10/11/2011 Newsnight

Tonight, warnings of a new recession for Europe. As investors

and the commission cut growth forecasts across the EU, is the

euro itself about to crack? We will hear tonight from Rome, Berlin and

New York. The man who knew too much,

apparently not, James Murdoch says the truth of widespread phone

hacking was hidden from him. But the News International boss

apologises for the revelations broken by Newsnight, that lawyers

of phone hacking victims were put under surveillance by News of the

World. I want to say for the record it is appalling, something I would

never condone, and the company should never condone, it was

shocking when I found it out. parliament, frustration. But did it

really merit this. Mr Murdoch, you must be the first Mafia boss in

history who didn't know he was running a criminal enterprise.

Watson, please, I think that is inappropriate, Mr Chairman. We will

hear from a News International executive and a victim of hacking.

Also tonight, the battle of the oligarchs, from the creme Len to

the alps to the courts. Abramovich versus Berezovsky.

Hello and good evening, what if it is already too late? Despite calls

from politicians to act now to save the eurozone there are some voices

now admitting that the chance may have already been missed. Today the

European Commission downgraded its growth forecasts and admitted

Europe was at risk of a new recession. A banker is now in

charge of Greece. The country recognised Lucas Papademos as their

head. The market seemed reassured by the changes, even with

Berlusconi agreeing to go. Is it too late to prevent a recession?

There are people in the markets who believe this problem of Italian

sovereign debt may be yesterday's problem. That the movements in the

price of Italian debt, certainly its short-term debt, may be

signalling something else, which is trouble in the banking system,

primarily in the Italian banking system, more widely in the European

banking system. This short-term debt is a key instrument that banks

use to trade with each other. We have had, tonight, it is not often

I read out notes from analysts, we had a note from analyst at

Schroders, this is a company that manages �300 billion worth of

people's money, saying this, politicians have missed their

opportunity to prevent a European credit crunch, and following

yesterday's events, the banking system in Europe is now likely to

experience a serious shock from the fal fall-out of the country's bond

market collapse. That is a fairly clear bet, or

wager, on another Liamman in Europe. To stop it -- Lehman in Europe, the

action to stop it, the solutions are as political as they are

economic. The German nightmare about money,

is coloured in black and white. By what happened in the 1920s. In the

Weimar Republic, the Central Bank printed money, and hyperinflation

followed, children used bank notes as toifplts they weren't much use

for anything else. Those cultural scars explain why Germans are so

nervous about letting the ECB take the extraordinary measures other

central banks have taken. Instead the technocrats at the European

Central Bank are attempting, not very successfully, to keep a lid on

things, with a short-term fix. ECB has been coming in, day-to-day,

since the beginning of August, and buying Italian and Spanish

Government paper, trying to keep the prices up and yields down. This

way the price of Italian debt is affordable. In reality the

programme is not transparent. The banks don't know when the ECB is

coming, what the point of the programme, and when it will stop.

This graph those what the ECB is doing, buying up loans from Greece,

Ireland and Portugal, and since August, big time from Italy. But

Italy as another 300 billion euros of debt to roleover this year,

nobody else is buying. What they note -- roll over this year, nobody

else is buying. What they need is to have a reserve of thrillions,

and then the markets would know where the ECB is going and know it

is at affordable levels. There is a problem, board members and other

European traditionalists, thinks it breaks the treaty law and the

spirit on which the euro was founded. The other option, already

offered to Italy, but refused, is a short-term credit line from the IMF.

That comes at a price too. The IMF mission in Rome, already demanding

specific privatisations, and more refoerms. -- reforms. It would be

very difficult for the IMF to fund the entirety of a bailout of an

economy. That is as rich in Germans of GDP per capita, as Italy, other

economies are much poorer economies contributing to the IMF, would feel

uncomfortable with that. If the short-term threat is contagion from

geez Greece, -- Greece, then getting Greece under control will

help. The new Prime Minister was swoorn in there today. Can the

banks losing money under the private sector involvement lose

more? No says the man who rep presents them. I think for Greece

the 50% nominal reduction is the beard line of what could be

reasonable as voluntary, any reduction in value and losses

clearly would be there with markets that are non-voluntary. In the

short-term there is a mismatch, everybody thinks the ECB will move,

those in politics think it won't. Markets have given up on

Governments, given the mess in Italy and Greece in the past week,

markets have moved on that a single Government can change situations.

