Jeremy Hunt told me to quit, says former special adviser Adam Smith
Culture Secretary Jeremy Hunt told his special adviser to quit after highly damaging emails revealing the close relationship between his department and the Murdoch empire were released, the former aide said.
Adam Smith said the Secretary of State had reassured him that he had only been doing his job and not to worry on the evening the documents were published.
But the following day Mr Hunt spent the morning in meetings before calling in Mr Smith and telling him everyone "thinks you need to go", he said.
After the emails were published, Mr Smith told the Culture Secretary that if the pressure became so great that it would help if he resigned he would "not hesitate to do so".
He said he could not remember verbatim what Mr Hunt had said in response. "It was something along the line 'It won't come to that'," he added.
Mr Smith told his boss the emails were one-sided and "in many cases exaggerated" and Mr Hunt accepted the explanation.
The pair then went for a drink with other special advisers in the Department for Culture, Media and Sport and he was told not to worry.
Mr Smith said the following day he was "aware Mr Hunt was having meetings and I was not present".
Asked what Mr Hunt said to him, he replied: "To the best of my recollection, 'Everyone here thinks you need to go' was what he said.
Mr Smith said the pair then discussed how much they had enjoyed working together.
Mr Smith was warned that James Murdoch's evidence to the Leveson Inquiry might be relevant to him, and so watched the 24 April session on TV.
He said in a written statement: "I was surprised to hear evidence about emails which it was said I had sent to News Corp, as I did not recognise much of what was said."
He added: "My initial reaction was that the evidence that had been presented was not the whole picture, that there was a great deal of exaggeration in Mr Michel's emails and that there were in fact relatively few emails from me to Mr Michel."
Mr Smith said following the publication of the documents no-one approached him to go through the contents. "At no time was I invited to consider the evidence which had been published with Mr Hunt or with the Permanent Secretary or anybody else. Neither did Mr Hunt nor anybody else criticise my conduct."
After the meeting with Mr Hunt at which he was told he had to resign, Mr Smith was handed a resignation statement, which "came from the Cabinet Secretary's office".
It began: "While I believed it was part of my role to keep News Corp informed ..." but Mr Smith objected to the words "I believed" and refused to include them.
Mr Smith repeatedly conceded that he had been "too flippant" in the text messages and email exchanges with News Corp lobbyist Fred Michel.
He said: "In hindsight, the tone of the language that I used was not appropriate.
"But I think, in terms of the content, what I said to Mr Michel had either been expressed to Mr Murdoch through meetings and letters, or was known to Mr Michel from the correspondence they were having with Ofcom and the OFT."
The inquiry heard that Mr Michel was told the media giant's BSkyB takeover bid would go ahead once plans to spin off Sky News were accepted.
But Mr Smith said he did not remember telling Mr Michel it would be "game over" for opponents of the buyout after the proposal to make the news channel a separately listed company was announced.
At the time other media groups criticised News Corp's intention to buy the 61% share of BSkyB it did not already own, alleging it would concentrate too much power in Rupert Murdoch's hands.
Mr Michel, News Corp's former director of public affairs in Europe, sent an email to fellow executives on January 23 last year based on a conversation with Mr Smith.
He wrote: "His (Mr Hunt's) view is that once he announces publicly he has a strong UIL (undertaking in lieu, namely the Sky News spin-off plans), it's almost game over for the opposition."
Mr Smith, who quit as Mr Hunt's special adviser last month after admitting he got too close to Mr Michel, said much of the lobbyist's email was factually accurate but disputed its tone.
He told the inquiry: "I think that that's a sort of colourful explanation of the process.
"If you have an undertaking in lieu that Ofcom (the broadcasting regulator) and the OFT (Office of Fair Trading) say satisfied the plurality concerns that Ofcom had identified, then the whole point of that is that then there are no plurality concerns. So the deal would go ahead.
"I don't remember saying 'game over for the opposition', but I can imagine we had a conversation along those lines about the process and talking around what happens."
Mr Michel's email said Mr Hunt was "keen to get to the same outcome" as News Corp.
But Mr Smith disputed this: "I wouldn't have said that... They didn't have the same outcome. Mr Hunt's aim was to follow the process, whereas I'm sure Mr Murdoch's aim was to acquire the remaining shares."
Robert Jay QC, counsel to the Leveson Inquiry, suggested: "The wider objective was the same outcome, namely the securing of the bid for News Corp, because he thought in policy terms that was desirable."
But Mr Smith insisted: "That wasn't his objective. Now his objective is to carry out his legal and statutory duties."
Yesterday, the inquiry was shown a memo Mr Hunt sent Prime Minister David Cameron, arguing the case for News Corp to take over BSkyB, just weeks before he was given quasi-judicial oversight of the bid.
The note, dated November 19 2010, warned that Business Secretary Vince Cable's decision to refer the bid to regulator Ofcom could leave the Government "on the wrong side of media policy".
Jonathan Stephens, permanent secretary at the DCMS, said Mr Smith was considered before the emails emerged to be someone who "understood and would abide by his proper role".
He told the inquiry the better the special adviser, the more reliable a guide they were to a Secretary of State's view.
"I think he was well tuned in to the Secretary of State's thinking," he said.
He went on: "The first suggestion that contacts went beyond what was proper was April 24 with the release of emails from Fred Michel and this was the first occasion I recall mention of Michel by name.
"The following morning I told the Secretary of State I thought the number, extent, depth and tone of contacts supported by those emails went beyond what was acceptable."
Mr Stephens said he believed Mr Smith had been drawn into a "web of manipulation" in his dealings with News Corp.
Lord Justice Leveson said the episode was a calamity for the department and the special adviser.
"You have an able, highly regarded young man who isn't in any sense mischievous, who is very keen to do the right thing but has got into a degree of contact, in the context of a small office. How has this happened?"
Mr Stephens said: "How it happened I don't know, but the judgment I have made is that, sadly, Mr Smith personally, I believe against his will and intentions, was drawn into almost what seems to me to be a sort of web of manipulation and exaggeration, and was drawn inadvertently beyond what he intended to do or what he wanted to do. But, unfortunately, he was beyond it."
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