11/05/2012 Newsnight

Tonight, Rupert Murdoch's former top executive in Britain reveals

just how much she influenced Government ministers.

For one three-minute conversation at the beginning of dinner, I got

the opportunity to give our view. I don't see why that's inappropriate.

Rebekah Brooks, chief executive of lobbied for the BSkyB bid.

The Culture Secretary sought guided advice on his position.

We will analyse the claims and the damage to the Government, with two

political commentators and a prominent media lawyer.

The drain in Spain, more protests, the latest twists in the eurozone

bail-out, and another black hole in banking finances. Paul Mason is

here. The Spanish Government is lending

the banks 30 billion euros, only one slight problem, that is the

money the banks have lent to the Government. The Rochdale grooming

convictions raise new questions about the crisis in care homes all

across Britain. Good evening, one former News

Corporation executive calls it, Leveson Syndrome, the inability of

otherwise apparently healthy people to remember the details of rather

important events, when questioned at the Leveson Inquiry. Today the

star witness was Rebekah Brooks, who certainly did remember close

contact with the people who run this country. Including the

affectionate tone of texts from David Cameron, and his

commiserations when she lost her job. The greatest heat was on the

Culture Secretary, Jeremy Hunt, whose career is already in the

balance. A newly revealed e-mail suggests he sought private advice

from News Corporation over phone hacking.

She's the ultimate newspaper red- top, for a decade the distinctive

Rebekah Brooks has been at the heart of Britain's tabloid press,

as an editor and executive with daily access to senior politicians.

But, as the inquiry reminded her, these are difficult days for this

once powerful woman. You are under police investigation in the contegs

of Operation Weet weet, -- on text of Operation Weeting, Operation

Elveden, and for also perverting the course of justice, is that

true? Yes. Even after Mr Brooks was arrested and she lost her job in

July 2011, the politicians still made contact, to send their

condolences. Number Ten, Number 11, Home Office, Foreign Office. One of

Mr Cameron's messages, sent through an intermediary, went along the

lines of "keep your head up". you also receive a message from him

via an intermediary along these loings, "sorry I could not be as

loyal to you as I could be, but Mr Miliband had my on the run", or

words to that effect. Similar, but indirectly. Sadly, Rebekah Brooks

told the inquiry, that none of the numerous text conversations with

David Cameron had survived. They definitely weren't more than a

couple of weeks, definitely not the dozen a day of certain reports. One

thing we could say, is they were pretty chumy in tone. Her Majesty's

Prime Minister and first Lord of the Treasury, apparently signs his

messages, LOL DC. Occasionally he would sign them off, LOL "lots of

love", until I told him it meant "laugh out loud", then he didn't

sign them like that at all. In the main, DC, I would have thought.

There was, we heard, substance to this relationship, David Cameron

called Rebekah Brooks, she said, to discuss phone hacking. He wanted an

update. They also discussed the BSkyB bid, though not at any length.

Mrs Brooks said she had a longer discussion during a dinner with the

Chancellor of the Exchequer, in late 2010. Although she says she

can't remember who brought the subject up. You think it is an

appropriate conversation with Mr Osbourne or not? It was an entirely

appropriate conversation. I was reflecting the opposite view to the

view that he had heard by that stage from pretty much every member

of the anti-Sky bid alliance on those occasions. For one three-

minute conversation at the beginning of dinner, I got the

opportunity to give our view. I don't see why that is inappropriate.

If you remember the length of the conversation, you might be able to

assist us in who initiated it, Mrs Brooks, wouldn't you agree? I was

accepting for the sake of argument that I brought it up, I can't

remember if it is absolutely true. The most interesting revelation

related to Frederic Michel, director of public affairs for News

Corporation. Today we saw an e-mail he sent to Rebekah Brooks,

apparently detailing a conversation with Jeremy Hunt, the Culture

Secretary's special adviser. Jeremy Hunt was the minister deciding on

the BSkyB bid, code named Rubicon, by News Corporation. The company

was desperate to know whether recent revelations on phone hacking

would put the bid in jeopardy. Mr Hunt was due to make a statement to

parliament in a few days time what they needed to know -- what, they

needed to know, was he going to say. According to the e-mail recovered

from Mrs Brooks's smart phone, was that hunt would be referring to the

Rubican and repeating the same narrative as given in parliament.