It doesn't really matter who is running Greece and Italy in the

near term, what is what matters is the ECB coming in and trying to

deal with the situation. Italy too has its nightmare images of the

past. Burning money to control inflation. Tonight, something more

valuable than money is smoldering, the credibility of the eurosystem.

We will be hearing about that a little later from Paul. Joining

from Rome, Federica Mogherini, an Italian member of parliament,

Michael Barrymore, and Gillian Tett of the Financial Times, and here in

the studio, Alan Brown from Schroders, mentioned in the report.

I will start with you, Alan, one of these lines in the report is that

Europe is essentially missed -- has essentially missed the opportunity

to prevent a credit crunch. Do you believe it is too late to avoid

recession? I believe we are at the early stages of a credit crunch

right now. I believe the real politics is that it is virtually

impossible for politicians to get ahead of the game at this stage. I

almost feel that we have to almost reach the train wreck before

politicians will actually be empowered to take the actions that

most of us in the markets believe are necessary. Where is the train

wreck, how far away are we from that? We are already

extraordinarily close. The focus is on Italy because that is where the

large money is. We are talking about debts of 1.9 trillion. We are

talking about the Italian economy going back into recession, and the

yield on Italian bonds today would be completely unsustainable for

Italy's finances, if they were maintained at that level for any

length of time. Mogherini, David Cameron, our Prime Minister, --

Federica Mogherini, David Cameron, our Prime Minister, pointed the

finger and said Italy was a clear and present danger, a major part of

the problem? We are aware of the fact that we have a responsibility.

We as politicians, even being in opposition, it is hard for me to

share the responsibility with Berlusconi's Government now, but we

are aware of the fact that politics and the Government has a

responsibility, and that we have to fix the problem. Not only for Italy

but for the eurozone, for the European Union, and for the world,

probably, because we see how the markets are interlinked. We are

trying to do our best to speed up the process. To have a different

Government in a couple of days, not more. To do whatever is needed to

recover and make sure that it is not too late. Hopefully we are

still in time. It is interesting, the point that Paul made in his

report is that markets have essentially given up on Governments

now. As a member of parliament, how do you respond to that? That is

very sad, I have to say. But Italy has had, and still has, partly, a

credibility problem, that is peculiar to our political scene in

the last months and years. I believe that with the choice of

having Mario Monti as the next Prime Minister, given that it is

the choice, because it is not given for granted yet, but still it looks

like it will happen in the next 48 hours. I think that will be the

right choice. Also considering what was said before, he is, for sure,

the right person to reassure the markets, and to try to solve our

problems, even if his point of view is not a political one, but more of

a technical one. I think this is the right choice at the right

moment, finally. Gillian Tett, in New York, I know you have been with

Alan Greenspan today and talking to Obama's people, viewed with that

distance and perspective, is the solution more obvious? Well, I

think the sense of fear is palpable. In fact, Alan Greenspan told a

meeting earlier today as far as he's concerned Europe is America's

biggest economic problem right now. In a sense there is real concern

about contagion, that the global economy could be pulled into a

slowdown f not recession, as a result. And we're heading for

financial market turmoil. The Americans, perhaps, more than

anybody, know that when markets are losing confidence, what you need is

clear action, decisive action, and preferably action that surprises

the market on the upside, doing more than they ask for. They know

what to do, that is what they did with the bailout programme in 208,

to top the panic after Lehman Brothers. What is causing concern

here, is they don't see any sign that the European leaders have

their version of a bailout. What would that be? It would be clear

measures to draw a line in the sand, to joined pin the eurozone bond

markets, to force the banks to come completely clean about their

exposures to sovereign debt, and if necessary to inject more capital

into the system. Then, to start talking about whether the eurozone

is going to create more co- ordinated fiscal policies going

forward, or address the fundamental structural problems that are

plaguing the eurozone now. Essentially yolking an economy like

Italy, which is very unproductive, where productivity is not grown

over the last decade, with Germany, where productivity has grown 9.4%

in the last decade. There are big structural problems exposed.

