05/07/2013 Newsnight

Labour's biggest donor broken the law, tonight the police have been

asked to find out. One seat has become a real test of strength.

will have no part of the Labour Party, no part of the kind of

politics we believe in, and no kind of politics that I think Len

McCluskey should be believing in. chance for the leader to show his

metal, or the Tories to draw blood. Also tonight, gunfire and clashes

in the streets of Cairo, as the Muslim Brotherhood try to fight

back. We will have the latest from the city tonight.

Meet the man who sold his social networking site Bebo for $8950

million and bought it back for just $1. Do you feel at all guilty about

those people who suffered? I hadn't until now, not really.

Good evening. The Labour Party has passed information to the police

about whether its biggest donor, the union, Unite, has broken the

law. The allegation is the union signed up scores of members, often

without their knowledge in an attempt to win the selection in the

safe Labour seat of Falkirk. Ed Miliband says he has acted

decisively. The union boss, Len McCluskey, says he's giving into

Tory hysteria. And the Conservatives, when they could drag

themselves away from debating Europe, mostly kakled with delight.

-- cackled with delight. Today threatened to be a mid-summer

nightmare for Ed Miliband. While this lot lounged, the Labour leader

felt a diefrpb kind of heat. Chancellor Eppinged to chastise

Unite, the union, his biggest financial backers. With a hole

blown in his election strategy with the resignation of the man in

charge of it. For Ed Miliband, the last 48 hours haven't been a walk

in the park. In the end he used the sunlight to his own advantage. To

disinfect a political wound. Instead of defending these

practices, Len McCluskey needs to face up to what happened in Falkirk.

This can have no part of the Labour Party, and no part of the kind of

politics we believe in, and no part of the kind of politics that Len

McCluskey should be believing in. Instead of throwing allegations

around in the way he is, he should be facing up to his responsibility,

not to defend this kind of machine politics.

That was Ed Miliband's strongest challenge yet to this man, Len

McCluskey. Labour also handed to police the task of investigating

whether individuals aligned to Unite sign people up to Labour to

rig -- signed people up to Labour to rig the vote in Falkirk.

McCluskey didn't back down. clearly disappointed that the

developments back in London in relation to the Falkirk situation.

It seems to me that the Labour leadership has now been caught up

in anti-union Tory hysteria. Let's resolve the situation. We have

Shadow Cabinet members saying Unite overstepped the mark. What does

that mean? We asked too many of our members to join the Labour Party,

we should have told them that the Labour Party was full up, perhaps?

But McCluskey is used to disagreeing with Labour HQ. While

Ed Miliband won the Labour leadership with a little help from

union brothers, actually in his near three years as leader there

have been frequent disagreements between himself and McCluskey. Ed

Miliband has had rows with Unite, Labour's largest donor before. It

doesn't harm him and makes him look like an independent chap. But it

does come with some risks. The first is that ban Miliband thinks

he might win a parliamentary majority -- Ed Miliband thinks he

might win a parliamentary majority by winning a Labour majority.

Bringing back all sorts of people that left before. By having rows

with unions like Unite doesn't really help that. The second

problem is this, Unite gives Labour a lot of money.

One MP speaks for many of his Labour colleagues when he defends

Unite. There is also some within the Labour Party who take the view

that the trade unions are there to pay up and shut up. They are there

to be passive, they are not there to be active or involved in the

Labour Party, and as soon as some of the unions try to get what many

of them would see as above themselves by actually having an

involvement in selecting candidates they want to stamp on their heads.

Disciplining Unite, but keeping them on side, Miliband must get it

right, because politics at the moment is quite finely balanced.

Since January Ipsos mori's poll has Labour's lead narrowing, the Tories

are stable but UKIP hasn't had a bad six nooints -- months. There

are suggestions some of the gains come about doubts on Labour. This

week the Tories and Labour tried to turn weaknesses in advantages. For

Labour it was the issue of the union link, for Tories it was

Europe. While the sun shone David Cameron gathered all his MPs inside

this building to vote for a referendum in 2017. The Tories had

always promised that they wouldn't bang on about Europe, but with this

vote today, many Tory MPs told me that this party is happier than

they have been at any time since March 2012.

