Culture, Media and Sport CommitteeWritten evidence submitted by Rebekah Brooks, Chief Executive Officer, News International Limited

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 Glenn 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:-

“Whilst I note Mr. Whittingdale’s comments on confidentiality, we do not necessarily agree entirely with his legal analysis. I will be as open in my explanation of the two settlement arrangements and their background as I believe I can be and would request, in return, that the Select Committee treats the information provided below in strict confidence.

Clive Goodman

“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 amount representing a possible compensatory award at tribunal (which was some way below the then £60,600 limit on such awards). It should be noted that, as a matter of policy, News International companies tend always to pay notice, even in cases of summary dismissal (which is not unusual). 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 some quarters). The sum paid to Mr. Goodman was not, in any event, of an amount consistent with a desire on either side to buy silence but was entirely consistent with a normal unfair dismissal settlement. It should be noted that Mr. Goodman, through his lawyer, had initially intimated a potential claim against News Group Newspapers Limited under the Public Interest Disclosure Act 1998 (the so-called whistle-blowing legislation) on the basis that his employment had been terminated for “whistle-blowing”. Had News Group Newspapers Limited really wished and intended to pay Mr. Goodman a substantial amount to “buy his silence” under the guise of a compromise agreement, we could readily have accepted this as a claim, as such a claim carries unlimited compensation at tribunal and this would then have allowed payment of a far larger amount to Mr.Goodman. In fact, we resisted this claim very strongly from the outset and it was ultimately dropped by Mr.Goodman and his lawyer.

Glenn Mulcaire

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 amount representing a possible compensatory award at tribunal (which, again, was some way below the then £60,600 limit on such awards). Part of the settlement payment was made, at Mr. Mulcaire’s request and for tax-planning reasons, direct to his consultancy company. 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). In particular, there was again, in his case, a Public Interest Disclosure Act 1998 claim which we resisted and which was ultimately dropped by him and his lawyer,”

Question 1.

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.

Question 2.

As stated above, Jon Chapman and Daniel Cloke, both of whom are still employees of News International.

Question 3.

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 authorisation.

Question 4.

Attached is a list of published articles which we are able to identify as resulting from the payments, and copies of those articles.

Question 5.

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.

Question 6.

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 identity.

Question 7.

News Group Newspapers Limited paid for Clive Goodman’s legal representation in the criminal proceedings involving him. Throughout those proceedings, he was an employee of News Group Newspapers Limited.

Question 8.

Any initial reporting on these matters was communicated orally.

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 attached.

Question 9.

One

Question 10.

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 view, relevant.

Once again, we trust that the answers given in this letter can now bring matters to a close.

4 November 2009

ATTACHMENT

Letter from Lawrence Abramson, Harbottle & Lewis to Jon Chapman, News International Limited

29 May 2007

Dear Jon

Re: Clive Goodman

We have on your instructions reviewed the emails to which you have provided access from the accounts of:-

Andy Coulson

Stuart Kuttner

Ian Edmonson

Clive Goodman

Neil Wallis

Jules Stenson

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 assistance.

Thanks and best wishes.

Yours sincerely,

Lawrence Abramson

29 May 2007