day consultation, then that would given a bit of time between the two to get the consultation ready, then that would have sort of followed that mid-February would be when that would end.
Q. So are you likely to have said that, aren't you?
A. Well, we may have discussed it. I think that could have been something that Mr Michel said or something that I said.
Q. If he said it, it is something which you assented to, would you agree?
A. I may well have said that that sounded about right or something along those lines, yes.
Q. What about the next sentence, which I think is possibly going to be more controversial between us: "His view is that once he announces publicly he has a strong UIL, it's almost game over for the opposition." Mr Michel was clear that you did say that but may I have your evidence on that point, please?
A. I think that that is a sort of colourful explanation of the process. If you have an undertaking in lieu that Ofcom and the OFT, say, satisfies the plurality concerns that Ofcom had identified, then the whole point of that is that then there are no plurality concerns, so the deal would go ahead. I don't remember saying, "Game over for the opposition", but I can imagine we had a conversation along those lines about the process and, you know, talking around what happens.
Q. So your point is that, although the terminology may be a bit flamboyant and you're certainly not sure you used that term, in fact, this is a proposition which is fairly unremarkable because strong UILs would mean that the opposition, as it were, would lose much or most traction; is that correct?
A. Yes.
Q. What about the next sentence: "He understands fully our concerns/fears regarding the publication of the report and the consultation of Ofcom in the process, but he wants us to take the heat, with him, in the next 2 weeks." Do you think you said that?
A. I may have said that I understand that you don't want the Ofcom report to be published, and I would have reminded Mr Michel that Mr Hunt had already told News Corporation that the Ofcom report was going to be published. Again, the "take the heat, with us, with him" kind of expression, that wouldn't have been I mean, I don't think publishing the Ofcom report wouldn't create any heat for Mr Hunt because he was following Ofcom's advice.
Q. Okay. He very specifically said
LORD JUSTICE LEVESON
Hang on, hang on. That has to be read in the context of the preceding sentence: "His view is that once he announces publicly he has a strong UIL, it's almost game over Then there's the publication of the Ofcom report, so there will be heat on the Secretary of State, won't there?
A. Um
LORD JUSTICE LEVESON
Isn't that the point? He's saying he's going to come out by talking about a strong UIL and game over, then the plurality issues are solved, but once the Ofcom report comes out, which has all these comments which you've been talking about, well, then there's going to be some flak, and are you inviting Mr Michel to encourage News Corp to share that adverse publicity with him to help deal with it?
A. No, because I think at this stage the UILs Mr Hunt didn't describe as strong. He announced a few days later that he was minded to refer the deal to the Competition Commission but that News Corporation had offered a UIL and it was right that he consider it, but I don't think he would have said in fact, I don't think the statement subsequently demonstrates that he said it was strong. So I'm not sure that that would have been what I'd said, no.
LORD JUSTICE LEVESON
Well, of course, one has to be careful that one is looking at what was discussed on the morning of Sunday, 23 January, not what happened two days later when actually announcements were made.
A. But I think the substance of this email had been discussed with News Corporation three days before, and it had all been set out that they were going to publish the Ofcom report, that the OFT and Ofcom would look at the UIL that they had received, but there was no mention of it being strong, that if they came back with advice, there would be a consultation, that was all set out in a meeting with News Corporation and I don't believe a strong UIL I mean, I'm sure that News Corporation described it as a strong UIL, but I don't believe Mr Hunt did.
MR JAY
I think what Mr Michel was trying to do was to pry deeper into departmental thinking on this and he was, if his email is right, achieving greater revelation than emerged at the meeting on 20 January. Do you see that, Mr Smith?
A. I'm not sure that I would because, as I say, the points of substance in this email match almost perfectly to the minutes of the meeting on 20 January.
Q. Apart from it provides insight into what departmental strategy was, and particularly if you read on: "He very specifically said that he was keen to get to the same outcome and wanted JRM to understand he needs to build some political cover on the process." Did you say that?
A. I wouldn't have said that. The "same outcome" was not something that I mean they didn't have the same outcome.
Q. Why not?
A. Well, Mr Hunt's sort of aim was to follow the process, whereas I'm sure Mr Murdoch's aim was to acquire the remaining shares.
Q. Mr Hunt's statutory duty was to follow the process in a quasi-judicial way in the context of the Enterprise Act, but he also had a wider objective which you well understood, didn't you, Mr Smith?
A. A wider objective?
Q. You're looking at me incredulously. The wider objective was the same outcome, namely the securing of the bid for News Corp, because he thought, in policy terms, that was desirable.
A. That wasn't his objective. Now his objective is to carry out his legal and statutory duties.
Q. He had to be loyal to his legal and statutory duties, so that that was one compartment of his mind. At the same time you well knew that another compartment of his mind was favourable to the bid because he saw great advantages to the United Kingdom in News Corp securing the bid. You knew that, didn't you?
A. Well, he had then received expert advice which showed that there was potentially a problem, and so his objective was to, as you rightly say, follow his statutory duty, follow the expert advice, and that's what he did.
Q. Okay. So the line three lines from the end: "He said that we would get there at the end and he shared our objectives." It follows from what you've just said that you couldn't and wouldn't have said that?
A. Yeah; correct.
Q. I should also deal with three lines earlier, actually: "If were to follow our option 1 and not provide any details on the Ofcom report, he would be accused of putting a deal together with us behind closed doors and it would get in a much more difficult place." So taking that in stages, News Corp's option 1 was indeed not to provide any details on the Ofcom report, wasn't it?
A. I would guess so from this. I know they were organising not to publish the Ofcom reports.
Q. That was their plan A, and it was also pretty obvious that, if plan A were followed, that would have a political downside because people would be saying it's a stitch-up, and that's what Mr Michel was clearly communicating to you, or rather you were explaining to him and you reached an understanding about that, didn't you?
A. Again, I would have reiterated what had Mr Hunt had said three days beforehand, where he said that the Ofcom report would be published, and I would have probably been explaining the same reasoning that Mr Hunt gave at that meeting. I mean, he had said the report was going to be published and I would have said as much now.
Q. Okay. Can we move on to the evening of that Sunday?
LORD JUSTICE LEVESON
Just before we leave this email, Mr Smith, do you understand that reading this email just as an email, it is at least implicit that there is common cause being fought here?
A. I think if you take this email as 100 per cent accurate, then I can understand that, yes.
LORD JUSTICE LEVESON
Right. Now, there are three possibilities. The first possibility is that this reflected accurately the Secretary of State's view. The second possibility is that it didn't represent the Secretary of State's view, but represented your perception of where the Secretary of State was or would become. And the third possibility is that this just doesn't fairly reflect the conversation at all.
A. I think it's a bit of a mix, actually, because it does reflect the detailed the substance points about what was going to be published and what the OFT were going to do, what Ofcom were going to do, the fact that there would be a consultation. Those points are factually accurate because Mr Hunt had already told News Corporation those same points three days beforehand. The tone of it I would dispute, yes.
LORD JUSTICE LEVESON
So as to that, you say it is the third of the three options I've given you?
A. I think the third one was you saying that it doesn't reflect the conversation at all.
LORD JUSTICE LEVESON
Correct.
A. Well, I think it would have reflected my confirmation of those points, but beyond that, no.
LORD JUSTICE LEVESON
Yes, that's why I prefaced my question by referring to the implicit nature of the email, not drilling into specific facts.
A. Oh, okay. In that case, yes.
LORD JUSTICE LEVESON
All right.
MR JAY
The evening of that self-same Sunday, 01693, Mr Smith. It's really reiteration of some of the points we'd already seen in the morning email, isn't it?
A. Yes, I believe so. I think this was another attempt at not publishing the Ofcom report and things like that. Yes.
Q. The reference to the publication of the Ofcom report helping him, that's Mr Hunt, to buy some time politically, do you agree that you might have said that?
A. No. I mean, I would have said that we are publishing the Ofcom report to be as open, as transparent as possible.
Q. "And he's keen for me to work on the statement during the course of tomorrow." Might you have said that?
A. Certainly not, no.
Q. Why were you prepared to speak to Mr Michel on a weekend like this? What was the urgency?
A. I don't particularly believe there was any urgency, but if I was phoned or had a missed call, I would call him back because I would think that was the right thing to do.
Q. At this stage, your relationship with him was warm and friendly presumably, was it?
A. Yes. He's always struck me as friendly.
Q. As I said later on, certainly by the time we get to June, there was possibly a chilling in the relationship as I think frustrations had built up on both sides by then. Would that be a fair characterisation?
A. I think after six months of weekend calls and things like that, I was getting quite frustrated, yes.
Q. 01695, this is 24 January. We're now on the Monday afternoon. Bear with me, please. There are various text messages which preceded this, as well as an 18-second conversation. The text messages are ones we looked at yesterday. They're the exhibit to Mr Michel's first statement at 03256, although they're not particularly revealing. Do you recognise at least the substance of the email in terms of the facts therein stated and there, by implication, the conversation you had with Mr Michel?
A. Sorry, the email's just disappeared. Ah, thank you. I certainly recognise things like "He will thus confirm that Ofcom recommended him to refer", because, as I say, Mr Hunt had already told News Corporation that.
Q. I think you dispute the sentence: he has tried to get a version which helps us." Which is the second bullet point.
A. Yes. I mean, the statement by this stage had been started to be drafted and none of the drafts that I saw or indeed the statement that Mr Hunt gave in the end qualified the threats identified by Ofcom. In fact, said that Mr Hunt agreed with them and I don't believe it was helpful.
Q. It's fair to you, on this occasion, to reemphasise that we only have an 18-second telephone call and we have a series of fairly limited text messages, so whatever inferences may be drawn from that could be drawn from that.
A. I think
Q. Do you see the point?
A. Yes, and I think things like the timings of the press statement, I believe he'd been in touch with another official on that, and a Parliamentary written statement, I'm not sure that I think they all go out at 9.30. I'm not sure that that's kind of confidential, so he could quite easily have found that out from a variety of sources.
Q. You've noted, of course, the bit he's put in bold in the parentheses: "Although absolutely illegal." Is it possible you gave him the impression that you were providing him with a sneak preview of something which you perhaps ought not to have done at that stage?
