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


  • Kindly sit down and make yourself comfortable, Mr Desmond and give us your full name.

  • Thank you. Under file 1 of the three files, in tab 2, you should find your witness statement of 19 September of last year. You'll see at the end that you've signed it and appended a statement of truth to it, so is this your truthful evidence, Mr Desmond?

  • You explain that you're the founder and owner of Northern & Shell plc, acquired the Express group of newspapers, in which I'm of course including the Daily Star and the Daily Star Sunday, in November 2000; is that right?

  • To be precise, we actually launched the Daily Star Sunday about seven years ago, in fact.

  • Okay. And you also explain that you've been a media entrepreneur throughout your working life. You founded Northern & Shell in 1974. Your first career was in magazines, then you moved into television -- of course you didn't lose your magazines -- Channel 5. In 1993, you started OK! Magazine, and then in November 2000 you acquired these newspapers.

    OK! Magazine you describe as one of the most successful magazines in the world. We are going to hear from them next week. What is your business model in relation to OK! Magazine?

  • To provide great editorials and great -- and a great product they all want to buy every week.

  • Okay. How would you define, if I ask you this question, your business model in relation to the Express Group of newspapers?

  • If you go back to November 2000, basically Lord Hollick, who owned the -- or should I say at United Newspapers Lord Hollick was the chief executive of that newspaper group. I don't believe he owned any shares, I believe it was about 3 per cent of the United News business and he didn't like newspapers, he didn't like the Daily Star. He had turned the paper to Labour, to be a Labour paper, I believe he's a socialist peer, and the paper was a left-wing paper and when we walked in -- I mean, basically the only other people that were going to buy it were the Daily Malicious -- sorry, Daily Mail, who obviously would just close down the Express and pick up the circulation, and the other person that was looking to buy it was the disgraced Conrad Black. So, really, Express Newspapers had had its day and in 2001 they budgeted to make a loss of GBP 21 million, which is quite a lot of money, even 11 years later, but it was certainly a fortune 11 years ago.

    So our first thing we had to do was take a grip of the economics of that group, and basically get rid of what I would call -- or as Jethro Tull would call living in the past, because, you know, these guys -- you know, I remember comments from the editorial people, "What are you talking about? The Express is like roast beef, it will be there forever, it's part of the history of Britain, there's no problem at all with the Express". In the meantime, it was losing, as I say -- budgeted to lose GBP 21 million, and the Daily Star was selling around 400,000 copies a day, and one of the reasons why it was selling 400,000 copies a day is because it wasn't being given enough money in particularly in the photographic area, and we felt that the Daily Star had an opportunity to grow because it was so badly produced in the past.

    So we felt by backing the editor, by putting more money into the editorial on the Daily Star, by looking at the chess correspondent, who was based in Latin America, or the New York bureau, one person in New York, all this sort of nonsense and grandism that surrounded the paper at the time, we felt that by taking a firm control of that we could, you know, get the magazine -- get the newspapers back into profit.

    Plus, of course, we were able to -- you know, we enjoy selling advertising space, and we enjoy partnering with people, and basically, you know, we like to work with advertisers as opposed to being arrogant and stiff-necked with these people, and we were able to increase the advertising.

    So basically that was the main thing. And, I mean, they had -- an example, I don't know what this means to you, but they had 100 reps on the road with cars. From our experience of running magazines, we've tried every single aspect of trying to increase circulation, and basically the way it works is the whole -- the way it works is you have around 50,000 retail outlets and you have the wholesalers, and the wholesalers get delivered magazines or newspapers and they deliver to the retailer.

    Now, the only way the wholesaler makes money or the retailer makes money is on their sale, okay, and they don't want returns. So another example of our good business was cutting the amount of copies that were coming back. I think at the time it was something like 300,000 copies a day of the papers coming back on returns, which we took down to 200,000 copies a day, because what is the point in just having waste?

    So all these sort -- I can go on and on, but that was basically the -- that was basically the way that we -- that was the first priority, was to -- you know, West Ferry Printers, they had 690 staff. You know, we were able to operate quite efficiently with 550 staff, the West Ferry Printers.

  • So what you're talking about is sharpening up the business ethic?

  • Yes, or running it as a business. It really wasn't -- you see, the trouble is, with media, they are living things and you have to -- well, probably I'm sure if you're a baked beans manufacturer it's the same thing, but certainly with media, my experience, you have to love these products, you have to live these products, and if it's just part of a huge group which isn't loved and lived and looked after, then, you know, the end result is going to be what it was.

    It's the same, frankly, with Channel 5. We bought that last year, I think it was, and it was owned by a German group called RTL and they managed to lose GBP 15 million a year for 14, 15, 16 years. We were able to turn that into a profit within a month just by simple housekeeping. Not because they weren't good, because they weren't in this country. You have to live and breathe these things, and you have to understand the business.

