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

  • MRS SLY BAILEY (sworn).

  • Good afternoon, Mrs Bailey.

  • Could you look at your witness statement and confirm your full name?

  • Are the contents of your witness statement true and correct to the best of your knowledge and belief?

  • They are, Mr Barr. One amendment I should like to make is that when I submitted the statement to the Inquiry, we published 160 regional newspapers. We now publish 140.

  • I see. Just before we continue, the microphones seem to be booming quite a lot. Are they working properly?

    Your witness statement sets out, Mrs Bailey, that you're the chief executive of Trinity Mirror, and it explains that you've been appointed chief executive in December 2002, joining the group on 3 February 2003. Are those dates both correct?

  • So you became chief executive before joining the group?

  • No. It was announced that I would be, but I wasn't actually appointed to the board until that day in February 2003.

  • Now I understand. You explain that you joined Trinity Mirror from IPC Media. Your witness statement, which we're going to take as read, sets out your very successful career at IPC up to the time of your appointment at Trinity Mirror and you tell us that as well as being chief executive at Trinity Mirror you're also the non-executive director, or have been at various times, of the EMI Group?

  • Now is it Ladbroke plc? And that you're a non-executive director of the Press Association. In addition to that, you're on the panel advising the government to review the BBC's royal charter. You did that in 2006.

  • I was in 2006, correct.

  • And you're a trustee of the English National Ballet School and the president of a charity, NewstrAid, which assists people in the newspaper and magazine business.

  • At Trinity Mirror you explain to us what your role is as chief executive on the board. You sit with Mr Vickers, Mr Vaghela and the non-executive chairman is Ian Gibson. Your responsibility, you tell us, is for developing the group's strategy, and that you have delegated authority from the board to execute that strategy and the group's operations. Your role also covers investor relations, maintaining relationships with key Trinity Mirror customers and suppliers and dealing with public affairs and corporate communications. You tell us also something about who the leading shareholders are.

    Does that mean that in distinction to some of the newspaper groups we've heard of who have identifiable human proprietors, what distinguishes Trinity Mirror is that there is no single identifiable human proprietor; you are answerable to your shareholders?

  • Yes. I'm human, but I'm also the proprietor.

  • Forgive me. Insofar as you are the human proprietor of Trinity Mirror group, can you help us then with the level of contact that you have with shareholders?

  • Liaising with the shareholders is one of my primary responsibilities. There are at least four times a year which I would formally see shareholders: after our preliminary interim results twice a year, at our -- and following our trading statement, if shareholders want to see us then. It's customary that as chief executive of a plc, once you've announced your results, you go on something called an investor roadshow, and that I do with my finance director and head of corporate communications. Those are the main meetings that we have with shareholders, where we update them on strategy, the performance of the business and they get the opportunity to raise any issues that they may have with us about the business.

  • And you meet with major shareholders or talk to major shareholders at other times?

  • From time to time, they may ask for a meeting, either with me or perhaps with the chairman. Good governance certainly would see the Chairman also meeting with shareholders, perhaps on an infrequent but still regular basis. So I'm there to see them whenever they wish to see me.

  • There's a suggestion in Mr Morgan's book that there might have been attempts by shareholders in 2004, when he lost his position as editor, to pressurise you and the board of Trinity Mirror, particularly from American shareholders, because they didn't like the anti-war stories which were being published by the Daily Mirror at the time. Were there any such attempts to influence --

  • No, there weren't. There weren't any at that time from either any UK or indeed American shareholders. It's not anything that I have ever encountered. The only phone call that I ever received, after we'd published those photographs in 2004, was from one shareholder who was interested as to what the advertiser response had been, ie had we lost any advertising as a result of it. But that's the one and only call that I ever received.

  • Had you lost advertising?

  • As we know, Mr Morgan did lose his position as editor following the publication of those photographs, and that was your decision, was it?

  • It was a board decision, but it was certainly something that I talked to the board about that they supported me in.

  • And if fell to you to communicate the decision?

  • Since you've had the experience of having to terminate the employment of the editor of a national newspaper, can I ask you: what are the reasons for terminating Mr Morgan's employment?

  • You can imagine it was an awful time for the business after we had published those photographs. We were literally in a maelstrom of interest in the business and media interest and frankly, it wasn't so much the publishing of the photographs themselves, which I do believe that Mr Morgan did in good faith at the time, but what happened was that in the intervening period the board lost confidence in him as editor, and that was why we fired him and that is exactly what I said to him when I did so.

  • Because of things that he said and did in that intervening period or was it because of the maelstrom, as you've described it, and the reaction of external bodies?

  • It was a combination of both of them. You'll see in our risk map that we talk about one of the risks being catastrophic editorial error and indeed that was what happened in this case. We did publish an apology. After Piers was dismissed, the team -- and it was their decision, under the deputy editor at that time -- published an apology the next day and we lost a lot of readers as a result of that episode, so it was a catastrophic editorial error.

  • Your statement goes on to tell us a little bit of an overview of Trinity Mirror, something about the size of the operation. You have in the region of 6,350 people. You've altered the number of titles down to about 140 --

  • It's 145. It's 140 regionals.

  • Regional titles. 160 to 140 since I wrote the statement.

  • One of the seminars had a paper from Claire Enders on the commerciality of newspapers. You'll doubtless remember it. We are going to hear some regional editors and I am very conscious that they have a very important story to tell, but without disclosing any commercial confidences, could you elaborate upon the pressures which Trinity Mirror are facing in relation to regional newspapers? I'm conscious that if in a few months you've gone down the number you've gone down, that itself tells its own story.