A. No. I mean, I don't really understand that point, because, again sorry to sort of reiterate it again but these points about referring to Ofcom and having a consultation, four days earlier Mr Hunt had sat in a room with Mr Murdoch and explained that that's what was going on happen next. Um, the minutes of that meeting were then published, if not on the 25th then certainly maybe in March, I can't quite remember, but so I don't I would not have been saying anything here that hadn't already been said to them, so I'm not quite sure where the sort of excitable tone in the bold bit would come from.
Q. Okay. Let's move on to a different email. I think there's more relevant material to put to you. 01704, the morning of Tuesday, 25 January, this is the one about: "He can't say they are too brilliant otherwise people will call for them to be published." The "too brilliant" relate to the remedy, and the remedy, of course, is the UILs. Do you follow me?
A. Yes.
Q. Your text message, which is set out at 03245, timed at 8.03 that morning: "There's plenty potential to mitigate problems! We can't say they are too brilliant otherwise people will call for them to be published. Will check on meetings." So what were you intending to convey by that message?
A. I think by this stage, Mr Michel had got quite cross that Mr Hunt's statement didn't, as he had been asking for and pushing for previously you will call the UILs strong or brilliant or, you know, some sort of description like that, and the first part of my text was a bit of a the potential to mitigate problems bit was paraphrasing what Mr Hunt's statement had said that had gone out slightly earlier that morning, was an attempt by me to say there is support for the UIL. I mean, if you read what Mr Hunt said, I mean it didn't support the UIL, so my attempt there was quite sort of shaky ground, if you like. Then, the other part was too flippant and jokey, I admit that.
Q. The position is that Ofcom was recommending a referral to the CC. The UILs had been published or at least published internally on 20 January and this was the remedy which would prevent the referral to the CC if they were strong enough, but the departmental view, apparently, was that the UILs were solid, were good indeed it was your term, "brilliant", but you couldn't say they were brilliant, otherwise that would undermine the process and, what's more, as you rightly pointed out, people would ask for them to be published. Don't you accept that that's the only reasonable interpretation?
A. That was an attempt by me to pacify and mollify by being slightly disingenuous. If you read what Mr Hunt had said, he didn't say they were brilliant.
Q. No, because he couldn't say they were brilliant, because if he did, he would appear parti pris, but the internal thinking was that they were the solution, and you were telling Mr Michel, "Yes, we agree they're the solution, but we can't say that expressly", don't you see that, Mr Smith?
A. I'm not sure that the department at that stage had had a view on them, because, for instance, we hadn't received the final versions of them. They came from News Corporation a few days later, so and I certainly wouldn't have read them in detail by any stretch of the imagination, and it wasn't for me to decide whether they were the solution or not. That was for Ofcom and the OFT.
Q. Yes, it wasn't for you, but the department would nonetheless have a view about the quality of the UILs, wouldn't they?
A. I'm sure individuals each individual in the department had a view, yes, but I mean they were quite rightly and understandably lengthy and technical undertakings, which needed to be looked at by those who were experts in that area.
Q. No doubt it wasn't a final considered view, but the preliminary view of the department was that these were good UILs, and you were communicating that sentiment to Mr Michel, weren't you?
A. Well, they were good enough to be considered, because that's what Mr Hunt had told News Corporation on 20 January, and that's what he had told Parliament. It was right that he consider them, but they weren't anything more than that.
Q. I think your position is that the "too brilliant" was really disingenuous on your part to get the guy to shut up, is that what it amounts to
A. Yes.
Q. and not an insight into either your thinking or anybody else's thinking. Is that what also it amounts to?
A. That's correct.
Q. Let's move on to the next email, 01705: "Just had a chat with JH." That's you. It's not a chat, it's a text message.
A. Yes.
Q. before he went to Parliament to get further reasons why not stronger support of the remedy." They're still trying to find out from you why you are not publicly providing stronger support for the UILs; do you agree with right?"
A. Yes.
Q. The email said: "He said he had no legal wriggle room in a statement to Parliament." That's what the text message says. Text message says: "Other than what Jeremy and I have told you, we have no legal room in a statement to Parliament." What did you mean by that?
A. Well, other than what Mr Hunt had told them on the 20th and what I then reiterated, that they were going to be considered, we hadn't come to a view and therefore Mr Hunt couldn't speculate on them in Parliament.
Q. Of course he wouldn't, because if he did, he would be pre-judging the issue, wouldn't he, Mr Smith?
A. Yes, I assume that's what I was referring to in terms of
Q. You were stating what was obvious, in one sense, that he couldn't mislead Parliament, that he had to say to Parliament, "We've just got the UILs, they need to be considered properly in accordance with due process", but the message you're giving to him, particularly the use of the language "legal wriggle room", is, in fact, the private view of the department is that these are rather good UILs. Isn't that the reasonable inference one can draw?
A. I think again this is another example of me trying to get him off my back.
Q. One strategy you might have used by this point is simply to turn off your mobile phone, frankly. Weren't you reaching the point that this was getting much too close now, to this man?
A. I don't think that I would have been doing the job that I had assumed in terms of being a point of contact with News Corporation if I'd stopped being the point of contact with them. I mean, in hindsight I would have maybe liked to have at some stages to have had a break from it, yes.
Q. Yes. It's impossible, Mr Smith, to identify a moment at which some might say, well, you've crossed the line, do you follow me, because this is an accumulation of material and there isn't a, sort of, a chasm and which you can say, well, you've now jumped into it because you are acting inappropriately. If you look at the next text messages and perhaps the relevant email, 01707, this is the one where there's a reference to: "JH believes we're in a good place tonight." Do you remember that one?
A. Yes, I do.
Q. The antecedent text messages say this is at our page 03245, it's not necessary to turn it up we saw it yesterday, but I'm going to read them out. Mr Michel to you: "Today went well, look at the coalition campaign statement, so weak!" You don't reply to that. So he waits four hours nearly and then texts again. It's 10.26 at night: "I think we're in a good place tonight, no?" Then three minutes or slightly less later, you say: "I agree, coverage looks okay, let's look again in the morning though." So "Let's look again in the morning though" must be a reference to the morning papers?
A. Yes.
Q. Obviously. But you're agreeing with his proposition, "I think we're in a good place tonight, no?" "I agree", do you see that?
A. I see that that's how, in the sort of many months later that looks, yes, but I think this is maybe where the weakness of text messages come in, in that I was agreeing that I think Jeremy thought his statement had gone well. I'm not the "we are in a good place", maybe I should have said, "I think Jeremy is happy with how it went", rather than, "I agree", but text messages aren't quite used in that way, so I was certainly referring to Jeremy was happy with the way his statement had gone.
Q. How did you know he was happy with the way his statement had gone?
A. Well, I would have spoken to him, I'm sure, afterwards.
Q. It's part of the informal communications you've been describing to us yesterday and earlier today. You were, at this point, in quite frequent contact with Mr Hunt, weren't you?
A. Yes. If there was a big set piece like that, I think also on that day we may well we would have almost certainly described how we thought it had gone, yes, definitely.
Q. It would have been inconceivable had there not been a chit chat about it, wouldn't there?
A. I think so, yes.
Q. As part of that chit-chat, albeit informally, Mr Hunt would have expressed a view about the UILs to you, wouldn't he?
A. I don't think he would have necessarily done, at that stage, beyond because like I say, he, I don't think, would have gone into them in huge amounts of detail. He would have looked at the advice from officials and looked at the end UILs and come to the view that they were worthy of Ofcom and the OFT looking at, and I suppose they must have been good enough to meet that criteria, yes, but beyond that I don't think we would have discussed much more.
Q. Mr Smith, he must have had a preliminary reaction to them. I don't think anybody would suggest he could have properly reached a final view about them and expert advice would have been necessary anyway. But it would have been contrary to human nature to think that, at least provisionally, he didn't have a view about them
A. Well, no, I think his view was that they were certainly that they weren't so bad that they wouldn't have come close to remedying the problems, and therefore they needed to be properly looked at.
Q. But it went much higher than that, Mr Smith, that you were saying in the earlier text message, "We can't say here too brilliant". I'm not putting to you that Mr Hunt used the phrase "brilliant" or anything like it, but he must have given you some indication that the UILs were more than satisfactory to his provisional perception. Would you agree with that?
A. No, I think those texts were me being flippant and, in hindsight, too loose with my language. I don't think that they're evidence of that at all.
Q. Well, whatever your texts say, you knew, didn't you, what Mr Hunt's view was about the UILs at that stage?
A. Yes, and I think I've explained it.
Q. So it was little more than a studied neutrality, really: we're not going to put them in the dustbin, they're worthy of consideration, let's see what the experts say. It was just that, was it?
A. I think it would have to have been slightly more than that for them to have been considered. I think you have to make an initial judgment that they may mitigate the problems that Ofcom have found in their report.
Q. Thank you. Press on. Just bear with me, Mr Smith. Seeking to look at every single one of these. 1709, apart from the use of the word "privately" at the end, is this an email which you would recognise?
A. Its um yes. I am not sure Steve Hunger, or that I particular I assume the JH at the bottom is probably a reference to myself.
Q. Yes.
A. I asked to share the OFT letter I would have probably if Mr Michel said, "Would you like to see it in" I would probably have said, "Fine, send it". Likewise for the business plan. But in terms of what Ofcom and the OFT were looking at, then that's a reconfirmation of what Mr Hunt had said to Parliament and to News Corporation already.
Q. Okay. Let's look at 01712, the Friday afternoon email of 4 February. There are some text messages here. A phone call at 9.24 in the morning I think it was the morning of 3 February which lasted 23 minutes, 15 seconds, but no phone call on the Friday evening, but some text messages on the Friday evening. Mr Michel to you: "Are you able to send me the Enders and Slaughter documents. Would help me prepare for the public debate, enjoy golf." So you were playing golf that weekend, it seems. Then you say at 17.30: "I haven't actually got them at the moment. Officials just told me about them. Don't mention them to anyone like OFT, et cetera. I will and if you if we need them, I'll show you." Why did you say don't mention them to anyone like OFT, et cetera?
A. Because it was the department that would send any of the relevant submissions to OFT and Ofcom, which I think they did subsequently, so they were submissions for the department to do with them as they saw fit.
Q. One possible inference is that you were going to do something a little bit surreptitious. Would you accept that?
A. I do accept that it looks like that way, yes, but I don't believe anything like that happened.
Q. Mr Michel might have got the impression that you were acting a little bit conspiratorially, you see, and that you were now pretty much on side. Do you feel that that was a reasonable perception he might have derived?