    I think a lot of these other groups don't really understand that it is a business, and, you know, there's more to life than the chess correspondent based in Latin America.

  • So when you took over this business, you grabbed it by the scruff of the neck, you reduced costs where they could be reduced, you sought to increase advertising and were you successful in both of those objectives, Mr Desmond?

  • Yes, we were. It was very easy, very quick. Within three months we had it into a profit. You know, I remember one of the things -- we were talking about the private investigators, and one of the things I remember is walking around the floor and there was a room with a lot of scruffy geezers and I said to the editor, "Who are they?" "Oh, I can't tell you who they are". "What do you mean, you can't tell me?" "Oh, it's the investigative department." So I said, "What is it?" "I can't tell you." So Paul, who is in charge of that area, found out what they did. They were special investigators, you know, sort of bugle stuff, Dan Dare stuff.

    And then the final thing was I think the first week they asked for £5,000 or £10,000 of cash, or the editor at the time asked for that, to pay these geezers, shall we call them, to do their private investigative work. My reaction was the last thing we're going to do is to start paying out cash to people, we don't know what they're doing, et cetera, et cetera, et cetera. So I said to Paul, "You know what? I don't like the whole thing". Paul didn't like the whole thing. "You know what, cut the whole area. No one knows what it is and it seems a bit dodgy."

    What makes me laugh is a few weeks ago we're sitting on the Parliamentary Committee around the table and there's my friend Lord Hollick sitting there asking me about newspapers, whereas he was the chief executive of that company that employed these people. I do find it ludicrous, frankly.

  • Were these people, as you've put it, were they employees of the company?

  • Yes. Employees of the company.

  • So they weren't freelancers, they weren't independent contractors?

  • No. It was a very important area, you know. Very important, very secretive, important area. But we cut it out within -- I think within a week or two weeks. I think that's probably why we made so many friends in the first few weeks, because we did cut a lot of these type of people out. If we didn't know what they did, we got rid of them.

  • Were you applying here some ethical principle or was it simply a commercial principle?

  • Well, it was a legal thing, really. I mean, you know, we do not pay out cash without receipts. I mean, I never have done since I started my news magazine in 1975, and I certainly wasn't go to start 25 years later paying out thousands of pounds of cash every week to -- you know, without ... ridiculous.

    That was the ethos of the company. I'd never seen anything like it, hundreds and hundreds of people, all very important. In the meantime, the circulation is going down, the advertising is going down. As I say, budget to make a loss of GBP 21 million.

  • Some have said, particularly in relation to the Daily Star, that costs have been cut too much and that has led to a diminution in standards and a cutting of corners. Would you accept that?

  • Absolutely not. We've invested more in the Daily Star than, you know -- just look at the product. It's fantastic. At the end of the day the reader decides, and 11 years ago we were selling about 400,000 copies a day and now we're selling 700, 800,000 copies a day in a mature newspaper market, shall we say. I think it's fantastic what we've done on the Daily Star, but the readers have decided, you know, they can't get enough of it.

  • What interest, if any, do you have in ethical standards within your papers, or is that purely a matter for the editors?

  • Well, ethical, I don't quite know what the word means, but perhaps you'll explain what the word means, ethical.

  • I think it's paragraph 22, perhaps, of your statement. You make it clear everybody's ethics are different:

    "We don't talk about ethics or morals, because it's a very fine line."

  • "It's a very fine line". The very use of that term or language would suggest that certain things are on the right side of the line and certain things are on the wrong side of the line. Can we agree about that?

  • As I say in my statement, we don't talk about ethics or morals because it's a very fine line and everybody's ethics are different.

  • It may be you don't talk about ethics or morals because you simply don't care less about them, or it may be, as you say, that there's a very fine line and it's often difficult to say what falls on which side of the line. I'm not quite sure what you are trying to tell us there, Mr Desmond. Could you clarify?

  • I'm trying to tell you exactly what I said in my statement, which is we do not talk about ethics or morals because it's a very fine line, and everybody's ethics are different.

  • One should go on, in fairness to you:

    "We do, of course, care about the title's reputation and so would not run a story if we thought it would damage that or seriously affect someone's life."

  • Yes. So that is an ethical consideration, isn't it?

  • Different proprietors enter this business for different reasons. Some because they think they might acquire power and influence, some because they think it might flatter them in some way, but what would you say was your reason both entering this business and continuing in it?