  • Indeed it does, sir. The pressures on the business over about the last five years have been intense, and the businesses face two challenges. One, which is structural, as we see the growth of new devices -- you know, first of all we saw the Internet and now we're seeing new tablet device and smart phones and the proliferation of news and information on those sources, and at the same time the business has been under the most intense cyclical pressure as a result of the poor economy.

    My view is that the cycle has been much worse for us than the structural issues. I think we've coped pretty well with that and were coping pretty well with that. You can see in my statement that we publish more than 500 websites so we have a similar publishing strategy online in our local markets that we traditionally had in print, that what we seek to do is to have the products and services that our readers and advertisers would want to find, whether that's in print or whether that's in digital, and indeed our strategy is to build a growing multi-platform media business.

    But the important thing to understand are the differences in the business model between nationals and regionals. A national newspaper is predominantly a circulation-driven business -- certainly tabloid national newspapers, I should qualify that as -- with traditionally 60 per cent of the revenues coming from circulation from cover price, and that, of course, is driven by the mass of -- the frequency and the number of copies that we sell at the price that we sell them at.

    And the advertising is display advertising driven, so large corporates that you would know the names of that traditionally reside on the high street, with very little classified advertising.

    Regional newspapers -- and this is the big issue -- have an inverse business model, where 70 from advertising, only 30 per cent comes from cover price. They're smaller, they're often weekly, so you just don't get the economic effect of the cover price in the same way, and perhaps most instructively in terms of advertising, it traditionally hasn't been display advertising-led; it's traditionally been classified, so the key elements of that being recruitment, property, motors and then community services like births, marriages and deaths.

    Clearly, as we've seen a worsening of the economy pretty much since 2007, the category that's been hit hardest, which is our highest yielding category which really supports our news-gathering activities, in terms of that's the revenue that we generate to support the business that we're in, is recruitment advertising. So at the peak, we had around £150 million recruitment advertising supporting our titles, and last year we had less than 20. And when you're facing that happening to a business, then you have to reduce your costs effectively and quickly to ensure that you have a business and that you can come out the other side of that.

  • And property advertising?

  • Property advertising has less of an impact because it's traditionally been a much lower yielding category. So yes, the same thing has happened in broad terms in terms of the decline, but the real problems for us have been with recruitment advertising. It is an interesting area because I think there's a received wisdom that it's all gone online. Now, clearly some of it has gone online. Indeed, we've been launching and buying businesses in the area of classified recruitment over the last five years, but the majority of the sorts of jobs that you'd have seen if you'd opened the pages of the Liverpool Echo or Newcastle Chronicle would be what we call everyday jobs for everyday people. They're not legal directors or finance directors; they would be jobs in the public and private sector, lower level administrative jobs in the retail sector, baggage handlers if we're near an airport, taxi drivers, hairdressers, and that has all but dried up.

  • Just gone, full stop? Or --

  • You know, I'm sure you read the headlines all the time where there will be a retailer that, you know, is recruiting staff and there will be thousands of people queueing around the block for it. So the liquidity in the market is simply not there to drive the need for clients to advertise for those positions.

  • But that suggests that that's economy-driven --

  • Exactly, so that's --

  • Exactly. I'm not saying that there aren't any structural issues there. Clearly, there are. What I'm saying is we've built such strong positions in our local markets that we understand an awful lot more about that, and unlike in a property market where there is a dominant player in the form of Rightmove that has emerged in the property market, where you can see there's been a structural shift, there isn't one online dominant player in the recruitment market which would absolutely bear out my thesis that actually this is mostly driven by the cycle and mostly driven by the economy. But clearly the longer the economy is as challenged as it is, and structural change continues to happen, then the less likely that we'll see 100 per cent of that. I believe we'll see some come back but it won't come back in the way it was.

    That has been the primary issue, is the -- it's almost like a falling knife that's been getting sharper on the way down as we have gone through the cycle and we're bumping along the bottom but it's yet to improve.

  • This might be a little bit away from the core concerns that I have in this Inquiry, but I am concerned to know whether there is any structural change that would assist what I believe is a vital part of local democracy which is provided by local newspapers.

  • The best thing that we can do is to remain profitable so that we can come out the other side of that.

  • Yes, I don't think I can make a recommendation to that effect.

  • No, but clearly in good times what happens is in terms of portfolio management, where you're looking for maximum economic return in any market, then you will push out in geographies and you will launch new titles, new websites, and you will add to your portfolio. When the revenue shrinks in the way that it does then you have to pull the portfolio back.

    A grain of comfort that I could give you, sir, if I may, is that we have been doing an awful lot of reengineering and restructuring the business using technology, not trying to do the same things with fewer people, so we can continue to offer the service that's so valued by our readers in markets. That's very much front of mind for us with any changes that we're making.

  • But if there is anything that you feel that is structural which falls within my terms of reference that could impact on the commerciality of local newspapers that report on local authorities, on local health interests, on courts, then I would be very interested to know about it.

  • I guess the biggest concern is a regulatory one, where I remain unconvinced that the regulator is seeing the market for what it is now, ie. it's still applying those very narrow definitions of print markets and allowing any further consolidation or M&A activity in the regional newspaper market rather than understanding now that we are competing for readers' eyeballs and advertising revenue in a much broader sense than we have ever done before. So the BBC online locally is a big competitor. Google will be a competitor. Rightmove will be a competitor, because -- you know, that's just simply what's happened to our business. But I do fear that despite an enormous amount of work that we've done over the last few years, that that's still not well enough and properly understood. And that's the biggest thing that could hamper that should -- for us, should consolidation be in the interests of our shareholders, the concern would be that that wouldn't be allowed to happen. I can't say that it wouldn't but it's a concern and we saw --

  • It's a plurality problem.

