:00:08. > :00:13.A new eurozone bailout, but is it simply delaying the inevitable
:00:13. > :00:18.final act of a Greek tragedy. France and Germany lead the way on
:00:18. > :00:23.the compromise. Is it more of the same old sticking plaster. We will
:00:23. > :00:28.hear the verdict of the new head of the International Monetary Fund.
:00:28. > :00:34.If possible, the News International story just got a bit murkier.
:00:34. > :00:38.Newsnight has been told that three lawyers acting for the phone
:00:38. > :00:41.hackings were themselves put under surveillance by the News of the
:00:41. > :00:48.World.Another argument in the high echelons of the legal world on who
:00:48. > :00:51.should have acted on allegations of criminality in news international.
:00:51. > :00:56.News Corporation is under attack by some of the people who invest in it.
:00:56. > :01:00.This man thinks the way that Mr Murdoch runs his empire is an abuse
:01:00. > :01:10.of power, do the biggest shareholders care
:01:10. > :01:12.
:01:12. > :01:16.The British artist Lucian Freud has died 88.
:01:16. > :01:20.Good evening, decisive leadership or simply staving off an inevitable
:01:20. > :01:25.default. This is one of the many days deemed crucial for the leaders
:01:25. > :01:28.of the eurozone, as they try to stem the tide of fear over the
:01:28. > :01:32.crisis gripping the continent. The latest summit does appear on the
:01:32. > :01:38.surface to have gone further than before, making it easier for Greece
:01:38. > :01:41.to pay back its debts and getting the private sector to help out too.
:01:42. > :01:46.Will it just be another stopgap measure.
:01:46. > :01:49.You know the journalists are still arguing here about the figures in
:01:49. > :01:56.tonight's package, and whether or not they add up, the first kalde
:01:56. > :02:01.tails are very complex. But the - fiscal details are very complex.
:02:01. > :02:04.But the diplomatic issues are stark and simple, well known to people in
:02:04. > :02:11.European politics, is when the Franco German motor works well the
:02:11. > :02:16.EU can move forward. In recent weeks Franco German differences
:02:16. > :02:19.over Greek debt created an unstable situation that was punished by the
:02:19. > :02:25.markets. Overnight President Sarkozy and Chancellor Merkel had
:02:25. > :02:28.meetings and patched up their differences. It was clear from the
:02:28. > :02:35.details of a plan released, that things would be different at the
:02:35. > :02:39.summit, it is a began today. Brussels awoke to the Belgian
:02:39. > :02:43.national holiday, and yet another emergency summit on the euro. That
:02:43. > :02:51.brought tanks to the streets, and Europe's political big guns to slug
:02:51. > :02:55.it out over Greece. But their battle has caused
:02:55. > :03:02.consternation in the markets, as faith in the euro as faltered, so
:03:02. > :03:06.giving a sense of urgency to today's meeting.
:03:06. > :03:09.TRANSLATION: I assume we will be able to sign off a new programme
:03:09. > :03:13.for Greece, that is an important signal to give out. European
:03:13. > :03:17.compromise often demands looking glass solutions. This place is
:03:17. > :03:22.certainly no stranger to them. But the leaders coming here knew that
:03:22. > :03:25.those who had already lent money to Greece were bound to take a hit, a
:03:25. > :03:30.partial default was on the cards, but few wanted to acknowledge it,
:03:30. > :03:35.for fear of the harm that might do to Europe's other big debtor
:03:35. > :03:38.nations. It is worrying, we have to have a formal default or something
:03:38. > :03:42.considered by Credit Rating Agencies as a default, it is
:03:42. > :03:46.something to be avoided. A lot of these financial markets still
:03:46. > :03:48.relies on forms of self-regulations or regulation by big market
:03:48. > :03:53.organisations what are the markets doing now, reading what is going on,
:03:53. > :03:57.they see a lot of uncertainty and disagreement on member states on
:03:58. > :04:03.how to handle this, of course they are selling. If they see there is a
:04:03. > :04:06.consensus and a strong willingness to go together in the one direction,
:04:06. > :04:09.they think probably they have been overdoing the situation.
:04:09. > :04:13.President Sarkozy and Chancellor Merkel came hotfoot from meeting
:04:13. > :04:18.last night in Berlin. They brought to Brussels agreement to shelf a
:04:18. > :04:22.German idea that the new bailout be funded in part by a tax on European
:04:22. > :04:28.banks. Instead, the leaders promised to underwrite the new loan,
:04:28. > :04:33.and gave Greece twice as long to repay the old one. I think it is
:04:33. > :04:36.satisfactory, especially for the Greeks. Because the burden now goes
:04:36. > :04:41.down, that's very important, but it is also a very good sign to the
:04:41. > :04:46.market, we have already seen that the markets reacted positively. And
:04:46. > :04:51.I wonder why this sign, this important big sign, couldn't have
:04:51. > :04:55.been made earlier. A couple of hours ago the leaders emerged to
:04:55. > :05:00.announce that those draft proposals had been adopted. It was a better
:05:00. > :05:05.outcome than many expected, and it is intended, its architects say, to
:05:05. > :05:09.seal off the Greek situation, and prevent uncertainty from
:05:09. > :05:15.undermining other debt ridden European economies. Today we
:05:15. > :05:21.tackled a prob blem by addressing two main - problem by addressing
:05:21. > :05:24.two main factor, investors feared that losss were being posed on a
:05:24. > :05:28.non-voluntary basis on bond holders Greece and maybe in other countries
:05:28. > :05:32.as well. The second fear, market uncertainty over the eurozone's
:05:32. > :05:36.ability to resolve the crisis. it comes to the looking glass
:05:37. > :05:41.quality of this summit, Britain's position is even curiouser, David
:05:41. > :05:44.Cameron is not here, Britain is not part of the euro, of course, but he
:05:44. > :05:48.declined to come as an observer, either. But his Chancellor, this
:05:48. > :05:53.week, has urged the eurozone countries to integrate their
:05:53. > :05:57.finances more closely, to avoid similar crises in the future. What
:05:57. > :06:03.reality could be more inverted than a British Conservative Chancellor
:06:03. > :06:07.trying to urge forward the process of European integration?
