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

  • MR ADAM JOHN SMITH (affirmed).

  • Your full name, please.

  • You've provided us with a witness statement which is dated 18 May and also with a mass of materials which we have put together in bundles and disclosed. Are you content to confirm the truth of your statement in line with your signature and the statement of truth which we see?

  • There's one small correction, if I may, Mr Jay.

  • Paragraph 48, I reference meetings that I had, and I say that they were between June and July 2011. That should have been January. The meetings themselves are then from January.

  • Not surprisingly, considering the first meeting you identify was in January.

  • Mr Smith, this can't be an easy time for you. I'm very grateful to you for the obvious time and trouble you've taken putting this statement together.

  • Mr Smith, we're going to start with your career history, which you cover on page 09027. Can I check, please, that you're working from the same numbers on the bottom right? If you're not, it's page 2 on --

  • You were at Durham University between 2000 and 2003 and studied history. You then went to a public affairs agency. You were appointed Parliamentary Researcher to Mr Hunt when he was in opposition in June 2006. You then became his Chief of Staff in July 2007 when he was appointed Shadow Secretary for Culture, et cetera. And then at the General Election you became his special adviser; is that right?

  • Yes, that's correct.

  • Mr Smith, do you mind if I ask a somewhat impertinent question? How old are you?

  • In terms of the team with whom you've been working, this is paragraph 12 of your statement, the team you say is quite small, 15 or so people. You've all worked incredibly closely together, and the key members of the team remained in their positions for nearly three years; is that right?

  • Yes. That's right, yes.

  • Given the experience you accumulated, you were of some assistance in drafting the culture, media and support sections of the Conservative Party Manifesto in 2010, the sort of role someone like you would be expected to undertake; is that fair?

  • Yes, because I'd been working on those policies with Mr Hunt in the run-up to that period.

  • Can I ask you to elaborate on paragraph 17 where you refer to a very close working relationship with Mr Hunt, in your own words. How did that develop and what are the manifestations of that relationship?

  • Well, we'd obviously by that stage worked together for quite a number of years, and as I said, the teams that we worked in were very small, and I sort of reported directly in to Mr Hunt and spent quite a lot of time with him and co-wrote quite a few documents and speeches that sort of thing. So over the time that we worked together, we got to know how each other worked, I got to know what he liked and expected from his members of staff, and likewise he got to know how I worked and how he could use me and how I could be of assistance to him.

  • Over the course of time, did you get to know his thinking on relevant issues of policy?

  • Yes, mainly through, you know, discussing them with him, but yes, I did.

  • And so by the time we reach the relevant period for us, which is June 2010, were you extremely well acquainted with his philosophy, his policy, viewpoint, his political standpoints generally?

  • Yes, and sort of in particular I knew very much what he wanted to focus on during his time at the DCMS and knew what he thought about each of those areas.

  • Thank you. Now, special advisers, please. This is page 4, our page 09029. There were only two special advisers within the department, because DCMS is quite a small government department, isn't it?

  • And your colleague was concerned primarily with liaising with the press and you were concerned with policies; is that right?

  • Yes. When we'd worked together in opposition, we had divided the roles that way and they just naturally continued when we were in government.

  • When you were appointed a special adviser, you were provided with relevant contractual documents, including the special adviser's code of conduct, and you refer to that at paragraph 23 of your statement, page 5, our page 09039. We note from clause 3 of the code that there's absolutely nothing there about advising ministers in a quasi-judicial role. Do you agree with that?

  • Am I also right in saying that the concept of a quasi-judicial role or function was not one which was well familiar either to this department or to you in particular until you were bequeathed it on 21 December 2010?

  • That would be right, yes.

  • Because, for obvious reasons, DCMS did not have regulatory functions, contrast BIS?

  • Clause 5 of the model contract you refer to, paragraph 24, our page 09031, there is a general obligation there that:

    "You shall not without authority disclose official information which has been communicated in confidence in government or received in confidence from others."

    Do you see that?

  • And the responsibility for discipline, paragraph 25, resides with the minister who made the appointment, so it's personal to him, but can I understand, please, what if any did you see the role of the Permanent Secretary within the department? Did he have a supervisory role over you, in your opinion?

  • Well, the Permanent Secretary is responsible for all officials in the department, so my understanding was that included special advisers, who were albeit only temporary civil servants, but the difference was that special advisers are appointed personally by the Secretary of State rather than recruited in the normal way that civil servants would be.

  • So in terms of your line manager, if that's a correct concept vis-a-vis someone like you, who was your line manager?

  • I didn't really have a line manager, if you like. I reported in to Mr Hunt and would sort of meet with and talk with the senior officials, including the Permanent Secretary, but there was no sort of manager in that sort of strictest sense of the word, no.

