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Jeremy Hunt faces Leveson Inquiry
Culture Secretary Jeremy Hunt told George Osborne he was "seriously worried" the government was going to "screw up" the BSkyB deal hours before he was given control over the bid, the Leveson Inquiry has heard.
He sent text messages to the Chancellor after receiving a phone call from James Murdoch questioning the legitimacy of the process when secret recordings of Business Secretary Vince Cable "declaring war" on News Corporation emerged.
Timed at 4.08pm, Mr Hunt's message to Mr Osborne read: "Could we chat about Murdoch Sky bid? I am seriously worried we are going to screw this up. Jeremy."
He immediately sent a second, saying: "Just been called by James M. His lawyers are meeting now and saying it calls into question legitimacy of whole process from beginning. 'acute bias' etc."
A couple of minutes later, Mr Hunt sent an email to Andy Coulson, the former News of the World editor at that time working as Prime Minister David Cameron's director of communications.
"Could we chat about this?", he wrote.
"I am seriously worried Vince Cable will do real damage to coalition with his comments."
At 4.58pm, with the formal appointment of Mr Hunt to take over examination of the takeover bid to be announced within the hour, the Chancellor replied by text to Mr Hunt: "I hope you like the solution."
It also emerged Mr Hunt sent a "great news" message to James Murdoch on the same day. The text, sent at 1pm on December 21 2010, was one of a number from Mr Hunt to Mr Murdoch, inquiry chairman Lord Justice Leveson heard.
It read: "Great news on Brussels just Ofcom to go," - a reference to the bid clearing legal hurdles in Europe.
The inquiry also heard Mr Hunt carries out all of his email communication using his personal gmail account, not his official departmental account.
Mr Hunt said: "That's the only email account I use. My department email gets looked at by my private office and if there is anything they need to show me they show me but the only email account I use is my personal account."
Downing Street announced that responsibility for media competition and policy issues was passing to Mr Hunt shortly before 6pm on December 21.
Asked for his personal opinion of the bid prior to taking responsibility, Mr Hunt said: "I was sympathetic to the bid. I hesitate to say supportive."
But he issued a staunch defence of his ability to "set aside any views you have" in taking the quasi-judicial decisions - and insisted his actions backed that up.
"My suitability for the role is demonstrated by the actions I took when I did take responsibility for the role because I believe I did totally set aside all those sympathies."
He went as far as to "set up a process explicitly to make sure" that happened.
In January 2011 News Corp put together a proposal that would take Sky News out of the deal to appease claims it would have too much control over the UK news media.
That was a "pretty big offer" that Government should consider, Mr Hunt said.
But he made James Murdoch "very cross" when he decided that he would get advice from two regulators, instead of one, on the plans, he told the inquiry.
"From Mr Murdoch's point of view he considered that was tantamount to wanting to kill the deal," he added.
Mr Hunt said claims made on July 4 that murdered schoolgirl Milly Dowler's phone had been hacked by the News of the World made him question the News Corp bid.
In the days after the allegations the Murdoch empire announced it was shutting down the Sunday newspaper.
"That, for me, was a very significant moment because then I began to wonder whether there could be an issue that spread beyond News International to News Corporation," he said.
"I asked myself, if they found it necessary to close down a whole newspaper, this is a big big decision for News Corporation, is there a corporate governance issue here?"
"Is this a company that doesn't actually have control over what is going on in its own company?"
Mr Hunt lavished praise on his former special adviser Adam Smith, who he had told to quit following disclosures of his close contacts with News Corp lobbyist Fred Michel during the bid process, describing him as highly intelligent and able.
He admitted that Mr Smith had not been given any specific instructions about how to act as the "official point of contact".
"I do not think he was given any express instructions," he told the inquiry, but he had attended meetings that should have left him aware of the requirements of the quasi-judicial process.
"He was present at all the meetings where we had advice from lawyers and officials.
"He heard, as I heard, all the things we needed to be careful about."
The Culture Secretary said there was a "degree of pushiness" about Mr Michel that meant he began to limit his replies to text messages to one word.
The inquiry heard he "didn't predict this barrage of contact" from the New Corp lobbyist.
Mr Michel sent 542 text messages to Mr Smith, which Mr Hunt said worked out at about five a day.
"We didn't anticipate that at all," he added.
The inquiry also heard that before Mr Hunt took responsibility for the bid he wanted to make representations about it to Mr Cable.
Lawyers at the Department for Culture, Media and Sport advised him not to intervene in the process. He cancelled a meeting with James Murdoch as a result of the advice but spoke to him by mobile phone instead.
He said: "I cancelled that meeting not because I thought it was wrong to have contact with News Corporation but because I thought they would be wanting to have the meeting with me that Vince Cable had refused to have with them, that therefore to have that meeting would be creating a parallel process in a way that might not be seen to be appropriate."