Michael Barrymore, isn't the solution staring us in the --

Katinka Barysch, is the solution staring us in the face, I can see

Gillian nodding her head. The IMF have been ruled out, none of the

poorer countries want a fund that bails out Europe, essentially, the

buck is right in your corner, isn't it? Yeah, and I'm in Berlin, the

world is staring at Berlin for a solution, and I'm in Berlin and

everybody seems to be staring at Frankfurt. Now, one thing that I

have picked up here over the last couple of days is there is an

acceptance in the German political circles that the ECB has to do

whatever it takes to tide us over this particular part of the crisis.

Although you will always hear German politicians say that they

are against the the central banks buying dodgy Government bands,

there is an acceptance. There is an awful lot of communication going on

between Frankfurt and the German Government at the moment, not the

ECB and the German Government, but also the Bundesbank, the German

Central Bank and the German Government, there was a falling out

recently, because the German Bundesbank wrecked a plan to use

special drawing rights of artificial currency that all IMF

members hold, to boost the European Financial Stability Fund. There is

bad blood even between those authorities. It is all in Frankfurt

at the moment. Having said that, I think that a lot of German

politicians, sorry? Just to say, are you saying the ECB is not in

the picture at all. Nobody is talking about the ECB now? They are

talking about the ECB, but the Germans are the people who

basically invented independent central banks and they are not

necessary happy with all the ECB does. I have met some people who

are very close to the Government and are very unhappy with the ECB

druging its feet. Exactly what Gillian has just said, and what the

market analyst also said, they should make a very clear statement

that they are now going into the market, they don't disclose the

sums, they just say we will back the Italian bonds. That they stop

dithering, they are buying bonds at the moment, they say they don't

like it, they don't know how long it will take. The German

politicians aren't necessarily happy with this, but this is a

country where you don't criticise central banks openly, it is not

done. I take it back to Gillian Tett, although it seems like the

obvious solution, there is no direct chain of command between the

German Government and the ECB, it simply can't be done? There is no

direction and command. But frankly, all eyes now on Mario Draghi. This

really is his historic moment. It is worth bearing in mind for the

ECB to step in and underwrite the Italian and Greek bond markets is a

huge psychological step. For the US Congress, in late 2008, it was a

huge psychological step for America to essentially nationalise, or use

public money to bail out the banking system. Psychological steps

can occur, in a crisis. It wouldn't be impossible to imagine this. But

the really big question now is will Mario Draghi, because he's Italian,

feel he has to be more German than the Germans to get credibility? Or

is he willing to really role the dice and do something bold and

dramatic. He does come from the private sector background, it is

worth rembering that. He has worked at Goldman Sachs before. He knows

what happens when traders get involved, and maybe just maybe a

point will come where he says he's going to behave like a trader, he's

going to do something bold and dramatic and make my mark. Time to

break the rules? Absolutely, it is breaking the rules. Under the

Lisbon Treaty, the ECB is not allowed to go out and monetise debt

in the system. It means tearing up rules. That is why we will get to

the 11th our and 59th minute before we get it. We have further to go

with this, stay with us. We will be talking about the future of Europe.

Meanwhile it has been reported that France and German officials have

held discussions on the prospect of a smaller eurozone w some countries

leaving the currency all together. The discussions are still highly

theoretical and have been denied by the German Chancellor herself, but

much of the focus in the midst of Europe's worst crisis since the ske

Second World War, will be clearly The sovereign debt crisis has

pulled Europe's long-term problems well into the short-term. A

currency union without a tax union, a half cocked Central Bank, a huge

competitiveness gap, a social model, but no-one left to pay for it. From

the politicians, always the same plea, give us breathing space to

make the long-term structural reforms. But 18 months of

indecision has removed the breathing space. Europe now has to

do structural reform in the worst of circumstances. The European

Commission slashed its growth forecast for 2012 today by more

than two-thirds, from 1.8% to 0.5%. It predicts recession in Italy,

stagnation in Spain, sharp slowdowns in German and northern

Europe, and stagnation in the UK for the first half of next year.