:06:07. > :06:12.Despite today's agreement, Britain's intervention has struck a
:06:12. > :06:17.chord, the eurocrats are quaking in their boots at the prospect of a
:06:17. > :06:22.Spanish or Italian crisis and want a proper system to even out the
:06:22. > :06:28.debt imbalances within the euro. There is some scepticism, that
:06:28. > :06:32.today's package alone can prevent spreading of the Greek contagion.
:06:32. > :06:38.I think it is absolutely necessary now, to make the next big step
:06:38. > :06:45.ahead. We were discussing too long about the no bail out rule b things
:06:45. > :06:49.out of the past. We have now to think not of federal Europe, but of,
:06:49. > :06:58.especially concerning fiscal affairs, and the monetary union, a
:06:58. > :07:02.very united European Union. The Belgian national day parade
:07:03. > :07:07.went on outside the summit. The last few months have shown the
:07:07. > :07:11.consequences of what happens when Europe's nations can't keep in step.
:07:11. > :07:16.It will take careful coaxing, new political and fiscal language, even,
:07:16. > :07:22.to form the eurozone recruits into a disciplined force. If they fail,
:07:22. > :07:26.there is little doubt that defeat awaits them in the markets.
:07:26. > :07:30.Just before we came on air I spoke to the head of the IMF, Christine
:07:30. > :07:35.Lagarde, she was in Brussels, and was instrumental in today's deal. I
:07:35. > :07:39.suggested what had been agreed was, effectively, a Greek default?
:07:40. > :07:44.not at all, that is not what I have seen and heard today. It is
:07:45. > :07:48.certainly not the spirit in which discussions were held. It was most
:07:48. > :07:52.amazing, from my perspective, as new managing director of the IMF,
:07:52. > :07:57.to see the European leaders of the eurozone come together in the way
:07:57. > :08:02.they did. And clearly it was a new experience, I used to be minister
:08:02. > :08:07.of finance, for France, but it was very comforting, and I found it, it
:08:07. > :08:10.was a combination of being, you know, collective, comprehensive and
:08:10. > :08:14.constructive. I was very impressed. It is great to hear there was such
:08:14. > :08:18.a great spirit, looking at the detail of what was decided, debts
:08:18. > :08:24.are being rescheduled, the amount to be repaid is reduced, the
:08:24. > :08:27.interest rates are being taken down, it is some kind of default, surely?
:08:27. > :08:30.You can't prevent members of the eurozone to actually decide that
:08:30. > :08:34.they are going to reduce the interest rate, simply because they
:08:34. > :08:40.want to make sure that one of the partners, who has been under severe
:08:40. > :08:45.attack, who has delivered under the programme so far, needs to be
:08:45. > :08:51.supported, and needs help. That's really what happened tonight. What
:08:51. > :08:57.I found really most amazing is the collective resolve to actually
:08:57. > :08:59.continue to support countries until such a time when they regain access
:08:59. > :09:03.to markets, provided they deliver under the programme. I think it is
:09:03. > :09:09.am combination of give and take. You deliver, you do what you have
:09:09. > :09:13.to do, and we will back you. But it is not just the verdict of the IMF
:09:13. > :09:16.and the other countries in the eurozone that matter, it is
:09:16. > :09:19.organisations like the Credit Rating Agencies, and all these
:09:19. > :09:24.countries will be vulnerable to what they decide you did today?
:09:24. > :09:29.rating agencies will have to take a view, they will have to decide
:09:29. > :09:33.whether a group of banks that are concerned about being part of the
:09:33. > :09:39.pack, who are volunteering into negotiations, who sit at the table
:09:39. > :09:43.together with the Greeks, eventually coming to terms, if that
:09:43. > :09:47.is you know, voluntary, or otherwise, it is for them to decide,
:09:47. > :09:53.what I regard as critically important from my perspective, and
:09:53. > :09:55.forgive me, but I'm not a rating agency, nor do I pretend to be one.
:09:56. > :09:59.From my perspective what was important was the determination of
:09:59. > :10:03.the members of the zone, to continue to back and support the
:10:03. > :10:08.country that is delivering under its commitment, until it returns to
:10:08. > :10:10.market. But you can understand, you can understand, can't you, or
:10:10. > :10:14.acknowledge why whether it is Credit Rating Agencies, whether it
:10:14. > :10:18.is investor, and right around the world, look at what is happening in
:10:18. > :10:23.the eurozone, over more than a year now, and wonder about the
:10:23. > :10:26.leadership, everything seems to be so incremental, almost grudging, we
:10:26. > :10:30.have to reach one crisis point after another, before anything
:10:30. > :10:35.happens? I concede to you, because that is really what you are after,
:10:35. > :10:40.but it has been, up until now, incremental, sometimes labourous,
:10:40. > :10:46.but I can tell you today that it was game changing. It was quite
:10:46. > :10:51.amazing to see premiers and heads, as different as the premier of
:10:51. > :10:57.Slovenia or that of Italy, of Germany, as of Slovakia, come
:10:57. > :11:01.together and say, yes, we have to do that collectively, we all have
:11:01. > :11:05.to do it, because what happens to one could happen to another, and
:11:05. > :11:09.what affects one could affect another. What must happen to get to
:11:09. > :11:14.this resolve, we see the risk of contagion spreading around the
:11:14. > :11:18.eurozone? What matters today is they have decided to transform the
:11:18. > :11:23.European financial stability fund to make it precisely flexible, so
:11:23. > :11:27.it can be used as guarantee, and a precautionary instrument, it can be
:11:27. > :11:31.used to buy on the secondary market. Those are things that the IMF has
:11:31. > :11:36.been advocating for a long time. And it is a plan that is
:11:36. > :11:40.comprehensive, and you are right. For a long period of time it was
:11:40. > :11:45.piecemeal, it was sporadic, it was fragmented, but this one is