  • It is a plurality problem and we saw it demonstrated only a couple of months ago with the Kent Messenger Group unable to purchase the titles from Northcliffe that they wished to, and after that we saw a number of title closures, which to your point, sir, cannot be a good thing, where regulation is having almost the inverse or the wrong impact on the market. So that remains a concern in the background.

  • There's a real problem about trying to find the way to create a regulatory framework which covers all these diverse activities.

  • Yes, I mean, this clearly is one for the competition authorities, but in your asking me of concerns, that would be one of the biggest concerns that actually touches on plurality and the hugely important role that we fulfil in our communities, yes.

  • Thank you. Sorry for that diversion.

  • Not at all. I've been asked to ask you to slow down a little so that the transcript shorthand writer can keep up.

  • Thank you. You go on in your statement to tell us about the activities of Trinity Mirror under the heading "Corporate responsibility". You refer to the Pride of Britain awards which we've heard about from another witness, how Trinity Mirror has won six successive gold awards from RoSPA and about the group's environmental and health and safety credentials more generally, and also about its charity work.

    You then move on to the culture of ethics. Can I ask you: it's conspicuous in your disclosure that Trinity Mirror has a large number of paper systems as part of its system of corporate governance. To what extent do you think that in addition to those extensive paper systems and processes it is incumbent upon the chief executive of the organisation to provide an ethical and professional lead?

  • I think it's terribly -- I think it's terribly important, Mr Barr. You know, I would see ethics as being a set of principles by which you live your life, both your personal and your business life, that drives the highest standards of integrity and personal conduct, and I hope -- your know, I think that the reinforcement of that through the chief executive in everything that you do, in the way you conduct your business affairs as well as documenting it at every opportunity, the importance of it in your policies and procedures, and I think you can see in the bundle that we do take the opportunity to reinforce, you know, how the high standards of conduct are important to the company at every opportunity we can.

  • How do you personally spread that message in addition to the paper systems?

  • One way that I do it is that I have a call with my top 200 managers every month. In that call, I update them on the performance of the business, challenges that we're facing, good things that we have done, performance and progress around the group which is, you know, reinforcing all the things that we're about that we're working towards, that -- a part of our strategy in a way that it takes the form of our operational performance. When those 200 managers get back to their desks, there is a briefing document of all of the things that I have said. The job of those managers is then to cascade that through the organisation, and the way the system works is we think it's important that everybody should hear that. Some people don't have computers, and if you're a van driver, for instance, or you're at the print site, that those messages are communicated to you and you have a personal briefing. I think that's just an example of one of the things that we do. I spend a lot of time out in the businesses, talking to people, and again, I do believe that a lot of the culture of the business is indeed vested in the chief executive, yes.

  • Do you keep track of chief executive level of, for example, the number of libel actions which your titles are facing?

  • Keep track, but once a year we would have, you know, a legal report to the audit committee and I have ongoing discussions with my group legal director. So in that way -- I couldn't say I would be aware of all of them as they're happening.

  • So for you, it's an annual --

  • No, it would be more frequent than that. The formality is the fact that all legal cases pending not just libel would be captured formally at one point, but that I would be updated through the year -- not on everything.

  • But that seems to me, if it's all types of legal action, to be just a facet of the running a business and looking at the legal risk. What I'm interested in is trying to filter out the ethical dimension. So do you promulgate any instructions about ethics personally in addition to the systems that we've seen?

  • Yes, I think I do it in the sort of general source of business and the conversations that I have and the -- if you like, enforcing the policies and procedures that we have and the way that we go about doing our business, whether it's our relationship with suppliers or advertisers or readers, yes.

  • One of the things that I haven't seen in your documents is the incorporation of a conscience clause. The Editors' Code is incorporated into the contracts of employment, but there isn't a specific conscience clause. Have you considered whether or not that would be a good idea for employees and that within the group?

  • I haven't, but I think I might.

  • You explain to us that corporate governance is rated by proxy voting agencies and that Trinity Mirror has done very well in such ratings. Are those assessments of your systems of corporate government or the actual performance and delivery at the coalface?

  • No, they're an assessment of our systems. We, as a plc, comply with the UK code of corporate governance and that's quite prescriptive, of course, as well as the listing rules, and that is what we are being benchmarked against, and that would be done very much in the annual report and accounts, and the corporate governance report in that. It would be the way the board is functioning, the board evaluation, the board committees and the way that the structure works and shareholders' confidence.

  • High level stuff?

  • Yes, but I think that -- corporate governance, I think, frankly, aren't two words that are often used outside of the boardroom. I think that what happens is that when corporate governance leaves the boardroom in the form of systems and controls and policies and procedures, it really becomes, for the rest of the business, good management practice. That's not something I'm concerned about but I'm just saying to you that I think that that's something -- they're words that the very high level team would use, rather than lower down in the business. It doesn't mean to say they're not doing them because it's not the way that they would normally think about referring to them.

  • That good management practice incorporates a mechanism of oversight, which presumably works?

  • I believe that it does. I think that no system of corporate governance can be completely bomb-proof, but what it does is it minimises the risk of error, it minimises the risk of wrongdoing, it makes people think very hard about judgment in the way it lives in the culture, and it helps you to catch things quickly if they are going wrong. But I do believe that we have a robust system.

  • Your statement goes on to tell us about the expertise and the experience of the trinity board members. I'm looking at page 11 of your witness statement onwards. Having looked at this, it does appear that there isn't a single person on the board -- please do correct me if I'm wrong -- who has journalistic experience on a newspaper, a person with experience of being a legal manager on a newspaper, not anyone who is a dyed in the wool journalist. Is that fair?