It makes it worse for all of Europe, not just a southern European

problem. GDP is not growing and their dynamics look worse, on paper

all the countries have a lot more fiscal tightening to do. It pushes

them into a fiscal spiral, they are cutting and the economy is pushed

into recession, and it is hard to get out of the mess. On paper it

makes growth worse. What are the long-term options, the eurozone

could go for fiscal union, but discussions focus lately on who is

in and who is out? The best scenario for the eurozone is the

most highly indebted economies leave. And you are left with a much

stronger core eurozone involving Germany and some of the other

northern countries. That could then perhaps make convincing steps

towards a fiscal union, which means this situation doesn't arise again.

If the eurozone did break up, the collapse in asset prices on the

periphery, might be enough to take down a large part of the banking

system, here and across the world. The dreaded credit event, or Lehman

moment. That would beanter mount to default, the nomination -- be anter

mount to default, the new thing would be more than the nominations

of the current area countries. They are in the euro, one is a key

country in the world, any redenomination would produce

significant loss. There is one other option, Germany leaves the

euro, and forms a new currency block around the new reborn damp

mark with other countries, like Austria, Finland and the

Netherlands. That option is looking more and more feasible the longer

this goes on. If Germany is forced into much larger bailouts, much

larger contributions to other countries, than it is comfortable

with, it might be in the end it chooses to leave the eurozone.

would be Europe, but not as we know it. Paul Mason there, the guests

are still with me. Federica Mogherini, an Italian MP,

Katinka Barysch from Berlin, Gillian Tett from the FT in New

York, and Alan Brown of Schroders. I will throw this to you, Bill Cash,

In Berlin r they privately considering this smaller Europe?

Some people are very publicly considering it, there are some

prominent commentators, the former head of the employers' federation,

who say we need the euro nord that is only with the stability

orientated immediate neighbours, and we kick the southern Europeans

out. That is a minority view. Within Government circles there is

no talk about breaking up the eurozone. They are, of course,

discussing the idea that eventually maybe we need a clause in the

European treaty that allows countries that don't want to stay

in to leave. This is a very long- term sort of thing. As a solution

to the crisis, in Government circles people are not talking

about a break up of the eurozone, partly because there is a feeling

of solidarity, partly because they know for countries such as Greece

to be out there on its own would be very, very tough, and they know

there would be mayhem. How do you disentangle what is a drachma-

eurobond and a damp mark euroband, how do you have capital controls in

the monetary union. They know if parts of the periphery breaks away,

the rest of the eurozone will have a currency that is exceedingly

strong, for an export-orientated economy, such as gaeerm Germany,

that is a scary thought. Is it inconceivable? No, since 1945, on

the narrowest of definitions, 69 currencies an the world, many odd

and small, have come to an end, and the sun still rises in the morning.

It doesn't have to be a calamity, but it has the potential. It

becomes one if, in the removing say Greece from the eurozone, we then

end up with a contagion, leading to a domino collapse of all the other

perrif kal economies. Is Italy on the in-- Periphery economies.

Italy on the in or outside? I think it is on the inside, it is running

a much lower deficit than the UK. It is the governance structures of

Europe which unfortunately are making it so difficult for the

European economy, at large, to cope with this problem. Federica

Mogherini, do you think that once the political structures change, by

that, the euphamism is Berlusconi is gone, could Italy find itself

back on the inside? Absolutely, I think the Italian economy, and the

banking system are stronger than they have been described so far. I

think with the right reforms and measures, both long-term, mid-term

and very short-term, we can do much better than we have done so far.