  • Just about over the 25 years of magazines, we covered music magazines is where we started, bicycle magazines, mountain bike magazines, adult magazines, reader magazines, attitude magazine, stamps magazine, Liverpool Football Club -- you know, every single magazine, venture capital magazine, OK! Magazine, you know, which is the biggest magazine in the world on the news stand. And so therefore we were a bit stuck as to what to do, and I had offered, or we thought we had tried to buy Express years before, because we'd seen the way the management -- we thought the management was useless, hopeless, and we thought we could do a better job, and we thought the price was around 400 million, which was in fact turned down, and then we saw a leaflet, what do you call it, a flyer from Merrill Lynch saying how Express Newspapers were finished and how it was only worth between GBP 75 and GBP 100 million, and I thought, oh, GBP 75 to GBP 100 million, we're making around 20 million at the moment and we had about 30 million -- well, we didn't have about, we had exactly 30 million, so I knew that we could borrow the rest and buy that group and make it better and restore it back to its true glory, which is what we did.

  • So you make it sound as if -- but I may be wrong -- that it was largely because it was commercially attractive, it was a business opportunity?

  • Of course. The same way as Channel 5.

  • Apart from it being a business opportunity, is there anything else which attracted you to the idea of being a newspaper proprietor?

  • Okay. Because some proprietors in the past have had enormous influence over politicians.

  • I'm not a -- you know, I remember meeting Mr Blair for the first time when we bought the papers. He was very nice, we talked about -- fortunately, we talked about music and drums, which is my passion, and as we walked out of the door, he said to me, "Well, who do you support then?" I said, "Pardon?" He said, "Who are you, left, right, you know, one of us?" I said "Honestly, mate, I'm not really interested in politics". And he said to me, "You will be", and interestingly on my way back to the office I got hijacked by Porter who said, "What are you? Are you a Tory or a socialist?" I said he seems a nice fellow, Blair, so I was a socialist.

  • We've heard from Mr Hill that the paper changed direction, perhaps re-entered its natural habitat before 2005.

  • Did you have any interest in or influence over that decision?

  • Yeah, I felt that I betrayed Tony, as a mate. I felt he was a good bloke, I thought he was doing a good job, I liked him. You know, he came to my house, I went to his house or flat or whatever you want to call it. I thought he was a good guy. So I felt on a personal level bad, but at the end of the day Peter Hill runs the editorial of the paper and that was the decision that he made.

  • And it's a decision, therefore, which from my understanding of what you just told us that you didn't oppose. Because you could have overruled it, it could be said?

  • We don't really work that way.

  • That's quite important. So for you, a proprietor of the newspaper, that's not to persuade people to adopt your approach to anything; for you it's a commercial venture?

  • A commercial venture, of course. I say of course because -- I mean, that was -- you're right, because I remember when we first walked into Express, the then managing director said, "How often are you going to be coming in?" I said, "Mate, I've just written out every penny in the world I have, plus mortgaged the company up plus mortgaged myself up, I'm going to be here every day from 7 o'clock in the morning until 10 o'clock every night seven days a week", and that confused everybody. You know, they thought it was a wicked plot, or I don't know what they thought, but I was there that amount of time to turn the company or to help turn the company, with the team, into a profitable business.

  • But not to exercise editorial influence?

  • No. I'm not an editorial man. I'm an advertising man. My father was in Pearl and Dean advertising. I started off selling classified advertising. That is my area of expertise, but I'm not even sure of that any more. I think I'm probably a bit past it in that. But that is an area of expertise, that's my expertise.

  • Did Mr Hill explain to you that moving back to the Express's natural allegiance, the Conservative party, might improve circulation or did that not enter into it?

  • I think the conversation was really -- it was a radical move for Peter to suggest, but I knew the facts were my mother and father bought the Daily Express, who were middle market Conservatives, and I knew -- yeah, he was right to do that. He wasn't wrong to do that at all.

  • In terms of having one's finger on the commercial pulse, you explained in paragraph 13 you look at your ratings -- this is the last sentence of it -- and your competitors' ratings, and of course here we're talking about circulation figures, aren't we?

  • Mm-hm. And advertising.

  • Do these come to you daily, the circulation figures?

  • We see the figures daily, but they're meaningless, really, because nothing really moves. I don't know why you look at them every day, really, because all you're doing -- we're praying for miracles, but the circulation figures of newspapers are pretty static. I mean they're only going one way. But apart from that, there's nothing really exciting to see.

  • But of course you have improved over the years the circulation figures you say of both the Star and the Express?

  • We haven't increased the circulation of the Express. We're in line with the market on the Express. The Daily Star, we have increased the circulation and we have launched the Daily Star Sunday from nowhere to selling around 800,000 copies every Sunday now.

  • There are fluctuations, though, in the circulation figures. Are you able to identify what it is, if anything, which is causing them?

  • The fluctuations, I mean, you know, I don't know what world these people live in. The fluctuations, we're talking about on 700,000 or 800,000, you might be talking about a fluctuation of 10,000 copies, which is, just to put it in commercial terms, which is 10,000 times 30p, which is £3,000, less the cost of production, less the cost of distribution, less the cost of everything. You're talking about maybe £1,000.