A. I'm not sure that he would have derived that I was on side from that text message, no.
Q. The assessment at the start of the email: "Feels overall the process is in a good place and the media attention on the remedy has disappeared." First of all, had media attention on the remedy disappeared?
A. I honestly can't remember. I would imagine there was this is not that long after the fact that Mr Hunt had said there was a remedy, but this is before the remedy itself had been published, because that, I don't think, was published until March.
Q. Mm.
A. So I can remember that there was some sort of speculation of what that remedy might be, but I don't know that there was a great deal of press coverage.
Q. Might have you given him the impression that, overall, the process was in a good place?
A. If I had, I mean I can't remember doing so, but I would have meant that the statement had gone well and the remedy had been I think yes, by this stage it had been sent to OFT and Ofcom, and that they were considering it, so the process was being followed, I suppose, was working.
Q. If you regarded this process as no different from any other policy issue, which I think is paragraph 51 of your statement, why would you insulate from consideration wider policy considerations which either you were sympathetic to or you knew Mr Hunt was sympathetic to?
A. Which wider policy considerations?
Q. Well, the fact that, regardless of the strict test in the Enterprise Act, you would have regard to whether this bid was in the wider interests of broadcasting, newspapers and news media in the United Kingdom?
A. Oh, I see. Well, because the one caveat that I added to my treating it as a normal policy project was that I was aware that Mr Hunt had to consider it only along the lines of media plurality and so that was what he was basing his considerations on and that alone.
Q. 01717, 9 February. There's a lot of material around this one. There's one text message I hadn't referred to with Mr Michel earlier that afternoon on 9 February at 14.13 hours, our page 03247. You said: "Take your stab proof vest with you. I'm hoping for an update later on process. Will let you know of anything new." What was that on reference to? Can you remember?
A. News Corporation were well, I think Mr Michel had told me that they were going to see Ofcom and the OFT to discuss the remedies. In fact, I think he may have even emailed me the agenda that they'd agreed, and knowing the tension between
Q. It's someone else, actually. You're meeting I think it was Lord Black, or they were meeting Lord Black that afternoon.
A. Oh, really? Oh, okay, sorry. So that would be my well, knowing that he was against the bid, that would have been my rather flippant comment
Q. Oh, I see.
A. which, again, I wouldn't have used that language again, if I had the opportunity.
Q. Yes. So the context is clear now. He was going to they were going to see someone who was against the bid and you were saying rather flippantly, "Put on a stab proof vest". It's as simple as that.
A. Yes.
Q. So it's another example of flippancy generated, perhaps, by the fact that this is a text message and people sometimes are flippant on text. Is that it?
A. Yes, and clearly not as funny as I thought it was at the time.
LORD JUSTICE LEVESON
Mr Jay, we've had an hour and a half.
MR JAY
Oh, have we?
LORD JUSTICE LEVESON
I think we ought to give the shorthand writer a little break. We'll just take a few minutes. (10.58 am) (A short break) (11.06 am)
LORD JUSTICE LEVESON
I'd be grateful if everybody could make sure that their mobiles aren't near microphones because there's apparently been some interference.
MR JAY
I overlooked a relevant text on an earlier email, I'm sorry. 01705, which is Mr Michel's email of 25 January. This is the legal wriggle room email. The email goes on to say: and he only needs some space to prevent any accusation of deal-making at this stage." There's a text from you which says: "It's all exactly as we said. We just need space." Do you remember that?
A. Yes.
Q. What were you intending to convey by that text?
A. That we needed space and time to consider the UILs and Ofcom and the OFT needed time to do so. My text didn't say the subsequent remainder of that sentence.
Q. The reference to "space" rather than "time" sort of creates a political dimension here. You were, were you not, communicating the basic message, notwithstanding the Ofcom report, it all had to go to the CC, the UILs were the way of avoiding that consequence. Politically, you needed space for those UILs properly to be considered and to avoid the accusation of deal-making, but, at the end of the day, the UILs would secure the intended result, namely no reference to the CC. Do you accept all of that?
A. No. I was saying that we needed space and time to consider the UILs.
Q. You don't accept that the term "space" imports something more than time? Do you see what I mean?
A. I do see, yes. I mean, this is probably again, text messages are not the best way to convey
Q. It's just the accumulation of text messages, which arguably give rise to an impression. One can't identify one particular message and say, "Aha, this means X rather than Y", it's just the series of them. Do you accept that they are giving a rise at least to the perception that you were on side with Mr Michel?
A. I can see how that perception would be created, yes.
Q. 9 February, this is the Swan Lake, as it were, email, 01717. I'd set out the position here yesterday, Mr Smith, the number of calls you had. The call out that was made to Mr Hunt, which was at 19.03 for 3 minutes, 23 seconds, can you help us about Swan Lake? Do you know where Mr Hunt was?
A. I don't. I know that I wasn't at Swan Lake, because I've never seen Swan Lake, but I don't know where I understand when me and Mr Hunt discussed this before I resigned, this particular one, I understand that he thought he went to Swan Lake the following week, but I don't know.
Q. We do know that it wasn't on at Covent Garden that night, but that's not you can't take that point any further?
A. No. No.
Q. Can you help us, though, as to why you had a call with Mr Hunt that evening shortly after 7 in the evening?
A. I can't as I said before, I spoke to him quite often on every day, really, so I don't know what it would have been about. Could have been about any number of issues.
Q. Can ask you, please, about the content of the email? In particular, the second bullet point: "He understands this is a deal stopper for us and shares our frustration 'we all know what Ofcom's attentions are and have been from the start on this'." Did you say that?
A. The bit in quotes? No. I think the "deal stopper for us" section, by this stage Ofcom and the OFT had sent correspondence to News Corporation saying what they thought had to be in the undertakings in lieu, which, at the time, Mr Michel was sharing with me, but I actually didn't look at them, and he explained to me that the one that they thought was a show-stopper was the idea of Mr Murdoch not being chairman of the spun-off Sky News. So I would have acknowledged if he'd said "That's a show-stopper", I would have acknowledged that.
Q. But didn't the department privately believe that Ofcom were dead against this bid and would do all they could to stop it and that, in effect, meant referring it to the CC because that was the limit of what you could do?
A. No, not at all, because I think Ofcom's eventual advice on the undertakings in lieu, once they'd got all of the various concessions that they'd asked for, was that the undertakings did indeed address the plurality issues that they had identified.
Q. But didn't wasn't it well understood in the department that Ofcom were against the bid, or at least that was the perception, and would do all they could to stop it? I'm not suggesting that they would do more than they could, or would act outside the law, but they would take it as far as they could take it. Wasn't that the departmental view?
A. No. Well, I certainly knew that that's what News Corporation thought about Ofcom, but that wasn't the department's view.
Q. That wasn't Mr Hunt's view of Mr Richards, for example? Is that your evidence?
A. Yeah, I mean I think Mr Hunt holds Mr Richards in very high regard.
Q. The third bullet point: "He can't instruct his officials to get back to Ofcom as he's not supposed to be aware that we have received the letter and its content." That was a correct statement of the position as at that time, wasn't it?
A. Well, I think this is so Mr Michel has sent me Ofcom's letter to News Corporation saying that the undertakings in lieu must include X, Y and Z, and until reviewing all of the evidence for this Inquiry, I didn't actually read and he sent me lots of those things, which were not of interest to me because the work was being done by Ofcom and the OFT. So I suppose he may have inferred that we weren't supposed to know that because Ofcom hadn't told us, but he had shared it with me and explained what was in it.
Q. The point at the end: "I told him [that's Michel telling you] he had to stand for something ultimately and this was his chance to dismiss Ofcom's views and show he had some backbone." By that stage the conversation arguably was getting a little bit rancorous, was it?
A. Well, I don't actually remember him saying those sort of specific words, but I do know that they were constantly pushing for the department to essentially ignore Ofcom.
LORD JUSTICE LEVESON
Are you acknowledging, Mr Smith, that this comes out of a conversation you had with Mr Michel?
A. Well, I don't particularly remember the conversation, but I don't understand from the records necessarily where I don't think my understanding is that I don't think he spoke to Mr Hunt at this stage.
LORD JUSTICE LEVESON
Because, I mean the word "he" must change, and it may be consequent upon Mr Michel's rather unusual use of the initials "JH": "I have managed to get JH quickly before he went in to see Swan Lake." Well, you didn't go to see Swan Lake, actually it looks as if nobody went to see Swan Lake, but that's a slightly different point. "He really feels this Ofcom letter is the further weapon for them to block the deal he agreed That presumably refers, if the conversation is with you, to you, and do I understand that this is the analysis you're doing with Mr Jay although some of the underlying facts may be accurate, the spin on this letter is wrong?
A. Yes. I mean, I think that is a clear case of Mr Michel putting their views and me simply acknowledging them.
LORD JUSTICE LEVESON
Well, is it? Let's take the next one: "He understands this is a deal stopper for us." In other words, he's saying you, Mr Smith, understand this is a deal stopper. It's rather more to say he, that is you, share the frustration. You may recognise the frustration, but the question is whether you share it.
A. Well, quite. I didn't. I understood that they felt that that particular issue was a deal stopper and I can understand that they were frustrated by that.
LORD JUSTICE LEVESON
So the truth is that this is, in reality, a complete misrepresentation of your position?
A. Yes. I would imagine we discussed each of these points, but I don't recognise the fact that I would have put it like this.
LORD JUSTICE LEVESON
I'm sorry. To say, "I don't recognise" admits of the possibility that it might have been so.
A. Oh, well, sorry, no. No, in that case, that's not the right word for me to use.
LORD JUSTICE LEVESON
All right.
MR JAY
After the backbone, or rather the lack of it: "He said he couldn't ignore Ofcom, he had brought them into this OFT process to get some cover and in public debate, he would get absolutely killed if he did such a thing." So this is yet again, but in flamboyant language, a reference to the need to create some space. Do you see that?
A. Well, I would have said that Mr Hunt wasn't going to ignore Ofcom because that would be breaching the legal process, as I understood it. I suppose, yes, the colourful language bit, but that, I don't think, was me.
Q. The final conversation that evening was just after 8.00 between you and Mr Michel on the phone. There is a text message at page 12781, which Mr Michel sends to you at 20.48 hours that evening, which refers to the conversation you had about 45 minutes earlier: "Agree it is ridiculous and duplicative. As for ability to implement unfortunately it would be possible, as you could just include in the articles of incorporation an obligation that we would vote against amendment. Jeremy should be able to say it makes no sense and reject he has that discretion! Let's discuss in the morning. It will be a very personal decision for James. Let's see how we can get through this final hurdle." If the text message is accurate, you had expressed an opinion which was the same as the opinion which was coming from Mr Michel, do you see that?