Forget about Henman Hill or Murray Mount at Wimbledon, for one day in

there it was Cameron's chamber. a time of profound change in Europe

this bill would give the British people the power to deone of the

greatest questions, whether we should be in or out of the EU. Must

say in deference to my honourable friends in the Liberal Democrat

party, that in this speech I'm not speaking for the whole coalition,

as will be quite obvious toe the House, I'm speaking on behalf of

the Conservative Party. Thank you Mr Speaker, I beg to move that the

bill be read a second time. Mr Speaker it is an honour for me to

put forward a bill that has at its heart the heart of our democracy.

Power should reside with the people, Mr Speaker. In proposing this bill

I speak for many in this House, but I speak for millions more outside

of this place. But for now Ed Miliband, hoping he

has shown the unions who is boss, and David Cameron, over Europe,

letting his party boss him around. Different tactics, but the same aim,

keeping their parties together through all kinds of weather.

The Shadow Business Secretary, Chuka Umunna, is with me now, we

will come to you in a moment, first the Energy Minister, Michael Fallon,

amongst your titles. It was called Tory hysteria today, and the Tories

seem excited about this. I wonder if any of this matters if it is an

internal Labour problem snfplgt it is far worse than that, this is

appallingly weak leadership by somebody who wants to be Prime

Minister. He has known about the allegations for weeks, he has done

nothing about it and finally referred them to the police only

when he heard a Conservative MP was referring them to the police. We

needs to act very quickly to make sure one union doesn't subvert the

democratic process. We have discovered why he wouldn't do that,

Unite are his paymaster, they got him elected, they gave him �8.5

million last year and he's too weak to stand up to them. People have

always rigged selections, it has been revealed Thatcher's own

election has been rigged. It has been happening for years? It is one

vote one person in the Conservative Party. If people have been signed

up to vote to choose new MPs, without their knowledge, that is

criminal activity. And the police should be investigating it.

think that is criminal? If they have been signing people to vote

without their knowledge to be members of the Labour Party to get

their vote, that would be criminal and a matter for the police. What

would the crime be? Being signed up without their knowledge, they have

been impersonated. That is something the police should

investigate and should have been investigating all along. He has had

the allegations in front of him for weeks, he has done nothing about it,

the contrast couldn't have been clearer, in Falkirk you have a

democratic process being subverted where you won't have true one-

person-one-vote, in the Commons you had David Cameron leading his party

giving everybody in the party one- person-one-pert. That was hardly --

Vote. You is in hock to his party, otherwise he wouldn't have this

crazy bill that won't be brought into the election? There is nothing

crazy about giving people the vote about staying in Europe or not.