  • Who then carried out your performance appraisal, which you set out in paragraph 32 of your statement? Was that Mr Hunt or was it someone else?

  • We were asked by Number 10 to provide five or six individuals. One of them had to be our Secretary of State, another one the Permanent Secretary, and then other than that we could ask either other officials or Coalition colleagues or other special advisers and they would then fill in a form that was then sent in to Number 10.

  • This is known as a 360-degree appraisal?

  • Round the people working around you?

  • Yes. So it would be people senior to me, obviously, like Mr Hunt, also other special advisers who would be colleagues.

  • But the Permanent Secretary was involved in that process, was he?

  • Yes, he filled in one of my forms, yes.

  • Thank you. So it would be fair to say that you occupy a somewhat hybrid position vis-a-vis the Civil Service? You're temporary civil servants, you have special obligations under a code, you are responsible to your minister, but you're in part a civil servant but in part under the wing of your minister. Is that a fair way --

  • That is a fair way, yes. Not just myself, obviously, but all special advisers.

  • Indeed. In paragraph 26 you say:

    "Although Mr Hunt never gave me precise instructions as to what he perceived my role as special adviser to be, this was, I believe, generally understood between us."

    Is it fair to say that he therefore gave you no instructions as to what you should do, but you, because you knew him so well, would work it out?

  • No. This section is about whether he gave me instructions sort of at the beginning of my tenure as a special adviser as to what he wanted me to do. As I explained earlier, in opposition myself and the other special adviser had split the duties between press handling and policy work, so that's how we continued it in government. He gave me specific instructions on occasions, as I detail later, which we may come onto.

  • Yes. So a specific job or task would obviously require a specific instruction, but in terms of how generally you should comport yourself, that was something for you to work out with reference to the documents you were provided and your own common sense; is that right?

  • Yes, and my understanding of what Mr Hunt expected of me.

  • Thank you. In terms of the way the department worked as regards its meetings, this is paragraph 29, Mr Smith, our page 09032, there's a weekly policy meeting, which is obviously quite high level. There's then a communication meeting, which is more informal. Then there's a political meeting, Permanent Secretary's meeting, and then much more informal interactions, which is paragraph 29.5. Did you see that?

  • Yes. I should clarify the policy meetings weren't one policy meeting. There would be a policy meeting on each of these topics that I've listed, but yes, other than that, that's correct.

  • So whilst the BSkyB bid was going on, there was, is that right, at least one meeting a week specifically devoted to it?

  • I don't know whether it worked out like that, because that was a sort of a project, if you like, that came up rather than one of Mr Hunt's priorities. He would have meetings as and when he required them, but the bid would certainly have been discussed at some of the communications meetings or Permanent Secretary meetings, yes, but I don't know whether it was as frequent as once a week.

  • Okay. In terms of informal interactions, this is paragraph 29.5 and paragraph 40. We can read those two paragraphs together, I think. Paragraph 40 is at page 09036, your page 11.

  • You're giving the impression here of frequent informal regular contact, which I suppose would be typical for that which obtains between special advisers and ministers who get on well?

  • Is that correct?

  • And that would entail telephone meetings by mobile phone, email contact, possibly text messages and face-to-face contact?

  • In terms of the frequency of that contact, of course it will wax and wane, depending on what's going on in the office, but can you give us a flavour; how often, for example, would you speak by telephone?

  • Well, only if he and I weren't in the same building, which did happen obviously quite regularly but I'd probably speak to him two or three times a day. If he was out and about or in Parliament and I was in the department, maybe a bit more, more like three or four times.

  • Could you help us a bit with the geography? Where did he sit, where did you sit, where was everybody?

  • So the second floor of DCMS is the ministerial floor, so each minister has their office and their private office adjoining it, and the special adviser's office was in one corner of that floor, sort of down the corridor from Mr Hunt's --

  • You're simply down a corridor?

  • The private office, of course, consists of his civil servants?

  • His private secretaries, yes. So you had to go essentially through their office to go into --

  • He will have had a number of them, will he?

  • Yes, there were three or four most of the time, yes. Each minister had private secretaries.

  • But when the BSkyB bid is going on, we're probably now in January 2011, could you give us a flavour, Mr Smith, in your own words, how frequent is your contact with Mr Hunt about the bid? Whether it be by text message, mobile phone, face-to-face discussion or whatever.

  • Not as frequent as it -- as you might have thought, I suppose. I mean there was the meetings which I've listed there, but I would -- I wouldn't go and speak to him about it on anything like a sort of daily basis or even -- it would only be if he was preparing for a major statement or if there were the odd occasion where an issue that I judged to be of significant interest to him, that I would go and speak to him about it, but he -- the whole point of having the department, the officials and myself, I suppose, was so that we could kind of carry on with the work and not need to go running to him every day.