A. Sorry, the text isn't there.
Q. The bit at the start, "it is ridiculous and duplicative"?
A. I don't know what that's in reference to and I don't understand the following bit about articles of association either, so I'm not quite sure what that conversation was about. The personal for Mr Murdoch bit I understand, but I don't understand the previous bit.
Q. Do you think, Mr Smith, that you would have expressed an opinion to Mr Michel which was not Mr Hunt's opinion?
A. I'm sure I would have done at some stage, yeah.
Q. So are you sure that you would or you wouldn't have done?
A. I'm sure that I often say things that aren't Mr Hunt's opinion, yes.
Q. Can I take that in stages? Do you feel that you knew Mr Hunt's opinion on all the issues we've just been discussing?
A. So on the this is an example of one of the things I would have gone back to sort of talk to Mr Hunt about. I remember a sort of very brief conversation about the chairman of the newly spun off Sky News. It may not have been on this day, may have been a bit later, possibly even the following Monday when we met to discuss that with Mr Hunt.
Q. Yes, the Friday actually. We'll come to that email.
A. I knew that he thought and he said as much, that if Ofcom thought that was the right thing to do, they should do it. But in terms of some of the other details, articles of association and things like that, I don't remember I wouldn't have gone to him with those bits of detail.
Q. We're talking about the big points, namely Ofcom's position, the reaction to the UILs, the need to create space, Mr James Murdoch being chairman of the newly spun off Sky News, or rather not being chairman. Did you know what Mr Hunt's opinion was on those big issues?
A. I certainly knew yes, pretty much, but I knew that, essentially, all of those were that he'd entrusted Ofcom and the OFT to do that work, and he would take advice very, very seriously.
Q. Of course, Mr Smith
A. But
Q. I'm talking about informal discussions you had with Mr Hunt. You were his special adviser. He wanted to know what your view was, presumably; is that right?
A. Not particularly, I don't think, on whether, for instance, Mr Murdoch should or shouldn't be allowed to be we didn't because we'd, sort of, given that role or rather Mr Hunt had given that role to Ofcom and the OFT, the discussions we would have had were about surely, therefore, you ought to follow that advice. I don't remember us particularly getting into detailed conversations about whether we thought one bit of that advice was right or not at this stage, no.
Q. I think it's clear though that you can't help us with what happened during that short conversation you had with Mr Hunt shortly after 7 o'clock on the evening of 9 February, is that fair?
A. That's fair. I mean, it could have been about arts policy or something. I just can't remember.
Q. It's not really likely, Mr Smith, frankly. You're in the middle of a series of communications with Mr Michel. Mr Michel's email makes it clear that there had been just been communication with you. The only reasonable inference is that you were speaking to Mr Hunt about something relevant these matters. Would you agree with that?
A. Well, no, because we spoke on all sorts of different things at all sorts of different times.
Q. At 7.03 in the evening, when he's about to do something else, whether it's go to the ballet, it appears not, or something else altogether? Surely it must have been sufficiently important and sufficiently relevant to that which was occupying your mind at that exact time, namely conversations with Mr Michel. Don't you accept that?
A. For me to call Mr Hunt at 7 o'clock in the evening was not unusual, and for me to only just catch him because he was off to do something is equally not unusual. I may well have not seen him that day and wanted to quickly talk to him about something. 7 o'clock in the evening was quite early in the evening for I mean, I had conversations with Mr Hunt much later than that. I don't think that that's
Q. Can I ask you to reconsider that answer in the context of this, that you are in the middle of a series of communications with Mr Michel, who's bombarding you with stuff, probably getting on your nerves, on your version of events. You then break off from that, have a short conversation with Mr Hunt, we see this email, and then you have another conversation with Mr Michel shortly after 8 o'clock. Isn't the only reasonable inference that the conversation you had with Mr Hunt had to do with these matters?
A. I think you could infer that, but what I'm saying is I don't know whether that's what I spoke to him about and it could perfectly reasonably be about any other number of issues.
Q. Yes, in theory, it could have been, and had there been a conversation with Mr Hunt which relates to this, your evidence, I suppose, is, well, it was a perfectly neutral conversation, after all, it was all going to be with the expert advice received from OFT and Ofcom in due course, it's nothing to do with the sort of stuff we read in this email, is that it?
A. When I spoke is to as I say, I do remember speaking to Mr Hunt about the particular issue of the independent chairman, so I mentioned to him that News Corp thought that was a show-stopper or deal breaker or whatever the language that was being used. So I certainly did speak to him at some stage about that, but I don't know that it was that phone call and it may well have been the following day or indeed after the weekend.
Q. 01720, Mr Smith, Friday evening. Call data demonstrates 18 minutes plus on the phone to Mr Michel for each of two conversations. You're giving him a sneak preview here, it appears, of the OFT and the Ofcom view, particularly in relation to the UILs; is that correct?
A. No, because the correspondence and the discussions that Ofcom and the OFT had been having with News Corporation, they had written, I believe, either on the 10th or the 11th to News Corporation saying these are the things that need to be in the UILs, and I think News Corporation wrote back saying they're not going to be, or disagreeing to put those in, and so they were very well aware of those particular issues, and it was also I think it was around this time that these particular issues were being discussed now within the department and around this time, I believe, that Mr Richards called me to explain that those were the issues that were the sticking points. So they were in terms of those two points about the acquisition of shares and non-exec chairman, News Corporation were well aware of those.
Q. It goes much further than that, this email: "JH doesn't want this to go to the CC. He also said his officials don't want this to go further as JH believes it would kill the deal." The JH there, of course, can only be you, if it's anybody. Did that not represent Mr Hunt's view or at the very least your view?
A. No, because at that point we were referring it to the Competition Commission. It had been announced that he was minded to refer it to the Competition Commission.
Q. Yes, he was minded to, but he was hoping that the UILs would prevent that happening because he didn't really want it to go to the CC. That was his private view and you knew that, didn't you, Mr Smith?
A. But if the Ofcom and OFT advice had been these UILs aren't good enough, he would have sent it to the Competition Commission, so I think the facts don't bear that out.
Q. No, the facts are rather different. Had the UILs been strong enough, a reference to the CC would have been avoided, wouldn't they?
A. Yes.
Q. That was his ultimate goal, wasn't it, to avoid a reference to the CC on the basis that the UILs would be strong enough, and you knew that, didn't you?
A. But he I don't I don't particularly think so, no.
Q. There was also antipathy in the department to the Ofcom position because everybody thought, as we see here, that they were taking a subjective and non-legal approach and that was the view that was privately being communicated to you, wasn't it?
A. That was the view that was being communicated to me by News Corporation, that Ofcom were taking a
Q. Of course it was but it was also the view which your department held, wasn't it?
A. No, or nobody said that to me, no.
Q. I suppose the only way we can resolve this issue is to say this email is, if your case is right, completely incorrect. I don't think there's any mid-position here, is there, possibility for misunderstanding?
A. In terms of well, there are some I mean, the two the Ofcom concern on non-exec chairman, OFT concern on acquisition of shares, those two points are correct. But yes, sort of the tone of the rest of it I wouldn't agree with.
Q. 01727 I'm afraid I have to miss out some I was intending to take you to. There simply isn't going to be time to deal with everything. It's what you yourself said to Mr Michel: "Interesting. More evidence that we need to be strong and confident when we go to public consultation." What did you mean by that?
A. The point of the email below is that there were I think it was on the radio, wasn't it? Yes. An individual from Enders' analysis had been saying that there were possible remedies that could deal with the Ofcom concerns and, of course, by this point News Corporation had written to Mr Hunt to concede on the points that Ofcom and the OFT had asked to be in the UILs, so the point there was that, if people that had previously been opposed to the undertakings in lieu were now saying that there may be undertakings in lieu, that could work and that News Corporation had conceded on the issues that Ofcom and the OFT had wanted in there, then there was every reason for the department and Mr Hunt to be confident about those undertakings in lieu.
Q. You're almost communicating there a public relations message, and coming close to putting yourself in the same boat as News Corp by using the pronoun "we". Do you accept that?
A. "We" would have been "we" the collective department I wouldn't have put "I" because I obviously wouldn't have been saying anything publicly.
Q. 01732, a reference to a debriefing of JH, which is you. There are four telephone conversations which precede this email, lasting eight minutes in all. You apparently said you're not impressed, and are going to speak to Jon Zeff and see both why Ofcom is intruding in the process in this way and how OFT can be influenced by it at this stage. Do you feel this is a fair reflection of those conversations?
A. I don't. I don't actually particularly understand this email. Mr Hunt had asked Ofcom to be involved in this process, so I don't understand the reference to intruding in the process. So I don't think I would have said that. If Mr Michel was phoning me up again to moan about something Ofcom and the OFT had said needed to be in the undertakings in lieu, that may well be the basis for this email, but I don't recognise the "not impressed" bit and I don't really know what the issue is that this refers to.
Q. The next email at 01733 is a conversation later on that evening, the Wednesday evening, now at quarter to nine or thereabouts: "His team talked to Ofcom tonight." We know there was a phone call at quarter past 8 which lasted 9 minutes and 40 seconds and this email is therefore 18 minutes after that call. You must have told him that your team or rather officials within the DCMS had spoken to Ofcom that night, would you agree?
A. I could have done, or Ofcom and the OFT could have told him, but yeah, it could well have been me, yes.
Q. But it's likely that it was you, wasn't it because otherwise he wouldn't have put it in these terms? Would you agree with that?
A. Not particularly, because some of the terms that he's used have previously not been accurate. I mean it certainly may well have been me, but I don't know for certain because I don't really recognise again at what point we are on this, so.
Q. "The feedback he got tonight is that all was going well and it was only discussion on details." So that appear to be something that you communicated to Mr Michel during that call, would you accept that?
A. I would have done well, as I say, I think I wouldn't have particularly known whether things were going well, so if the officials had said to me it was going well or if Ofcom and the OFT had said to News Corp it was going well, I might well have agreed with that, but
Q. Ofcom and OFT would be unlikely to have told News Corp it was going well. Your officials must have communicated that message to you. That's the only reasonable inference and you were communicating that back to Mr Michel. Don't we gather this clearly from this email, Mr Smith?