This is based on his belief that the police is pursuing things

thoroughly, and phone hacking has nothing to do with the media

plurality issues. It is extremely helpful. He goes on that Jeremy

Hunt wants to prevent a public inquiry. The e-mail goes even

further. "JH is now starting to look into phone hacking practices

more authorisely and has asked me (Mr Michel) to advise him privately

in the coming weeks and guide his and Number Ten's positioning." Do

you know what that was about? think it speaks for itself.

idea that a Government minister, even Number Ten, was seeking

direction on what to do about phone hacking, from the company at the

heart of the scandal. Well, if true, that would be explosive. Tonight

Jeremy Hunt has issued a statement saying the e-mail from Frederic

Michel is completely inaccurate. And that he intends to set the

record straight when he gives evidence to Leveson in the next

couple of weeks. In her evidence today, Rebekah Brooks also detailed

a simply cosy relationship with previous prime ministers,

particularly Tony Blair. But, the current Prime Minister knows that

he's the man in power, and he is the one who has to defend his

conduct. The writer and columnist Iain

Martin, David Richards of the Independent, and the lawyer --

Steve Richards, and the lawyer Charlotte Harris, who has

represented phone hacking victims, and are here to review Rebekah

Brooks's performance. You saw a lot of witnesses, what did you make of

today? I thought she started off very smooth, and confident, and

prepared. But then, of course, she has had a lot of time to think

about this. This is going on for such a long time. She also was

clearly so involved in the paper that you would have thought that

she would be able to assist the inquiry. Her appearance was

interesting. Because she appeared to be dressed quite innocently, but

with the collar, the contrasting collar, it did look a little bit

Salem. The Massachusetts witch trials? A little bit. She's very

dramatic and an iconic figure. There was that drama today with the

inquiry. She turned up with her massive red hair, wearing a black

outfit, with white collar and white cuffs, and she faced her audience,

and she did that, I think, very unapoll gettically. Certainly she's

an -- apologeticly, certainly she's brought that up. She talked about

trivial stuff which people found ironic. On the e-mail question with

Jeremy Hunt, if he did say what he is supposed to have said, he's

toast isn't he? If, it is a big if, that is the big news story that

comes out of the inquiry. It was not a great day of revelations. I

was taken by the puritan chic. But what was fascinating about it was

seeing this person who has been one of the most powerful people in the

country for a decade, or more, actually put on the spot. You

realise that we haven't actually seen very much of her until now. We

haven't heard her say very much. You have to remember that is

probably also the first time she has been put on the spot in that

way, in the course of the last decade. She has been the boss,

people have been reporting to her, she asks them questions, not the

other way round. I thought she was slightly thrown earlier on, she was

thrown by the novelty of it. But grew in kf can dense as it went on.

-- In confidence as it went on. Frederic Michel's e-mail where he's

talking about Jeremy Hunt, could be talking, it is accepted, that

sometimes he meant people in his office, special advisers. That

might go nowhere. It could be a blow hard saying he had great

contacts? It might be, I felt that part of the day, when they focused

on this, they were getting somewhere fresh and specific. The

early stuff, it was fascinating to see her, I thought she was witty,

elegant, authoritative, I was told she's a very nervous interviewee,

and hardly appeared in a studio when an editor. It revealed much

about her personality, but it wasn't about her and it was about

the politicians. Most specifically, it became interesting when we heard

more about the degree of co- operation, between, at the very

least, Jeremy Hunt's office. question was in relation to the

BSkyB bid, which is the real political issue here? This is the

most explosive area of this, in terms of relations with politicians,

we have known about it. She said it today, actually, about 1,000 bookss

will be written about new Labour and the relationship with Rupert

Murdoch. And we know quite a lot about David Cameron, it doesn't do

him any good at all to be up there so vividly. LOL laugh out loud.

This old era is ending and he's trapped in it. The specifics on the

BSkyB bid, is where it gets most dangerous for him and Jeremy Hunt.