And I think that Italy is ready to be back on its feet again. And be

part of the eurozone as it should be and it is now. I started by

saying this is all highly theoretical, of course, is it

possible to have a controlled break-up, does it make any economic

sense? It is not highly theoretical, I can tell you that here in New

York there are banks and asset managers doing all sorts of

internal fire drills for a potential break-up and exit of one

or two members. I was chatting with asset managers, people who control

some of the biggest pots in the world, going down the list saying

do you draw the line of groz and Portugal, what about Ireland, if

there is some kind of exit of members. People are certainly

talking about it. Any kind of exit or break up will be messy. People

know that, and the great lesson of Lehman Brothers back in 2008, when

it collapsed, of the interconnectiveness of the

financial system today means there are often very unexpected shocks

that no-one has thought of when something happens, that is what

people are worried about. This couldn't happen without a

substantial number of banks going under, could it? Banks may need

more capital, but they don't necessarily have to go under.

your view the same, Gillian? It is unclear, that is exactly why people

are so concerned. There are already people looking at the linkages

between the banking system and trying to work out exposures. One

tiny example, at the moment public entities, state entities don't post

any capital when they post derivatives deals, nobody thought

we would be in situation where people could default. What are the

reprecussions if people did default and didn't pay back the money they

owed, we don't know. Economically you can see how it is ethically,

but it could be catastrophic. You have the illusion of parity, France

and Germany, standing strong side by side together. If it emerged

that France was not as strong as Germany, that is pretty much the

end of post-war Europe, isn't it? My generation grew up with the

conviction that in European integration the direction is always

in one way, towards more integration, more harmony, more

solidarity amongst the European people. For the first time in my

lifetime, we are staring at the real possibility that we might go

back wards, that countries might opt-out, that there might be chaos.

There is bad blood in the European Union already, we don't like each

other as much as we thought. This is much more about banking sector

chaos, and finance. This is about the European identity. And what we

are seeing already now, that we tried to hold the euro together. We

might just be able to do the things that are necessary to save this

currency, but it is eroding the political fabric on which the

European Union is based. So whichever way this goes, we will

come out with a European Union that looks very different from this

harmonious, nice place we thought we were in when we started this

crisis. Thank you very much.

James Murdoch has accused former News International employees,

including a company lawyer, of misleading him about the phone

hacking controversy. He returned to Westminster today to answer more

questions from a select committee of MPs, who repeatedly insisted he

hadn't been told of the so-called "for Neville" e-mail, which

suggested phone hacking was widespread at News of the World.

Tonight Tom Crone hit back and accused James Murdoch of giving

disingenious evidence. James Murdoch was fighting for his

corporate reputation today in parliament. Recalled to explain

inconsistencies in evidence about who knew what, when, at News

International about phone hacking, the stakes couldn't have been

higher. Did you mislead this committee in your original

testimony? No I did not. When James Murdoch gave evidence at the select

committee today, it immediately became apparent there was a

straight conflict. Either his account of what he knew about the

extent of phone hacking was correct, or the account given by the in-

house lawyer and former editor, a couple of weeks ago was correct.