A. Well, they may well have I mean, there are other emails where the News Corp legal counsel
Q. I'm not interested in the other ones. Just this one.
A. I was going to say that there are other people that have told them that things are going well but this one could have been me, yes. But, as I say, I can't remember, but it may well have been.
Q. Okay. 3 March oh no, sorry, 24 February. 01735: "JH just texted that he can't interfere with the process but can give us more time to sort things out. He can't engage with substance while Ofcom is working with us. He can only use his officials to put pressure at this stage." There are a series of text messages which bear on this. Just bear with me while I find them. At 012863 you text saying: "They said this was a promising basis on which to work in their advice to JH. Not quite complete acceptance, so I guess that's why we're looking for confirmation on some things." Then a little bit later on, 012870: "We can't interfere with the process, really [that's exactly reflected in the email]. We can give more time but not deal with substance while they're working with you." Again, that's reflected in the email. Then finally 012875: "Just replied, will talk to officials tomorrow morning and let you know." So the part of this with which you would disagree was putting pressure by officials because that's not borne out by your texts. Do you see that?
A. Yes.
Q. But the rest is reflected by text, isn't it?
A. Yes. But I mean the promising basis from which to work in their advice was the advice that Ofcom and the OFT had written to Mr Hunt on I think it was 14 February and then that had prompted a letter from Mr Hunt to News Corporation to say, as such, these are promising but there are four points that you need to address. So I assume that that's what I was just simply stating again, that bit there. But yes, the rest of it is.
Q. The early morning of 3 March, you'll remember that since you were up all night, really.
A. Pretty much, yeah.
Q. There's a whole flurry of text messages. There are three telephone calls, the last one lasts 15 minutes and 5 seconds at 3.05 in the morning, and they're the emails which start at 01742. We can look particularly at 01744, can't we, which is the email at 3.25 and which must have been based on what you told people during the just after 3 am conversation; would you accept that?
A. I would, and also I do vaguely remember this call. As you say, it was in the middle of the night.
Q. Do you feel
LORD JUSTICE LEVESON
You didn't say, "Look, whatever you're doing, 3 o'clock in the morning is not a time to communicate with me!"
A. I was still in the office working with the officials on the statement the following day.
MR JAY
Oh right.
A. Working on the documents and working on the preparation for the statement the next day. I wasn't answering my phone calls whilst asleep, no.
MR JAY
Did your officials know that you were texting Mr Michel and speaking with him on the phone?
A. They did at this stage because there was a long and some of the previous emails refer to this there was a long and protracted process of redacting the documents that would be necessary for the statement the following morning between the officials and News Corporation, and we had a conversation about not confirming that the decision had been made until those redactions had been made, and there are some emails from some of the officials to me saying things like, "Have you heard from them whether they're going to redact these sorts of things yet?" So they certainly knew I was in contact at that stage, yes, and I would understand that the lawyers were also in touch with each other as well.
Q. Given that there were all these more formal channels, in particular, the involvement of lawyers, discussion of redactions, finalising the drafting, as it were, of the UILs, what was the point of you having this extra chit-chat with Mr Michel on top of it?
A. In the case of the redactions I was asked to essentially put some pressure on News Corporation to agree with what the department wanted. You know, they were clearly I don't know what the actual issue was, but clearly News Corporation thought something was commercially sensitive and our department didn't and, therefore, they asked me to try and forcibly put the point that these things needed to be unredacted so the public could see them.
Q. I understand. Let's move on to 01748, which is an email, afternoon of 10 March after it's the 34-minute catch up with you, it's not the one-hour catch up. You'll remember that one.
A. Oh yes.
Q. "Overall he believes that the debate is extremely quiet and lacks arguments." Do you think you said that?
A. I don't think so, because at that time I think the debate was rather raging.
Q. I think it's more a comment on the quality of the debate
A. Oh, right, I'm sorry.
Q. in the sense that not necessarily its rank or lack of it but that the contrary argument was rather thin. Do you see that?
A. Yes. I do, actually, yes, I see that now.
Q. But Mr Michel was probably quite insistent, wasn't he, at this point in his conversations with you?
A. Yes. I mean, he had been, I think, insistent throughout, but now I think they were wanting to get on with things as quickly as possible and were being quite pushy.
Q. But more importantly, the point of the call from his perspective was to find out at the very least what you were thinking, and you must have worked that out by now, that he'd been texting and calling you so often. It wasn't to impart information to you, it was more to extract knowledge of what your thinking was so that would provide his team with reassurance. Didn't that occur to you?
A. It did, but I also think that it was a lot of the calls were to try and put pressure on me to go and then sort of, you know, interfere in the process that was happening, which I think he sort of you know, misplaced calls in that sense, because that wasn't my role.
Q. I'm sure he may have been overreaching himself to that extent because, as you rightly say, you couldn't influence the process but, at the very least, he wanted to know what the department was thinking, didn't he?
A. I'm sure he would have wanted to know that, yes.
Q. You must have known that because he must have subsequently been asking you questions to elicit precisely that information. I'm not saying that you provided that information but that's what he was trying to do.
A. Yes.
Q. Do you think that you might have given him information regarding what other editors might have told the Secretary of State?
A. I don't think so because, as I say in my written evidence, I wasn't, as far as I can remember actually, on any of the calls listen to any of the calls, because the handling of the press was the other special adviser's job, so I don't think so, although, as I also say, I think the views of all the other newspapers were well-known and public
Q. I'm not sure the business about Mr Dacre being clear that their campaign was purely motivated for commercial reasons, that was certainly a possible inference, but if he told that to the Secretary of State, which according to this he did, and then the Secretary of State told that to you, that's something which you could then logically impart to Mr Michel, would you agree?
A. If that had happened, yes.
Q. Do you think this might have happened?
A. I don't believe it did, no.
Q. Why not?
A. I don't remember Mr Hunt saying anything like that to me and I don't remember saying anything like that to Mr Michel.
Q. What about the reference to judicial review, Mr Smith? Do you think there was a discussion about that?
A. There may well have been a discussion about
Q. There may well have been or there was a discussion?
A. Well, I can't remember, so I think, using this as a sort of memory prompt, I could imagine that there was a discussion where, if the process was followed properly, that there would have been unlikely to have been a judicial review, but I'm no lawyer to have been able to make that particular judgment
Q. But it was a concern to News Corp that there might be a judicial review at the end of this; is that correct?
A. Yes, yes.
Q. The department was well aware that, given the sensitivity of all of this, judicial review was always going to be a possibility; are we agreed?
A. I think we sort of operated on the that there would be
Q. It was understandable that there would be talk about it, if only to allay concerns on both sides, would you also agree?
A. I would agree he that we probably discussed it but I'm not sure that we would have been able to allay concerns. Because, as I say, I wouldn't have been in any position to do that
Q. You couldn't give him a definitive view but you might have been able to share what departmental thinking was at that stage, namely there wasn't any basis for a successful judicial review. Do you feel that that might have occurred?
A. Not particularly. I mean it's sort of I suppose self-evident that if we'd followed a process that the department would have been confident in that process, but I don't know I think in within the department, the view was very much that there was going to be a judicial review one way or another, whatever the decision, just because the sort of stakes were so high. I don't think that was a legal view, I just think that was sort of the general view that the department had.
Q. The final point on this email, three-quarters of the way down: "On 21 March his team will look at all the submissions, it should take three to four days. Lots will be pure anti-Murdoch ones. He doesn't expect any groundbreaking issue." Do you think that's the sort of point you might have made to Mr Michel?
A. I can imagine that we discussed that and I imagine that 21 March, I think, was when the consultation closed, and there had been an organised campaign to by that stage, to sort of bombard MPs and such like with emails and letters about it, so I imagine we may well have been speculating that that would continue.
Q. But do you think that's the term you might have used, "anti-Murdoch ones"?
A. I don't remember. I don't think so.
Q. If you don't remember, you don't know then, do you?
A. No.
Q. Privately, Mr Smith, by this point, you must have had a personal opinion not just necessarily on the narrow test of the Enterprise Act but more widely about the merits of this bid. Are we agreed?
A. Yes, I think I probably did have a personal view.
Q. Well, hold on, Mr Smith. It's not "probably did". It would have been inconceivable that you didn't. You're a special adviser, you're well conversant with the issues. People tend to have, if I may say so, somewhat polarised views about this. I'm not suggesting that you held a polarised view, but I am suggesting that you at least held a view. Is the answer "yes" or "no"?
A. Yes, I would have held a view, but
Q. You would have held a view or you did hold a view?
A. I mean, I would have held a view, I had a view.
Q. You had a view?
A. Yes.
Q. Thank you. What was your view then at this point? Your personal view?
A. My personal view was that, if the consultation didn't throw up any new issue that we hadn't thought of, that the undertakings in lieu were therefore likely to have worked.
Q. That's not really a personal view. That's a sort of studied legal response, namely: "We'll go through the procedures in the Enterprise Act and everything's played with a straight bat and fair enough". I'm talking more widely. Share with us your personal view about this bid. Were you in favour of it or not?
A. Well, as I say, I don't think my view that I've just expressed was a legal one. I was essentially saying that, at that stage, there had been no issue of substance that had come up that, in my personal view, made a difference.
Q. All right.
A. As I said yesterday, I actually wasn't that fussed about it, so I'm sorry if my personal view was a bit legalistic and processy, but that's what it was.
Q. That rather suggests that you didn't really have a personal view, that you didn't feel strongly about this, indeed, really, you were neutral about it. Is that it?
A. No, I didn't feel strongly about it, but I did have a personal view, as I've just expressed.
Q. And there were all these people clamouring against the bid, saying it was disastrous for the interests of the United Kingdom because it would bundle too much economic and media power in one individual. Okay, that was one side of the camp. The other side of the camp was completely the contrary. Very good for the United Kingdom, we'd be put back years, I think someone said, if we don't do this.
A. (Nods head)
Q. Can I just understand where you stood on that wider issue?
A. I suppose on the wider issue I sort of looked at it from the point of view of the consumer not probably being that concerned because get their news or watch their TV and don't really, you know, mind too much about where that comes from.
Q. Hm. I'm getting the sense that you're slightly parrying the questions and you don't want to tell us what your personal view was. I suspect that we all know what it was and you're just not going to come out with it. Is that where we are going to remain on this?
A. No, because, I think, I have told you my personal view, that I didn't think that there was an issue with the UILs at the time and, therefore, that the bid was fine but if any of the points of substance came out that may well change my personal view.