Mr Hunt agreed that it was not the legal advice he wanted to hear. Asked if he was frustrated by it, he said: "I think I had a concern about the situation where we had this very important, significant merger in my sector, I didn't think there was a particular problem with it. The organisation concerned said that they did feel that they were encountering a number of obstacles."
Asked why it was appropriate to speak on a mobile phone if he had been advised a meeting was inappropriate, he said: "I didn't see a telephone call as a replacement for the meeting."
He added: "I just heard Mr Murdoch out and basically heard out what he had to say about what was on his mind at the time."
He later received a text from Mr Michel that said: "Thanks for that call with James today, greatly appreciated. Will work with Adam to make sure we can find you helpful information. Warm regards, Fred."
Mr Hunt replied immediately: "My pleasure."
Pressed on what that meant, Mr Hunt said: "I probably gave him a sympathetic hearing but I would not have said that I can get involved in that decision because I had taken on and accepted the advice that I couldn't."
Labour has been calling for Mr Hunt to resign since the extent of the contact between him, his special adviser and News Corporation emerged.
Prime Minster David Cameron has refused to order his independent adviser on the ministerial code, Sir Alex Allan, to launch an inquiry, insisting the Leveson Inquiry was the best way to examine any allegations.
Mr Hunt denied he had been pressured by Number 10 to ask Ofcom and the Office of Fair Trading to re-examine the bid in the aftermath of the Milly Dowler revelations and the closure of the News of the World.
He was told in an email from an adviser ahead of a Commons debate about the takeover called by the Labour leader that Downing Street "think it is highly possible that Miliband will win".
The Prime Minister's advisers were "most worried" about arguments to be deployed by Mr Hunt, it showed.
But the Culture Secretary insisted that he had been moving towards the re-referral - and the possible application of fit-and-proper-person tests - "under my own steam" and prompted by the possibility that there had been "a massive failure of corporate governance" at News International.
There had been a lot of talks between the DCMS and Number 10 but between media teams, not politicians, he said.
"This issue had exploded onto the national scene and Number 10 wanted to know what we were doing and how to handle it in communications terms," he said.
Lord Justice Leveson was shown text messages between Mr Hunt and Mr Michel in 2011.
Robert Jay QC, counsel to the inquiry, suggested to Mr Hunt that some of Mr Michel's messages were "pushy".
Mr Hunt said that at the "beginning of the process" he had not foreseen the "volume of communication".
"I think this is something we have to reflect on in terms of the way we handle things in the future," said Mr Hunt.
"Adam Smith is one of the most decent, straight and honourable persons that you could imagine and even he was not able to maintain the impartiality that he needed to because of the volume of communication.
"And I think that was one of the things that went wrong as far as communication was concerned."
Mr Hunt agreed that some texts from Mr Michel were "pushy" and written during the consultation process.
But he said he "made a point" of replying to texts and did not think it wrong to reply to Mr Michel's texts.
The inquiry was told that in one text Mr Michel described Mr Hunt as "impressive" and in another said "very good on Marr".
"Flattery was a weapon that Mr Michel deployed quite frequently," said Mr Hunt. "And persistently."
Mr Hunt replied to one message by saying "Merci" and adding that "hopefully" when the consultation was over they could meet for coffee "like the old days".
"I had a personal relationship with him," said Mr Hunt.
"It was a relationship that did get a little bit warmer because of the coincidence of both our wives having children almost on the same night."
Mr Jay said one occasion Mr Michel appeared to have spotted Mr Hunt at the Wimbledon tennis championships and texted: "We should get together to celebrate the one year baby birthdays."
He suggested it was "pushiness par excellence".
Mr Hunt said the text message saying "hopefully when the consultation is over we can have a coffee like the old days" was him "just saying" he could not have any contact with Mr Michel until the process was over.
On July 3 at 3.45pm Mr Michel sent him a text saying "Come on Nadal", in reference to the tennis player Rafa Nadal, who was competing that day.
"It was incredible ingenuity. He was just looking for any excuse he could to establish contact of some kind."
He added: "What I didn't deduce from this was the effect of this kind of contact multiplied many, many times over to Adam Smith."
On July 13 Mr Smith sent the Culture Secretary a text telling him Rebekah Brooks had resigned as chief executive of News International.
He replied immediately saying: "About bloody time!"
The inquiry heard that Mr Hunt dropped plans to meet ex-Downing Street communications director Andy Coulson, former editor of the News of the World, a month after he quit amid fears it would look bad if they were spotted together.