There was straight contradiction. If Mr Brown and Mr Myler are

telling the truth, you are not telling the truth, if you are

telling the truth, they are not telling the truth. At the centre of

the story are three men with delivering recollections of the

events. James Murdoch who sat way above News of the World in the

parent group, Tom Crone, News of the World's vastly experienced

legal adviser, and Colin Myler, brought in to clean up the mess

after the phone hacking scandal, that led to the conviction of Glenn

Mulcaire and Clive Goodman. It is the case of Gordon Taylor has most

dangerous for James Murdoch. Police have discovered a transcript of a

message left on his phone with a "for Neville" message for him on

the phone. The case seemed to look bad. On the 24th of May, Tom Crone

Sure enough their barrister, Michael Silverleaf, delivered his

considered written opinion on the Tom Watson MP, who has been like a

dog with a bone on this inquiry, asked him whether the QC's advice

was discussed at a meeting on the 10th of June, with News of the

World's legal adviser, Tom Crone, and editor, Colin Myler. There was

no mention of a culture of legal information discussed at that

meeting. Certainly not. Do you still maintain that neither Crone

or Myler mentioned this, even in passing, given the strength of

words used? That is exactly right, they did not mention it. Despite

this information going to the very heart of the problem, you and they

were meeting to discuss, namely that Taylor settlement, they didn't

raise anything within the Silverleaf opinion? They gave me

sufficient information to authorise the increase of the settlement

offers that they had already made, that they had commenced making,

some weeks before, without my knowledge. They left that meeting

with the authority to continue to negotiate. But in September Tom

Crone told the committee that James Murdoch had been told about the

"for Neville" e-mail, and seemed to indicate others at the News of the

World knew. James Murdoch said he got that wrong. With respect to my

knowledge, I thought that was inconsistent and not right. I

dispute it, vigorously. You think Mr Crone misled us. It follows that

I do, yes. Tom Crone hit back I need to tell you that I have met

Neville Thurlbeck, and although the meeting was supposed to be in

confidence, I think there is a public interest in revealing what

he said to me. Mr Thurlbeck told him that Tom Crone had shown the

damaging e-mail to James Murdoch, and he said the company was not

ware of concerns he had raised. fully sympathise and understand why

News International have made this decision to dismiss me. Because it

was based from a position of ignorance. They have been deprived

of vital information. That I have provided and offered to the News of

the World. I have spoken to Neville Thurlbeck over the past couple of

days. It is clear he maintains his innocence. He says his concerns

about the called "for Neville" e- mail were ignored by management. He

says it rather seemed their purpose that it absorbed all the pressure.

He had a colourful turn of phrase for this, he said the "for Neville"

e-mail was like nag net for the iron filings of the mission.

Reported a News of the World investigator who followed leading

phone hacking lawyer, Mark Lewis in Manchester. Mr Murdoch was asked

about this today. Are you aware that Mr Lewis's family was tried by

private investigator, including his 14-year-old dau, would you agree

with me that is completely despicable and has no place in the

practices of a modern media corporation. I totally agree with

you. I wasn't aware of the allegation, if it is the case, as I

have just said the whole fair is not acceptable and not on. Once

again he seemed to put the blame on Tom Crone. That was absolutely not

a corporate activity that was condoned, it is absolutely not

appropriate. Mr Crone and the other person did not do that with any

authority or knowledge by me, and I would never condone that behaviour.

Again a dispute. Tom Crone seemed to deny arranging for this to

happen in September. Did you arrange for the lawyers of phone

hacking victims to be monitored by private detectives? No. Did you

arrange for a dossier to be kept on them and follow up on their private

lives? No. Many other private detectives were named in parliament

today by Tom Watson. It seems it is rarely a week goes by without some

new revelation about hacking, or at least highly questionable

journalistic ethics. For News International it is the front page

lead that refuses to die. Joining me now is Roger Alton, executive

editor of the Times, and Chris Bryant, the shadow Justice Minister,

who has had his phone hacked himself. Chris Bryant, the select

committee got no further today. We have ended up with one person's

word against another? We did get somewhere. We got some apologies

from James Murdoch. We learned he hasn't the faintist idea what goes

on in his own organisation. We learned he doesn't refer to it as

his organisation, but as "it company", as if it is nothing to do

with him. We learned that somebody at News International has been

lying. Personally I suspect all of them have been lying to various

different degrees. James Murdoch had to portray himself today as

either being incompetent or a liar, he chose to go for being

incompetent. It is extraordinary, Roger Alton, the kind of

inconsistencies that remain. This jump in the amount of money, to

�750,000, that James Murdoch didn't think to ask about? It was damages

plus costs. Mr Murdoch had been advised that it was a good thing to

do to settle, the cost might go higher. That was an award that

could be done to Gordon Taylor. I think he was right to do that. He

said in the hearing he didn't want to drag the company's name through

the courts. I think the arguments for settling were perfectly fine.

The idea it was a bribe or hush money doesn't wash. It certainly

does wash, what you have just said is a complete load of nonsense, you

know it yourself. The truth of the matter is when somebody makes a

claim about a newspaper, and the newspaper decides to make an offer,

let's say they offer �100,000, they might then take into consideration

that if it went to court there would be additional costs. You

wouldn't add on the total costs of both sides, and then give all that

money to the litigant. Because it is, in a sense, you wouldn't be

saving yourself any money, would you be - you would be better going

to the court. It was part of buying the silence and the cover-up

organised by people at the very top of the organisation. There clearly

wasn't a cover-up, what James Murdoch admitted today was that the

company hadn't dealt with issues of governance, sufficiently he

admitted that. Don't you think that is extraordinary Can I finish, he

had two things to do today, one to deal with the questions of his own

personal integrity, which I believe he Z and the other was to deal with

questions around how News International runs itself. He admit

add lot of things had gone wrong. There was a culture in the company

of keeping stuff from the boss, and there was a culture in the company

of being too aggressive. Not just keeping stuff from the boss, but a

boss not asking or checking or being curious about the Gordon

Taylor payment? He said himself he should have been more curious. He

admitted that. He didn't say that, that is completely untrue. That is

exactly what he didn't say. He said there was no problem with

governance in the organisation, it was a matter of transparency.