This came after UKIP pushed him to it, and after the Queen's Speech

that didn't contain it. It is hardly strong leadership? It is a

Private Members Bill paving the way for a vote in 2017. What did the

Labour Party do? They didn't vote for it, they didn't vote against it,

they couldn't decide whether to be in favour of a referendum origins

it. That again is weak leadership. Let me ask your position with

regard to the unions, do you think they have a pernicious effect on

accomplish politics? If you have a procedure set out to organise

selection in 40 constituencies, clearly they are trying to subvert

the democratic process. That can't be right. Ed Miliband, if he's

showing any new leadership at all should suspend the selection

contest. You don't mind isolating union members that might vote

Conservative. 30% of which we hear? This is not an attack on union

members, this is a matter for a union leader who has decided to

subvert the democratic process, to put his people into 40

constituencies. 40 future Members of Parliament who will be passing

laws. That can't be right. Michael Fallon thank you very much. To

Chuka Umunna, I know you didn't want to enter into discussion with

Michael Fallon. Let's just examine some of those points. Is this

criminal activity, is what what you fear? We had an internal

investigation carried out in the party, it is totally untrue to say

no action has been taken on this for weeks. In mid-May, hours after

the leadership were informed of the allegations of irregularities in

that selection contest it was suspended He has only just gone to

the police in the last 24 hours, has there been possible criminal

activity? We have taken advice from the party solicitors and further to

that advice decided to talk to the police. When did you decide it was

a massive problem? Once the final report had been produced and

further evidence came to light this week. It was the further evidence

that triggered its referral to the police. On Tuesday when Matthew

Watson offered to resign it wasn't a -- Tom Watson offered to resign

and by Thursday Ed Miliband had sacked him? Tom is a distraction to

this. It is about the strength of leadership and the clarity of

thought, which Ed Miliband promised. Did he think wrong had been done

before Tuesday? First of all, you have sought to establish a

connection between whether or not this has been reported to the

police and Tom Watson, I'm telling you there isn't. The thing that has

triggered it being referred to the police is the fact there is further

evidence that has come to light. Tom Watson still a member of the

NEC tonight? I have no idea about that question, but I do know he has

stepped down his role as the general election election co-

ordinator. It is kind of critical to his position now whether he has

resigned or not? A sub-committee of the NEC will decide on a timetable.

Will you feel confident if Tom Watson was sitting on the NEC now?

I don't believe he will have role in the process now. Labour's

biggest donor may have acted criminally, that is what the police

investigation is ultimately about, the General Secretary, Len

McCluskey, says he has done nothing wrong. If this is proven criminal

activity, should Len McCluskey go? Let's see the extent of anybody.

This is not about Len McCluskey, two individuals were suspended this

week, who had been involved in that particular selection. I'm not aware

that Len McCluskey was directly involved. So you have complete

faith in Len McCluskey, The Dark Knight leader? I haven't seen all

the details of the report. I know its conclusions and I know it is

referred to the police. Do you have faith in him as the union leader,

your biggest donor? In relation to Len McCluskey's position in Unite,

that is an issue for Unite. I'm concerned about taking strong and

swift action for a situation that has arisen in one of our 650

constituency parties and we have seen swift action taken. Do you

think Labour would like to be Leeds dependant on union leaders. Are you

reviewing now your relationship with the unions? We don't just have

a relationship with the unions. have lots of relationships, what

about the one we are discussing tonight. Let me finish my sentence.

Can you answer that one? I'm trying to. There are lots of affiliates to

the Labour Party and lots of different people part of the party.

I'm brought of that. Let's not forget what we are talking about,

members of the trade union, if we were ill and an ambulance arrived,

a trade union member would come to help us and our children are taught

by trade union members. Vince Cable has worked with the senior

management of GM Vauxhall and management to keep British jobs in

this country. Are you reviewing that close relationship between the

unions and Labour, is that wrong? I'm not aware of any review that is

going on into Labour's relationship with the trade unions. It is not a

review that is needed? No, because we engage with a broad spectrum of

stakeholders in our party to come up with policy. We seek to govern

in the interests of the British people. I don't believe it is a

huge issue. For example, do we charge donors �100,000, whatever it

is to have kitchen supper with our leader, we don't do anything like

that. I'm afraid we have to end it there,

thank you very much. Coming up.

Do you think they massively overpaid? They did, yeah. But

hindsight is a wonderful thing. sold his company for almost a

billion dollars and then he bought it back.

Chaos on the streets of Cairo tonight, supporters of the ousted

President, Mohamed Morsi, have gathered outside the city. The

members of the Muslim Brotherhood have rejected the military coup,

and they call them the usurping authorities. In a day of rumour,

skirmishes and bloodshed, the Egyptian army has deployed tanks

and roadblocks, demonstrators have been gunned down by the army, five

police officers are said to have been shot. I spoke to Jeremy Bowman

who was injured slightly today in a demonstration? Big demonstrations

today from the Muslim Brotherhood, a very long and impassioned prayer

at the mosque which they have made one of the centres of their protest.

Lots and lot of men with tears pouring down their face as the

cleric leading them prayed to God for guidance and help through what

they say the prayer said was their ordeal. After that, when

demonstrations and marches began I was at a military compound when the

army opened fire on the crowd and killed at least one man. I saw one

dead body there. Reports of two others at that particular place as

well. And there is a real sense now that this coup is starting to get

pretty messy. How do you judge the situation tonight? Definitely messy.

Very messy and bloody as well. Fears that there could be more of

it. It is not just in Cairo, in many other cities, and it has been

particularly serious violence we are told from the second city,

Alexandria. The chances are that the Muslim Brotherhood will want to

keep their people on the streets to show their strength on the streets

for a few days more. They have said they would like to keep their

people out until President Morsi is reinstated. Other Islamist parties

are trying to form a bridge between the Brotherhood and the army,

making proposals, one of which is for a referendum on early elections.

