One of the funnier aspects of last week’s round of court orders by Belgian brewer Interbrew was the sight of the Financial Services Authority (FSA) declaring it might come along for the ride, as Interbrew’s lawyer served penal notices on The Guardian, the Financial Times, The Times and The Independent.
Interbrew is litigating against the newspapers to force them to give up leaked documents about an impending bid for South African Breweries (SAB). Interbrew claims the documents may have been doctored to give an impression that such a bid was imminent and the resulting stories effectively destroyed Interbrew’s chances of making a play for SAB.
The FSA is involved because it believes the leak may have been a ploy to rig the market. That’s why FSA chairman Sir Howard Davies indicated his own officials might accompany Interbrew’s David Sandy, of law firm Simmons & Simmons, as he toured “Fleet Street”, having the mickey taken and being told politely where he could put his penal notices.
In the event, the FSA must have decided that it had better things to do – such as catching those who mis-sell pensions, ensuring that auditors don’t conceal massive corporate costs, and making sure that insurers such as Equitable Life can meet their liabilities.
You can see why the FSA might have been attracted by the relative glamour of riding around town in a Skoda (Sandy’s chosen form of transport), serving notices on newspaper editors, rather than the boring old business of regulating the markets.
Sandy himself knows that life at the sharp end is anything but glamorous. Seven years ago, he acted for the shareholders of the collapsed Bank of Credit & Commerce International (BCCI). He was accused of conspiracy to conceal the business diary of the BCCI’s chief executive from a grand jury and was indicted on three counts before his firm reached a settlement with prosecutors that banned him from practising law there for 18 months.
It would have been good if the financial regulators that came before the FSA spotted BCCI’s irregularities before its collapse. But that’s another story. What should concern us in the Interbrew story is whether it is a terrible indictment of British justice that newspaper editors should be threatened with fines, or even jail, when so many of the fraudsters they write about are walking free.
Journalists protect their sources not through some kind of high-mindedness that prescribes that they should look after their informants, but because it encourages insiders of conscience and whistleblowers to come forward. As well a
s selling more newspapers, that encourages transparency and a more open society.
Very often, such journalists are investigatively well ahead of the plods and bureaucrats of the regulatory and enforcement authorities. I remember Jeremy Warner, then of The Times and now of The Independent, being prosecuted by the Department of Trade and Industry (DTI) in the mid-Eighties to reveal his source of an insider-dealing ring that he had exposed.
Warner, who had just started a family, faced the prospect of spending Christmas in jail at a time when the DTI had failed to convict a single insider-dealer. But, as Interbrew and the FSA demonstrate, it’s easier to hunt down journalists than criminals.
This, at any rate, is the argument that one can make for newspapers and against those who prosecute them to reveal their sources. But there are other considerations too.
Newspapers can’t afford to be too pious. The Guardian’s Alan Rusbridger was the first editor to send Sandy packing. That was, perhaps, an improvement on his predecessor, Peter Preston, who shopped civil servant Sarah Tisdall to the authorities when she leaked to The Guardian plans to base US cruise missiles in the UK. She spent three months in jail.
There was, at least, a public-interest factor in the Tisdall case, as there was in fellow civil servant Clive Ponting’s leaking of details surrounding the sinking of the General Belgrano during the Falklands war.
It’s more difficult to see where the public interest lies in the exposure of Interbrew’s proposed bid for SAB. Particularly if the documents were doctored to make such a bid look imminent as part of a market-manipulation scam.
Companies shouldn’t have their lawful business interfered with by newspapers running made-up information. Before these papers get on their high horses, I should add that, for all I know, their Interbrew stories were thoroughly checked and based on bona fide documentation, that the authorities now want to seize for no better reason than to punish the moles.
But we need to know which it is. And we need to make a distinction between sources being protected because they are whistleblowers, or have broken the Official Secrets Act as a matter of public conscience, and newspapers protecting sources as a matter of course, regardless of whether those sources are inaccurate or motivated by criminal self-interest.
It’s about distinguishing publicly between good and bad sources, because the latter threaten the security of the former, as well as the prosperity of companies whose shares have been manipulated.
George Pitcher is a partner at communications management consultancy Luther Pendragon