  • So you presumably would have spoken to him in and around the publication of the UILs on 3 March 2011, is that a correct deduction?

  • But there are a number of -- I won't say key events, but significant events in the history, maybe half a dozen significant events, and we can deduce those by looking at the relevant emails. Are we to infer that in relation to each of those events, there must have been a conversation, at least one, between you and Mr Hunt about them? Is that a fair deduction?

  • I would think only if they were leading up to him announcing something. He would often have meetings with me and the officials about what he wanted to say in a statement and the officials would advise on whether that was appropriate or not, but I don't think if there was what I agree may appear to be quite a significant moment, if it wasn't in the run-up to an announcement it would have been unlikely. Not impossible but unlikely.

  • We may come back to that. Paragraph 30, 09033. You use a number of metaphors to describe what you're doing, you're eyes and ears, an early warning system and you're a buffer. In relation to the buffer, when you refer to outside organisations and maybe News Corp fits into that category, how would you be buffering Mr Hunt, if that's the right way of describing what's going on?

  • Well, obviously a lot of outside organisations want to meet with secretaries of state. They don't have the time to meet with everybody that may want to meet with them, so I would often have contacts with them first to see whether what they had to say was of interest or of note, and then I would either feed that back to Mr Hunt or, if I thought it was particularly interesting, perhaps suggest he meet them as well, but it was to help him so that he could focus on what he wanted to do, rather than deal with the sort of --

  • So would you use your discretion then as to whether to feed back information to Mr Hunt or not?

  • Yes, yes. I would often have meetings where I thought they were a waste of my time and therefore would almost certainly be a waste of his time.

  • We're just dealing with general points now. You draw attention to your performance appraisal, December 2011, at paragraph 32. It's highly laudatory. Speaks for itself. This will obviously be put online with the rest of the evidence. I'm not going to read it out, if you don't mind.

    I'm going to move forward to paragraph 35 --

  • What you have to appreciate from this is that this is different people talking.

  • These paragraphs come out of different responses. So, for example, the second paragraph is clearly the Secretary of State, the "eyes and ears at meetings" comment. But then the top of the next page, "he provides SOS [Secretary of State] with really excellent support", that's clearly not the Secretary of State because he would have said "me". Equally the next one, "I don't think we could ask for a SpAd who is more dedicated to his ministerial department", again that can't be the Secretary of State but it could be any one of the others.

  • We just need to understand how this fits together.

  • Can we move now to Mr Hunt's thinking on the BSkyB bid pre-21 December 2010. Was it your assessment that Mr Hunt was close to News Corp and/or News International?

  • No, not particularly.

  • Why do you say that?

  • He didn't really have much of a relationship with either of the Murdochs or the chief executive of News International. He tended to deal, as I think the Inquiry has seen, mainly with Mr Michel, but I wouldn't have said he was particularly close to News Corporation, no. He met with them in the same way that he met with other media organisations, but actually nowhere near as frequently, I do not think.

  • Were you aware of what was on his personal website about being a cheerleader for News International in the context, I think, of television?

  • I did see that, and actually I think that that was not what Mr Hunt himself had said. If you look, that was actually an extract from an interview that he gave to Broadcast magazine and the Broadcast magazine journalist had written -- I think it was "Like all good Conservatives, he's a cheerleader", and then -- so the entirety of the interview had been put up on Mr Hunt's website, which was often the case, just to show what he'd been up to, but cheerleader for BSkyB wasn't -- it may well be what the journalist inferred -- I saw it was reported as this is what Mr Hunt describes himself as.

  • I don't think it was ever said he was a cheerleader for the BSkyB bid specifically. The point was he was a cheerleader for News Corp or more particularly News International. Do you see that distinction?

  • Oh yes, I do, but I mean even that point I think was what the journalist wrote and the whole article then appears on Mr Hunt's website. It wasn't what Mr Hunt wrote about himself, if you see what I mean.

  • When the bid was announced, which was on or about 15 June 2010, and subsequently, did you have informal discussions with Mr Hunt about his attitude to the bid?

  • I can't remember doing so, no. I know that he made some public comments to the Financial Times around that time, so I would have obviously seen those and he may have mentioned those to me, but I don't remember him specifically talking about it.

  • Did you believe him to be supportive of the bid or not?

  • No, I think his public comments were obviously well-known. He said something along the lines of he couldn't see a problem with it but he didn't want to second-guess the regulators and not second-guessing the regulators was something that he consistently stuck to throughout the process.

  • Let's have a look at some documents. In your four bundles you've produced it's volume 3, page 09798.

