News Corp Legal Fees: Why is Murdoch Happy to Pay Mazher Mahmood's Fees - But Not Andy Coulson's?

By Joe Public

Only three years after the closure of News of the World, and two years after the launch of its replacement Sun on Sunday, Rupert Murdoch’s News Corp parent company of subsidiary News UK is about to be engulfed in yet another serious scandal.

This time, the allegations are far more serious than phone hacking. On Monday, BBC Panorama will expose one of Murdoch’s longest serving journalist. Mazher Mahmood, the undercover reporter who spent most of his career under Murdoch titles pretending to be a real sheikh and enticing subjects to break the law before handing evidence over to the police.

In July, at a trial of Tulisa Contavlos for dealing cocaine, Mahmood, the main prosecution witness was called a liar. Since then, two trials involving Mahmood – again as a prosecution witness – have collapsed. Worse, another 13 arrested for football match fixing by National Crime Agency have had their cases dropped.

No longer a witness of truth, he’s now facing a perjury charge. Even though suspended by his employers News UK [Sun on Sunday], they have been funding his legal fees. What makes this arrangement eye catching is at the height of the phone hacking scandal in 2011, News Group Newspapers [News Corp] had stopped paying Andy Coulson’s legal fees a month after his arrest in July on charges related to phone hacking and payments to public officials.
Back on 23 August 2011, Tom Mockridge, the new CEO of News International, wrote to Coulson:

We take this opportunity to be clear that NGN Limited’s payment of your reasonable professional costs and expenses under the Agreement… relates solely to your required participation in any such proceedings by reason of the performance of your duties as Editor of News of the World as a former employee of NGN Limited under the terms set out in your contract of employment. Therefore, NGN Limited will pay for your reasonable expenses in accordance with clause 4.6 in respect of the Leveson inquiry and the Select Committee investigations. As a result of recent events, NGN Limited has reviewed clause 4.6 and has formed the view that clause 4.6 does not require it to reimburse costs that relate to proceedings (including criminal) which relate to alleged conduct outside the scope of your contract of employment. Consequently, effective from the date of this letter, neither NGN Limited nor any Associated Company will provide any assistance towards costs and expenses incurred by you in defence of, or appearance in, any criminal proceedings or other proceedings relating to alleged conduct outside the scope of the terms set out in your contract of employment. If NGN Limited has previously made payment of invoices relating to any such proceedings it will not seek to recover payment at this stage. If you have any claims for fees incurred up until the date of this letter, please forward them to NGN Limited as soon as possible. Any future invoices for costs incurred after the date of this letter and relating to the matters described above will not be paid by NGN Limited.

A week later, DLA Piper acting for Coulson replied challenging that stance.

On Sept 5th, Allen & Overy for NGN replied by maintaining their position.

Then James Laddie QC for Coulson submitted:

That it was in NGN’s interest just as much as in the Coulson’s interest to assist Coulson to defeat allegations of unlawful conduct arising out of his editorship of the News of the World. There was no divergence of interest between the Coulson and NGN. If the Coulson with the assistance of lawyers paid for by the NGN was able to rebut allegations of wrongdoing [whether in a civil or criminal context] NGN benefited too because it eliminated the possibility of the NGN being held vicariously liable for the Coulson’s actions.

Mr Christopher Jeans QC, for NGN, submitted:

That the clause is directed at protecting Mr Coulson from legal professional expenses arising from the ordinary occupational hazards of having been an Editor. The purpose of the clause is to protect him from the cost of the sort of inquiries and proceedings into which an Editor may inevitably be drawn by virtue of his position. Editors may be drawn into a wide range of inquiries and proceedings as a result of being Editor. Libel actions and press complaints inquiries are the most obvious examples. A criminal investigation into the Editor’s alleged personal criminal behaviour, relating to payments to police officers or interception of communications, is not among the ordinary occupational hazards of being an Editor. It is not within the contemplation of the clause.

Laddie QC countered with the argument that: “Criminal conduct at work lies within the scope of employment.”