    So the only growth you really get is if you do, you know, cut the cover price, which we have done in the past, where you've given DVDs, where you stick £5 notes on the front page -- that's always a good thing, you always increase the circulation with that.

    What else is there? That's about it, really. Or £50 is even better. But that is really the only way, you know, with respect to journalists, editors in this country, that is the only way that you increase circulation. And having a good story, you know, an idea of a good story to one person, you know, might be a bad story to the other person. In any event, we're talking about such a small amount of copies that it doesn't translate into meaningful figures profit-wise.

  • I might come back to that point in a moment, Mr Desmond, but I'm dealing now with general points. Mr Ashford told us that when you started in 2000 you were somewhat of an outsider, culturally and geographically?

  • Oh, did you see the cuttings?

  • Mr Desmond, it helps if you don't ask me questions.

  • Just give me an answer which makes it clear where you're coming from.

  • We were vilified, we were pillared, we were attacked. The only thing I wasn't accused of was murder. I think that was the only thing I wasn't accused of. I think I was accused short of murder.

  • Are you referring to all your competitors or are you referring just to some of them?

  • Well, no, pretty much -- you know, I mean the Mail were the worst, because they were upset that they hadn't bought the Daily Express. In fact, you know, a day after we bought the Express, they came in and said aren't I lucky I made £100 million because they wanted to buy it from me and I said that's not what I want to do.

    The Mail were upset. The Telegraph were upset because they had this joint venture with a printing company and basically they were having, you know, a great time with the previous management of Express running rings around them and they knew they weren't going to run rings around me.

    So they were upset because they weren't able to steal the printing plant from us. Then the Guardian were upset because we came from left field, so nobody knew who we were and, you know, we didn't really, you know -- you know, we were cutting their friends' jobs, so they didn't like us. Then we had the Sunday Times, I can't remember why they didn't like us, but, you know, they wrote lovely things about us.

    No, it was pretty evenly spread. The Independent. The Mirror, the Sun, I can't remember them, but they probably did have a go, but compared to the others, I think we were let off lightly.

  • So the notional proposition that there might be some sort of anti-aggression pact between you as a proprietor and other proprietors is something you would laugh out of court, wouldn't you?

  • I would. I mean, only two weeks ago, Baker vilified me in his horrible rag.

  • Are there non-aggression pacts between other papers, to your knowledge?

  • I think you made it clear that the Daily Mail is, as it were, your worst enemy. Is that a fair way of characterising it?

  • I think it's Britain's worst enemy, the Daily Mail.

  • I think, you know, their tone on the -- their tone and everything is so negative and so disgusting, that --

  • All right, yes. I think we'll just move on.

  • I think we will progress.

    Looking further on in your statement, Mr Dacre --

  • Sorry, Mr Desmond. You've got me completely on the wrong --

  • Dacre is the fat butcher.

  • All right, all right. We'll allow you one, Mr Jay.

  • I lost sight of the ball only temporarily. I'm aware where I am.

    Paragraph 17, this is your relationship with editors about issues and giving your opinions. Can you identify, please, the sort of issues which you would be interested in and the sort of opinions which you give?

  • I like to go down -- you know, if you work for a company -- when I was a kid of 15, 16, I worked for Thomson Newspapers, I used to like it that Lord Thomson would come around and have a little chat about the classified advert. I don't know if everyone remembers who Lord Thomson was, but he was -- does everyone know who he was? He was the -- I'm sure everyone knows who he is. Was. And, you know, I liked that style.

    So when it comes to the editorial floor, you know, we employ around 500 editorial people and I think it's good that they see that I'm interested enough to walk around at 6 o'clock or 7 o'clock or 8 o'clock at night and have a little chat about, you know, the City or about football or around these sorts of things. And I will hopefully look at the cover the next day and sometimes I will say, "Why don't you look at changing the top part, the colour of the top part, because it's not quite, you know -- it could be brighter", or, "Have you thought about putting caps on", or, "Have you thought of this or that?" Sometimes they say, "Good idea", and sometimes they say, "No, we're doing it like that". It's more to show interest than anything else.

  • You're demonstrating a keen interest rather than to influence the direction in which the paper might go, is that --

  • Yeah. I do walk around the finance department, and do similar things, you know, to the credit controller, you know, "How's the ledger", or to the paper buyer, "What's the price of paper?" or to the advertising department, "How is this advertiser doing, how is that advertiser doing?" I think that's important as the boss to show interest and sometimes come up with an idea that might help them.

  • Can I move on to paragraph 18, the withdrawal from the PCC, which is a decision the board took --

  • -- in January of last year. So it's obviously not one that the editors took.

  • Was it you who drove that decision?