:11:45. > :11:50.different. It is clearly comprehensive, it addresses the
:11:50. > :11:54.case of Greece, it encompasses Ireland and Portugal, although
:11:54. > :11:59.clearly Greece is a unique case, in the sense it is the only one that
:11:59. > :12:02.will attract a degree of private sector involvement, although
:12:02. > :12:07.voluntarily. But the other two countries are going to benefit from
:12:07. > :12:13.the same extension of maturity and reduction of interest rate. Forgive
:12:13. > :12:16.me for being sceptical, we have heard many of these kinds of terms
:12:16. > :12:18.before. Whatever, however comprehensive the plan you have
:12:18. > :12:23.come out with today, it is still really the taxpayer who is bearing
:12:23. > :12:27.the burden of all of this. The idea that was floated of the private
:12:27. > :12:31.sector sharing the pain, that has been dropped, hasn't it? There are
:12:31. > :12:34.quite a few numbers floating around, you have clearly looked at the
:12:34. > :12:39.document, you can look at the charts as well, they are real
:12:39. > :12:42.numbers on the table. But there is no danking tax, and the involvement
:12:42. > :12:47.of the private sector is voluntary, it is up to them to decide whether
:12:47. > :12:52.they want to get involved any more in this? You before wanted it to be
:12:52. > :12:57.a selective report now it is not, I have convinced you! The private
:12:57. > :12:59.sector has largely been let off the hook, the whole idea it is
:12:59. > :13:03.voluntary, their involvement? is important is there are gives and
:13:03. > :13:07.takes. On the one hand, the partners are saying, you, Greece,
:13:08. > :13:14.have performed for a period of time, there was an element of reform
:13:14. > :13:18.fatigue, well it is time to get back on that trend of structural
:13:18. > :13:23.reform, privatisations, fiscal consolidation, and in argues for
:13:23. > :13:28.that, we will back you up, and we have trust, that confidence is
:13:28. > :13:32.restored amongst the members. The markets will see as they feel, as
:13:32. > :13:37.they see fit, they will characterise as they wish, but,
:13:37. > :13:41.sorry, the truth of the pudding is in the eating. At this time tonight,
:13:41. > :13:45.I can tell you that the heads of state, heads of Government, are
:13:45. > :13:48.determined to close ranks and be together. When you say fiscal
:13:48. > :13:52.consolidation, how far does that actually go, let's think further
:13:52. > :13:56.ahead for a moment. Your friend, George Osborne, here in Britain,
:13:56. > :14:00.believes there is a remorseless logic for monetary union on to
:14:00. > :14:06.fiscal union, is he right? There were heads of states and
:14:06. > :14:09.Governments tonight saying there had to be a federation at the
:14:09. > :14:14.financial, fiscal and economic levels. That is a change as well.
:14:14. > :14:18.So that is a step in the direction that you would welcome, a logical
:14:18. > :14:24.step? At the moment, where I stand, and in my new capacity as managing
:14:24. > :14:27.director of the IMF, what is of most concern to me is Greece, and
:14:27. > :14:34.other countries on the programme, can actually get back to the
:14:34. > :14:37.markets, in due course, and they can restore growth, that they can
:14:37. > :14:46.create jobs and their debt sustainability be significantly
:14:46. > :14:51.improved. That is what matters to Thank you for your time.
:14:51. > :14:54.Mark Urban is with us and we're joined by our economics editor,
:14:54. > :15:00.Paul Mason, who is on the road in the United States but managing to
:15:00. > :15:04.be with us. Not surprisingly, Christine Lagarde talking about how
:15:04. > :15:07.positive today was. Will this deal hold, do you think? I might allow
:15:07. > :15:12.Paul to give you the key verdict on whether or not it will hold. I can
:15:12. > :15:18.tell you more of the detail. It seems that the state element of
:15:18. > :15:22.this amounts to about 109 billion euros between now and 2014. The
:15:22. > :15:26.private sector is estimated over that time scale at about 50 billion.
:15:26. > :15:30.The interesting thing is, the state sector has been hemmed in, because
:15:30. > :15:35.of the political lack of willingness on the part of some EU
:15:35. > :15:39.members to extend this across the whole of the eurozone, it is hemmed
:15:39. > :15:44.in to the debtor countries, Greece and a couple of others, it is
:15:45. > :15:48.limited in how far this mark an extension and loosening of all the
:15:48. > :15:53.rules around the stablisation fund. The private sector thing you hit
:15:53. > :15:56.upon in your interview with Christine Lagarde, that is really
:15:56. > :16:00.interesting. We have heard widely delivering estimates of what the
:16:00. > :16:06.private sector could be. Including President Sarkozy who said at a
:16:06. > :16:12.briefing this evening, that it could be up to 155 euros, right
:16:12. > :16:17.from the low estimates to 50, to 106 which is in the commune Kay. We
:16:17. > :16:21.don't know to what degree the people lending one in the private
:16:21. > :16:24.sector will accept the guarantees made today, and take up the offers
:16:24. > :16:28.putt on the table, being underwritten by the European
:16:28. > :16:33.Governments. That is the big unknown, one of them, the other one
:16:33. > :16:38.is how far can the principles laid down today to deepen co-operation,
:16:38. > :16:41.be exlended more in the coming months. - extended more in the
:16:41. > :16:45.coming months. President Sarkozy talked about this in the briefing,
:16:45. > :16:49.they would be working on this summer, moving towards what George
:16:49. > :16:53.Osborne has said today, closer fiscal union. Those are the two big
:16:54. > :16:57.unknowns. The degree of private sector involvement, and the degree
:16:57. > :16:59.to which eurozone members are really willing to move towards a
:16:59. > :17:03.much, of closer fiscal co- ordination.
:17:03. > :17:09.Paul, you get the job of telling us, Christine Lagarde thinks this is a
:17:09. > :17:13.game changer of a deal, do you think it is one that will hold?