His media special adviser, Sue Beeby, texted him saying: "Had a think about Andy drink and I think it might be best to wait until News Corp process is over. He's so closely linked to them that if you were seen it wouldn't look great. I'm sure he would understand and it should only be a week or so."
In another text Miss Beeby said: "Please don't take any calls from Vince (Cable) over the next few days. Will explain all when we speak but he is trying to be very sneaky over News Corp."
Asked to explain what that meant, Mr Hunt said: "I think Sue Beeby heard a rumour that Vince might be somehow planning to distance himself from my quasi-judicial decision and she was worried there might be something there and there was a presentational issue for the Government and so she was trying to minimise it."
Mr Hunt conceded that, with hindsight, his chatty exchanges with Mr Murdoch were ill advised and that he would avoid such conversations during any future quasi-judicial processes.
He accepted that point after the inquiry saw further text messages, including one in which the Culture Secretary congratulated the media executive on being promoted to the role of deputy chief operating officer at News Corp.
"Many congratulations on the promotion although I am sure you will really miss Ofcom in NY!" he wrote - in what he said was a response to hearing a news report about the move.
He said he was "pulling his leg" about Ofcom, given his general hostility to the body, and was not making a point about the bid process.
Mr Murdoch, in a reply that did appear to reference the BSkyB takeover, wrote back: "Sadly I fear they won't see the back of me that easily! Hopefully we can move our other business forward soon."
Reflecting on such messages, he said there were "probably things we would learn" about how to behave.
"I think probably now I would not take the same view and would avoid all text messages," he said.
He insisted however that the messages he sent "had absolutely no impact on the process.
"It was not material to the decisions I took and it was just me being courteous."
As the inquiry began to look in detail at the 163 pages of emails between Mr Smith and Mr Michel, Mr Hunt said he had read through them "more times that I would care to mention" in preparation for his evidence.
He firmly denied ever using the phrase, attributed to him in one Fred Michel report, that it was almost "game over for the opposition" to the bid, or urging the media group to find legal loopholes in the Ofcom ruling.
Mr Hunt said he "felt sorry" for Mr Smith after discovering, through reading the emails, that his aide had been having discussions with the lobbyist early on a Sunday morning.
"He is a very helpful, courteous person - I imagine it was the last thing he wanted to do to be dealing with that at the weekend," he said - suggesting it was further evidence of the pressure the adviser felt to say things to get Mr Michel "off his back".
"I think it does explain why sometimes he slipped into inappropriate language," he said.
Mr Hunt said he had been in favour of the Murdoch bid before taking over responsibility for the decision.
He said that when he became responsible he had a job of a "higher order".
"I know what my thinking was up until the point when I took responsibility for the bid," he said.
"I didn't just set aside those views. I actually had a much higher order job to do."
Mr Jay suggested that Mr Hunt's mind contained "Chinese walls".
"I believed I had a different job to do," he said. "I knew that no one person or no one company should have too much control over the media we consume."
Mr Hunt said he wished he had "spelled out" the need for Mr Smith to take more care.
"I wish we had spelled out to him that he needed to be very careful," said Mr Hunt.
"I wish he had told us about the pressure he was under and the barrage he was getting."
Mr Hunt added: "I think the barrage he was under, pushed him into situations, into language, that was inappropriate."
Mr Hunt said he considered quitting at the height of the furore over his links with News Corp but decided it "wasn't appropriate for me to go".
Last week Mr Smith, 30, told the inquiry Mr Hunt initially reassured him he would not have to quit but the following day told him "everyone" thought he should go.
Mr Hunt said he "found the whole thing incredibly difficult".
"This was someone who I had been working with for six years, someone whom I had the highest opinion of, I felt responsibility for and someone who is very decent and honourable and it seemed terribly unfair but the pressure was such that it did seem it was inevitable," he added.
"I do have responsibility for what he does."
He added: "I did think about my own position but I had conducted the bid scrupulously fairly throughout every stage and I believe it was possible to demonstrate that, and I decided it wasn't appropriate for me to go.
"But it was with an incredibly heavy heart that I felt that we just didn't have a choice but to accept Adam's resignation.
"I do feel in this case the bid was conducted completely fairly but what we didn't predict was the pressure that Adam Smith was going to come under."
Later, Downing Street said Mr Hunt would retain his place in the Cabinet after Prime Minister David Cameron decided not to order an investigation into whether he breached the ministerial code of conduct in his handling of the News Corporation bid for BSkyB.
After watching the Culture Secretary give evidence to the Leveson Inquiry, Mr Cameron judged that he had acted "properly" throughout the period when he was responsible for the bid, said Downing Street.
Labour deputy leader Harriet Harman said it was "frankly disgraceful" that Mr Hunt was not being referred to the PM's independent adviser on the code Sir Alex Allan.