  • Not really. I think -- you know, this whole, you know, association thing, we're not natural members of any clubs. When we were magazine -- well, we are still magazine publishers, but when we were only magazine publishers, we were never members of -- what was it called? The PPA, Periodical Publishers Association, because they didn't respect the people involved in it. So we weren't ever members of it.

    The fact is we ended up, after many years, having the biggest magazine on the news stands of the world, so, you know, most of these guys have gone out of business.

    So when it came to the MPA, it was a similar attitude. We call it the biscuit and tea brigade, they all sit there and talk a lot of rubbish and be hypocritical and then try to stab you in the back, so it wasn't our natural area.

    They had a thing called the Newspaper Marketing Association, which was around GBP 50,000, GBP 60,000 a year, which I didn't want to do but the board decided to carry on with. It went on for four or five years and then the managing director in charge of advertising sales said to the board, "We need to spend now a quarter of a million pounds a year on this Newspaper Marketing Association", and I said, "What's it going to do?" He said -- he tried to explain what it was going to do and I couldn't understand it, so I asked them to bring in the chief executive of the Newspaper Marketing Association and they explained to me that everyone was putting a quarter of a million pounds to help sell advertising to advertisers and to give awareness to newspapers, which I couldn't quite get, because I think newspapers are pretty prominent in 55,000 outlets and millions and millions of copies every day of newspapers are being sold, and we ourselves have a sales team of over 100 people selling advertising, and so do the other newspaper groups, they may have more, so what was the point in being members of this newspaper marketing association?

    "Oh, you have to be part of it, you'll see your revenues go down and you'll see the future of newspapers" and da da da da da. What finally did it for me was what we do -- we try and encourage promotion in the group and, you know, one the little girls at reception was working in my office three days a week, 17-year-old, 18-year-old kid, bright girl, and we were paying her, I don't know, £17,000, £18,000 a year, and she gave her notice in. Out of interest I said, "Where are you going?" She said, "I'm going to the Newspaper Marketing Association". I said, "Oh, very good, congratulations". She said, "Yes, I'm going to get £35,000 a year."

    This was an association that our competitors, idiots, I say, had basically -- just nonsense.

    So when it came to the PCC, you had that thinking behind it, plus you had the fact, you know, of the way they strung out poor old Peter Hill, because at the end of the day, all the newspapers were doing the same, you know, plus or minus, you know, it was a major story, and basically I saw it that we were the only honest ones and straightforward ones. We stood up and said, "Yes, we got it wrong, there's the money for the McCann fighting fund, let's try and help find McCann", the poor little girl, "Let's get rid of it, put it on the front page and apologise properly", which is what they did.

    Then to see the chairman of the PCC, whatever his name is, you know, stand on BBC television and vilify Peter Hill and vilify Express Newspapers was sort of a final -- you know, like a -- you know, that was like the final straw. Because I felt it was a useless organisation run by people who wanted tea and biscuits and phone hackers, you know, and it was run by the people that hated our guts, that wanted us out of business, that tried every day to put us out of business, and yet smiled at us and were completely ineffective.

    I mean, what else do you want me to say about the PCC?

  • Can I ask you two follow-up questions, please, in the context of that answer? The first is: aren't you treating the PCC as if it was some sort of trade or marketing organisation rather than at least an attempt to regulate an important industry?

  • Well, I don't -- yes, you're probably right. Yes.

  • I'll come back to that, if I may. Secondly, in relation to the McCanns, if one accepts that other newspapers also defamed the McCanns, accept that, would you not accept, though, that given the, if I may say so, the systematic and egregious defamations which your newspaper perpetrated on the McCanns, that it's a bit rich to blame the PCC for failing to provide you with guidance, as you say under paragraph 18 of your statement?

  • Because, after all, it was up to your editor not to behave in such a way. Would you accept that?

  • No, not at all. Every paper -- I didn't bring every paper with me, but I'm sure we can justify my statement -- every paper every day for that period of time was talking about the McCanns. It was the hot story -- it was the story. And poor old Peter Hill, you know -- I remember that night after he was attacked by the chairman of the PCC, I remember calling him at 11 o'clock at night. I think he was convinced I was going to fire him. But I didn't fire him, I spoke to him from 11 o'clock for about two hours and my ex-wife spoke to him for about an hour afterwards, you know, because he'd done to the best ability -- report the facts. And unfortunately, when it came to it, as he said earlier, I mean, it's fair to assume that the Portuguese police that were giving him the information would have been a reliable source.

  • Hmm. When the stories were being published between, I think, September 2007 and January 2008, did you take any interest in those stories at all?

  • Not -- interest, of course, but -- you know, I would go down, "What's happening now? What's happening?" It was a big -- I remember going to people's homes or social functions or charity raisers and 10, 15 people would come up to me, "What's going on with the McCanns?" It was a big, big, big story. Everybody was interested in the McCanns and everybody had a view about the McCanns.