:17:13. > :17:16.Games changer when we look at some of the details. The 109 billion
:17:16. > :17:20.bailout of Greece is on top of a significant reduction in the
:17:20. > :17:24.interest rate that Ireland and Portugal, as well as Greece, have
:17:24. > :17:30.to pay. Then we get this expansion of the stability fund. This was
:17:30. > :17:34.created last May, May 2010, to save Greece, but it is now looking
:17:34. > :17:38.something like a mini-European scale IMF, with powers not simply
:17:38. > :17:42.to bail out the countries that need bailing out a lot more money we
:17:42. > :17:48.understand, but also to bail out banks in countries that are not
:17:48. > :17:52.being bailed out, aka, Germany and France. This is game changer, as to
:17:52. > :17:56.whether it work, as Mark says, the crucial thing in the short-term is
:17:56. > :18:01.whether the banks and hedge funds, and the pension funds, who have
:18:01. > :18:05.bought this Greek debt, accept the losses they will have to take on it.
:18:05. > :18:09.My understanding is it is something like 17 billion in losses out of
:18:09. > :18:15.the 50 billion they are puting into it. If they do accept it, as the
:18:15. > :18:20.briefing said, the private sector has agreed to do X, Y and Z, we
:18:20. > :18:24.don't get a contagion level event. What we have had today, let's be
:18:24. > :18:27.clear, is the transfer of risk from the private sector, from banks to
:18:27. > :18:32.pension fund, to Governments. It will be the Government who is bear
:18:32. > :18:35.the risk of the Greek bail out, and the risk of the Greek bail out
:18:35. > :18:40.going wrong. There is no guarantee that Greece does recover and start
:18:40. > :18:44.to pay its way in the world F in two or three years time we come to
:18:44. > :18:49.the place where Greece defaults again and this is a selective
:18:49. > :18:52.default, the rating agencies will say it is a selective default, if
:18:52. > :18:57.it does it again it is the European taxpayer, that includes people in
:18:57. > :19:04.the UK, who are on the hook for it. I know we will be hearing more from
:19:04. > :19:07.you in America on America's debt issues next week. Thank you to you
:19:07. > :19:11.both. Apologise for the quality of the line to Paul Mason in Arizona.
:19:11. > :19:14.If you thought that the phone hacking story was going into pause
:19:14. > :19:19.mode, I am afraid you were mistaken. The stories are still coming thick
:19:19. > :19:25.and fast. There was another sacking tonight, this time of the Sun's
:19:25. > :19:32.features editor, Matt Nixon, apparently during the time he
:19:32. > :19:37.carried out his work on News of the World.
:19:37. > :19:42.It is a pretty major story this time. It is a major development.
:19:42. > :19:46.Let's paint some context to the story. For News International the
:19:46. > :19:50.whole phone hacking scandal unravelled in 2008 with the out of
:19:50. > :19:56.court settlement with Gordon Taylor, the former head of the professional
:19:56. > :20:02.Football Association. It is thought to have cost News International �1
:20:02. > :20:06.million to keep key evidence out of court. It was Mark Lewis,
:20:06. > :20:09.representing Mr Taylor who was behind it, he went on to get a
:20:09. > :20:16.strong reputation for the phone hacking cases, celebrities came to
:20:17. > :20:21.him, such as Chris tarnt, and many others, - Tarrant, resulting him in
:20:21. > :20:25.representing 70 people, most significantly of all he's
:20:25. > :20:28.representing the Dowler family. Is it Mark Lewis at the heart of
:20:28. > :20:32.the allegations we are talking about now? Clearly Mark Lewis has
:20:32. > :20:37.been a major thorn in the side to News International over the last
:20:37. > :20:42.two or three years. A well mazeed source has told me today, that not
:20:42. > :20:49.only was - a well placed source has told me today, that not only was
:20:49. > :20:54.Mark Lewis's phone hacked, but someone at News of the World set a
:20:54. > :20:57.private investigator on to him and trailing him, and put him on
:20:57. > :21:01.surveillance, covert surveillance and fofd photographed him. I can't
:21:01. > :21:04.name the individual for legal reasons, we do have his name. I
:21:04. > :21:07.have been told by other sources that two other solicitors, also
:21:07. > :21:11.involved in the phone hacking scandal, representing claimants,
:21:11. > :21:15.have also been targeted in a similar way. I'm told that one of
:21:16. > :21:19.these solicitors was shown a dossier of confidential information,
:21:19. > :21:25.quite recently, earlier this year. That information could only have
:21:25. > :21:29.come from illegal means. That was a very serious development. If we
:21:29. > :21:32.have three solicitors targeted in this way, it raises fundamental
:21:32. > :21:36.questions about what News of the World were doing at that time.
:21:36. > :21:39.We did try to put this to News International tonight, there was no
:21:39. > :21:43.comment at this time, there was nobody available to give a comment
:21:43. > :21:47.on. That the curious thing about this, finally, is my understanding
:21:47. > :21:51.is that News of the World weren't doing this for actual story
:21:51. > :21:55.research. That raises the possibility they were doing it to
:21:55. > :21:59.discredit solicitors who were their opponents, if that is true, it is
:21:59. > :22:02.pretty serious. Also tonight, other information has
:22:02. > :22:05.emerged about senior legal figures in the scandal, when they were
:22:05. > :22:09.first made aware of hacking allegations, what they actually did
:22:09. > :22:13.with that knowledge. We will be exploring this issue with the
:22:13. > :22:16.former Attorney-General, Lord Goldsmith in a moment. First of all,
:22:16. > :22:20.Mark Lewis, who we were just talking about is with me now. You
:22:20. > :22:28.found out about this when Newsnight put it to you, what did you think?
:22:29. > :22:33.It was something that n a way, was scary, but not intimidating. It
:22:33. > :22:38.wasn't a surprise that they would try to find out what they could
:22:38. > :22:44.about me. But the idea of intimidating a lawyer, at all was
:22:44. > :22:48.not a surprise, because they tried it in 2009, when the story came out
:22:48. > :22:54.in the Guardian, they threatened me with an injunction to stop me
:22:54. > :22:58.acting. They threatened me throughout the cases. I haven't
:22:58. > :23:05.been scared of them, and been standing up to them. Did you have
:23:05. > :23:10.springss, when we put this to you, you weren't all together surprised?