LORD JUSTICE LEVESON
Can I try it a slightly different way? We spoke yesterday about the memorandum that the Secretary of State sent to the Prime Minister, in which he makes it abundantly clear that plurality issues, in other words, the very stuff of the Enterprise Act, had to be put to one side. That putting that to one side, there were very positive reasons for this to go ahead. Policy reasons. Now, you saw that?
A. (Nods head)
LORD JUSTICE LEVESON
Would it be right, you had a part in drafting it?
A. I think, on that occasion, Mr Hunt drafted it and sent it to me
LORD JUSTICE LEVESON
For textual consideration.
A. for typos and facts yes. I think I mean my view on that was that I probably didn't go quite as far as Mr Hunt on that sense, but
LORD JUSTICE LEVESON
Well, play about with that. Quite as far? I think Mr Jay just wants to know what your reaction was to the whole idea. Is that fair, Mr Jay?
MR JAY
Yes, I think it is.
LORD JUSTICE LEVESON
Thank you.
A. As I said, I didn't feel that strongly about it one way or another, and at that stage that we're talking about now, I couldn't see any particular problems with the UILs, but I if new evidence or a new opinion had come forward, then one's allowed to take that into account and change one's mind.
LORD JUSTICE LEVESON
But on the wider question, you didn't feel quite as strongly as the Secretary of State. Of course, that was his view and he's entitled to reach whichever view he wishes about the wider policy questions
A. Yes.
LORD JUSTICE LEVESON
however irrelevant they may be.
A. Nor did I feel as strongly against it as a lot of the other opinions that were expressed. I was not that fussed, as I said yesterday.
MR JAY
I suppose the logic of that, to the extent to which you did communicate a personal view to Mr Michel, that personal view would have been more muted than Mr Hunt's view. Would you agree with that?
A. Um not well
Q. I think you have to agree with that.
A. I was just trying to think of an example that I could refer to in that sense, but I'm not entirely certain that I ever did give that much of a view. Most of these emails would have been issues raised by Mr Michel that I would have acknowledged or understood. Not sort of talked at great length about what my own personal view might have been, which he would have known was actually a bit of an irrelevance.
Q. Mm. But throughout this narrative, throughout these emails, did you feel that you were speaking for your Secretary of State?
A. Not on the points of not on the sort of detailed issue points, no. I wouldn't have within doing my job if I'd had to run and check what Mr Hunt thought about every stage of the process. In this particular bid, I would argue that I was actually just being more of a buffer and a channel of communications rather than representing Mr Hunt's views to anybody.
Q. But insofar as you were speaking on behalf of anyone, you weren't speaking purely in your own personal capacity, were you?
A. No. The explanations I would give on process or reconfirming what Mr Hunt had told them, that would have been on behalf of the department, yes.
Q. Insofar as you expressed a view, you certainly would not be intending to express a view which was contrary to your Secretary of State's view; is that correct?
A. Yes. I mean, if I did, I would have heavily caveated that with it being my view.
Q. Yes, but you would have been logically overreaching yourself if you expressed a view which was contrary to your Secretary of State's position; is that correct?
A. Yes.
Q. On many of the bigger issues, as I describe them, you knew what the Secretary of State's view was; is that correct?
A. Yes, as did News Corporation, because he'd told them.
Q. Yes, but you were in a different position to News Corporation because you had access to your Secretary of State, he had access to you, and you had personal and private communications with him, didn't you?
A. Yes, but I think on the points of substance that we've discussed, the ones that I referred to in this email, had already been communicated to News Corporation by Mr Hunt.
Q. Yes, but those points of substance were more to do with the strict legal process. I'm going to the underlying policy issues, which I'm suggesting you had conversations with Mr Hunt about. Is that correct?
A. I don't think we had many conversations about the policy issues around this bid. We night have talked about in the future what we think the process should be changed to. I mean, he's publicly said he thinks that it's worth thinking about taking the secretaries of state out of this process. Those sorts of policy issues we would have discussed it.
Q. Did not Mr Hunt ask you for advice, as you were his special adviser, in relation to policy issues which could be capable of bearing on the bid?
A. I don't think there were any policy issues capable of bearing on the bid because he was considering the bid under that strict legal process and considering it against the media plurality concerns. I don't think there were any wider policy considerations.
Q. In terms of what might have been wider strategy, in terms of securing an outcome, were those matters discussed or the subject of discussion between you and Mr Hunt?
A. Of achieving an outcome?
Q. Yes?
A. No. The outcome being that we would follow the process, yes. I mean we had lots of process meetings, yes.
Q. Okay. Can we go back to some emails? These are highlights. 01777, we're now onto 17 May. There were some telephone conversations before this call. The issue about whether Mr Murdoch was going to speak to Mr Hunt, I don't think is necessary to go into, but it's the sentence: "He understands our frustration on the process." Do you think that's something you might have communicated to Mr Michel?
A. If he was I imagine by this stage, as we're in May, they were very frustrated with the amount of time that it had taken and I might have acknowledged that frustration, yes, so I can understand how that would be frustrating.
Q. The next email, 01778, this one is does match up with a text message at 03249. Yes. Before this email was sent, Mr Michel texted you at 20 to 8 in the morning: "You could have warned me about yesterday's speech!!!" Then you mention back. "It wasn't a speech, it was one remark to journalists and doesn't say anything different to what I've said to you. Will take as long as it takes and we need to get it right!" Do you remember sending that
A. Yes.
Q. Then there's another text at 8.19: "You did tell me by 24 June I might need JRM to call JH. Let's discuss." Finally at 8.21: and that hasn't changed [you say] but we can't tell journalists that, can we?" Why did you say that, Mr Smith?
A. I think any speculation that I may have had about the date that something may have happened was just that, purely speculation, and you don't want to say randomly what date might be publicly because then if things happen to mean you miss that date you would look a bit foolish.
Q. It does give the impression, more the impression, that you're giving information to Mr Michel which is somewhat surreptitious, something that would not properly enter the public domain. Would you agree?
A. Yes. That's my wild speculation of when the date might be. It wasn't in the public domain, no.
Q. Again, the impression might be of a relationship between you and Mr Michel which was or had become far too close. Would you agree with that?
A. No. I don't think our closeness had changed much. I mean the frequency of contact had obviously increased, but
Q. When I say had become, it possibly had become too close as early as January, but this was a perpetuation of a state of affairs which some might say was inappropriate, inappropriately close, in other words. Would you accept that characterisation?
A. I think the tone of some of the language that I may have used in some of the texts, in hindsight, was a bit too flippant and loose, certainly. Of, but I don't think the substance of what we've been through was inappropriate.
Q. The next one, 01780, 2 June. Before that email was sent, you sent a text message to Mr Michel: "Over the last few days I have been causing a lot of chaos and moaning from people here on your behalf. I shall have an update later today." That's precisely transcribed here in the email. But why did you say that?
A. This is the one that I do regret the most. By this stage I was probably coming toward the end of my tether, as it were, and I sent him a text to get him off my back, but I certainly don't think anybody in the department would have said that that's what I'd been doing, and I certainly wasn't doing anything on their behalf, but in hindsight I shouldn't have sent it, but it was an attempt to mollify him.
Q. Either to mollify or to indicate assent to the proposition, I suppose, there's a degree of collusion here between you, that you've become so close that you were almost working together. Do you feel that that's a reasonable inference or not?
A. I can see how people would think that, but I sent it to mollify him and get him off my back, not to do as you've just suggested.
Q. There's another email at about this time. It's lunchtime on 3 June, 01781. This is the email about the blame game, you'll remember that one.
A. Yes.
Q. There were two short phone calls at 10.43 and 12.48 hours. Then a 19 minute, 26 second call at 13.23. It's subject to confusion about British Summer Time, we think, antedated this email. I hope I'm right about that. There's a reference in the email itself to "had conversations with him today", so insofar as this information is coming from anywhere, it's coming apparently from those conversations, isn't it? Was the position as regards the delay because delay had accumulated by now, hadn't it?
A. Well, things were taking time, but I think sorry, I think News Corporation thought there had been a delay, yes. From our side of things, I think the Ofcom, OFT and the outside legal advisers that had been asked to do some work on it, were, you know, doing their work and it was taking as long as it would take.
Q. But regardless of fault for the delay, the process, which at one point looked as though it would be wrapped up in the middle of February was still ongoing in early June, and recriminations were flying about the place, weren't they?
A. Yes, I think it's probably fair to say that I don't think anybody expected it to take as long as it had done, yeah.
Q. From the department's perspective, I'm sure the position was "It's certainly our fault, it's someone else's fault, let's blame Ofcom".
A. No, I don't think the department would have blamed Ofcom, no.
Q. Who would they blame then if it wasn't going to be blame internally?
A. I don't think the department or myself were blaming anybody. As I say, I think at various stages either Ofcom or the OFT or, in fact, when it was the department that then brought in the outside legal advisers
Q. So the reference to everyone's getting very heated, his own legal team is not in the best of moods, that must be fantasy, if what you're saying is correct.
A. I don't know whether our legal team were in the best of moods at that stage.
Q. You would have known because this was a fairly tight-knit office, you could have sensed the mood of the place. People were getting a little bit fractious weren't they, by this point?
A. Yes, I suppose they probably were.
Q. The very heated bit although it may be slightly hyperbolic is not wide of the mark, is it?
A. Sorry, Mr Jay, this is which line?
Q. Third line: "Everyone is getting very heated."
A. Okay. That might well have been not wide of the mark but I can't remember.
LORD JUSTICE LEVESON
Well, Mr Michel is providing this information back to his boss and the person he's talking to is you and he's either making it up, and it's quite difficult to see why he should make that up, or he's reflecting what you're telling him.
A. It may have been Mr Michel telling me that they were all getting heated and me making a remark like "Oh, yes, same here or something". But yes, it could well have been accurate but the reason I say "could" is because I can't remember the conversation. I think, as you say, you can infer that that was certainly the case, but I can't remember discussing it.
MR JAY
Where are you leaving us, Mr Smith, with that particular paragraph? Are you inviting us to say, "Well, I accept that this is probably what I said removing some of the hyperbole", the very heated and maybe just keep it at heated, or are you saying, "No I don't recognise this"; can you assist us?
