FT & friends 1, InBev/FSA 0

This is a hugely important ruling for financial journalism across Europe, even if it has taken eight years to arrive.

From The European Court of Human Rights, In the case of Financial Times Ltd and Others v. the United Kingdom.

Extracts:

59. The Court reiterates that freedom of expression constitutes one of the essential foundations of a democratic society and that, in that context, the safeguards guaranteed to the press are particularly important. Furthermore, protection of journalistic sources is one of the basic conditions for press freedom. Without such protection, sources may be deterred from assisting the press in informing the public on matters of public interest. As a result, the vital “public watchdog” role of the press may be undermined and the ability of the press to provide accurate and reliable reporting may be adversely affected. Having regard to the importance of the protection of journalistic sources for press freedom in a democratic society and the potentially chilling effect that an order for disclosure of a source has on the exercise of that freedom, such a measure cannot be compatible with Article 10 unless it is justified by an overriding requirement in the public interest (see Goodwin, cited above, § 39)…

67. As regards the allegations that the leaked document had been doctored, the Court recalls the duties and responsibilities of journalists to contribute to public debate with accurate and reliable reporting. In assessing whether a disclosure order is justified in cases where the leaked information and subsequent publication are inaccurate, the steps taken by journalists to verify the accuracy of the information may be one of the factors taken into consideration by the courts…

70. While, unlike the applicant in the Goodwin case, the applicants in the present case were not required to disclose documents which would directly result in the identification of the source but only to disclose documents which might, upon examination, lead to such identification, the Court does not consider this distinction to be crucial. In this regard, the Court emphasises that a chilling effect will arise wherever journalists are seen to assist in the identification of anonymous sources. In the present case, it was sufficient that information or assistance was required under the disclosure order for the purpose of identifying X (see Roemen and Schmit v. Luxembourg, no. 51772/99, § 47, ECHR 2003-IV).

71. The Court, accordingly, finds that, as in the Goodwin case, Interbrew’s interests in eliminating, by proceedings against X, the threat of damage through future dissemination of confidential information and in obtaining damages for past breaches of confidence were, even if considered cumulatively, insufficient to outweigh the public interest in the protection of journalists’ sources…

73. In conclusion, the Court finds that there has been a violation of Article 10 of the Convention.

Backstory (biased*)

On the evening of November 27, 2001, the FT’s Adam Jones published a story about the plans of Interbrew (now InBev) to launch a takeover bid for South African Breweries (now SABMiller). Jones had received one of the bid planning documents prepared by Lazard and Goldman Sachs, which had been couriered to him anonymously.

It quickly transpired that other news organisations had also been sent the docs – namely Reuters, The Times and The Guardian.

There was a rush to publish stories following up the FT original, but over the next 24 hours it became clear that something was not quite right with this leak.

Interbrew was planning a move, for sure. But there were said to be discrepancies in the doc – specifically, the Interbrew camp claimed the price was wrong and said a timetable included with the doc was a forgery.

As the shares of SA Breweries and Interbrew gyrated, the Belgian brewer suddenly went ballistic – rushing to the British courts to get publication bans slapped on the press, demanding disclosure of the source and the handing over of the documents in the hands of the press.

Crucially, it also dragged the FSA into the affair, alleging that this was a huge criminal conspiracy aimed at manipulating share prices.  The regulator, then headed by Sir Howard Davies, was spoiling for a fight with the financial press – so it eagerly engaged.

Now, the press genuinely didn’t know who the anonymous source was. The best guess was that it was a disaffected member of one of the aristocratic Belgian families who largely controlled Interbrew and who wanted to disrupt the merger plans. It certainly didn’t look like share price manipulation.

No matter.  In a series of bizarre rulings, the British courts basically agreed with everything Interbrew claimed, effectively deciding that one (foreign) company’s need to fix its own internal security outweighed the need to protect the most basic principles of press freedom in Britain.

At which point the whole thing turned in to a pantomime.

Reuters, shamefully, decided to comply with the order – handing over the docs to Interbrew. The organisation is directly regulated by the FSA and it felt it had no freedom to evade the regulator, which was by now conducting a fruitless insider dealing investigation.

The courts, meanwhile, granted Interbrew sequestration powers over those newspapers that didn’t comply.

Despite now having a copy of the leaked document (which would supposedly help the company identify the source), Interbrew avoided a clash with the FT and The Times (presumably because it saw these as “establishment” papers) and turned on The Guardian instead. The paper was declared in contempt of court and there was a move to have the entire paper sequestrated.

This was idiotic. The Guardian treats legal actions as marketing opportunities and this offered brilliant publicity – a huge corporate bully running roughshod over cherished principles that underpinned British democracy. Every elite legal privacy/libel specialist in the country was suddenly at the paper’s side.

All the newspapers stood firm and finally, after a year of legal manoeuvring, the matter was placed in the hands of the European Court of Human Rights.

The FT and friends were determined that they would not be seen as an arm of the state.  The FSA was to learn that it does not have the right to demand that journalists help its investigations when it thinks there might have been some insider dealing.

As for Interbrew, the company suffered massive reputational damage in the UK; it soon replaced its chief executive and it still can spring a leak.

__________

Note: the author of this post was Financial Editor at the Guardian at the time of these events, and therefore has a clear and one-sided recollection of events.

Related links:
CASE OF FINANCIAL TIMES LTD AND OTHERS v. THE UNITED KINGDOM – European Court of Human Rights
Media win European ruling on press freedom – FT
Secrets, leaks and insider gossip – Edmond Warner in the Guardian
Plugging the leaks in a listing ship - The Guardian
Zulu leak was forged, says Interbrew – The Guardian