  • It's factually correct to say that, yes.

  • Since the businesses is in publishing of newspapers and magazine, do you think that is a weakness of the Trinity Mirror board, that it doesn't have a journalist on the board?

  • No, I don't think that it does, and I think in a plc, you are looking for directors with a broad range of experience. You're looking for diversity in terms of experience and most certainly gender, and I think -- you know, the primary functions -- not exclusively, but the primary functions of the board are the strategy of the business -- is that the right one? Will it determine the best results for shareholders? The performance of the business. Is it performing in the way that it can and should be? Governance, as we've talked about earlier, and risk management. It tends to spend most of its time not necessarily at a high level, but -- the board can go wherever it wants to go, but broadly it -- where it focuses would fall into those categories, and it would not be usual for the detail of editorial matters, which is a matter for editors as you've heard today, to be discussed at the board.

    I provide the board every month with a fairly lengthy chief executive's report that gives them my views on the business and performance and not just the numbers. We're trying to give greater clarity and understanding, but that's so that they can keep pace with the business as we're developing it. It's a fast-moving business now with lots of changes and that is the way that that is covered. But, no, I do not believe that Trinity Mirror has a gap that needs to be filled by not having that.

  • But wouldn't a director with journalistic experience, when touring around various publications, be much better placed to understand what's going on, particularly ethical nuances and to get a finger on the ethical pulse, as it were? Would you accept that proposition?

  • But I think that when you're a director of a business in a public company, it's very important that the board are able to all contribute to that wider set of responsibilities that they have, as I've just outlined, that they don't, you know, pop up and just speak about -- I would put to you that would not be the right sort of board that would not function well, if you only had people that were focused on a particular area, and I think the board feel that anyone they wanted to invite into the boardroom tomorrow to talk to them, they could do.

  • Can we move now to your system of risk management. You have a committee, one of the subdivisions of the board, as I understand it, the audit and risk committee.

  • You've kindly provided the terms of reference for the audit and risk committee. I'm looking now at page 15 of your witness statement. Its remit appears to be high level oversight of the systems; is that right?

  • No, I think it's more than that, actually. We have an independent, highly experienced, very diligent chair of our audit committee. The risk map is central to the way that we manage the business on a day-to-day basis, not just something that's a document that goes to the audit committee. As I've outlined, we have 27 top risks in the company right now, and what we do is we review the risks in the business and analyse them for their probability and their impact, should they happen. We then analyse the policies and procedures that we have in place to minimise that, and then what flows out of that are a set of systems and controls.

    We have a very strong internal audit function. We have an ongoing work programme throughout the year, which is a rolling programme, and I think importantly the head of risk and audit reports jointly to me and to the head of the risk and audit committee, who's not a member of the executive team, as an additional check and balance. So they have to deal with high levels of data and information about the company, whether that be -- you know, looking at the accounts, the auditors, the performance of the business, the integrity of the financial statements, and the numbers, analysis of us as a going concern, intangible assets -- all of those things that I would say, yes, are higher level for the audit committee, but they will also look in much more detail than that because of the audit plan that's provided to them by the head of internal audit.

  • When they're looking in detail, are you saying they're looking in detail to ensure that the systems are in place?

  • Yes. And that the control environment is in place.

  • Not just the systems.

  • Could you explain to us what you mean by "the control environment"?

  • So what are the policies and procedures and the management actions that are taken. So what would be the authority levels, for instance, what would be the expense levels, what are the protocols that are built into IT systems to ensure that things either happen or can't happen. So those are the sorts of things that they would be looking at.

  • So auditing the systems themselves but doing so in detail?

  • Sorry, I don't understand.

  • I'm talking about my experience of the Court Service. The impact and the probability of risk is each scored. So there's a very high risk, red, then a medium risk, amber, and then low risk, green.

  • Yes, we have -- exactly. We have -- and those will change. You know, I mean, as an example, there was a very real issue with the supply of news print because of what was happening in the global market last year, when we had very real concerns about our ability to source the amount of news print that we had. So that risk was put further up the agenda and we looked at what we could do to ensure that that didn't happen and indeed it didn't. So it's very much a living document, in that it does need to be constantly analysed because the business is changing. The macro-environment is changing and it needs to be kept under constant review.

  • All right. I think you'd better slow down again. The speed at which you're talking -- because I can see the extent to which the shorthand is writing "inaudible", and that's not because you are inaudible, but because it's actually impossible to keep up.

  • Would I be right that this committee in its work doesn't measure what's actually happening on the ground; it's measuring whether the systems are in place on the basis that that should reduce the risk of things going wrong?

  • I think in so doing it is looking at things that are then happening on the ground.

  • So what I want to know is: is there a system for looking at the ground truth, for looking at, since we're considering ethics and practices, looking at how many complaints there have been to the PCC, looking at how many legal actions there've been, looking at how many apologies have had to be printed and so on and so forth?

  • The board would leave that very much for me to do, but then there would very well be things that I would draw to their attention. The point about the CEO's report is to keep the board updated, so those sorts of things would regularly be a feature of my report.

  • Do you collect data for that sort of indicator systematically or do you just ask for it when you feel that you need it?

  • It would depend what it was. I, for instance, do know that we've had, across the group, 12 PCC adjudications against us in the last five years.

  • Do you know how many libel actions and that sort of hand?

  • I don't have that to hand, no.

  • If you don't have it to hand now, is that data collected or not?

  • If I asked for it, I could certainly have it.

  • I get an impression it's on request rather than something that's served up to you periodically to be monitored?

  • I'm not criticising the systems you have in place; what I'm trying to identify is whether there's a gap. If you have the systems in place, you still need to measure the output, don't you?

