12 August 2002
In Autumn 2001, several newspapers anonymously received a document detailing Belgian company Interbrew's interest in acquiring competitor South African Breweries (SAB). It had been prepared for Interbrew executives by its investment bankers and suggested a bid was imminent. The broadsheets made check calls and the story was published. Interbrew suggested the speed with which it might act had been exaggerated and noticed that the document had been doctored and the unknown source, it believed, had intended to manipulate the market in the companies' shares. So it went to the UK courts to seek the return of the leaked documents for fingerprint checks.
The newspapers cited a duty to preserve the confidentiality of their sources and refused to hand back the papers. The High Court and the Appeal Court ruled in Interbrew's favour and the House of Lords declined to hear the case, having already dealt this year with the issue of journalists' sources.
Large companies spend a lot on positive PR, so it was surprising that Interbrew threatened jail, fines and even to sequestrate the assets of The Guardian. Belatedly, Interbrew offered to drop its hand if the papers were passed to the Financial Services Authority, which also wants them as it, too, suspects that they may have been leaked in an attempt to manipulate the market (Interbrew's shares fell on the reports while SAB's rose).
The judges followed the Contempt of Court Act 1981 and existing case law and found that the public interest in protecting the source of the leak was outweighed by the public interest in letting Interbrew seek justice against the source. It should be remembered that Interbrew was a victim, missing out on an opportunity to take over a rival and being unfairly criticised in the media when the story broke. But the cases applied by the courts come from an era when capitalism smelt sweeter than post-WorldCom and Enron. The rotten hearts of these US companies was discovered only thanks to internal whistleblowers.
The Interbrew information was not major league or concerned with criminality, but the principle of a free flow of information is one journalists feel they have to defend. A journalist who betrays a source would never work again. But an unforeseen result of the perhaps blinkered approach of the courts is that journalistic standards may be compromised. The reason Interbrew focused on The Guardian was that it belatedly told Interbrew's solicitors that it did not have the papers - they were in the hands of the journalist to whom they were originally sent. In such cases, claimants have to start again; and many believe it is better for individual journalists to be jailed than for newspapers to be run by accountants.
The lesson to be learnt by newspapers is that they should destroy documents prior to any legal complaint, perhaps making a copy but ensuring that fingerprints or any other evidence is masked. Risky stories should go to freelancers, who could be allowed to take judicial heat, perhaps in return for an unrelated commission. Why stop there? Photographs of riots, which may be requested by the police under PACE 1984, could be destroyed or sent abroad. Journalists' notebooks may now not be kept, which would damage the emerging defence of qualified privilege in libel where there is a legitimate story containing unintended defamatory errors. Journalists could even stop checking contentious stories with companies and 'publish and be damned' rather than face a gagging order followed by a demand for documentation. None of this is good news for consumers' news.
The courts should perhaps also remember that if the claimant has really been damaged it can sue the newspaper for damages for breach of copyright, confidentiality, malicious falsehood or old-fashioned libel. Even Interbrew is happy to have a good press: its chief executive gave an interview to the Financial Times just before the leak, in which he talked of the milestones of the previous year and outlined the company's acquisition strategy. Apart from the fearful costs consequences, rows over handing over sources can be as silly as two bald men fighting over a comb.