A. I think the I think if you tone it down a bit, I certainly wouldn't I personally wouldn't have been blaming anybody but I think the heated and everybody working hard
Q. I'm sure you as a special adviser wouldn't have been blaming anybody but you are reflecting on what others within the department are doing, which is blaming everybody. Isn't that the message that's coming out of this?
A. I don't that may well be the message that this email here suggests, but I don't think that the department was blaming anybody. I can't remember the department blaming anybody.
Q. It's pretty surprising if they weren't because this process was, on one view, taking a long view, people were saying, "Why is it taking so long", and it's human nature in such circumstances not always to accept full I'm not saying they should have done but to blame someone else. Isn't that really what was going on here?
A. I don't think at this stage the department was that worried about the time that it took. I think News Corporation were very frustrated and worried about the time but I don't think that the department was
Q. That's not true either, Mr Smith. Look at the third bullet point. "He's politically very keen to get this done as quickly as possible and understands the potential impact this will have on the share price." The longer this continued, the more political flak the Secretary of State was going to take, are we agreed?
A. It would be sustained, yes, I suppose so.
Q. Are we agreed or not?
A. Well, he'd get lots of flak at the end of the decision if it went one way or another, so I suppose the flak was a sort of constant.
Q. And this must have been something that you and Mr Hunt discussed privately, are we agreed?
A. We could have done. I don't recall him saying I mean it was sort of self-evident that he was getting flak, and it may well have come up if there had been a particular article that had sort of had a go at him or but I don't remember us, sort of, sitting down and
Q. But you were his special adviser, you've told us in your statement that you were close to him, you had a very good relationship. You would at least expect him to empathise with you as the best person around to do so, wouldn't you agree with that?
A. Yes, but as I say, I don't recall him ever saying to me this is, you know, terrible, I can't cope with the flak any more, or anything like that.
Q. I'm sure he wasn't saying that but what he was saying to you is that this delay is aggravating, it is enhancing the political flak, we need to get this over with for political and other reasons and what's more it's impacting on the share price. All of that must have been the subject matter of conversation with you, don't you agree?
A. I don't ever remember him saying anything about the share price. I certainly don't remember ever having a conversation with Mr Hunt about share price. We certainly would have discussed that like I say, with the other special advisers and other officials any particular heat that he was taking. Yes, we would have done.
Q. What about the 12th bullet point on this email
LORD JUSTICE LEVESON
Hang on, is the answer to the third bullet point that he was entitled to pick up that the Secretary of State was keen to get it done quickly, and then Michel might have said to you, "Do you know, this is having an impact on the share price", and you say, "Yes, I can see that, I can understand that"?
A. That
LORD JUSTICE LEVESON
Would that explain that sentence?
A. That is a fair explanation, I would say, yes.
MR JAY
I should really have dealt with the second bullet point because it may be relevant: "He puts OFT and Ofcom in the same bag when it comes to blaming each other and delaying the process as much as possible. He is not impressed by the OFT either." Do you see that?
A. Yes.
Q. Was that your view?
A. No, it wasn't. I can imagine that Mr Michel may have said OFT and Ofcom are delaying things and I may have acknowledged that they thought that but my view of the OFT and Ofcom throughout had been that well, the limited contact that I'd had with them had been that they were doing a very good job.
Q. It's possible, isn't it, Mr Smith, that Mr Michel came back at you much harder than that, words to the effect, "OFT and Ofcom are complete rubbish" or words to that effect, he may have used an even more flamboyant term, and you may or may not have agreed with it. Do you think that's possible?
A. Um I suppose it's possible that he may have done that I'm not sure that I would have it's difficult to know how flamboyant
Q. Let's unpick that a little bit more it was the News Corp view that OFT and Ofcom were rubbish, wasn't it?
A. Yeah, well, I think they I think News Corporation's view of Ofcom, I think, is sort of quite widely known. I'm not so sure what they thought of the OFT generally, but it's fair to say that by this stage they were definitely annoyed that it had taken both bodies and the outside lawyers that the DCMS had got in so long to deal with the issues, yes.
Q. So therefore he was seeking some sort of explanation for the delay or at least expressing the view that the delay is unacceptable and that was part of the agenda of your discussions, wasn't it.
A. Yes, I'm sure you would have been saying that and I would have acknowledged I would have listened to that was may role, really, to be their sounding board, in a sense.
Q. As a loyal special adviser in this department, you may well have given him the impression that it's not our fault, it's someone else's fault, do you accept that?
A. I think the only time that that I can remember doing that is when I said that it is was News Corporation's fault for not responding quickly enough to Ofcom and the OFT.
Q. I'm sure, in the course of formal emails and meetings, that a proper distance is attained at all material times but in the course of a 20-minute or so it's 19-minute 26-second telephone conversations, someone with whom you've been in lengthy communication with over the preceding months, you're pretty friendly with now, that you're lapsing into indiscretion, Mr Smith, aren't you?
A. I don't believe so. I may well have said "I can see your point, I understand what you're saying", but I wouldn't have lapsed into indiscretion, no.
Q. The 12th bullet point: "At the end he said that, for him, being able to obtain a full green light on everything from Ed, which is Ofcom in the coming days and the easiest way to clear the process and then make a swift decision without facing any credible legal challenge." Taking that in two stages, as a proposition of fact, opinion and law, that was spot on, wasn't it?
A. In that if everybody came back and advised Mr Hunt that these UILs were satisfactory, then he could accept them, yes.
Q. That had been the position throughout but the easiest way to get this through was to bring Ofcom into the position whereby they could accept the UILs and that would reduce all the risks, both political and legal; is that correct?
A. I'm not sure I would describe it as the easiest way to get it through, I don't think that was I think the process was they were looking at the undertakings in lieu and, if it got to the stage where they had decided that they were fine, then there would be no particular reason for Mr Hunt not to accept them.
Q. Is it possible that you did say something along the lines that we read in paragraph 12?
A. I may well have explained the process as I've just done, yes, which is a sort of version of that. I'm not sure I would have said "the easiest way", it's just that's the process we're following and that's the way it would happen.
Q. If I were to alight on this particular email, having just taken you through it, do you happen to remember whether you had a discussion with Mr Hunt following the email or not?
A. I don't remember. What day is it? My phone records may have
Q. 3 June, the Friday afternoon.
A. It's perfectly possible that I would have spoken to Mr Hunt on that Friday afternoon but I don't know whether my phone records show that I called him.
Q. Is the position that, in relation to any particular email, unless there's evidence of a phone call out from you to Mr Hunt and we saw that on 9 February, didn't we, you're not really able to say one way or the other whether you had a conversation with Mr Hunt about a particular matter. Is that a fair summary of the position?
A. I can remember a couple of the ones that I did have conversations with him and I think I mentioned when some of those emails were going around about the independent chairman of Sky News. I remember mentioning that particular issue to Mr Hunt. I'm trying to remember if there are any others. But I think most of the other ones were more to do with the sort of detail and the process that I wouldn't have felt necessarily the need to speak to Mr Hunt. I may, in passing, have said News Corp are getting frustrated it's taking so long for instance, but I don't remember doing so.
Q. Do you remember on any occasion communicating a view that Mr Michel expressed to you back to Mr Hunt?
A. I certainly remember the independent chairman issue, yes, the idea that that was sort of a step too far for them, if you like.
Q. That was the email back in February, I think, wasn't it?
A. Yes, it was, I think, sort of, shortly after that, Mr Hunt wrote to Mr Murdoch and said, amongst other things, that that was something that he expected to see happen soon, yes.
Q. That's the one of 11 February, the independent chairman one. Okay, 01792. You see: "Had a debrief with JH and team tonight at 7 pm before he left to his constituency." There's some text messages which relate to that. More importantly, was Mr Hunt involved in the discussions you had?
A. This was the I believe this was the day that the responses to the first consultation and Mr Hunt's subsequent statement about there needing to be a second consultation, so he'd made a public statement today, so I would almost certainly have spoken to him after that to sort of find out how he thought it went and I'm sure that would have happened, yes.
Q. I'm not sure I can take that one very much further. 01794: "Spoke to JH. Very important to keep same briefing lines as discussed and insist on the plurality issue. They are going very strong with journos today on the strength of UIL and approval by Ofcom/OFT." The text reads, his text to you: "We are going to take some important steps today, I will call you about it. It would be helpful if we could both keep the same briefing line for the consultation process on no link and very specific legal decision." The no link relates to the phone hacking issue, I think, are you with me?
A. Yes, I believe so, yes.
Q. Then you text back: "We are definitely doing very strong but this is about plurality."
A. Yes.
Q. So this email does reflect your text, doesn't it?
A. It does, which I think, in turn, reflects what Mr Hunt had said publicly on many occasions, that he was dealing with this issue on the basis of plurality concerns.
Q. 01799. This is the 7 July email. We know from the call records there was an 11 minute 8 second conversation. You called Mr Michel at 17.35 hours and within half an hour this email is sent by Mr Michel to Mr James Murdoch. Do you follow me, Mr Smith?
A. Yes.
Q. There is reference to two possible public inquiries, which, at that stage, we believe does represent government thinking on 7 July. The suggestion is that the only source for this information could have been you, and it ties in with what we know to be a fact, namely the telephone call half an hour earlier. Would you agree that or not?
A. I'm not sure that I would necessarily be the only source of that information. I can't remember, at that stage, whether I knew that that was the case. I may well have done.
Q. You may well have done?
A. Yes, I may well have done but I can't remember whether I did, but I think most of the discussions were most of those conversations were being dealt with by Number 10 but I don't know
Q. This wasn't in the public domain as yet, Mr Smith. I think the simple point I'm making, and it may be more a matter for inference, if you knew the facts set out in the first bullet point, if you accept that there was a conversation within half an hour of this email, one possible inference, it may be a reasonable inference, is that you're the source of the information we see in the email. Would you agree with that?
A. I would agree that that is a possible inference, yes.
Q. Probable inference?
A. Possible.
Q. Unless there was someone else providing this information ahead of the game, you're the only person we can possibly look at for these purposes, I think. Would you accept that?
A. I don't know who else I mean lots of other people would presumably have known only far more than I would have done by this stage because but I don't know who
Q. Pretty confidential, I would have thought at this point, what government thinking was. It would have been known about, obviously within Number 10, the Cabinet Office, people high up in DCMS and something that you knew about because Mr Hunt might have shared it with you. Is that fair?
A. I don't know that I did know about it, but he may well have shared it, yes, but I don't remember at this stage.
Q. Had he shared this information with you, do you accept that it's information which, I'm not saying that you did impart it to Mr Michel, but you shouldn't have imparted it to Mr Michel?