saying there is a problem with governance. He used a whole load of

language that is management speak for avoiding responsibility. This

was his organisation, his employees. If I were a shareholder in BSkyB or

News Corp, I would be saying, frankly, this man doesn't know what

is going on under his fingertips. You have to accept one of the two,

either he does no know and isn't saying t or he doesn't know how his

company is run. He's a News International executive. He has run

the company really well, and it is extremely good company. Extremely

huge amount of good people there. There is a problem, nearly 6,000

people had their phones hacked. Hundreds of people were harassed

and intimidated by being trailed. Members of the Government, members

of all political parties. Members of the Royal Family. The

Metropolitan Police were corrupted, individual police officers were

bribed, for informationle all of this done by an organisation --

information, all of this done by an organisation you think is extremely

well run. He said problems about the running of the company, James

Murdoch said they were being addressed, he apologised for things

like surveillance. We know in the last decade there was problems

within the News of the World for accessing illegal information. That

is been dealt with and the paper has been closed. We have heard this

from people from News International for years now. It is only because

some people took News International to court that some of the material

came out. It is only because the Guardian mounted an investigation,

which was vigorously and aggressively poo pooed by By the

News of the World and the Independent. On the main subject,

the central issue, on which the select committee kept going at, is

that e-mail that Crone and Myler both say James Murdoch knew about,

he denies it. We are no further on. It is inconceivable he didn't know

about it. There is no rational for paying the �750,000, or the deal

with Max Clifford, which he believe to be more than that number. There

is no rationale or that, except to keep out of the public domain that

there was not just one rogue reporter, that it was endemic in

the newspaper. That was the argument James Murdoch, Rupert

Murdoch, and Peter Brookes, and Andy Coulson, awe relied on. Isn't

it a sign of -- All relied on. Isn't it a sign of the frustration

of the parliament when Tom Watson made the comment about the Mafia,

the Mafia kills people? It was colourful language, I have been

accused that have in the past. So has the Sun and the News of the

World, indeed, when the committee produced its rorp, just before the

last general election d report, just before the last general

election, and said it was inconceivable that people at the

News of the World didn't know about the "for Neville" e-mail. They

attacked certain people out of the newspaper, and bringing to light

the truth, that was what they did. Indeed Murdoch said, one of the

problems they had done had been far too aggressive, when the company

had been criticised, this was wrong. He admitted it was wrong. One of

the reasons is people have always attacked in ferocious terms the

company. That is why they were overdefensive and not dealing with

the problem. They are dealing with the problem now. They had committed

crimes and covered them up and then lied. Something they vigorously

deny? No, they own up to it. saurvilleence he has apologised for,

the phone -- surveillance he has apologised for, the phone hacking

leading to two arrests and a number of arrests, this as a resulted in

the ending of the BSkyB deal, and closure of certain places and the

loss of jobs. If it were true what Mr Murdoch is saying, why wouldn't

he pay every single person who was litigating against him and the

whole costs of going to court. think it is time to move slightly

away from this, there is nowhere else for it to go. Of course you do,

there is people to go to prison yet. It has been described as the

largest private lawsuit in the world, an epic legal battle between

the superrich tycoons, Roman Abramovich, and Dimitar Berbatov,

which has been riveting a packed courtroom. Allegations of extortion

and corrupt deals with the Kremlin have been bandied around over a

disputed �3 billion, that has provided an unprecedented glimpse

into the lives of the oligarchs and how Russia is run. The most

flamboyant of Russian Tyrone Koons versus the quietest, one of the

Kremlin's bitter -- Berezovsky versus Abramovich, a battle of

basic human values, according to the Berezovsky. TRANSLATION:

trust Abramovich in an eastern manner, like a son, a lot of years,

and then he betrayed me. Battle between past and future, according

to Abramovich. TRANSLATION: time had past, his period in post

communist history was over, Russia had moved on, I had moved on.

battle over a �3 billion claim that the owner of Chelsea Football Club

describes as wholly without merit. For the past six weeks the high

flying tycoon has been grounded in London, confined, like his rival,

to an English court radio. They have both had to squeeze their

bulky body guards into the public GALry they have both been pummelled

relentlessly in the wins box, by Britain's two cleverest barristers.