:23:10. > :23:16.There are things - did you have suspicions, when we put this to you
:23:16. > :23:19.you weren't at all together surprised? They shouldn't and can't
:23:19. > :23:23.intimidate lawyers and witnesses, you have to stand up to them. It is
:23:23. > :23:26.a very serious matter, I have had to refer it to the police because
:23:26. > :23:30.of the nature of what is going on. You have already told the police
:23:30. > :23:35.about this? As soon as I was notified I had to notify the police,
:23:35. > :23:44.because this is such a fundamental matter. It goes to the very issue
:23:44. > :23:47.of representation of a client, who leave me messages, tactical
:23:47. > :23:50.decisions, barristers might leave messages for me. They shouldn't be
:23:51. > :23:54.listening to them. They are not about getting stories, it is about
:23:54. > :23:58.legal cases. You have taken this to the police today. Ideally what
:23:58. > :24:02.would you like to see them to do, how would you like them to act?
:24:02. > :24:08.Undoubtedly the police would have to investigate. They will obtain
:24:08. > :24:15.records from phone companies as to what was happening in terms of my
:24:15. > :24:18.phone messages. They will try to obtain any report that is exist
:24:18. > :24:22.about me. News of the World, newsgroup newspapers to find out
:24:22. > :24:27.what is in their possession. And take action against the individuals,
:24:27. > :24:30.it is a very, very serious matter. Thank you very much for coming in
:24:31. > :24:35.to the studio tonight. As I mentioned earlier, in the
:24:35. > :24:40.Westminster studio now is the former Attorney-General, Lord
:24:40. > :24:45.Goldsmith. Your name came up in parliament yesterday in connection
:24:45. > :24:49.with all of this, Geoffrey Cox MP was asking questions about what you
:24:49. > :24:52.knew about the allegations at the time they first surfaced in your
:24:52. > :24:57.role as Attorney-General, when did you first come to hear of them?
:24:57. > :25:01.glad you asked me about this, what he said yesterday is I had approved
:25:01. > :25:04.and indeed instructed the police to conduct only a narrow investigation
:25:04. > :25:07.into phone hacking, that is absolutely not true. I'm very glad
:25:07. > :25:12.of the opportunity to correct that, that is certainly not the case.
:25:12. > :25:16.What did you do when you first became aware of the allegations?
:25:16. > :25:20.was briefed about the case and we are all aware of what that was, I
:25:20. > :25:27.was told there were other cases and we talked about those in due course.
:25:27. > :25:31.That particular case went ahead, we know that, that was Mulcaire and
:25:31. > :25:35.Goodman later that year they pleaded guilty. Was that the only
:25:35. > :25:38.case you were aware of, were you aware of the other allegations?
:25:39. > :25:43.wasn't aware of them. In background from the briefing I had about that
:25:43. > :25:47.case, or those cases, I was told that the police whreefd there were
:25:47. > :25:50.other cases as well. - believed there were other cases as well.
:25:50. > :25:56.There was probably further investigations in due course. I
:25:56. > :25:59.think the point to make absolutely plain, there was never any request
:25:59. > :26:04.from me or answer from me suggesting that the inquiry should
:26:04. > :26:08.be kept narrow. Let's focus on what you did with the information you
:26:08. > :26:12.received in that briefing? You were told there were a series of
:26:12. > :26:17.allegations, not just a single case, did you follow up on it at a later
:26:17. > :26:21.date? I'm not the Metropolitan Police commissioner or Director of
:26:21. > :26:27.Public Prosecutions. As I understand it, you do supervise the
:26:27. > :26:31.role of the DPP? I have general oversight. What I was told is there
:26:31. > :26:34.was a particular case or cases that ended up quite rightly in
:26:34. > :26:39.conviction, I was told the details of that, they were sensitive cases
:26:39. > :26:44.for reasons we all know. Because of the individuals who were involved
:26:44. > :26:49.in that particular case. I was told as background there were other
:26:49. > :26:53.cases and those were, it was said that they would be or might be the
:26:53. > :27:00.subject of investigation in due course. That is what I expect it to
:27:00. > :27:03.be. The superintending role that the Attorney General has over the
:27:03. > :27:07.DPP, does that not involve following up on things to see
:27:07. > :27:11.whether they have moved along or not? The particular case I was
:27:11. > :27:15.talking about went along to a conviction last year. One case?
:27:15. > :27:18.That was the case I was told about. As to what happened afterwards, as
:27:18. > :27:22.to why this wider investigation that was referred to didn't take
:27:22. > :27:27.place, you will, let me finish, please let me finish, you will have
:27:27. > :27:31.to ask the police, or the director of public prosecutions, Ken
:27:31. > :27:37.McDonald, what they did afterwards, that wasn't my responsibility. They
:27:37. > :27:45.didn't ask me for any advice, they didn't give me any advice, that is
:27:45. > :27:49.not what the Attorney-General do. - does. We have asked Ken McDonald
:27:49. > :27:53.before we came on? I will look forward to what he has to say.
:27:53. > :28:00.said there was one case in particular, that is The Good Muslmi
:28:00. > :28:05.good and Glenn Mulcaire case. You were aware there - that is the
:28:05. > :28:10.Clive Goodman and Glenn Mulcaire case. It is not my job to do that.