However, Mr Justice Supperstone, handed down judgement against Coulson and ruled that NGN is not liable to pay Coulson’s legal bills if allegations of criminal activity are made against him.

It was not until a year later Coulson won on appeal when Lord Justice Laws said in his judgement :

I cannot accept the judge’s [Justice Supperstone] view that because Mr Coulson’s duties as editor comprised only lawful duties, it cannot have been identified that activities outside his lawful responsibilities would be covered by the indemnity … That would surely deprive the indemnity of all practical use. It would not even cover the editor for the costs of defending proceedings arising out of the publications of alleged libels or publications said to constitute contempt of court, the very occupational hazards of editorship referred to by Mr Jeans [for NGN] in argument.

NGN accepted the ruling and said they wouldn’t appeal.

After an eight months of the subsequent trial at the Old Bailey, in June this year, Coulson was found guilty of conspiring to hack phones whilst Editor of News of the World. It is still unclear if NGN will cover his CPS costs.

In contrast with Coulson, Mahmood has had no such problems getting his legal fees paid for by NGN despite the judge at the Tulisa trial at Southwark Crown Court, Alistair McCreath stating “There are strong grounds for believing that Mr Mahmood told me lies when he gave evidence to me in June [pre trial hearing]. He went on: “There are also strong grounds for believing that the underlying purpose of these lies was to conceal the fact that he had been manipulating the evidence in this case by getting Mr Smith to change his account.” Before throwing the case out.

Alan Smith had played the part of a chauffeur for the job with Mahmood and drove Tulisa to and from meetings with Mahmood that led to the “sting”. Smith made a statement to police but he retracted it on the same day after emailing the statement to Mahmood. Three days later in a pre-trial hearing Mahmood told the judge he had no knowledge of Mr Smith’s statement. But Mahmood himself retracted that at the trial, and was forced to admit that he had seen the statement and had discussed it with Smith after it was emailed to him.

Judge McCreath told the court: “The evidence contradicts what he told me, to knowingly lie on oath and to do so to conceal improper conduct on his part, constituting interfering with evidence, with someone who may have been a witness for the advantage of the defendant and disadvantage of Mr Mahmood.”

Before finally adding: “Mr Mahmood perjured himself.”

The Sun on Sunday then released a somewhat strange and panic stricken public statement that had no relevance to what judge actually said: “We are very disappointed with this outcome, but do believe the original investigation was conducted within the bounds of the law and the industry’s Code. This was demonstrated by the CPS decision to prosecute. The Sun, of course, takes the Judge’s remarks very seriously. Mr Mahmood has been suspended pending an immediate internal investigation.”

There has been no update on the “immediate internal investigation” announced by News UK. That was nearly 4 months ago. But what we do know is, instead, NGN [News UK] have provided Mahmood with top lawyers from the same firm – Kingsley Napley – they provided for Rebekah Brooks during her trial.

During Mahmood’s attempt to block Panorama broadcasting his images of his appearance in a high court injunction last week, a remarkable letter from the Attorney General’s office to BBC producer working on Panorama Meirion Jones was submitted in evidence.

It said :

The intention of the BBC to broadcast a Panorama programme on the activities of the reporter, Mazher Mahmood, has been drawn to the attention of the Attorney General by the solicitors acting for Mr Mahmood, Kingsley Napley. The Attorney General has asked me to write to you. The Attorney General recognised that as Mr Mahmood has not been arrested, the provisions of the Contempt of Court Act 1981 do not apply. Neverthess, he asks you to consider whether it is in the public interest for the BBC to broadcast a programme at this time. The proposed broadcast may have the potential to prejudice any trial, should Mr Mahmood be charged.

No doubt, there will be discomfort at the Attorney General’s office, after all, Mahmood has recoreded 98 past convictions working alongside Metropolitan police and CPS for over twenty years, but News Corp’s treatment of Coulson who had only been arrested and not charged and also in more senior position than Mahmood who in comparison, was called a liar by a judge at a trial is obvious. The question is why.