Why on earth is this taking place in London. As Abramovich says in

the witness statement, the claims in these proceedings have virtually

no connection with England. He doesn't even live here, yet by an

extraordinary stroke of bad luck, from his point of view, Abramovich

happened to be out shopping with his body guards here on Sloane

Street in Kensington, one day at 2007, at exactly the same time as

Boris Berezovsky was out shopping with his. Berbatov, leaving Dolce &

Gabbana, caught side of Abramovich two doors away, and grabbing the

writ he wanted to serve on his rival for months, he rushed into

Mez and tried to thrust it into Abramovich's hands. Four years of

legal wrangling later, and that writ has led us to the High Court.

Where not just the relationship between two extraordinary

characters, but one of the murkyist and most fascinating periods of

recent Russian history is being brought under the forensic light of

English justice. A Perth period in the dark dawn of capitalism, when

many ordinary Russians' lives collapsed. When their country's

vast national resources were sold off to a pittance to those with the

governance and connections and the The question for the court, how did

Berezovsky, the avuncular maths professor, turned car dealer and

politician, work together with Abramovich, the youthful plastic

dock manufacturer, turned oil trader, with partners in the

sidneft oil company, or not. Certainly when Berezovsky needed a

few more millions or hundreds of millions to sustain his lifestyle

and public persona, Abramovich forked out. Berezovsky says the

cash was his share of joint profits. Abramovich says he was simply

saying one of President Yeltsin's most powerful courtiers to protect

and intervene for him, in a chaotic, dangerous world. Abramovich's

barrister called medieval. In our own national experience we have to

go back to the 15th century to find a comparable problem. I hope I

won't have evidence from the 15th century. No, your lady has read

Shakespeare, no doubt. energetic Vladimir Putin makes the

story even more Shakespearian. Berezovsky believed he had made the

new President, a former little known spy chief, that he had helped

promote. But the king turned on his maker.

The turning point, the court heard, was the sinking of the Russian

submarine, the Kursk. Berezovsky's TV channel attacked the Kremlin's

sluggish response, Putin was furious, two months later,

Berezovsky, fearing for his safety, left Russia, never, so far, to

return. For the court, this is simply a commercial case about a

business dispute. For anyone interested in Russia, it is also

deeply political. Pitting Boris Berezovsky, now one of the

Kremlin's most implacable enemies, against Roman Abramovich, who is

always -- who has always tried to steer clear of controversy, and

keep the best possible relations with Vladimir Putin. Late in 2000

Abramovich also entered politics, serving Putin as governor of the

reindeer herders and one of the remoteest provinces, Chukotka.

Later it was heard that after a meeting with the Kremlin in the

French Alps, Abramovich agreed to pay a staggering $1 billion dollars

as a final pay off for the protection he no longer needed.

Berezovsky says Abramovich was buying him out of his business at a

knockdown price. Saying if he didn't accept the terms, Vladimir

Putin might jail one of his friends. A secret recording, according to

Berezovsky proves Putin's involvement. If President Putin

wanted someone to be arrested, if not they wouldn't. That's right,

isn't it No, that is not right, this just says that President Putin

is the most well informed person, that doesn't mean that he

influences who should be arrested and who shouldn't. Abramovich, keen

to stress the lawlessness of Russia in the 1990s, is keen to stress its

lawfulness today. But whatever the rights and wrongs of this case,

which continues, at least until Christmas. The fact that there are

other similar Russian disputes, engaging the English courts, tells

another story. It suggests there is still little reliable justice in

Russia. Takes these cases on is lucrative legal business, but

whether it ultimately enhances or diminishes the reputation of the