The transcripts of the official inquiry into the culture, practices and ethics of the press. More…

  • MR MANISH MALHOTRA (sworn).

  • Thank you very much. Could you give your full name to the Inquiry, please?

  • You've provided a witness statement to the Inquiry. It's behind tab 3 in the bundle before you. Can you please confirm that the contents of it are true to the best of your knowledge and belief?

  • Can we turn, please, to your career history starting at paragraph 7 of this statement. You explain that you are currently the finance director and company secretary of IPL, positions that you have held since the 29th and 30 September 2010 respectively. You explain that you are also finance director and company secretary of Evening Standard Limited and prior to your current roles you were a finance director of the Evening Standard division of Daily Mail and General Trust plc, group financial controller of Associated Newspapers Limited, financial controller of investments of Associated Newspapers Limited and finance manager, group finance at Associated Newspapers Limited. And prior to joining the media industry, you worked at Baker Tilley as a business services manager and an audit senior. That is a correct summary, is it?

  • I want to ask you about two things, Mr Malhotra: first of all, IPL's financial scrutiny of journalists' practices and expenses, and secondly, briefly, matters that you raised on the IPL code of conduct. Again, if those are matters best addressed to Mr Blackhurst, just tell me and I'll move on.

    Let's start with financial controls, please. At paragraph 11 of your statement, you explain that financial governance is extremely important to IPL and that you have strict procedures in place for authorising payments, expenses and so on. Why is it, in your view, so important for the newspaper to have this financial governance in place?

  • I think as Andy's alluded to earlier, we have a separation between editorial and commercial which has been known as a sort of church and state almost, as a separation, and so for that reason it's very important that editorial payments are going through the overall corporate and financial governance of the company so that we have clear sight of what's being paid and who's being paid.

  • You go on to say that the procedure you have in place and the constant financial scrutiny would ensure it would be very difficult for employees to use IPL fund to pay bribes or to fund the gathering of information by illegal methods. Do you see that? It's the end of paragraph 11.

    You go on to set out the procedures, in a nutshell, that are in operation over the IPL titles. We're not going to go into them in any detail, but what I want to understand is whether or not these controls would prevent, in practice, payments such as to police officers or cash payments to private investigators, and whether financial controls can really ever stamp out those types of practices. Do you understand?

  • Clearly there is a risk that those payments might be made but we have a system of internal controls in place, which places great reliance on the managing editor and his office, or her office, to ensure that the payments that are made are proper, are substantiated and, if appropriate, that there is a receipt to support them. We don't have any cash in the system, so there's no mechanism for journalists or any other member of staff to make those sorts of payments.

    We also have a very robust series of monthly meetings going through the numbers, and we break down the editorial budgets into a series of departments, so these are relatively small numbers.

    We've also, as a business -- as Andy alluded to earlier, we've been sailing in some fairly choppy waters. It's a very competitive environment, so we've been managing our cost base very carefully, which means we go into quite a lot of detail to ensure we know exactly what these costs are. So from my point of view, we also -- we only ever really delegate the responsibility for approving these payments to very hand-selected senior members of staff, so what we would call officers of the company: the directors, the managing editors and some desk eds. So from that sense, I'm very comfortable that the controls we have in place would pick up these kinds of payments.

  • I'm going to give you a theoretical example. I know you say at Independent or IPL titles, you don't use private investigators, but imagine you had a situation where you were trying to obtain information from someone like a private investigator, something that you believe to be above board. He may well be paid in a way which is completely in compliance with the systems you have in place but nevertheless is obtaining information illegally. How can a system of financial controls ever stop that occurring?

  • I would go back to the person who has to approve that payment would be -- generally within editorial payments is the managing editor's office, and they would always ask the person who's putting in the claim what exactly this money is for, and if they're not satisfied with that answer, I don't think they would make a recompense to that individual.

  • I understand. You then tell us that as far as you're aware these practices are adhered to in practice. Is that still the case?

  • I'm going to ask you briefly about the code of conduct, simply because you refer to it in the statement and in your appendix to your witness statement. It's in exhibit 1 to your statement. Do you see that? You explain that it came into force in September 2011. What input did you have into drafting the code, putting it in place?

  • I was involved in to a certain extent in the drafting and the initial kick-off meetings around it. I think the majority of the work was done by our in-house legal team, and Andy as managing director took a great lead in driving this forward as well. Once the code had been pushed up to board level and approved, then the distribution of it was down to the HR department and I took a hand in that as well.

  • You explain at paragraph 35 that the code formed an integral part of editorial practice at IPL and your approach, you say, is:

    "Our journalists are required to work within the criminal law and the PCC code."

    So what does the IPL code of conduct add to the PCC code?

  • I think it's a wider document because it covers both commercial and editorial operations. It also goes into the use of hospitality and guidance and policies around that. So it's broadening out and bringing into one document a whole series of policies.

  • I want to ask you about paragraphs 36 and 38 of your statement now, the contributory agreements which columnists who are self-employed have to sign and the terms for freelance contributions. Can I just be clear: are these two policies or agreements intended to apply to two different groups of people, the former being self-employed columnists and the latter being simply freelance journalists who may make a contribution to the titles?

  • I understand that contributories have to sign a particular agreement and freelancers have to comply with certain terms which you append to your statement, but is there any oversight over the practices of self-employed contributors and freelancers over and above their agreement to those terms?

  • I think the relationship generally with freelancers will be with the commissioning editors on the desks, so there you have a very good working relationship between the two individuals involved. So I think that is generally -- the series of checks and balances will be around that relationship.

  • Finally, I need to ask you about paragraph 39. You explain that one of the non-executive directors, Mr Whittam Smith, has carried out an internal review of IPL's practices which looked at some of the issues which you refer to above:

    "This was concluded recently and Mr Whittam Smith was satisfied that the titles have not been involved in telephone hacking, blagging, employing private journalists or any other types of improper journalist practices".

    Can you tell me a little bit about this internal review. Who did he speak to? How long did the process take?

  • My understanding is that Andreas verbally interviewed a whole series of journalists, some of whom had been with the paper for some years -- so it was crossing over into the previous ownership by Independent News and Media -- mostly the senior desk heads and managing editors, to get a sense from them as to what the editorial practices were and to ensure that the systems that had been put in place were being adhered to in practice.

    He then reported back to the board and gave us the assurance that nothing untoward had been happening.

  • Sir, unless you have any questions, I'm going to -- yes, you do.

  • Just so that I understand, thinking about what Mr Whittam Smith did, he spoke to people, looked at stories, looked at documents, looked at background stories, or just spoke to people?

  • I'm not 100 per cent sure, if I'm honest, but my understanding is that it was a series of verbal interviews. Whether he then took it further, I don't know.

  • Thank you very much indeed. Is there anything you want to add? I apologise, I always ask that question.

  • Finally this morning, sir, we have Mr Blackhurst, the editor of the Independent.