As Steve suggested, we knew some of this before about the access, I'm

not sure everybody knows the details and the questions ofing,

and all those things that did come -- of texting, and all those things

in themselves. There is a small number of people who get together

often, and take decisions on the big issues that affect the country?

That very much came out today. I felt that some of the

institutionalised attitudes of people who have worked in the press

at that level for a long time came across. That it seemed Brooks

Rebekah Brooks was a little bit blase about the kind of access that

she had, and the privilege that access gives you. Most people do

not have an opportunity to hob nobody with people who are -- hob

nob with people who are on politicalS, and people campaign

heavily for a few moments with the Prime Minister. It was a lack of

awareness from her point of view, that having that amount of meetings

is hugely powerful and influential, and you can't abuse it. The other

big thing, which came out, a lot of Mr Jay's questioning of her, this

idea of certain threats in aspect of the media. If she as a -- if as

a senior politician don't do what we want, you will have bad

publicity, she batted that away? That is the damaging thing,

ultimately, for the political class. The story of politics over the last

20 years, it has essentially become a game in which influence and power

are traded. That is a thread that runs through the banking crisis,

through MPs' expenses, a sense that the public isn't really invited to

the party. That there is an increasingly globalised elite which

conducts business and trades in its own interests. That, I think, is

ultimately where the harm lies for David Cameron, because he is now,

will now be painted by his opponents as being part of that. As

though coming from another age. Isn't there harm for the press too.

If you listen to some of it, the word wasn't used in this way, but

there was a suggestion that a kind of blackmail goes on here. We in

the press have a great deal of power, and if you don't support

this campaign or that campaign, you will get it in the neck, we will

reveal things about your private life, for example? It came up in

evidence, the ridiculous business of the Sun thinking that it decided

who won elections. That was always a nonsense. Which Rupert Murdoch

himself thought it was a bad idea. They got totally carried away with

that idea. There was a swagger, and it was most unseemly. I also think

that the most important thing that came out of today, was that we now

see that this inquiry, I think, is heading in a very, very troubling

direction. I think you could tell from the tone of the questioning,

and in certain respects, particularly on the question of of

Sharon Shoesmith and Ed Balls, a the question about had she phoned

the minister on the public campaign she was running. You could tell, it

seems to me, that there is a mind set at the heart of the inquiry,

which is, if we're not very careful, is going to lead to the protection

of officialdom. Certainly up until now, everything will change now.

You could sort of understand why politicians wanted to see her, and

get the endorsement of the Sun. You can sort of understand why Gordon

Brown was livid when he heard that wasn't going to happen on the night

of his party conference speech. You can sort of understand why David

Cameron and George Osbourne, who weren't getting a particularly good

press, wanted a good press. These people mediate politics to their

readers. She kept on saying that. So they are powerful. There is a

distinction between that and getting too close to them. And

certainly, when it comes to specific Government policies, then

you are on really dangerous ground. Briefly, the really interesting

thing was they weren't allowed to ask about phone hacking, because

there is a possibility of further legal prosecutions and so on?

is one of the big concerns. No questions on phone hacking, a

criminal prosecution that could happen, and I truly think they are

really closing up now. It is not going to be long. Running at the

same time as a public inquiry, where the same people who were the

key witnesses in a public inquiry, are also going to be facing very

serious criminal charges. Can they have a fair trial? And how far do

we take it in terms of this. That is why today was about the politics.

And the police investigation is about the media.

Could we be on course for the biggest eurobail-out yet, as

politicians in Greece still try to form a Government and stay within

the euro, a much bigger potentially problem has appeared in Spain. The

extent of banking losses still isn't clear there. Paul Mason is

here. Today what has essentially happened

is the Spanish Government has said the bank bail-out we did in

February, it was based on the wrong figures and we have to do 30

billion more. It came on the day that the European Commission chose

to issue a very bleak prognosis for growth across Europe. Basically

there isn't going to be any for a year. That is across the 27-nation

European Union. For the eurozone there will be what they call a mild

recession, 0.3% shrinkage. The story is of demand trying to revive

in the face of banks paying down their debts and refusing to lend to

businesses. Where have we heard that before, and of Government

spending cuts. Repressing the ability to recover. Spain is the

test case. Its economy is shrinking badly. It has high unemployment, we

are about to see another round of protests there. The bank bail-out,

30 billion is a lot of money. But that is money that the Government

has already borrowed from the Spanish banks, to bail them out. If

you think that is confusing, watch this.