  • Yes, you do, but I think that the areas that, if I'm right, perhaps you're talking about are matters of judgment where perhaps systems and controls -- tightening or changing of systems and controls would not necessarily change the output of that. In some instances, they would. I think that -- you know, following the closure of the News of the World, I instigated a review of our editorial controls and procedures. The last one we had done post -- the last full one that we had done in that form was post the death of David Kelly in 2004 and with what had happened at the BBC. So that's something that I put --

  • That's reviewing the controls, but if I may stop you there. I was asking you about measuring output. Does it come to this: that having gone to extensive efforts to put in place and to ensure that there are in place complicated systems for controlling risk, including ethical risks, that what happens after that -- if there are complaints and there are successful claims, do you just regard that as an unavoidable fact of running a media business?

  • Not in a way that we would wave it away as an unavoidable fact, most certainly not, but I do think that there is a point where risk management stops and judgment starts and that we understand -- the board understand that the business that we're in does rely on the good and sound judgment of our editors. We're not producing products that, you know, roll off all looking the same off a production line. We literally reinvent our business every day, and that is not without risk and it does rely on an enormous amount of judgment.

  • So what is the view of the chief executive to the evidence which you've patiently listened to all day? You've heard a number of examples of where things have gone wrong: the Jefferies case, the Sienna Miller photograph and a number of other examples that I've put to your editors. What is the chief executive's view of those? Are they the unavoidable residue of having to make judgment calls, the unfortunate consequence, or are they more than that?

  • I think sometimes clearly our editors do get it wrong and that's very regrettable. I think you can see from Richard's evidence today how very seriously and how very sorry he is, you know, regarding the articles published about Mr Jefferies, and indeed he called it himself a black mark on his record. He has assured me, as he did I think to you today, that in the future he will be more cautious. So I think that he has learned from that and taken it extremely, extremely seriously, as we all have.

  • I'm sure that's right. I'm sure that's right. The concern I have -- and maybe there's nothing to say about it -- is that that's what everybody says when there's been some disaster, until the next fabulous story comes up and suddenly one sees a tremendous story and then things go wrong again. Sometimes. Not always, obviously.

  • No. I would say that in the case of Richard, since 2004 he has made thousands and thousands and thousands of judgments, and usually he gets them right. This one he got wrong.

  • I wasn't actually personalising it.

  • Sorry, but I think what I'm saying is: ours is a business that, despite all of those things I talked about, does also rely on judgment and therefore is not without risk.

  • Not least because if all the other papers are doing it, then there's a bit of a herd mentality about them.

  • Well, I would hope that we -- I think ours is a very competitive industry, but I would hope that we didn't have a herd mentality. It's certainly not something that's encouraged.

  • Very much not being personal now but looking at the wider picture, at the start of this Inquiry there was a good deal of evidence from a large number of people who had fallen victim to reporting which should never have been made. Are you accepting that there is a problem which needs to be fixed?

  • A problem that needs to be fixed?

  • This Inquiry is dealing with the culture, the practices and the ethics of the press. Is it your view, having heard the evidence today, knowing about evidence generally to this Inquiry, that the present system for the regulation of the press needs to be changed?

  • I do think we need to make changes and I think we've all reflected very hard to what's happened over the summer and can see that changes need to and should be made. You know, I run a company which depends on the -- as much as they possibly can be, the confidence of investors and the certainty that they feel about the business. From a chief executive's perspective, having uncertainty around our industry and future regulation and what it might mean is not good for -- is not good for the business. So yes, it is something that needs to be looked at.

  • We'll come back to the details of that later, but for the moment, if I pick up in your witness statement, you tell us about the risk management certification system and your editors have done so too. You'll have heard the questions I put to them. Can I ask you: from the chief executive's perspective, what's the purpose of those certificates?

  • Executives know that they have to fill them in at the end of every year. We feel it's important in terms of reminding them of their responsibilities that they have to take those responsibilities very seriously and I think when people have to sign something, it makes them think very hard about it. Again, it's part of the control environment in a plc.

  • Can I ask you now about the Information Commissioner's reports in 2006. You, of course, were the chief executive at the time. Did the reports, "What price privacy?" and "What price privacy now?" hit your desk when they were published?

  • You've explained in your witness statement that a meeting was called to reiterate to very senior figures in the group editors and so on,what the corporate position was and that you weren't declaring an amnesty but people had to comply with the law.

    Can I ask if anything further was done, and specifically would I be right in thinking there was no internal investigation commissioned by Trinity Mirror to ascertain whether or not Trinity Mirror journalists had acted illegally?

  • We took our cue very much from the Information Commissioner who was, we saw, taking a forward-looking stance across a number of industries, not just our own. We made it very, very, very clear what was acceptable and what was completely and absolutely unacceptable, but we were told that he wouldn't be providing us with the details, it would have been difficult to hold an investigation, but that wasn't the reason we didn't hold an investigation; it was really about taking a forward-looking approach and taking our cue from the Information Commissioner, also informed by the fact that three of our journalists were interviewed under caution in 2004, and no further action was taken against them.

  • Because, of course, if you'd wanted to initiate an internal investigation you would have your own documents to show what had been sought from Mr Whittamore and with what result, wouldn't you, so you say it could have been done but wasn't?

  • But as I said, we took a forward-looking approach.

  • When you saw the table in the second report, it's a feature of that table that a number of your titles are pretty high up in that list, aren't they? Did you not think, given that what the Information Commissioner was talking about was activity which, unless the subject of a public interest defence, was illegal, that there was a need, in order to manage corporate risk, to look into and investigate what had been happening?