:28:10. > :28:14.I was told about the particular case that led to conviction, not
:28:14. > :28:18.one case, several cases. I was told the police, whose job it is to
:28:18. > :28:21.investigate, let's be clear about it, in this country politicians and
:28:21. > :28:24.even prosecutors don't tell the police what to do. Thank goodness
:28:25. > :28:29.for that. They are operationally independent, it is their job to
:28:29. > :28:33.investigate. My understanding, from the briefing I had, was that they
:28:33. > :28:36.were investigating, that they had contacted a number of other people
:28:36. > :28:40.who had been accessed, and didn't want to help them, that is what I
:28:40. > :28:42.was told. As to what happened afterwards, then the police and the
:28:42. > :28:46.Director of Public Prosecutions need to answer the question of what
:28:46. > :28:49.happened. Do you think that there is a case for the former DPP to
:28:49. > :28:53.answer, then, do you believe he should have done more? I think it
:28:53. > :28:57.is not for me to say at the moment. I think it is important to know
:28:57. > :29:04.what he says about T it is important to know what the police
:29:04. > :29:08.say happened afterwards, what I'm making clear is that the suggestion
:29:08. > :29:12.that I instructed, still less Government ministers, I don't think
:29:12. > :29:15.Government ministers knew about this, as it would be quite wrong as
:29:15. > :29:20.Attorney-General to tell other ministers about on going police
:29:20. > :29:24.investigations. What I'm a saying is neither I nor any other minister
:29:24. > :29:31.instructed anybody, or approve. you wish you had done more and
:29:31. > :29:39.asked more questions? I have asked meself why not ask Ken McDonald
:29:39. > :29:43.more about what took place. I look forward to what he said about it.
:29:43. > :29:48.My job was done by responding on a particular briefing, the police are
:29:48. > :29:52.there, good police force too, that is what we absolutely rightly
:29:52. > :29:55.believe, investigating this cases, and an independent Crown
:29:55. > :30:01.Prosecution Service, under its independent head, giving the police
:30:01. > :30:05.advice. It would be interesting to know what it was to cause the
:30:05. > :30:10.investigation not to continue in the way it seemed to be, from the
:30:10. > :30:14.briefing I had, going to go. suggestion is you think the DPP
:30:14. > :30:19.could have done more, you have mentioned him several times in this
:30:20. > :30:27.conversation? The D psm P is the conduit to the Attorney General,
:30:27. > :30:35.the DPP is the conduit to the Attorney General, not the police.
:30:35. > :30:39.It appears they were seeking advice of the DPP. The answer they give
:30:39. > :30:42.should be what people are looking The Murdochs' appearance in
:30:42. > :30:46.parliament on Tuesday has ramped up the debate about the way their
:30:47. > :30:51.company is run, both the fact it is not a one share one vote system,
:30:51. > :30:56.and also the way Rupert Murdoch remains as the chief executive and
:30:56. > :30:59.chairman of the business. Some sharehold rrs not happy, is there
:30:59. > :31:06.anything they - shareholders are not happy, but is there anything
:31:07. > :31:16.they can do about it? Phone hacking has dominated
:31:17. > :31:19.
:31:19. > :31:24.politics here for weeks. Is it just a storm in a British tea cup?
:31:24. > :31:30.A global tycoon like Rupert Murdoch must hope so. The News of the World
:31:30. > :31:38.is less than 1% of our company, I employ 5 3,000 people around the
:31:38. > :31:42.world. Who are proud and great and ethical, and distinguished people.
:31:42. > :31:47.The scandal that has engulfed Rupert Murdoch, directly concerns
:31:47. > :31:52.one tiny part of his empire, but it has the potential to damage his
:31:52. > :31:56.business worldwide. His biggest problem now may be that
:31:56. > :31:59.in denying knowledge of events involving the News of the World, he
:31:59. > :32:03.has raised wider questions among News Corporation shareholders
:32:03. > :32:07.worldwide, about the way the company is governed and about his
:32:08. > :32:13.own competence as its head. One of the concerns I think shareholders
:32:13. > :32:18.will have with that, is that we look to senior management to have a
:32:18. > :32:23.strong grasp as to what's actually going on within the company. The
:32:23. > :32:27.admission from Rupert Murdoch that he knew little or nothing as to
:32:27. > :32:30.what was happening in certain parts of his business empire, was not
:32:30. > :32:36.something which would encourage confidence in the systems and
:32:36. > :32:45.controls that were in place within the group.
:32:45. > :32:51.In the US some shareholders want change. The trade union ownedAm
:32:51. > :32:54.Malagaated Bank of America have filed suits, and others have said
:32:54. > :32:58.that News Corp doesn't have one share one vote, a corruption, it
:32:58. > :33:06.says, of the governance system. Other city voices also want more
:33:06. > :33:10.democracy in the company. If I look at the way the board is
:33:10. > :33:16.structured, you might want to question the prevalence of one
:33:16. > :33:19.particular family within that board. Whether there should be a greater
:33:19. > :33:26.representation of genuinely independent non-executives, and
:33:26. > :33:31.potentially a smaller representation for the family.
:33:31. > :33:36.Besides its ethical mistakes in Britain, News Corp has made big
:33:36. > :33:43.business mistakes in America. It bought Dow Jones, publishers of the
:33:43. > :33:49.Wall Street Journal, for $5.6 billion in 2007, two years later it
:33:49. > :33:59.was worth just $2.8 million. MySpace, the social networking
:33:59. > :34:02.website was bought by $580 million in 2005, sold for only $35 million
:34:02. > :34:06.this year. But one of the larger shareholders still has huge
:34:06. > :34:10.confidence in the company. You have seen a business in the last 20
:34:10. > :34:15.years that has evolved, moving from strictly newspapers into other
:34:15. > :34:21.media, and moving more into a fee- based business model as opposed to
:34:21. > :34:25.an advertising business model. I think there are an awfully lot of
:34:25. > :34:30.good steps that have been made. I'm very impressed overall with the
:34:30. > :34:34.company's success. Rupert Murdoch's now back in
:34:34. > :34:39.America. More comfortable perhaps in a country where some big
:34:39. > :34:46.investors still back him as News Corp's chief executive. Here is a
:34:46. > :34:51.man, who has, even though he is 80 years old, Warren Buffet is 890
:34:51. > :34:55.years old and doing well. These are - 80 years old and doing well.