A. Yes, I would say so, yes.
Q. Which may explain why you're hesitant to agree with me that you did impart it to Mr Michel
A. Well
Q. that would be natural, wouldn't it?
A. I don't remember imparting it, mainly because I don't quite know that I knew it, which would make it quite strange for me to be able to impart it.
Q. The penultimate bullet point: "The cabinet divisions reported in the press are much more to do with the hacking saga, rather than the deal itself." In a sense, that might have been self-efficient but is it possible that you confirmed that to Mr Michel?
A. I wouldn't have been aware, any further than whatever the press reportings on the Cabinet divisions were. I've never attended Cabinet or spoken to any other Cabinet Minister about it so that was either self-evident from press coverage or something Mr Michel was just putting down as fairly obvious.
Q. Did Mr Hunt ever share with you confidentially the thinking of Number 10, thinking of Cabinet?
A. On this particular issue?
Q. Generally?
A. Generally? Yes, yes, he would discuss with me if he'd been in meetings in Number 10 or I did quite often go to meetings in Number 10 with him.
Q. The email that Mrs Brooks disclosed at RB 2, you remember that one: "JH is now starting to look into phone hacking practises more thoroughly and has asked me to advise him privately in the coming weeks and guide his and Number 10's positioning." You deal with that in your witness statement but can we be clear what your evidence is about that, please, Mr Smith?
A. Yes, certainly. If this was a conversation with me, it's quite possible that I asked him to let me know what steps News International was taking in response to the phone hacking situation, mainly because the department is obviously responsible for the media sector, so that would be interesting, but I would never have asked to be guided, and I think this use of the word "privately" again is one that I don't really sort of recognise because if I'd asked him to send me statements they were making about phone hacking, then he would have sent them to me. I don't think that's privately.
Q. The point on "privately" is really the same point as arises throughout this stream of communication. It may be more one of perception, that from Mr Michel's perspective he is having private conversations with you I know you didn't see it in that way and in that light and therefore he naturally puts the adverb "privately" on everything when you felt you were having an open and transparent conversation with him, so that's the reality?
A. Yes, I suppose so, but for him to send the statements that News International were making is not a private matter as such.
Q. In paragraph 255 of your statement, page 09078, you explain again that it was your role to act as buffer so that there could be no suggestion that he was being unduly influenced by the unrelenting lobbying of News Corporation in relation to the bid?
A. Yes.
Q. Which suggests that you were entirely the recipient of material which might unduly influence your Secretary of State. Is that the point you're making?
A. Not material that I was necessarily because I can't think the material that I received were lengthy correspondence between Ofcom, the OFT and News Corporation. I don't think that would I mean that was just far too detailed, and Mr Hunt had outsourced that work, if you like. It was more that it was me that they were just sort of coming to for points of process and what have you, so that Mr Hunt didn't need to bother with that sort of thing after he's told them once in or twice in a formal meeting.
Q. Why did you say "unduly influence", though, in that paragraph?
A. Well, it may well have been if he'd been constantly badgered to the extent that I was, that might have got to him.
Q. It didn't get to you then, Mr Smith?
A. It got quite annoying to me, yes.
Q. The other aspect of this is that not merely was it irritating, possibly inappropriate, but also you may naturally have divulged things which, really, with hindsight, you shouldn't. Do you accept that?
A. I think, in hindsight, the tone of the language that I used was not appropriate but I think in terms of the content of what I said to Mr Michel it was all had either been expressed to Mr Murdoch through meetings, letters or was known to Mr Michel from the correspondence they were having with Ofcom and the OFT.
Q. If all the conversations that you had with Mr Michel in fact had taken place either with a civil servant or Mr Hunt rather than you, do you think any issues of perception or appearance of bias might arise?
A. If they'd taken place with a civil servant, I don't think so, because I think the civil servants were in some cases sending similar stuff, like the statements and things like that, so I didn't think there was any difference between myself and the officials. I think we had all taken the view that Mr Hunt should be kept out of all of that sort of contact.
Q. But was this just a matter of convenience; in other words, protecting your Secretary of State, who after all had other things to do rather than speak to Mr Michel, or is this a matter of the appropriateness of the contact at all? Do you see the difference?
A. I do, and I think because he was the individual taking the decision, I think that as well as the convenience factor it was also important for him to be seen to be only having some of those meetings with them, yes.
Q. Although he's constitutionally and legally responsible for the decision, of course he can take advice on it from within the department and possibly from you, was that your understanding?
A. Yes. He could certainly have taken advice from I mean as it happens, the advice that he wanted most was from Ofcom and the OFT.
Q. Can I move on to the events of late April this year, page 09078 of your statement. You had been warned out of courtesy that evidence from Mr James Murdoch might be relevant to the department, although you weren't told anything about what the evidence was going to be, so the position was you were watching it online; is that right?
A. On the TV, actually. I think it was broadcast live.
Q. And you explain what your reaction was at paragraph 261 of your statement: "The initial reaction on the evidence being presented was not the whole picture, there was a great deal of exaggeration and there were in fact relatively few emails from me to Mr Michel." But in terms of the paucity or otherwise of emails we know that there was a vast amount, frankly, text message and mobile phone contact between you and Mr Michel which preceded many of the emails we've looked at, is that fair?
A. Yes.
Q. You had a conversation with Mr Hunt after the evidence was given and after your initial review of the emails. Does it follow that you got hold of the emails online or by some other means?
A. Yes, it was whenever the Inquiry put the KRM 18 and the schedule online, which I've put in my statement was at about 4.30, but that may be slightly wrong. I thought it was after the evidence had finished they went up online.
Q. I think it's right, actually, because they were put on online immediately, so you're right about that, but the conversation must have been at about 5.30 or thereabouts, is that it?
A. Yes, I'd say roughly about that, yeah.
Q. And you told Mr Hunt that if the pressure became so great that it would help if you resigned you would not hesitate to do so. Can you tell us exactly what his reply was?
A. I can't remember verbatim but it was something along the lines of, "It won't come to that", but I couldn't say that that was exactly the words that he used.
Q. Did you set out to him what your position was in relation to these emails, at least in essence?
A. Yes. I mean essentially along the lines that I've said in the statement, that they were a one-sided reflection and in many cases exaggerated and that he, as in Mr Hunt, when he came before this Inquiry would be able to give a defence of them.
Q. Well, you would be able to give a defence of them because you were party to the antecedent conversations
A. Yes. I suppose at that stage I didn't realise I would be appearing before the Inquiry.
Q. No. Did Mr Hunt accept your explanation at that stage or not?
A. Yes. It was sort of lots of discussions between especially when, as I say, later on I had a drink with him and the other special advisers to say that it was me doing my job and not to worry.
Q. So there was a drink that evening in the office, you do give evidence as to that. How long did that last, thereabouts?
A. 45 minutes maybe.
Q. Was the mood fairly upbeat or not?
A. No, not at all. It was very pressured and one of the most stressful days that I'd certainly had to deal with.
Q. You say in 264 of your statement: "It was agreed that I'd just been doing my job." And you left the office at about 8.30 that evening?
A. Yes. That was the reflection of the conversation between myself, the other special advisors and Mr Hunt, but that wasn't a relaxed sort of manner.
Q. The following morning, you cover this in your statement, you say in paragraph 265 that there was a meeting which you weren't party to?
A. I think I was aware it may have been one meeting or others, but Mr Hunt was certainly having meeting that I wasn't present at.
Q. Then you had a meeting with Mr Hunt and you gave evidence about that in paragraph 265; is that right?
A. Yes, that's right.
Q. Can you remember precisely what he said?
A. To the best of my recollection, "Everyone here thinks you need to go", is what he said, yes.
Q. Was anything else said beyond that?
A. We did discuss how we'd enjoyed working with each other and how it was going to be tough and it wasn't just a one-line conversation, no.
Q. You make it clear that no one criticised your conduct; is that right?
A. Yes. I didn't have anybody sort of sit me down and say anything specific like that, no.
Q. I suppose the obvious question is and I suppose I should ask it: "No one was criticising you, but everybody thinks you need to go", or words to that effect; what did you think of that?
A. Well, I think I was I thought by this stage that the perception had been created that something untoward had gone on and therefore, I mean, that was sort of why I'd offered my resignation the evening beforehand and, "Everyone here thinks you need to go", I suppose was in my mind confirmation that everyone else also thought that the perception had been created that something untoward had happened.
Q. Then a resignation statement, as it usually is, is prepared, and in paragraph 266 you explain that there was one revision to the statement with which you were not happy; is that right?
A. That's right, yes.
Q. Could you tell us about that, please?
A. It was a suggestion that the first line was changed to "While I believed it was my role to keep News Corporation informed", I objected to the word "believed" because it had been self-evident and the department had known that that's what my role had been, so I didn't want that word included.
Q. And the department agreed with that since the final version of the statement does say: "While it was part of my role to keep News Corporation informed
A. Yes.
Q. Do you know who it was who suggested that amendment?
A. I think the emails that I got from the emails, which I've put in one of those bundles, shows that it came from the Cabinet Secretary's office.
Q. So not from DCMS; is that right?
A. No. And actually the Permanent Secretary who brought me that statement, when I said I want "believe" removed, he agreed that that was the right thing to do.
Q. So the Permanent Secretary showed no resistance to you wanting to revert to the original text, the steer had come from elsewhere, is that it?
A. That's my understanding I didn't know that at the time. From looking at the emails afterwards, that's my understanding of it, yes.
Q. Then finally you refer in paragraph 268 to the letter Mr Stephens wrote to you on 25 April?
A. Yes.
Q. You're described as: "Undoubtedly the best and the straightest." This is of all the special advisers he's seen. "You've worked smoothly and professionally you've given great service to Jeremy how you left today was characteristic of the selfless and self-effacing way that you've approached your role." And that's where it's left, really, isn't it, Mr Smith?
A. Yes.
Q. Is there anything else you wish to add to the evidence you've given on these matters?
A. No, thank you.
LORD JUSTICE LEVESON
All right. Mr Smith, thank you very much.
A. Thank you.
MR JAY
Sir, the next witness is coming at 2 o'clock.
LORD JUSTICE LEVESON
Right. Can we say 1.45 pm?
MR JAY
I think we probably can.
LORD JUSTICE LEVESON
Right. We'll have the hour now. Thank you. (12.45 pm)