It is early days on that though. This remains a very difficult

emergency for the Egyptian people. The kind of nightmare they really

didn't want. Joining me now is the former Brigadier who also teaches

international law at Cairo university. Thank you very much for

joining us. What do you make of the position of

the Muslim Brotherhood who simply refuse to accept the position of

the army? This actually to tell you the truth the shocking and

appalling news for the second wave of the 25th revolution is the shock

ing address levelled by the doctor, who (inaudible) for the Muslim

Brotherhood in Egypt their supporters and the party of the

deposed President Dr Morsi, I would like to tell you that there have

been many allegations and claims from the Muslim Brotherhood and the

supporters that the army stands here in Egypt not neutral, that it

is biased and prejudice, they claim the army is one-sided towards the

revolution against them. But militarily speaking I would like to

confirm that from credible military sources of information that the

rules of engagment have been directed to the army forces and are

special rules of engagment towards and targeting the Muslim

Brotherhood and the Salafist movement, to the largest

excontinuity on the other hand they apply the strict rules of engage to

the other parties. One important thing, confirming that an hour ago

General Wasfi is the chiefer or the commander of the second -- chief or

commander of the second wave in Egypt. The Egyptian military has

said tonight it will intervene if this continues. What does that

mean? What do you understand by intervention? Intervention means

that there is a very tense situation between the Muslim

movement, parties on the one hand and the secular, liberal, human

rights and also the revolutionists on the other. Intervention means

that the army is not going to have a one-sided stance, or stand. This

means the intervention. I would like to confirm what has been also

targeted and addressed by the removal statement of General El Sis,

the chief of the army. He said they do not seek power and they are not

going to assume control, they will withdrew and that is what has

happened, the next day, when yesterday the interim President of

Egypt, he assumed control, temporarily for an expeditious and

early presidential and parliamentary elections which are

going to settle down and calm down the whole situation, the tense

situation here in Egypt. Is there room in these new parliamentary

elections for a candidate from the Muslim Brotherhood? What if they

have put forward the President again? No ex cushion, because -- No

exclusion, and last year the proposed President Morsi, he and

his group applied all sorts of the exclusiveness in the Egyptian

society. He excluded the other parties from the constituent

assembly, the parliament, et cetera. That's why the Egyptian army forces

confirm it in other following statements to the statement by his

excellency the chief of the army. They confirmed that no exclusion

for Muslim movements here in Egypt. Thank you very much indeed. We

appreciate your time tonight. Anyone remember Bebo? It was the

social networking site that became big, biggish, shortly before

Facebook took the world by storm. It spent the last few years in the

doldrums, this week it was bought for a $1 million, by the couple who

originally created and sold it at the top of the market. What does it

pay about AOL, the company that paid $850 million for it but

couldn't make it work. Ever heard of a backronym, it is an acronym

applied after the name's invention, and in Bebo's case it is "blog

early blog often", people haven't been blogging often enough. Step in

this man, Michael Birch, with a million dollars to spare and ideas

to reinvent the site, he should find it no trouble. He and his wife

created Bebo in 1985, turning its popularity into a sale for AOL for

a whopping and you could argue unwise $850 million in 2008. AOL

failed to build on the success. By the end of the decade sites such as

Facebook and Twitter were ahead of the game. AOL sold Bebo for a

fraction of what it paid to a company that failed to turn around

its fortune, Michael Birch has his work cut out if he's to make it

cool again. Turning to the other web, he said "can we reinvent it?

Who knows, but we can only try". Do you feel like you have your baby

back? Yes, I did miss it when I sold it, now we are back in control

it feels exciting. Is it a very different beast it time around?

is very different from what we sold it, the traffic is 1,000th from

when we sold it. Why did it go badly wrong? To be fair it was

going badly wrong beforehand. That was why we sold it. It was in a

very competitive market, Facebook were really starting to beat you,

the writing was on the wall. Although the traffic wasn't going

down, we did everything we could to increase the traffic and we failed

for six months. You must have been laughing all the way to the bank.