  • I had been very clear that this sort of behaviour would not be tolerated and I felt very much that that was being complied with. The editors gave me their assurances that it was.

  • That's the forward-looking part, but in essence, are you -- doesn't it amount to this: by not investigating, you do not know whether or not your journalists have acted illegally in the past or not?

  • I don't know that they did or what was in the public interest or wasn't, because we didn't have the data to do that.

  • But as your editors have said rather frankly, given the sheer number of transactions, it would be very surprising --

  • They may have been, but I don't know that. As I said, we took the decision at the time in 2006 to take a forward-looking approach.

  • Doesn't that amount -- even if in terms you'd said there would be no amnesty, doesn't it mean that de facto there was an amnesty because nobody looked back to see what wrongdoing there was or was not historically?

  • That's not how I saw it.

  • The ICO recommended amendments to the Data Protection Act legislation. Do you have a view on whether or not the amendments he proposed are a good idea or not?

  • Sorry, which specific amendment --

  • It's the section (overspeaking) --

  • He wanted to increase the scope of the public interest defence to make it subjective as well as partially objective, but then increase the maximum penalty. Those were the amendments which were passed into law, but which haven't yet been implemented.

  • I would not have a problem with that.

  • Thank you. You then deal in paragraph 72 of your witness statement with events when Mr Goodman and Mr Mulcaire were convicted and again essentially you gather around the same group of editors and executives and give a message that this sort of behaviour is not going to be tolerated in the Trinity Mirror Group.

  • It was reiterating our existing policies, and clearly the PCC code and the criminal law.

  • Can I ask you, presumably that was quite a serious and solemn meeting?

  • Why was such a serious and solemn meeting needed if, what News International were saying, Mr Goodman was a lone rogue reporter?

  • I simply thought it was an appropriate point to reinforce our policies, procedures and the criminal law.

  • Had you heard by that stage that Mr Morgan was saying that you'd listened to a message left for Heather Mills by Sir Paul McCartney?

  • I don't believe that I was, I can't be sure but I don't believe that I was.

  • Were you aware of Mr Hipwell's allegations that hacking on the showbiz desk at the Daily Mirror had been rife in the late 1990s?

  • I did listen to his evidence last week, yes.

  • Were you aware of those allegations in 2007?

  • I might have been. I'm not sure.

  • Were you aware generally that there were rumours flying around that hacking might be more extensive than had actually been proved beyond reasonable doubt in the criminal court?

  • I think lots of journalists were speculating on that in media pieces, but certainly without any evidence.

  • As the News of the World found out, to its cost, illegal phone hacking is a potentially terminal business risk.

  • It would be right that in 2007, after the convictions, Trinity Mirror didn't investigate whether or not there had been phone hacking within Trinity Mirror?

  • Why didn't you try and investigate to see whether there was any truth in the allegations that were flying around?

  • I can't remember the specific, as you put it, allegations that were flying around, but there was certainly no evidence and we simply therefore didn't see a need to do that.

  • Because it's right, isn't it, that people move around within tabloid newspapers, and indeed people who are now under arrest and are being questioned about events, one presumes, at the News of the World, have also in the past worked for Trinity Mirror titles?

  • I think that was one of the reasons for reinforcing what we said in 2007 to make sure that our editors were being very clear in reminding their people what was acceptable and, you know, our absolute adherence to the code and the criminal law.

  • And two of the editors I asked this morning confirmed that the culture of the different tabloid titles is not discernibly different. All of that suggests, doesn't it, that if there was a widespread practice, you needed to nip it in the bud, or at least look to see whether it was there and infecting your titles?

  • There was no evidence and we saw no reason to investigate.

  • Is it right that you've still not investigated? I know you've told us that there's been a review of systems and processes, but it's right that you've not actually sought to investigate whether the allegations of phone hacking in your group are true or false?

  • We have only seen unsubstantiated allegations and I have seen no evidence to show me that phone hacking has ever taken place at Trinity Mirror.

  • I understand what you're saying, but my question is rather different. You haven't looked, have you --

  • -- for that evidence?

  • You're correct, Mr Barr, we have not conducted an investigation.

  • Do you think on reflection that it would be a good idea to have a look to satisfy yourself whether or not there has been phone hacking?

  • I don't think it's the way to run a healthy organisation is to go around conducting investigations when there is no evidence to say that our journalists have hacked phones.

  • Even in the extraordinary circumstances that the media now finds itself?

  • I think what we have done is send a letter to our -- I can't remember whether it's 43 or 44 senior editorial personnel across the group asking three very specific questions of them, which clearly shows the company's position and how we would never condone such activity, and I take comfort from the fact that they all signed it.

  • Even though the BBC is publishing allegations of phone hacking, which don't seem to have met with anything other than an informal protest?

  • The BBC in July -- are you referring to the Newsnight piece? I think that's a terrible piece of journalism, as we pointed out to them at the time, and they have no evidence and have not come back to us with any evidence. They were running unsubstantiated allegations as if they were fact, and I think that's terrible journalism.

  • Can I take it then that your personal knowledge is you've no personal knowledge of phone hacking at the Daily Mirror or any other Trinity Mirror title --

  • The review that you did carry out, we have in the bundle. What progress has been made with implementing the recommendations?

  • Good progress. I'm chairing a compliance committee and reporting back to the board. I last chaired -- well, I chaired the last compliance committee on Thursday of last week and we are meeting monthly and I'm satisfied that we're making very good progress with the recommendations.

  • One of those recommendations is a training plan should be developed to ensure all journalistic staff are fully aware of the need to verify sources and of the relevant legal and regulatory compliance issues which may affect the approach to obtaining a story. What was behind the training need that was identified?