  • I understand that, Mr Desmond, but in your discussions with Mr Hill, did it come out that in his view the perpetuation of these stories increased circulation?

  • But you had your finger on the pulse of circulation, did you not?

  • Well, I saw the figures every day and basically the figures don't move, as I said earlier on.

  • I think you're saying Mr Hill's perception is incorrect and that the McCann stories could not have increased circulation; is that right?

  • With respect to editors, editors have to believe that by putting a good story in, they're going to sell more papers. They have to believe that. The day they don't believe that is the day they go home and play golf, or whatever ex-editors do. They have to believe by running a big story that the sales will go up, but that doesn't necessarily correlate, or it may do for a week.

    You know, you have to understand that, you know, the commercialities of a newspaper basically is selling advertising. And advertisers, you know, if the circulation goes up by 100,000 copies in the month, 100,000 copies in the month is divided by 25 days, which it is 4,000 copies a day, which is not going to make -- the advertiser isn't going to go, "Whoopee, I'm going to pay you 4,000 of 700,000 or 800,000 extra money, but the advertiser is sophisticated and looks upon the circulation over a six-month period or maybe a 12-month period and the advertiser is not stupid. He knows that, you know, if a paper gives away a DVD and it goes up by 200,000 on a Saturday, you know, 200,000 copies divided by 25 is only 8,000 copies a day and it's not on that day anyway.

    But the editors have to believe by writing a -- I don't want to be rude to editors. They have to believe and it's right they believe that it will lift copies, but unfortunately, you know, we are in a non-growth business, and, you know, that's where it is.

    You know, this Inquiry is probably the worst thing that's ever happened to newspapers in my lifetime, because it means -- you know, it's very hard at the moment in Britain in business, you know, it's very, very hard. The banks are very tough on everybody, it's very difficult to get money and borrow money. It's very difficult to do anything, frankly, and therefore people are looking at every single penny they're spending, and if they believe that newspapers are basically dishonest hacking low lifes, I suppose is the word, you know, then they're not going to buy newspapers. And the last few months, the sales of newspapers have never been so bad.

    One of the reasons is -- and I'm not blaming the Leveson Inquiry, I'm blaming the source of the Inquiry, which is the hacking thing, which should have been nailed on the head years ago, and not left to go on for so many years. I've never known anything like it. Hacking is illegal. Why are these people still walking the streets? You know, it's ridiculous that we're all -- the amount of money, time, expense, et cetera, et cetera, et cetera, we're all putting in to look at, you know, this, that and the other, when these companies have committed criminal acts and should be prosecuted.

  • Don't you think it goes beyond that?

  • Yes. Don't you think that there are significant areas where it is important to see how one can ensure that people buy papers because they trust the content that they see, they trust the way it's been obtained appropriately -- I won't use the word ethically, but appropriately --

  • -- with respect to people's rights, and it is measured and balanced and accurate, as opposed to what you just see on the Internet?

  • I agree 100 per cent. Absolutely.

  • But isn't this, therefore, an opportunity to make sure that that is how your business proceeds? I'm not talking about you personally; I'm talking about across the range.

  • I hope so. Frankly, I'd rather get rid of this, you know, prosecute the people that have committed offences and get on with business. And have a proper RCD board of proper business people, legal people. You know, I like Lord Hunt. He came in to see me, I think he's a very good fellow, very sensible guy, you know, grey-haired guy. There's no angles, he wants to do a good job, have proper people that, I think Paul said earlier on, when things are being written at the time, bring it up then, not at the end and not try and pretend it's a little cosy club and, you know, definitely in the new committee ban biscuits.

  • What do you mean -- I'm sorry, you have to explain -- RCD?

  • Oh, I see. Sorry, I'm obviously slow myself.

  • Can I just go back to the McCanns and raise one question? You're concerned, I think, at the lack of consistency in the position the PCC took in singling out --

  • -- the Express in particular, is that --

  • Absolutely. First of all, I apologise to the McCanns and we have apologised to the McCanns and we have put it on the front pages and nothing would give me greater pleasure to find Madeleine and, you know, we've tried on many, many, many occasions to, in spite of some bad editorial, to try and find Maddie. So if I can just put that.

    Basically, every other paper was doing the same thing and yet, I forget his name, the ex-chairman and his cronies thought, "We'll hang out Peter Hill and the Daily Express". They should have all stood -- I think they should have all stood up and said, "You know what, we've all wronged, let's all bung in 500 grand each", which would have been GBP 3 million. In fact they did in the end, they probably spent more than £500,000. But we could have all done it as a united body, which might have been better instead of singling us out.