    I know you were here this morning. We're on to 7 October 2010 and Mr Michel had sent you two briefing documents relating to the bid, one of them covered competition issues and the other plurality issues.

  • And the briefing document itself has been redacted, as I pointed out to Mr Michel, but it's in our bundle. We can see your email to Mr Hunt was:

    "Obviously strictly commercially confidential but very interesting."

    And his reply was:

    "Very powerful actually."

    Do you see that?

  • Yes. I think that challenges what he had said publicly before, actually.

  • There was another document which we saw this morning, indeed I think I referred to it this afternoon as well, where his comment was "persuasive". Do you recall that?

  • Yes, I recall that's what I said he had said. I don't actually recall him saying as much to me, but I can understand that it was probably something along those lines, yes.

  • I think actually it was a text message, but in any event, it's just the one word "persuasive".

  • Which you were either transmitting because that's what Mr Hunt has told you or it's directly from him, I can't remember which. But aren't these pretty clear indicators of what Mr Hunt's view was, at least on the materials which were being provided as to the quality of the bid and its desirability?

  • Well, I think it chimes with what he said about he didn't think there was a particular problem but he wouldn't second-guess the regulators. I don't think that is any different meaning.

  • Another document which may be more revealing then --

  • Just before we pass from these two documents. Mr Smith, forgive me. What has this got to do with you? I mean, I'm just intrigued to know why you should be involved in this material. This was being dealt with by another department. I can't believe you didn't have more than enough to do. So what has this to do with you?

  • Well, it was a big issue in the media sector and I think Mr Michel had offered to send something through to me and I would always receive anything that anybody wanted to send through to me.

  • As opposed to anything else?

  • Yes. As you say, we weren't involved in the decision. And I think they wanted to make sure everybody knew what they thought.

  • You were involved in the formulation of a fortnightly update in November 2010, which was, I think, intended to be sent to the Prime Minister but you can help us on that. It's page 09802. It's dated 19 November 2010. Mr Hunt sends it to you. It's from his personal account to your personal account but nothing much may turn on that. This is a draft of a memo which did go to the Prime Minister, according to Mr Hunt, subsequently. Didn't go quite in this form.

  • There are two drafts in the bundle and this is one of the drafts. It says -- first of all, did you draft this or did Mr Hunt draft this?

  • I can't actually remember. We used to do those on a fortnightly basis and sometimes I would draft the first version and then Mr Hunt would redraft it and other times he would just write it and send it to me for fact checking. In this particular instance, I can't remember, I'm afraid.

  • I think it's the former, he's drafting it for you and you're being asked to look for typos and play around with formatting.

  • That's certainly what the email suggests but it's only from looking at that that I would guess that. I can't actually remember.

  • What it says is:

    "James Murdoch is pretty furious at Vince's referral to Ofcom."

    That had occurred a few days beforehand, hadn't it?

  • "He doesn't think he will get a fair hearing from Ofcom. I am privately concerned about this because News Corp are very litigious and we could end up in the wrong place in terms of media policy. Essentially what James Murdoch wants to do is to repeat what his father did with the move to Wapping and create the world's first multi-platform media operator, available from paper to web to TV to iPhone to iPad. Isn't this what all media companies have to do ultimately? And if so, we must be very careful that any attempt to block it is done on genuine plurality grounds and not as a result of lobbying by competitors.

    "The UK has the chance to lead the way ... but if we block it our media sector will suffer for years. In the end I am sure sensible controls can be put into any merger to ensure there is plurality, but I think it would be totally wrong to cave in to the Mark Thomson/ Channel 4/Guardian line that this represents a substantial change of control given that we all know Sky is controlled by News Corp now anyway.

    "What next? Ofcom will issue their report saying whether it needs to go to the Competition Commission by 31 December. It would be totally wrong for the government to get involved in a competition issue which has to be decided at arm's length. However I do think you, I, Vince and the DPM should meet to discuss the policy issues that are thrown up as a result."

    What did you gather from this memorandum?

  • I think again it's very similar to what he had said previously, that he didn't see any particular problem with it, but, as he mentions in the last paragraph, it would be wrong for government to get involved in a competition issue, which has to be decided at arm's length, and it would have to be considered on plurality grounds. I think this is a sort of obviously slightly longer version of that because it was only a one-line sentence to a journalist back in June, but I think that chimes with what he said back then.

  • It's a bit more positive than that, isn't it? He's saying that if the bid is blocked or rather if the UK doesn't lead the way, it will block our media sector and it will "suffer for years. In the end I am sure sensible controls can be put into any merger to ensure there is plurality."

    So in other words he's effectively saying that there aren't any real impediments in the way of this bid, isn't that fair?

  • Yes, possibly, but by this stage obviously the regulators haven't looked at it, and so they are the experts in deciding what plurality issue would -- whether there would be a plurality issue or not.