  • I think that we saw that across the group there were examples of very good practice and there were examples of some not such good practice, perhaps in terms of frequency of training, so we thought that it would be a good idea to introduce more standard practice across the group, and we are -- we have contracted the Press Association to do that and we are putting the finishing touches to that training programme now.

  • Another recommendation was that there should be a formal guidance note issued to all editorial staff dealing with workings practices when considering the public interest, in particular establishing a protocol for the editor signing off in advance of any actions that might be taken when a public interest defence would later be relied upon, and we've heard from the last witness that that's in place, at least at the People now. Is that now in place across --

  • Yes, it was a very key part of the review. It is in place. That guidance note has been issued and it also resides on our internal intranet.

  • Is that a practice which you would commend to your competitors?

  • Is there any reason why that step wasn't taken before now? Because it seems to be a fairly, if I may say so, obvious, commonsense way to protect and justify --

  • Indeed. I think on lots of our titles it would indeed have been happening and would have been standard practice. I think what we've done is add an additional control by saying, "This is our expectation, this is our process, this is how things must happen."

  • Were you aware of the Starsuckers programme and the allegations that were made against journalists from the Trinity Mirror Group?

  • I have become aware of it, but I couldn't be sure exactly when I became aware of it.

  • Perhaps we can try and roughly identify in time. What was it around 2009 when the film was released or was it around 2011 when it began to feature in this Inquiry?

  • I really can't be sure. I'm not sure that I've ever seen the film myself.

  • If you hadn't seen the film, were you aware of the allegations?

  • I'm certainly aware of them now. For the record, I think that some of the things that our journalists said were regrettable and my preference would have been that they wouldn't have said them. I do take comfort from the fact that we didn't pay for anything, we didn't publish anything, but I would still prefer journalists not to talk in those terms.

  • You tell us also about the weekly review of legal issues and so has one of your editorial witnesses. Do you think there's any further room for tightening practices with third parties? I'm thinking here of picture agencies. There seem to have been more an a fair share of regrettable instances involving pictures. What's your view of that?

  • We've also, as part of the review, written to third parties and made it very clear to them as to what our expectations are and the fact that we expect them to comply with those. Certainly what we discussed last week was making them part of any future contracts, should any contracts be in place, next time we negotiate them, so making it even more explicit than it is now.

  • Again, would you commend those proposed improvements to your competitors?

  • The question now about the relationship between the chief executive and the editor. I understand that the editor has the last say on editorial matters, it's his or her responsibility, but I'm interested in exploring how in practice things work, and I asked Mr Embley about the People's shift in political allegiance to a neutral stance and he described having discussed it with you and you agreed, as it happened. Can I ask, have you ever disagreed with one of the editors about any significant decision on the line, the editorial line that a newspaper in your group should be taking?

  • No, I don't believe that I have, and I think that there are some important key differences in our portfolio. For a start, all of our regional newspapers are apolitical. That's enshrined in their articles and they're very much champions of local issues and local causes.

    Insofar as The People, I thought it was a terrific idea. As Lord Justice Leveson has pointed out, The People and The Sunday Mirror actually do compete with each other on the newsstands, so there are a number of points of differentiation in their total packages but having another point of differentiation and that being a political one I thought was a terribly good and inspired idea from Lloyd.

    My job is to -- is certainly to hire editors and to put them in post and then allow them to do their jobs and to edit and to ensure that they have the resources and the support to be able to do that, and so I assure myself that that is so by having regular conversations with them. But they will really be directionally about the paper and I need our editors to be on top of their game. It's a tough business that they work in, it's pretty relentless, and in my conversations with them, "What do you think about this, how are you thinking about that?", part of my job is to ensure that they can discharge those responsibilities and they are on top of the agenda and what's going on.

    But I think also if you look if the Mirrors, they are very sure-footed in terms of their political positioning and it would just simply be unthinkable that that would change or I would attempt to change that or influence it. I mean, I'll give them points of feedback. I can remember, if you want an example, during the last American elections, when I felt that Richard's coverage was assuming a level of understanding that our readers would have about American politics that certainly I didn't have and I doubted whether they would have, and I gave him that feedback and said that more break-out boxes and explanation as to the system -- because we want to take our readers with us and make them feel good about what's going on and give them the currency to be able to discuss those things with friends, family, over the dinner table, and generally inform them. So I simply said to him: "I'm having difficulty with this, I think we could do a bit more explaining", and left it with him to think about that.

    The biggest area that I've ever given any feedback on is the area of TV listings. I'm an ex-TV listings publisher, as you heard from --

  • Slow down a little bit, please.

  • As you heard from Richard, listings are a key driver of the paper and as an ex-listings publisher, there are very technical ways of presenting listings that make more or less appealing to readers, so that would be, frankly, the biggest area that I have ever given feedback on.

    But I think it would be extraordinary for me to be totally disinterested, as chief executive in our content, but I've been in the business for a very long time and I know how to discharge those responsibilities.

  • Okay. Can I move on now to ask you about political influence. Do you meet politicians regularly?

  • I wouldn't say regularly. From time to time. What I tend to do is host regular lunches for senior politicians, cabinet ministers, predominantly for our regionals editors. If you're an editor of a national newspaper, you can pretty much get to see whomever you want to. It's not quite the same if you're the editor of a regional newspaper. A politician may want to see you when they want to come to your city or town because they have a particular reason for doing that, but it's very important that our regionals editors are aware of the broader political agenda and it's good use of everybody's time. So I would invite a cabinet minister to lunch at Canary Wharf, I would host the lunch and they would agree to come on the basis that it will be a very good use of their time because they will get the editors from Coventry, Liverpool, Newcastle, Birmingham, Cardiff all in the same room at the same time, so it would be a very productive lunch. Some of those issues that would be discussed would be local issues of concern. Others would be national issues, whether it be defence, education, health, whatever the editors wanted to raise with that minister.

