Written evidence submitted by News International
Thank you for your letter of 20 October. Like
the Committee, we are very keen to bring this long-standing matter
to a close and trust that the answers to the further questions
you have raised, which we provide below, will now do that.
"The grounds on which advice was given to
settle the claims of both Clive Goodman and Glen Mulcaire, and
the level of payments made (including the relation to salary and/or
contractual payments if necessary)."
I have asked Jon Chapman, News International's
Director of Legal Affairs, to deal with this question directly
and this is his response:
Clive Goodman's employment with News Group Newspapers
Limited was terminated in early February 2007. Subsequently, he
engaged a City law firm with a view to bringing employment tribunal
proceedings, the primary claim being that News Group Newspapers
Limited failed to follow the statutory dismissal and disciplinary
procedure in relation to termination of his employment. This procedure
was introduced in October 2004 (it ceased to apply earlier this
year) and contained minimum requirements to be met in relation
to any dismissal. Failure to meet such requirements made a dismissal
automatically unfair, entitling the affected employee to bring
an unfair dismissal claim, with a potential compensatory award
of (what was then) up to £60,600 (in addition to any contractual
notice pay entitlement).
News Group Newspapers Limited had not followed the
requirements of the statutory procedure, so the dismissal was
undoubtedly unfair under the statutory dismissal and disciplinary
procedure. In such circumstances, it is open to an employer to
argue before the tribunal that, even if the statutory procedure
had been followed to the letter, the outcome would have been the
same and that the employee was not, thereby, prejudiced. The options
were, thus, for News Group Newspapers Limited to defend the matter
in tribunal relying on this defence (which, it has to be said,
even in gross misconduct cases where correct procedure has not
been followed, is by no means guaranteed to succeed) or to try
to reach a settlement of the matter on reasonable terms. In all
contentious employment cases in the News International group,
a recommendation as to whether to defend or to try to settle is
made by me to relevant senior management, based primarily on cost
(to settle or legal and other costs to defend), the very significant
internal time and resource required to deal with a defence, likelihood
of success and publicity the matter may attract. I applied this
analysis to the Goodman claim and recommended to Les Hinton, our
then Executive Chairman, that we explore settlement on reasonable
terms. After some discussion with Mr Goodman's lawyers, a proposed
settlement was reached which was approved by Les Hinton and Daniel
Cloke, our Director of Human Resources. This was then embodied
in a compromise agreement. This is a type of settlement agreement
required to be used in employment cases and which complies with
the specific requirements of section 203 of the Employment Rights
Act 1996. In this case, we used a standard-form News International
compromise agreement and only minor changes were made to it. In
particular, there was nothing tailored specifically to Mr Goodman's
possible future activities.
Pursuant to the agreement, Mr Goodman was paid his
notice and an agreed settlement amount. It should be noted that,
as a matter of policy, News International companies tend always
to pay notice, even in cases of summary dismissal. As is normal
under the terms of compromise agreements, Mr Goodman's legal costs
relating to his employment claims and their settlement by compromise
agreement were paid by News Group Newspapers Limited.
I should conclude, in relation to Mr Goodman,
by stating that, in my view, there was nothing at all underhand
about this compromise agreement. It was achieved following negotiation
with a senior employment lawyer from a City firm and was implemented
through a standard-form News International precedent. It was entered
into in July 2007, some time after Mr Goodman's release from prison,
and, in my view, far too late for any silence effectively to be
"bought" (which I know has been the suggestion from
The News of the World treated Mr Mulcaire
as a contractor at all times and his contract was simply terminated
in January 2007. Subsequently, Mr Mulcaire instructed an employment
lawyer and, in April 2007, employment tribunal proceedings were
served on News Group Newspapers Limited. These alleged that Mr
Mulcaire had full employment rights based on such factors as mutuality
of obligation (ie he expected to be provided with work and the
News of the World expected him to be available for work).
As with Mr Goodman, he principally claimed unfair dismissal based
on News Group Newspapers Limited's failure to follow the statutory
dismissal and disciplinary procedure. On consideration, we took
the view that there was a significant risk a tribunal might find
he had employment rights. A similar analysis to that carried out
for Mr Goodman's claim was then followed and a similar internal
procedure was followed in relation to potential settlement. Again,
we used a standard-form News International compromise agreement
and only minor changes were made to it and there was nothing tailored
specifically to Mr Mulcaire's possible future activities.
Under the agreement, Mr Mulcaire was paid his notice
and an agreed settlement amount. As is normal under the terms
of compromise agreements, Mr Mulcaire's legal costs relating to
his employment claims and their settlement by compromise agreement
were paid by News Group Newspapers Limited.
All my comments (in the final paragraph above
relating to Mr Goodman) about the nature of Mr Goodman's settlement
apply equally to Mr Mulcaire (the compromise agreement with him
was entered into in June 2007).
The letter of 4 August stated that the board of
News International did not know about the settlement payment to
Gordon Taylor. Which directors of News Group Newspapers Ltd a)
knew about and b) authorised the settlement with and payments
to Gordon Taylor and the two further litigants?
Was the settlement with Taylor, or the other two
litigants, formally authorised by the board of News Group Newspapers
Ltd, or a sub-committee of the board, or directors acting with
the authority of the board, be it directly or under delegated
powers? The Committee would also be grateful for the relevant
minute of any such authorisation.
James Murdoch, Executive Chairman of News International
Limited and a director of News Group Newspapers Limited, authorised
the settlements and payments following discussions with Colin
Myler and Tom Crone. No other directors of News Group Newspapers
Limited knew about the settlements and payments at that time.