  • Yes, that was their public duty to perform, but in terms of someone expressing a political view, you could either express a political view which was hostile to the bid or one which was friendly to the bid. This is a view which falls into the second category rather than the first, doesn't it?

  • Yes, I certainly think Mr Hunt never said that he was hostile to the bid before.

  • No, but he always said he was in a favour of the bid really, didn't he?

  • I think he always said he didn't see any problems with it but didn't want to second-judge the process.

  • He had to be loyal to the process because the process had to be undertaken in any event but in terms of his political judgment and preference he was favourable to the bid, wasn't he?

  • Well, yes, I suppose his personal view there was, yes.

  • But this personal view wasn't, as it were, a revelation. It's true it's been communicated privately to the Prime Minister, but it's a view which you knew anyway, wasn't it?

  • And had been publicly stated.

  • Yes, but I asked you about quarter of an hour ago was he supportive of the bid and you gave me a non-committal answer, but now we're reaching a point where I think you might be agreeing with me that he was supportive of the bid but recognising throughout that there was a process which needed to be fulfilled. Can we agree about that?

  • Well, I think what I said was that he had always said there wasn't a problem with the bid and that was certainly the case, and he's pointing out what he thought some of the positives may have been in this note, yes.

  • The other point which may well be significant, although we think it came to nothing, is the last sentence, a meeting at a high level in government "to discuss the policy issues that are thrown up as a result." Do you see that?

  • Mr Hunt's witness statement makes it clear that his memorandum or the final version of it was sent to the Prime Minister but do you happen to know whether there was a meeting to discuss these policy issues or not?

  • I don't know, but I don't believe there were. To the best of my knowledge, there wasn't.

  • We've seen no evidence of such a meeting, but had there been, you would have known about it, wouldn't you?

  • Possibly, yes. I mean -- yes.

  • What did you understand the point of there being such a meeting -- I'm sure it didn't take place -- to discuss the policy issues that are thrown up as a result?

  • I understood and understand that to be the -- not the merits of the particular bid, but whether the policies around competition law and media plurality were sort of fit for purpose, which was something that I know that the DCMS was looking at more generally and is looking at more generally as part of its work on the communication side.

  • Were you aware of legal advice that was circulating around the department on 19 November -- although I see you weren't copied in to the relevant email -- which made it clear that the decision resided wholly and completely with the BIS Secretary of State and that Mr Hunt could have no involvement in it?

  • I don't remember seeing it at the time. Is that the advice that said something about whether he can offer an opinion or not?

  • It's an advice from the legal director of DCMS, which --

  • I understood that it was a Secretary of State for BIS decision. I don't know whether I definitely saw that actual piece of advice.

  • The advice was -- the conclusion -- this is actually our page 04256, this comes out of material we're going to be looking at in more detail next week, possibly:

    "Whilst there is nothing legally which formally precludes the Secretary of State CMS from making representations to the Secretary of State BIS to inform the latter's decision as to whether to refer the public interest considerations in this merger to the Competition Commission, it would be unwise to do so."

    Were you aware of that at the time?

  • I don't remember seeing that particular piece of advice, no. I remember reading it, I think, as part of the bundle for this Inquiry, but I do remember that I was definitely aware that the decision was very much Secretary of State for Business.

  • Was your Secretary of State keen, in your view, to speak to Dr Cable and at least get his opinion across to him?

  • To get Mr Hunt's opinion across to him?

  • I don't recall talking to him about that, no. He may well have been, but not to my memory.

  • The other issue, on 21 December, when quite rapidly, I think, Mr Hunt was acquiring responsibility now for these regulatory functions, did you have a conversation with Mr Stephens about Mr Hunt's position vis-a-vis the BSkyB bid?

  • I had a conversation -- Mr Stephens came to ask me whether I knew of any other comments that Mr Hunt had made about the -- any previous public comments he may have made about the bid, and I think I referred him to the comments he made to the Financial Times, which I think Mr Stephens had already remembered, but he was coming to check if I knew whether he'd said similar things elsewhere.

  • Was Mr Stephens' request of you limited to public comments Mr Hunt might have made or did he broaden his request of you to include anything that Mr Hunt might have told you privately?

  • I believe it was public comments.

  • Can we move forward then to 21 December. We're going to look at the detail of the KRM 18 emails probably now tomorrow, but I'm dealing with the generalities, as it were, first. You explain what happened when Mr Hunt assumed responsibility at paragraph 41, page 09038. Do you see that?

  • You say a team of individuals was established. Secretary of State, Permanent Secretary. The lead official was Mr Zeff. There was a more junior official, couple of legal advisers and a special adviser. So it's quite a small team, is that fair?