  • What about the police? Do you have any contact with senior police officers?

  • I don't have any. I never have.

  • Moving to the question of external providers of information, first of all private investigators. You tell us there's been a ban on these investigators implemented this year at group level. Do you know when Trinity Mirror titles stopped using Steve Whittamore or is that at a level of detail that doesn't cross your desk?

  • No, I can't be sure. I think it was around 2005, I think, but I can't be sure.

  • Expenses. We've heard evidence of a culture, in certain quarters at certain times, of abusing expenses. Is that a real risk in your business that needs to be tightly controlled, the abuse of expenses?

  • I'm fanatical about expenses. I would fire people if they abused expenses without -- immediately.

  • Is that because it is a real moral hazard in this business?

  • I think that whatever business you're in, expenses need to be claimed as part of business. We have a very tight system in which expenses can be claimed, so I think it's just -- I see it less as a moral hazard and more about the fact that it's just the way one should do business.

  • Sir, I want to explore two related topics to do with the PCC and to deal with the future, but before I do so --

  • I'm conscious of the time. How long do you think this will take?

  • About 10 or 15 minutes, sir.

  • I'm sure you would rather conclude, but I'm just a bit concerned.

    Okay, carry on, but a lot of the material we have covered, and it may be sufficient to investigate the extent to which Ms Bailey agrees or wishes to adumbrate upon what the three editors from MGN that we've heard from have to say.

  • For the future, that's what I'll do and for the present state of play, there are just two matters I want very quickly to put to you. The first is at tab 32 of your bundle. This is a letter from Sir Christopher Meyer at the Press Complaints Commission to you, dated 10 October 2007. In the second paragraph, it refers to the Commission's recent report into undercover news-gathering methods. Do you see that?

  • Sorry, this is 10 October?

  • Yes. The second paragraph --

  • Later on in that paragraph, it says:

    "Nonetheless, the board of PressBoF has asked me to write to the industry to find out what its response is to the report. I am pleased to say that the Commission's inquiry was welcomed by the government and our recommendations endorsed by the Culture, Media and Sports Select Committee, and has been credited with diminishing the appetite of Westminster for taking things any further. It seems likely that sooner or later we may be asked about their implementation across the industry."

    Is that sort of comment, greeting favourably no extension of action in regulation, typical of correspondence from the PCC?

  • I don't tend to have a lot of personal correspondence with the PCC, but you will -- I mean, you can see how I responded to it. They would tend to write to me or have done on more specific matters if they felt they really need drawing to my attention, like the Aldershot case, for instance.

  • Yes, that's what I'm coming to, the Aldershot case. You're familiar with the documents. This is a case where one of your regional titles, the Aldershot News and Mail, printed a story in August 2010 which identified victims of sexual assault, and that was a plain breach of clause 11 of the code.

    I think it is clear from the correspondence that what appears to have happened is that there was failure at multiple levels within that title. The reporter himself and then three layers of editing above all failed to spot this glaring howler, which was regrettably printed.

    What we have in the bundle is a course of correspondence between Trinity Mirror and the PCC in which the Trinity Mirror lawyer takes issue with the approach of the PCC. The PCC regarded it as a very serious matter which should be drawn to your attention personally and publicly, didn't it?

  • In the light of a breach, which is a clear breach and a serious breach, and one which has involved failure at multiple levels, serious systems failures, what is wrong with a sanction which simply means that the chief executive has the breach publicly drawn to her attention so that the PCC can be assured that something is being done about it?

  • Mr Barr, I don't think there is, really. I think we perhaps got caught up at that point on -- I would hate to diminish it by calling it a technicality but caught up in process.

    I think the concern was that there wasn't malice aforethought -- from our legal team, that there wasn't malice aforethought here, so what could a greater sanction be, but I'm not disagreeing with you in terms of the import of --

  • The criticism was one of proportionality.

  • "What worse penalty can be imposed than bringing it to my attention publicly when it wasn't a case of deliberate misconduct?"

  • That raises a question of the proportionality of sanctions and what sanctioning should be available generally.

  • Yes, but I think that we never queried the points that you made.

  • Thank you for that answer. It brings me on nicely to the final area of questioning, which is about future regulation. First of all, do you think that regulation in the future, there should be more teeth to the regulator? Fines, for example?

  • I'm taken with the discussions that I have seen so far at the Inquiry. Potentially let's call it the sort of three pillars. I think we want to continue to be able to resolve complaints swiftly. I think that a standards arm -- yes, a compliance arm, a standards arm, call it what you will, with far greater powers than they've had before I would support. And the third in terms of, you know, the whole issue of libel and perhaps the first tier that one could take that through at the PCC. So I think that perhaps the current discussions with Lord Hunt and the industry haven't gone quite as far as that at the moment, but I think the last discussion pre-dated some of the discussions or ideas that the courts -- that Lord Justice Leveson is having, but it seems to me that we are working towards a model that we could all have confidence in, yes.

  • Thank you. Those were all my questions.

  • Thank you. Let me say that allowing the process to be iterative, and by throwing out ideas for people to think about was specifically in order that editors and those concerned could contemplate them and see what good could come from them. So that's exactly --

  • I think that's working, sir.

  • -- the purpose that I intended.

  • Thank you very much indeed for coming and for being here throughout the day when all your editors have been present. Thank you. 10 o'clock tomorrow.

  • (The hearing adjourned until 10 o'clock the following day)