:34:55. > :35:02.These are men with long track records of great success. To not
:35:02. > :35:06.want some of that wisdom in there, I think would be a mistake. As Will
:35:06. > :35:10.Rogers said, good judgment comes from experience, a lot of that
:35:10. > :35:14.comes from bad judgment. The phone hacking scandal has sparked
:35:14. > :35:21.political reform in the UK, which some Americans are calling a
:35:21. > :35:27.British spring. How much reform there will be in News Corp itself
:35:27. > :35:34.depend on the markets to come. We are joined now in the studio by
:35:34. > :35:38.Terry Smith, head of his company my other guest from Reuters.
:35:38. > :35:46.Do you have issues with the way it is run? The voting structure thing
:35:46. > :35:49.is important. The Murdochs only own 13% of the company, but pause 30%
:35:49. > :35:54.don't have a vote they virtually control T other people put up the
:35:54. > :35:58.majority of the money. You might this that won't matter and people
:35:58. > :36:06.would ignore it when things are going well, but it is when things
:36:06. > :36:09.are going badly, because there isn't a correct mechanism of scale.
:36:09. > :36:14.Family-run businesses are like the poem, when she was good she was
:36:14. > :36:21.very, very good, but when she was bad she was horrid. Do the funds
:36:21. > :36:24.you run have shareholding? No. this reason? This is one of the two
:36:24. > :36:29.prime reasons. One is the newspaper interests, not very profitable. The
:36:29. > :36:32.other one is, we would never own shares in a company where a family
:36:32. > :36:39.has control, without putting up most of the money. Contrary to the
:36:39. > :36:43.view that Mr Murdoch seems to have, we don't think the ideal candidate
:36:43. > :36:48.to run the country needs to be called Murdoch. Some of the smaller
:36:48. > :36:53.shareholders are getting worked up by it, the big names don't seem
:36:53. > :36:58.that bothered? They are being polite, Mr Jacman, you have to bear
:36:58. > :37:02.in mind this is 12% of his fund. He's unlikely to be rude about it
:37:02. > :37:09.at the moment. Yofpbg he's really very - I don't think he's really
:37:09. > :37:16.very pleased. Do you think times are changing or is this some blip
:37:16. > :37:22.shareholders will worry about and then it will blow over? Terry has
:37:22. > :37:26.pointed to one of the key corporate governance issues which is the dual
:37:26. > :37:31.shareholder. You have had one shareholder speak out about t it is
:37:31. > :37:35.the biggest American pension fund, known as a campaigner on corporate
:37:35. > :37:38.governance. They have been speaking out on the point Terry makes. That
:37:38. > :37:45.is an important and influential voice. The interesting thing, I
:37:45. > :37:48.think, in America, is going to be two things. First of all, whether
:37:48. > :37:53.the crisis is of the corporate culture spreads to what News Corp
:37:53. > :37:58.was doing in the United States. If you see any evidence that the
:37:58. > :38:03.hacking extended to 9/11 victims, I think that will have a huge public
:38:03. > :38:06.impact, you will see a lot more action from US shareholders.
:38:06. > :38:12.just wondering on the corporate governance side of things, the
:38:12. > :38:16.other issue that stands out is the fact he's both the chairman and the
:38:16. > :38:26.CEO, is that again the kind of thing that seemed fine at the time,
:38:26. > :38:26.
:38:26. > :38:31.but now it looks suspect? In the American side of things, it is, I
:38:31. > :38:35.think it is best prak tus, but in the US it is more common than in US,
:38:35. > :38:40.a lot of companies have the CEO and the chairman. Are there changes to
:38:40. > :38:45.come in the wake of all of this? Yes, as we were saying, I think
:38:45. > :38:49.there is pressure right now on the dual shareholding structure, the
:38:49. > :38:52.other issue you are going to see is something Terry pointed to, which
:38:52. > :38:57.is the question of nepotism, it is the sort of thing that doesn't
:38:57. > :39:00.matter to anyone, as long as the company is making tonnes of money
:39:00. > :39:07.and there is no clouds over it. Now there will be big questions over
:39:07. > :39:12.Rupert Murdoch's age, and over whether he should have the right to
:39:12. > :39:17.treat News Corp like a hereditary monarchy. If tomorrow we did have a
:39:17. > :39:21.different heir apparent, a non- Murdoch heir apparent, Chase Carey,
:39:21. > :39:26.for example, would that make you feel differently about News Corp?
:39:26. > :39:30.It would make me feel differently. I would look at his strategy. It is
:39:30. > :39:38.not just the phone hacking scandal that poipbtsdz to problems with the
:39:38. > :39:46.country. They bought the Wall Street Journal for $5.7 billion and
:39:46. > :39:51.lost �2 billion on it. MySpace was another loser. They bought the
:39:51. > :39:57.company Shine, which the lawyers suing them called it rampant
:39:57. > :40:00.nepotism. We have to find out whether the same capital
:40:00. > :40:04.allocations practices would be the same. It is the same as flushing
:40:04. > :40:08.money down the drain. Hearing a list like that, it sounds like a
:40:08. > :40:12.company that could have done better, is this again one of the things
:40:12. > :40:16.with the benefit of hindsight investors take a different view on?
:40:16. > :40:21.Well the fact is that News Corp still has a lot of properties that
:40:21. > :40:26.are making a lot of money. That is why shareholders haven't been
:40:26. > :40:30.kicking up a fuss. In terms of corporate strategy, will the News
:40:30. > :40:34.Corp of the future be run to maximise shareholder value to make
:40:34. > :40:39.more money, or will it be run to maximise its public influence. Some
:40:39. > :40:44.of the investments which Terry has pointed to, which haven't made
:40:44. > :40:50.financial sense, have had the effect of giving News Corp a bigger
:40:50. > :40:53.public platform. Most notably the Dow Jones purchase. That is
:40:53. > :40:59.connected to Rupert Murdoch and the kind of man he wants to be. He has
:40:59. > :41:02.shaped the country in his imanimal. You have pointed out the issues
:41:02. > :41:11.that there r even after the appearance in parliament, which was
:41:11. > :41:14.pretty ref latery in many ways, we which they faced a grilling, on
:41:14. > :41:18.that the shares went up. It is a vote of confidence? You don't know,
:41:19. > :41:23.the shares can't tell you, it may be somebody takes the view that
:41:23. > :41:28.will be the end of the dynasty, as a result of him behave anything way
:41:28. > :41:31.that is aged. I wouldn't read that much into it. There are a couple of
:41:31. > :41:34.things that will lead to a conclusion, one of the things
:41:34. > :41:40.touched upon already, what happens with regard to the allegations
:41:40. > :41:43.about hacking of 9/11 victims, or their families. It is such an
:41:43. > :41:50.emotive subject of the United States of America, it would be an
:41:50. > :41:54.absolute bombshell if there are revelations to suggest that is true.