Spain's problem is brutally simple, its housing bubble was so vast that

it has left a wasteland of unsold, unsellable properties, and Spanish

banks sitting on a mountain of bad debt. Today is the latest stage in

the process of making the banks come clean. Bankia, nationalised

yesterday, had lent 38 billion euros to property buyers, of that

32 billion of the debt was problematic. For the whole system

there is 184 billion worth of bad loan,, and sealed up properties,

enough to sink the is -- loans, and sealed up property, enough to sink

the system. Today the Spanish Government acted, it gave the banks

a compulsory loan of 30 billion, at punishing interest rates, to shore

up the economy. It may not be enough. What the Spanish economy

needs is an injection of equity from the outside, perhaps from the

EFSF -- he was he was, or -- whatever the banks might benefit

from, in terms of the injection of equity, might actually lead to a

deterioration of the fiscal situation. We are stuck in this

trap where the only entities buying Spanish Government bonds have been

spannic banks, and the Spanish Government is then the entity who

is using the opportunity to inject capital into Spanish banks. It is

smoke and mirrors. Spain is turning into the economic danger zone for

Europe. It has been plaged by protests. It is predicted to shrink

by 1.4% this year. Unemployment stands at 25%, and for the young,

more than 50%. By the European Union is demanding

spending cuts and tax rises. Few doubt where that will lead. Spain's

stuck in this trap where confidence is very low, there is excessive

levels of debt. Consumers, banks and corporations and the Government

are all trying to pay off their debt. It cannot devalue because it

is in the eurozone. Tax revenues are falling. Tomorrow looks worse

than today, the day after tomorrow looks worse than tomorrow. It was

Spanish youth who, a year ago today, invented the idea of occupying

public space in mass protest. If today's move does not finally put

the lid on the Spanish banking crisis, the country is in danger of

a spiral of austerity, protest and recession. And we have already seen

that played out in Greece. Speaking of Greece, where does this

leave Greece, without a Government, no doubt? Without a Government, but

what has happened tonight, the Socialist Party, the former

Government of Greece, announced it is unable to form a Government with

the coalition talks. There is likely to be another election

called. What many in the mainstream in Greece hoped, was having voted

for the extremes on Sunday, the Greek people would move back to the

centre under the pressure of all the rhetoric coming out of Brussels

and Berlin. This is not happening. The latest polls reveal that Syriza,

the far left party, led by Danny Cipriani, we can see him at the

celebration -- Alexis Tsipras, we can see him at the celebration

rally when they got 17% in the election, they are polling 27% for

this one left party alone. On my calculation, that would put them in

pole position in the election and give them a third of seats in

parliament. The bad news for the European centre is there are

probably another 50 seats for the rest of the left. We could be

within a month of seeing a real far left Government in Greece. What

that would do to the euro's sent certainty, who knows. Greece won't

be in the euro then? Most of the left parties want to stay in. But

what they want will not allow them to stay in under current

circumstances. The only thing one could see saving the Greek party

system as it is, is if the European Union were able to offer a series

of concessions that the centreist politicians could take back to

their own voters. We came with a piece of paper, we got something.

All the rhetoric, the Germans have voters too, coming out of Berlin is

no way, this is not going to happen. This week's convictions of the men

behind the Rochdale sex grooming network, have raised serious

concerns about the protection of children in care, or perhaps the

lack of protection. The Rochdale men preyed on teenagers, plying

them with drink and drugs, and found their victims very often from

the most vulnerable. People who perhaps could have expected the

state to do for more them. The nine men convicted in Rochdale

for abusing girls as young as 13, targeted those who were typically

in care, or on at-risk registers. One 15-year-old was the sole

resident of a �250,000, round -the- clock air -- care home, who went

missing 19 times overnight in one month. There were recorded 631

recorded incidents of children being sold for sex in the last five

years. The children's minister told MPs this week it was impossible to

know the extent and numbers of children missing from care, because

of erratic data collection, which he said caused concern and

confusion. Since the 2008 trial, following the

death of Baby Peter, care applications have risen by 57%.