  • Yes, there may well have been a couple of other more junior policy officials but those were certainly the main -- the key people, yes, it was quite small.

  • And when this bid was acquired as coming within the realm, as it were, of DCMS, did it become the most important single task, as it were, or were there other matters which were even more important?

  • I don't know that it necessarily became the most important. At certain sort of key moments it would be the most important agenda on the department -- item on the department's agenda, but there were equally quite long periods of time where there was a lot of sort of detailed work going on, but it wasn't as high up -- certainly Mr Hunt's agenda. He would remain focused on his other priorities, but, you know, it certainly got right up there, as you could rather obviously imagine.

  • Was it understood -- this is probably obvious, really -- that there were potential legal pitfalls because you had quite litigious or potentially litigious people at either end of the pincer, as it were, in the shape of News Corp on the one hand and the coalition on the other, and there were also rather large political pitfalls which needed to be carefully negotiated, would you agree with that summary?

  • That required input presumably from the Secretary of State and the Permanent Secretary, did it?

  • Can you assist with how much input the Permanent Secretary made in relation to this bid? In other words, was he present at all significant meetings? Can you give us the flavour of that?

  • I can't remember whether he was present at all of the meetings. Possibly the minutes maybe for the ones I had with News Corp and Ofcom and the opponents might shed some light on that but I'm afraid I can't remember, but he would have been at quite a few of the internal meetings when the issues were being discussed, but again, very often when they were leading towards Mr Hunt either making a decision or making an announcement, he certainly wouldn't I don't think have been -- I don't remember him being at every single meeting that was held, no.

  • Did you feel that he was allowing the lead policy official to get on with it or do you feel that he was taking a keen interest in what was going on or would you characterise what he was doing differently from both of my characterisations?

  • I don't really know what sort of contact he had with the lead officials on it. I know it was mentioned at the Permanent Secretary meetings that we discussed earlier on a couple of occasions so he was certainly checking in with both myself and the lead official but I wouldn't have been aware of what he was discussing with the other officials, I'm afraid.

  • Okay. Can we move forward to the meeting on 22 December 2010, page 09039, paragraph 43. It was really a joint departmental meeting where the BIS officials were handing over the bid to the DCMS officials; is that correct?

  • They were there to brief Mr Hunt on where the sort of bid had got to thus far, and I suppose there it was a sort of a handover meeting, yes, because I don't remember too many meetings after that where there were any of these officials.

  • You say in paragraph 43:

    "They [that's the BIS officials] may also have mentioned that Mr Hunt was to act in a quasi-judicial capacity."

    I think the note of the meeting is likely to say -- I haven't in fact seen it yet -- that quasi-judicial was mentioned specifically. Are you able to assist with your recollection on that?

  • I think my paragraph 44, the minutes that I've seen, it says the process and the various legal considerations were discussed. So that sort of jogged my memory to suggest that quasi official may well have been discussed. I can't remember whether it definitively was, but we certainly did discuss quasi-judicial on other occasions if not that one.

  • Taking it in stages, is this the first time you've heard the use of that term?

  • No, I would have heard it in the previous few months in relation to the Secretary of State for Business.

  • What did you understand by the term?

  • My understanding was that it meant that the decision had to be made only after considering certain issues, in this case namely media plurality; the sort of wider political or other policy issues couldn't be taken into account. And then sort of uniquely within government that this was a personal decision for whoever the Secretary of State was rather than a collective government decision. So a normal policy decision, if you like, even though it may well have been Mr Hunt making it. Collective government would have meant that they were all essentially making that same decision.

  • What about any process requirements built into the concept? Were you aware of those?

  • Of the quasi-judicial concepts?

  • Not -- well, the process that we were following was in the Enterprise Act, but I didn't necessarily link quasi-judicial to --

  • Let's just think about the word judicial a bit, because there are lots of things I don't know much about but I know a bit about that. I'm sure you would agree with me that if a judge is trying a case, then he can't speak to the parties outside the case and go and chat to them in the evening as the case is going on, one side as opposed to the other. You don't have to be a lawyer to appreciate that wouldn't be right. I mean, would you agree with that?

  • I would. I think in this particular instance the quasi-judicial process and the fact that you're dealing with two interested parties, you obviously do need to discuss lots of different things with those interested parties. In fact, you need to, to get certain things to happen.

  • But in a way that's open and transparent to everybody. Don't you think? Or not?

  • It might be that I shouldn't be questioning you about what you viscerally understand about the phrase, but what you were told about the phrase. What you were told it meant you could do or what you were told it meant you couldn't do.

  • I wasn't told I couldn't do anything in particular. It was more about -- because it was Mr Hunt's decision, the discussion was mainly about what he could or couldn't do. I don't remember being told about myself.