This has been called the worse deal in dotcom history? I don't know if

that is a good or bad thing. We were relieved all the way to the

bank, I don't think we were laughing. Do you think they

massively overpaid? They did, yeah. But hindsight is a wonderful thing.

If you cast your mind back to that period we were the biggest Bible

social network at the time, so Facebook were too big to be bought,

and MySpace had already been bought, we were the next big opportunity,

could you take that and make it something really amazing, they

hoped they could. They lost interest soon after they bought the

business. They decided themselves it was a mistake and they properly

said so and that demotivated the staff at bee bow, at that point it

really didn't have a chance. you feel angry that they didn't

make that work? Or did you feel slightly guilty that you had sold

them a duff secondhand car? I would have loved to have seen it be

successful. If you said would you rather regret selling it because it

became a success or rather be happy you sold at the right time. I would

rather reing selling it and this thing that went on to greatness.

Given the choice I would choose that. I was a little bit sorry it

didn't work out. Do you feel apologetic in terms of the

investment made and the price that was made and presumably the knock-

on to the pensions that have suffered as a result of that?

are trying to make me feel guilty now. I hadn't done until now. No,

not really. What does Bebo become now? It is still a pretty crowded

market place? It is more crowded than ever. We have this luxury of

reinventing it to be whatever it makes sense to be. And what made

sense eight years ago isn't what makes sense today. The world has

moved on a lot. Now it is a mobile world, we are developing initially

probably only for iPhone and Andrews void and even the web, it

is questionable even with the web if we would do that. To be radical,

why would I not bother with Facebook or Twitter or the market

dominant ones? It is not about not bothering with emthis. It is not

trying to build a website where people cancel Twitter or Facebook

and use the new ones. Things co- exist, use Twitter and Facebook,

and I will continue to use them after we relaunch Bebo. They serve

a purpose and time and place. We are trying to take a blank sheet of

paper and think what can we build or design that we think will be

relevant today that will stand the test of time that isn't a fad, that

service some utility and purpose but is also just fun and engaging

for users to use. Do you think it has become harder for social media

sites to retain their consumers' trust? Have it become harder? I

think it has always been quite hard. When we were running Bebo I spent

most of my interviews talking about privacy concerns. As long as you

are aware of the sites that you use and how that information is shared

I feel comfortable using them. I do use them actively. I think the

difficulty is sometimes the smoke and mirrors of not really

understanding the cons sequences of taking a certain action -- cons

sequences of taking certain action, we speak to our children about

social media and how they should go using them. It is more education

than a threat from the beast of the internet. Will you seek to make

Bebo very profitable? It is the last thing on my mind right now. We

are not in any hurry to make it profitable. Obviously we can't run

a business forever as a charity. Because it is not a charity. So it

does have to eventually make a profit. Our aim is to build

something that people love. If we can succeed in that we know we will

have a successful business. Let me just take you through the papers

Apology for the loss of subtitles for 62 seconds

That's all we have time for tonight, Jeremy is back on Monday. Tomorrow

morning the British and Irish Lions team try to win the test against

Australia. Here at Newsnight we have decided to copy the Wells ---

# Pilgrims through this barren land # I am weak

# But though art mighty # Hold me with Thai powerful hand

# Bread of heaven # Feed me now and ever more

Feed me now It is said to be a lovely weekend

for the vast majority. Sunny skies from the whole of England and Wales.

But for Northern Ireland and western parts of Scotland wet

weather. Some cloud for Northern Ireland too through the afternoon.

But with the brightness 23 degrees in Belfast. The south and east of

Scotland not too bad, it is the west of Scotland that will be

plaged by cloud and outbreak of rain. Further south through England

and Wales a lot of sunshine, strong sun shine, warm sunshine, mid-20s,

stippically. In some places we could go as high as 27 degrees,

there is just the risk of some sea mist lapping on to the beaches

along the south coast. If you are heading to the coast be aware. It

could be disappointing from time to time. Patchy cloud for the south

west of England and at south-west Wales. It won't spoil things, it

will be a reasonable thing here. Inland temperatures will do pretty

well. That is the story through Saturday, that weather front will

weaken to tomorrow extent as we go through into the night. Further awe

field through this weekend a lot of sunshine across Europe. Heading to

Mediterranean, again largely sunny skies, there is just the risk of