:41:54. > :42:01.There was some sad news from the art world with the announcement
:42:01. > :42:06.that the artist Lucian Freud had died at the age of 88.
:42:06. > :42:12.We're here to talk about him. How do you think we will remember him,
:42:12. > :42:16.his ligcy. I think undoubtedly somebody who removed the whole
:42:16. > :42:22.traditional process, really, of inviting people to come into our
:42:22. > :42:28.studio, either sit down in a chair, lie on a sofa, or even actually
:42:28. > :42:32.recline on bare floorboards and submit yourself to the gaze of the
:42:32. > :42:37.painter, who is there in the room with you. It is very much a kind of
:42:37. > :42:41.intense relationship between the artist and the person he is
:42:41. > :42:46.painting. It is such a distinctive style, I think lots of people, who
:42:46. > :42:53.perhaps never even would have known the name, Lucian Freud would know
:42:53. > :42:58.one of the paintings when they see them. Was there anything derivative
:42:58. > :43:04.or somebody he would have made up on his own. When he was emerging,
:43:04. > :43:09.it was a time when modern art was at its most experimental. Most
:43:09. > :43:13.avant garde. A lot of people tended to dismiss him as somebody very
:43:13. > :43:19.traditional. Somebody who was just going over old ground, and not
:43:19. > :43:27.coming up with the goods. But gradually, by the 1970s, I think it
:43:27. > :43:37.is true to say, that Lucian Freud had established himself as somebody
:43:37. > :43:38.
:43:38. > :43:42.who was taking that skill and making it ref latery. He did paint
:43:42. > :43:46.to the end? That was one of the most extraordinary thing about him.
:43:46. > :43:56.Whenever I went to see him he was painting, not just one project, but
:43:56. > :43:56.
:43:56. > :44:00.maybe two or three. He had two big studios in London, he would go back
:44:00. > :44:06.and forth. He would shoot off and you would ask where he's going, and
:44:06. > :44:09.he would say he's painting a horse in stable down the road. And he
:44:09. > :44:14.would have a horse somewhere that would be a subject? The horse would
:44:14. > :44:19.be in stable, it is a were, waiting for him to come and be painted. He
:44:19. > :44:23.did do landscapes, sometimes, he painted his garden, he painted
:44:23. > :44:28.views of streets in London sometimes. But he was one of those
:44:28. > :44:33.guys, actually, who doesn't really like to travel very much. He was
:44:33. > :44:37.never happier than when he was at home, in London, with the brush in
:44:37. > :44:42.his hand, and with a lot of paint on the wall around him. You should
:44:42. > :44:48.have seen the paint, that was attached to the wall in the studio,
:44:48. > :44:55.it was extraordinary. Incredibly valuable works of art, but does the
:44:55. > :44:58.value go up overright as well? overnight as well? It is hard to
:44:58. > :45:01.imagine they could shoot up in value as they are so expensive.
:45:01. > :45:07.That tends to happen when artists die, sometimes.
:45:07. > :45:17.Thank you very much. Before we go let's have a quick look at the
:45:17. > :45:40.
:45:40. > :45:46.This story is based on a statement that came out from Colin Myler and
:45:46. > :45:51.Tom Crone. The Mail wants to know how many more poison victims, the
:45:51. > :45:57.debts at the hotel. We will leave you with the pictures
:45:57. > :46:04.of a journey that came to a final end today. After 30 years NASA's
:46:04. > :46:12.space shuttle has entered aviation history, no more Cape Canaveral
:46:12. > :46:22.countdowns and lift offs. The telescope is lifted up out of
:46:22. > :46:42.
:46:42. > :46:48.This is President Obama, whoam I talking to. You are talking to the
:46:48. > :46:53.crew of the space shuttle Atlantis. That was funny, I was just dialing
:46:53. > :47:03.out for pizza! A ship like no other, its place in
:47:03. > :47:07.
:47:07. > :47:10.history secured, the space shuttle As advertised for some time now,
:47:10. > :47:16.the weekend is looking dryer and brighter than it has been. There
:47:16. > :47:20.will be a few notable exceptions as we will see. Friday is shaping up
:47:20. > :47:23.OK. There will be a few showers around, not as widespread as we
:47:24. > :47:27.have seen. Across the Midland there may be one or two heavy showers by
:47:27. > :47:32.the afternoon. Some sunshine inbetween. One or two of those
:47:32. > :47:41.showers could effect affect the Test Match at Lords, we might get
:47:41. > :47:46.away with T showers across the West Country, but the tip of worn wall
:47:46. > :47:49.will be dry. Most of the showers further east. - Cornwall will be
:47:49. > :47:53.dry. Most of the showers further east. Sunshine and light winds at
:47:53. > :47:56.this time of year it feels pretty pleasant. One or two showers for
:47:56. > :48:00.Northern Ireland, one or two showers for Scotland as well.
:48:00. > :48:03.Nothing like as heavy or widespread as we have seen recently. 19
:48:03. > :48:06.degrees in Glasgow. Further ahead into Saturday, across northern
:48:07. > :48:12.areas, the improvement continues, a lot of dry and bright and warmer
:48:12. > :48:18.weather, along the east coast it will be cloudier and breezy, the
:48:18. > :48:22.same applies for England and Wales, the east coast is not too bad. This
:48:22. > :48:26.is the big picture on Saturday. Dry and bright for many, along the east