  • But isn't it fair to say, Mr Desmond, that if you look at the hard facts, I think the McCann litigation involved 38 defamatory articles. It is right, and Mr Ashford has drawn to our attention that there are other newspapers who also perpetrated defamations, but not to the same extent as your papers.

  • Is that -- I'm not sure that's right. I'm not sure that's right at all.

  • If it's wrong, Mr Sherborne here, who -- the McCanns are his client -- will demonstrate that in due course, but it's certainly my understanding that we're talking about 38 defamatory articles over a four-month period and that your paper was guilty, if I can put it in those terms, of the most egregious and serious defamations, and other papers were guilty of defamations of perhaps less severity in terms of quantity. Do you accept that?

  • Once again, I don't wish to minimise it, right? But four months is -- let me see now, it's 12 weeks?

  • It's 17 weeks, on my reckoning.

  • 17 weeks, thank you. 17 weeks times 6 -- you have to help me again.

  • 102, is it, Mr Desmond? I don't know. You're the businessman.

  • Well, I don't know. 102, very good. Is 102.

  • I'm not trying to win points here, because we did do wrong, but I could say there were more, if there were 102 articles on the McCanns, there were 38 bad ones, then one would say -- and I'm not trying to justify, please, I'm not trying to justify anything, but you could argue there were 65 or 70 good ones.

  • But the effect of the bad ones are really twofold. One, the possible pragmatic effect, namely if people thought that Madeleine had been killed, there would be less interest in trying to find her. Do you follow that?

  • From my memory, and it was a long time ago and -- but I mean it was just the story every day. It just went on all the time, was she killed? Was she --

  • You are not listening to my question and the, I would suggest, inexorable logic behind it. If people thought Madeleine might have been killed, particularly by her parents -- it doesn't matter by whom actually -- there would be less incentive to try and find her. Do you agree with that proposition or not?

  • No. Because if you take Diana as an example, you know, all these situations where no one actually knows the answer, as it turns out, it just goes on and goes on.

  • Mr Desmond, I'm beginning to sound irritated, but I am. There is no comparison between these two cases because to be absolutely stark about it, in the case of Princess Diana we have a dead body. What has that got to do with the McCann case, please?

  • Well, you know, there has been speculation that Diana was killed by the Royal Family.

  • And the speculation has gone on and gone on and gone on and there has been all sorts of speculation about Diana, and you know what? I don't know the answer. And if you go into a bar or coffee shop or whatever the thing is, and you start talking about Diana, you will get a view on Diana and you will get a view, and once again I do apologise to the McCanns, you know, et cetera, et cetera, et cetera, but there are views on -- there are views on the McCanns of what happened. And there are still views on the McCanns of what happened.

  • But that argument would justify newspapers such as yours publishing anything it liked at any time because it could say, "There's always another point of view"; would you accept that?

  • Again, there's an inexorable logic behind it which must be right, isn't there?

  • What I think is free speech is very important and if we get any more regulation -- I mean, what are we trying to do in this country? Are we trying to kill the whole country with every bit of legislation and every bit of nonsense? You know, I go to Germany, I put OK! Magazine into Germany. A British company, we go into Hamberg. The Mayor of Hamberg -- we have 30 people working there six years ago -- the Mayor of Hamberg welcomed me in, gives us, the company, 500,000 euros and says, "Welcome to Hamburg", you know. In this country I want to put a new print plant up in Luton. We go to Luton, you know, we have a warehouse, we buy a warehouse in Luton, 11 acres, 12 acres. Luton, as you may know, is on a road called the M1. The first objection is that we may clog up the roads at 2 in the morning by having lorries come out of our printing works. Okay?

    Then we go the next objection and just more objection, more objection, more objection. The bottom line is how much more -- at the end of the day, we put our printing plant up and the MPs walk round it on our opening night and I said thank you very much but what have you done to (a) encourage me, to encourage businesses, to encourage anything, to invest in the future the newspapers?

    So, I mean, if we think that newspapers are important, which I do, and you do, otherwise you wouldn't be here, you'd be doing other things, we have to be in a situation where people do have opinions and ideas, et cetera, et cetera, et cetera, which, to the best of their ability, if you take the case of the McCanns, you know, we did send journalists or reporters or whatever you want to call them to Portugal to get the facts. We did do, you know, everything reasonable, or Mr Hill did everything reasonable to make sure he was getting the facts and getting the stories across.

    At the end of the day, the McCanns, you know, as I understood it, although I've never met them, were perfectly -- if we ran it for four months, you know, it took them a long time to get involved in a legal dispute with us. They were quite happy, as I understand, in articles being run about their poor daughter, because it kept it on the front page. I think it was only when new lawyers came along, who I think were working on a contingency, that the legal --

  • Well, that's the facts. I'm sorry, that is the facts.

  • Mr Desmond I'm going to interrupt you.

  • I'm sorry, that is the facts.