  • So paragraph 43 relates specifically to Mr Hunt having to act or it may also be mentioned that he had to act in a quasi-judicial capacity. It said nothing about what you could and couldn't do. Is that right?

  • Yes. I mean, my understanding was always that it was Mr Hunt that was acting in the quasi-judicial way, and the department, which obviously included myself. Again, it wasn't our, obviously, decision; it was Mr Hunt's decision.

  • In terms of your role in relation to this somewhat unusual function that Mr Hunt was discharging, what value were you providing? What was your role?

  • To be one of the points of contact for News Corporation. To act as a buffer and as a channel of communications.

  • So buffer and channel of communication, they might be slightly different, but you could be a conduit pipe, material which was provided to you by a third party could be passed on to the department, but you'd also be able to, as buffer, protect Mr Hunt, I suppose, from unwelcome or irrelevant intrusion, is that it?

  • Yes. And if they -- if someone wanted to phone up and have a grumble about a process or something, then I would be the one that was on the receiving end of that, rather than Mr Hunt.

  • Was any of this made explicit to you or is this just something you carried out because you felt that that's what special advisers did in this particular context?

  • Well, I had previously carried out that role for other work that the department had done and, as we sort of discussed earlier, for Mr Hunt in opposition. It was never, to my memory, sort of directly said to me, but it was just sort of inferred by me and I think as we go through, we'll see the department sort of assumed that that would be the case. But there was no sort of direct instruction, if you like, no.

  • Is this clear from your evidence: no one told you explicitly what you could or you could not do, but you extrapolated, as it were, from your previous experience of working as a special adviser as to what it might be appropriate for you to do in this particular case. Is that fair?

  • Yes, that would be a fair summary.

  • We will come back to that.

    Still on paragraph 43, Mr Hunt, you say, made it clear he wanted to do things in a different way to -- it's Dr Cable.

    "He said he wanted to make himself available for meetings and wanted to be more open."

    Availability for meetings one understands, but what do you mean by -- or what do you think he meant by wanted to be more open?

  • Well, I think he recognised that the Department for Business had not had any meetings or representations had been made, and obviously with the remarks that Dr Cable made that were caught on tape, there was a sort of feeling that the media plurality concerns weren't the main driver, so I think Mr Hunt was quite keen that that issue would be what drove him and he would be quite open to hearing representations on those issues.

  • So he would be receiving representations either by a face-to-face meeting or in writing, and he would be open to receive them. Is that what it amounts to?

  • He and the department. I don't think he was necessarily being specific to himself. I think he just meant the process was going to be more that way.

  • Would it amount to this, that the representation that one party might send in would be shared with the other party out of ordinary fairness, or not?

  • I don't know that anything like that -- some of the representations were later shared with Ofcom and the OFT to help them in their various considerations, but I don't remember that happening, no.

  • The last sentence of 43:

    "I also remember him saying that he wanted to be fair to everybody, including News Corp."

    Was there a sense then that the previous incumbent, as it were, Dr Cable, had not been fair to News Corp?

  • I think that was the view, yes.

  • And fairness to News Corp would, I suppose, include being open to any representation that they might put forward. Would you agree?

  • Yes. I think it more meant that he would consider the bid on the grounds of media plurality rather than anything else.

  • Well, to be technical, that isn't a matter of fairness, that's a matter of statutory obligation because that's what the statute requires, doesn't it, to consider what's laid out in the Enterprise Act and nothing more?

  • That's the truth?

  • That is the truth, yes.

  • Can I ask you, please, about paragraph 45, which follows on really from what you've been telling us, that you assumed the role of managing the relationships with interested parties. I think that happened semi-automatically given that you were special adviser, you naturally fitted into that position vis-a-vis this admittedly rather unusual circumstance, would you agree?

  • And the interested parties, obviously News Corp and also the coalition or anti-alliance, however you want to put it. Were they an interested party?

  • Well, they were obviously interested in the deal, but I think the interested parties in terms of the merger were BSkyB and News Corporation. I think that was the technical -- under the Enterprise Act, but more broadly, people who were interested in it, yes.

  • Because we know that the Secretary of State did give the coalition a meeting on 24 March 2011. We've seen various documents which relate to that. Surely you regarded them as an interested party, didn't you?

  • Yes, possibly, but I don't really remember having any contact from them.

  • Yes, well, that was the next question, because we see arguably a plethora but certainly a substantial quantity of contact between you and Mr Michel on behalf of News Corp, don't we, without judging it in terms of its quantity?

  • You can agree with that. If I were to ask you: where is evidence of equivalent contact, any equivalent contact with another interested party, namely the anti-bid coalition, is there any or not?