But with increasing pressure on the services, and Rochdale only the

latest case in a failing system, how can we deliver proper

protection. Here to discuss what's going wrong

are the poet Lemn Sissay, who spent 18 years in the care system as a

child, and Sue Berelowittz, who is Deputy Children's Commissioner for

England, and has been asked this week by the he had case secretary

to make recommendations for tackling the targeted sexual

exploitation of children in care. I take it you don't have much

surprise, that the people targeted by this kind of gang, were people

in care or at risk, because they are vulnerable? It doesn't surprise

me at all. It seems that every few years a case comes up with a

vulnerable child, who has been in care, has suffered from some kind

of abuse. Look, the Government is the parent of the child. The legal

parent of the child in care. And therefore, we should give that

child exemplary service, as a parent would to its child.

suspect that everybody listened -- listening to this, from whatever

political background, would agree with this. It always puzles me why

people in care aren't cared for in a better way? That is a very good

question. The quality of care in places are good and in other places

it is not good enough. I meet children moved from one placement

to another. I met a child the other day, who actually stopped counting

at 25, he was recount to go me all the placements he had, between the

ages of three and 17. Imagine what it is like to move 25 times in that

period of your life. It is just not good enough. What about the case of

the girl we heard this week in the �250,000 home and she managed to

get out 19 times in three months. That is twice a week. How can that

happen? I can understand in so far as care homes, like anybody's home,

don't have locked doors. Children aren't locked into them, unless

they are in a secure unit. Children can come and go. As it was said,

the people who are running the homes, and the local authorities,

are the parents of the child. It is their responsibility, just like any

good parent, to make sure that their children are safe, that they

know where their children are going, that they get them back safely at

night. The problem is often that a child runs away from home, because

they want somebody to find them that cares for them. This is why

children run away from children's homes, what happens is the police

are sent to them. Because they fall into an institutional pattern then.

A child runs away from home to see somebody, they want to be found, I

think psychalogically, they want somebody who loves them to find

them. Or who cares for them. Underlying this is the film yart of

some of this. Familiar familiarity of this. You have been tasked with

this review, why does it take so long to get handle on this? What

I'm actually looking at is the sexual exploitation of children.

Nobody knows exactly what the scale and extent of it is. We are using

the Children's Commissioner's powers to get hold of the

information and -- the information and find out what is happening. My

initial plan was a report in September of this year, I launched

in October, giving facts and figures in terms of who is doing

what to whom in what circumstances. I'm tired of reviews, I'm tired of

the idea that change is needed. We are all parents, the Government,

the social services are parents. We know how to look after our own

children, how can we not transfer what we know about looking after

our own children, to the children who we are legally the parents of.

Why do we need another review. Is that more accountable to the

institution, rather than it is to the actual children we are supposed

to be caring for. Who is this review actually for? I'm not doing

a review. What I'm doing is an inquiry. An inquiry? Nobody knows

the extent of the sexual exploitation of children. I'm doing

it. In 2012? We can build an Olympic site, but we can't work out

how many of our own children n our own care, for our own Government,

sorry, I apologise. Just let her have a go? I'm looking not only at

children in the care system, but all children being sexually

exploited. The Secretary of State is particularly, at the moment,

worried about children in care, being sexually exploited. We are

worried about all children being sexually exploited. Just this

Government, or any Government, Michael Gove or anybody else, to

actually act on what you finally produce? They are going to need to

act. And the first task is to get people to wake up to the scale of

what's going on. Our findings telling us, that actually this is

very widespread. Nobody should be confident that there is any part of

our country in which children are not being sexually exploited.

We have run out of time. We're standing by with the review show in

a minute. What have you got? More lively discussion from us as

well as you guys, tonight we are covering a quartet of literary

heavyweights on a book special. New novels from Hilary Mantel, John

Irving and Mark Haddon, as well as the much anticipated follow-up to

The Suspicions of Mr Whicher, join me with Kate Mosse, John Mullen and