  • That must be a grotesque characterisation.

  • I'm sorry, that is the facts.

  • Your paper was confusing the McCanns on occasion of having killed their daughter. Are you seriously saying that they were sitting there quite happy, rather than entirely anguished by your paper's bad behaviour?

  • Just think about the question before you answer.

  • I'm going to answer your question, and I've already answered it. We ran -- on your suggestion, we've run 102 -- your figure, 102 articles. For four months you say we ran it, right? Nothing happened, to the best of my knowledge, until a new firm of lawyers were instructed, who were on a contingency, that then came in to sue us. And, you know, I mean that's a fact. Up until that stage, as I understand Mr Hill, they had a PR company who were working alongside Peter Hill and the team.

    But once again, please, I do apologise to the McCanns. I'm not trying to -- I am very sorry for -- you know, I am very sorry for the thing and I am very sorry that we got it wrong, but please don't, you know, try and -- every paper was doing the same thing, which is why every paper, or most papers, paid a -- paid money to the McCanns. Only we were scapegoated by the chairman or the ex-chairman of the PCC.

  • Mr Desmond, it's clear that your position is, in relation to regulation, that really you think newspapers should be left to get on with it, and you don't think there should be any regulator at all, do you? That would be your truthful answer?

  • The truth of the matter is in 1976 --

  • Can you say "yes" or "no" and then expand?

  • Well, I'm going to answer you.

  • Okay, please do.

  • In 1975 when we started International Musician, you know, when you start a new publication and you're 22, 23, it's very important -- the advertising is very important. And basically in the first issue one of our major advertisers was called Marshall, Marshall Amplifiers. In the first issue, Marshall had brought out an amplifier which was solid state. Before that he was known for valve amplifiers. The reviewer in the first issue said, "This amplifier will electrocute you, this amplifier should be withdrawn from the market."

    You know, you can imagine how I felt, having sold Marshall loads of advertising and, you know, a friend, in inverted commas, a business friend in inverted commas, but at the end of the day the article went in, Marshall went berserk and we lost the advertising for six months. But what happened was after six months Marshall did withdraw the amplifier, yeah? And he did then put his advertising back in for his valve amplifiers.

    The point of a long-winded story is that I learned at the age of 22 that actually the editorial integrity is the most important thing, and you -- you know, thank God we did the right thing and nobody was electrocuted, and back to papers, to answer your question directly, I think that Lord Hunt of Wirrell, surrounded with a couple of lawyers, surrounded by a couple of proper editorial grandees, not malicious people with -- what's the word? -- whatever the word is, and, you know, I think we'd all be very happy. You know, if you have this body, you have to have people you respect. You can't have people you don't respect. And you can't have people in there that are hanging you out to dry and you have -- who have ulterior motives and who lie.

  • So you would return, is this right, to a newly constituted body or whatever it's called --

  • I think RCD's a good name, isn't it?

  • With a constitution you would respect; is that right?

  • But unless and until that happens you would not return?

  • As simple as that. At the end of the day, I stay in this country because I respect the government and I respect the laws of this land. If I didn't respect the government and didn't respect the laws of the land, I would leave. As you would.

  • I think you've made your position clear about regulation and the sort of body we're looking at. Do you hope to expand your stake in other national newspapers if the opportunity arose?

  • Tough, tough, tough business.

  • Yes, thank you very much, Mr Desmond.

  • May I just add something? Dawn Neesom was asked this morning about allegedly Islamophobic headlines and you very kindly said we would have the opportunity to refute stuff. Ms Neesom is very concerned to show that the Star has taken a balanced approach and she's managed to get some headlines immediately. We'll obviously put some in writing, but she was asked this morning about poppy burning. On 28 November 2011 she was asked whether there was any coverage of Muslims raising money. She has "Kids who care, hundreds of young Muslims like this lad collecting for the Muslim Youth Association".

  • Straight away. (Handed).

  • And then page 23, on 21 November 2011 "Muslims top pie charts, Muslims are the most patriotic Brits according to a national poll".

    There are plenty more others that will be put in in writing, but as the questioning went this morning, it has received some coverage --

  • Thank you. Of course we'll incorporate these articles and I'm grateful for the speed with which that's been done.

  • Sir, there is some evidence we're taking at read. The statements of Mr Robert Sanderson, Mr Martin Ellis, Mr Martin Townsend and Mr Gareth Morgan, please.

  • Thank you. They'll be incorporated as within the record of the Inquiry and their statements can be published immediately.

  • Thank you. That concludes --

  • That concludes this week, does it?

  • Some of us, sir, are in the Divisional Court tomorrow. There we go.

  • Right. I meant the hearing of the Inquiry. 10 o'clock on Monday, thank you very much indeed.

  • (The hearing adjourned until 10 o'clock on Monday, 16 January)