  • There wouldn't be, because from my memory I don't remember them getting in touch with me, no.

  • Right. So your only contact was with Mr Michel because you had no contact, did you, with BSkyB the company, did you?

  • Not on this deal, no.

  • And you didn't have contact with OFT and Ofcom because they were the experts who were advising the -- well, you did have one contact with Mr Richards, didn't you?

  • But save for that --

  • And the meetings that Mr Hunt had with Ofcom and the OFT, I was present at those, but other than that, no.

  • So in terms of managing the relationship with interested parties, the only relationship we're talking about here is that with News Corp, aren't we?

  • Did that even intuitively raise alarm bells with you, Mr Smith, in terms of what arguably is a lack of balance here, in terms as well of whatever quasi-judicial might have meant to you?

  • No, not really, because I think the work that I would have done with Mr Michel was often things that needed to be sorted out, like redactions to documents or process points, and obviously you don't necessarily need to talk to other interested parties about documents because they would just sort of send them in anyway. So no, they didn't particularly ring any alarm bells.

  • You refer to a particular email that Mr Michel sent to James Murdoch on Christmas Eve 2010, we have looked at that several times now, that you were going to be the point of contact, but of course you didn't see that email at the time, did you, Mr Smith?

  • Did Mr Hunt explain to you that you were going to be the point of contact with Mr Michel or not?

  • Not to my memory, no.

  • Did the Permanent Secretary explain that to you?

  • When it began to happen that there was contact between you and Mr Michel, is it your evidence, well, this was just natural evolution, as it were? There wasn't the instruction given by anybody within the department that it should happen, it just fell naturally into your existing role as special adviser? Is that it?

  • Yes, exactly. And I think it would have not surprised anybody in the department, and I think as the process went on with discussions I had with members of the department or emails I sent them, they would have very clearly been aware and knew that I was having those discussions with Mr Michel, and nobody ever said, you know, where did you hear this or you shouldn't be doing that or -- it was -- I assumed that was the role I was going to be taking, and then as it developed, I don't think anybody was surprised that that was the role.

  • Fair enough. We'll come back to that.

    You say in paragraph 46 -- this again is in the context of the Enterprise Act:

    "... it was not explained to me how this might impact upon my contact with News Corp or any other interested party."

    So it would be fair to say then that you treated this particular function really in a similar way to any other policy decision, would you agree?

  • Yes, I think that would be a fair summary, yes.

  • So whatever quasi-judicial might have meant in practice, it didn't really -- maybe I'm putting it slightly too high, but it didn't really bear on what you did or didn't do because you just proceeded as you would ordinarily have proceeded in any straightforward policy area, is that fair?

  • Yes, because, as I explained, my understanding of quasi-judicial was that Mr Hunt had to decide on media plurality issues and that Mr Hunt himself had to decide on the bid. Beyond that, there was no difference to the way I approached it, no.

  • In a sense it is rather odd because Mr Hunt is looking at a specific question or maybe two questions under the Enterprise Act which were really questions of fact where expert evidence might be relevant, namely plurality, and the competition issues go off elsewhere. That's not really a policy question or it's certainly not a political question.

  • It's really one for expert evidence. Did you see a tension there?

  • Well, I was obviously never providing that expert evidence on the plurality issue. The work that I was doing was more about the process and facilitating it, so I don't think there was a difference in the way I approached the project. Some projects are about a policy decision. Others are about making a process happen.

  • As you said before, your role was to facilitate the process to manage the relationship but inevitably I suppose you attended the meetings, you read some of the material, you had your own view on the substantive issues, didn't you?

  • Those views might or might not have been confined to the narrow question under the Enterprise Act, they may have been more widely drawn based on your own political experience and your own political judgment. Was that fair?

  • Well, I think my views on the plurality issues were based on reading the expert evidence. I didn't think we ever really particularly considered much more than that.

  • Would you in essence describe your position on the merits of the bid as broadly speaking the same as Mr Hunt's position?

  • Very broadly. I actually don't think I was -- I didn't, to be honest with you, particularly mind either way whether it happened or not. In a funny sort of way I couldn't quite see what everyone was getting so worked up about, but broadly speaking yes.

  • Broadly speaking?

  • This is the sort of issue which, for whatever reason, has the tendency to divide opinion, where people hold strong opinions on either side. You're aware of that. It may be absurd that opinion is so polarised on this, so you may not have been on one end of an extreme, but you certainly had a position, didn't you?

  • Sir, I don't know whether that's a convenient moment?

  • Certainly. Certainly, Mr Jay, it's been a longish day. I hope you're not inconvenienced too much, 9.30 tomorrow?

  • Thank you very much. 9.30 tomorrow. Thank you.

  • (The hearing adjourned until 9.30 am the following day)