There was no requirement (either as a matter of company law or
under the constitution of News Group Newspapers Limited) for formal
authorisation of these matters by the board of News Group Newspapers
Limited. As Executive Chairman of News International Limited,
Mr Murdoch had authority to address this type of matter both for
News International Limited and for its subsidiaries. As there
were no board proceedings, there is no minute of the authorisation.
Colin's letter to us states that News International's
Director of Legal Affairs and Director of Human Resources are
responsible for all employment related claims at News International.
We would be grateful for the names of the personnel in those posts
at the time of the settlements made with Clive Goodman and Glenn
Mulcaire after their conviction, whether they are still in those
posts and/or employees of News International.
As stated above, Jon Chapman and Daniel Cloke,
both of whom are still employees of News International.
We would be grateful for a definitive list of
which directors or other staff of News Group Newspapers, News
International or News Corp a) knew about and b) authorised the
settlement with and payments to Clive Goodman and Glenn Mulcaire
following the termination of their respective contracts?
Were either of the settlements formally authorised
by the board of News Group Newspapers, News International or News
Corp or a sub-committee of any of their boards, or any of their
directors acting with the authority of the board, be it directly
or under delegated powers? If so the Committee would also be grateful
for the relevant minute of any such authorisation.
Les Hinton, then Executive Chairman of News
International Limited and a director of News Group Newspapers
Limited, authorised the settlement with, and payment to, Clive
Goodman, following discussions with Jon Chapman and Daniel Cloke.
He also authorised the settlement with, and payment to, Glen Mulcaire,
following discussions with Jon Chapman (Daniel Cloke was aware
this matter was settled but not of the terms of settlement). Stephen
Daintith, then Finance Director of News International Limited
and a director of News Group Newspapers Limited, was also aware
of these settlements. Tom Crone was aware the matters had been
settled but was not aware of the terms of settlement. No other
directors of News Group Newspapers Limited knew about the settlements
and payments at that time. There was no requirement (either as
a matter of company law or under the constitution of News Group
Newspapers Limited) for formal authorisation by the board of News
Group Newspapers Limited. As Executive Chairman of News International
Limited, Mr Hinton had authority to address this type of matter
both for News International Limited and for its subsidiaries.
As there were no board proceedings, there is no minute of the
£12,400 was paid to Alexander aka Glenn Mulcaire.
We would be grateful for the list of published stories which resulted
from these payments (Q 1697 to Stuart Kuttner on 21 July refers).
Attached is a list of published articles which
we are able to identify as resulting from the payments, and copies
of those articles.
Were the cash payments made by your organisation
to Glenn Mulcaire declared to the Inland Revenue?
The payments themselves would have been shown
in News Group Newspapers Limited's editorial accounts and thereby
formed part of the company's tax return.
Who else apart from Clive Goodman was aware of
or involved in authorising the cash payments being made to Glenn
The Managing Editor and the Editorial Accounts
personnel would have known that cash payments were being made
to a confidential source called "Alexander" but they
did not know the source's identify.
Did News Group Newspapers, News International
or News Corp pay or contribute to the payment of the legal fees
of either Goodman or Mulcaire (Q 2119 to Les Hinton on 15 September
Are there any written reports, either internal
or by the lawyers you appointed, of the investigations into the
activities of Goodman and Mulcaire, or other inquiry agents? If
so the Committee would be grateful for sight of these.
Any initial reporting on these matters was communicated
In May 2007, as the Committee knows, all emails
which were then on News International's IT systems between Clive
Goodman and Andy Coulson, Stuart Kuttner, Ian Edmondson, Neil
Wallis and Jules Stenson were identified and copied from the systems
and reviewed by Jon Chapman and Daniel Cloke, before being passed
to Lawrence Abramson, Managing Partner of Harbottle & Lewis,
an external law firm, for further review. A copy of a letter dated
29 May 2007 on this subject from Mr Abramson is below.
How many people called Neville did the News of
the World employ on 29 June 2005?
Colin's letter confirmed that he had reduced cash
payments for stories at the News of the World by 89% since January
2007. We would be grateful for this information (on the same basis)
in relation to all other UK newspapers operated by News International.
We believe we have made the position on this
clear to the PCC. In any event, the Committee's proceedings relate
to the News of the World and the internal administration
procedures of other newspaper titles which happen to be within
the same group of companies, but which otherwise have no particular
relationship with the News of the World, are not, in our
Once again, we trust that the answers given
in this letter can now bring matters to a close.
Chief Executive Officer
Letter from Lawrence Abramson, Harbottle
& Lewis LLP to Jon Chapman, News International Limited (dated
29 May 2007)
Re Clive Goodman
We have on your instructions reviewed the emails
to which you have provided access from the accounts of:
I can confirm that we did not find anything in those
emails which appeared to us to be reasonable evidence that Clive
Goodman's illegal actions were known about and supported by both
or either of Andy Coulson, the Editor, and Neil Wallis, the Deputy
Editor, and/or that Ian Edmondson, the News Editor, and others
were carrying out similar illegal procedures.
Please let me know if we can be of any further
120 Articles not printed. News of the World:
20 November 2005, pg 32; 18 December 2005, pg 26; 12 February
2006, pg 32; 19 February 2006, pg 7; 19 March 2006, pg 7; 26 March
2006, pg 15; 9 April 2006, pg 7; 16 April 2006, pgs 4 & 5;
21 May 2006, pg 43; 25 June 2006, pg 10; 19 February 2006, pg
32; and 7 May 2006, pg 33. Back
Answer provided in confidence and redacted for publication. Back
See Annex. Back