Fran O'Sullivan: No clear winner in PM's battle with Fairfax

Australian publisher Fairfax is "toe to toe" with the Prime Minister in a battle in which there are - as yet - no clear winners.

Fairfax "broke the code" by outing Helen Clark as a source of untrue claims to cover its corporate butt in a defamation case launched against the Sunday Star-Times (SST) by former police commissioner Peter Doone. Fairfax is off the hook while Doone turns his sights on the PM.

The company's journalists are confused.

Those shocked by the outing point out that the Watergate scandal would never have been exposed if Washington Post editor Ben Bradlee had revealed Deep Throat's identity.

The evidence Fairfax mustered - through exerting duress on the PM herself - shows it is Helen Clark's behaviour which looks distinctly Nixonian.

Fairfax must believe that any claims to confidentiality by Clark were dependent on her displaying good faith in her dealings with a paper they acquired in their 2003 takeover of INL's publishing assets. Not by using it to put the skids under an errant police commissioner.

It is now clear Clark fed the SST a bum steer by corroborating untrue claims by a police source (whom Fairfax is still protecting) that Doone told a constable "That won't be necessary" when the rookie tried to breath-test the commissioner's girlfriend on election night 1999.

Clark repeatedly assured the SST its information was correct. She then amplified it sufficiently so that journalist Oskar Alley could later write that Doone would be asked to "fall on his sword". She urged the paper to "hang tough" in spite of a warning from the commissioner's lawyer that the allegations were in dispute.

National leader Don Brash and Act leader Rodney Hide, who have since been fed the Fairfax evidence, claim it is an "absolute outrage" that Clark used the SST to undermine her own commissioner. They have a point. But unfortunately for Fairfax, whose lawyer Peter McKnight proclaimed Doone's decision to abandon the SST action as a "major victory", the evidential briefs it obtained from former SST editor Sue Chetwin (now with Herald publisher APN) and Oskar Alley also raise issues.

Two SST stories (on January 16 and 23, 2000) display a lack of good faith. The first quotes Clark saying "she could not comment on information the SST had uncovered as the matter was still with the Government". But Chetwin's brief pinpoints the PM as a prime source. Alley's brief says the story originated with an anonymous tipoff; a senior police adviser corroborated it, as did Clark.

The January 23 story - which disclosed the commissioner would be asked to fall on his sword - repeats the "Clark would not comment" mantra. Yet Alley's brief says "the information in my January 23 article came solely from the Prime Minister".

Chetwin maintained that the paper had done nothing wrong, especially as it had verified the story with the PM. She said a $10,000 settlement offer was "'more than generous". Doone puts the price on his reputation at round $850,000.

Yesterday, Chetwin would only say "No comment" when asked why the two front-page stories said the Prime Minister "would not comment" when she was obviously a key source. Chetwin was also not prepared to say why - in the face of defamation action - she had since disclosed the PM as a source, or whether she had earlier given any undertakings of confidentiality to her. Alley referred comment upwards.

Fairfax has signalled it will dig its toes in.

Yet even before the Doone Affair sprang back into public eye, Fairfax and Clark were jousting.

The PM was outraged by SST allegations last November that the Security Intelligence Service (SIS) had been spying on the Maori Party.

Clark announced an inquiry and challenged the newspaper to reveal its sources: "I'm sure if they feel so strongly about these matters that they would want them examined, then they would want to come forward. It really is not good enough to hide behind anonymity, [to] throw the mud and not front up."

When the inquiry disclosed the SST story was a hoax, her scorn was merciless.

At Fairfax HQ, where executives had been preparing their defence to the Doone action, Clark's stance would no doubt have been read as hypocritical. Fairfax NZ editor-in-chief Peter O'Hara, who is Fairfax's designated spokesman on this issue, refused to speak with the Herald.

But in a May 6 memo - to settle internal disquiet over the company's tactics - he said the PM had not been "outed" by Fairfax.

She had been asked to provide a brief of evidence on two issues: Government processes leading to Doone's departure and her role in the "verification process" the SST used before running its stories.

"The Prime Minister was told there was a possibility of subpoena ... but the Prime Minister did not wish to be subpoenaed and Fairfax respected that."

The O'Hara memo is a model of sophistry - as Clark quickly exposed on Monday.

Her lawyer had first been contacted on December 10, 2004. On February 28, Fairfax said that it would "subpoena her" if it was her preference.

In March, Fairfax was advised Helen Clark did not want to be involved. Fairfax then advised it would serve a subpoena on her, and tried to make arrangements. At that point, Clark said that "in the circumstances" she would prepare a brief. Fairfax agreed and advised that a subpoena was to be served but would be withheld.

"So you can see that indeed we were told that a subpoena would be served if a brief wasn't provided," Clark told a press conference.

Fairfax's approach invites speculation that it made a simple commercial decision to get the Doone action off its books by handing up Clark's head on a platter.

When Fairfax acquired INL's publishing assets in an $A1 billion deal it boosted profits. But at Fairfax NZ corporate level there was disquiet over "legacy" issues from defamation cases against former INL titles. Last year, Fairfax paid more than $1 million in court-awarded damages and costs to former police officers who testified against Senior Constable Keith Abbott in the Waitara shooting case after the SST was found to have defamed them.

Fairfax decided not to parade Chetwin, who was still in the editorial chair on publication date. It was left to veteran SST journalist Rosemary McLeod to reveal that although her byline appeared on the front-page story, she had not written it; she had merely authored an inside report.

Fairfax NZ sources suggest that at Sydney corporate level the company was unprepared for the size of the defamation loss.

Yesterday, Fairfax corporate affairs manager Bruce Wolpe was circumspect when asked if INL had fallen short in quantifying the likely downside of legacy cases during the takeover, and if there was provision for INL to pick up the tab for any losses. "Contingent liabilities were satisfactorily dealt with in the acquisition of INL," he said.

Wolpe would not reveal whether Evans and O'Hara sought permission from Fairfax CEO Fred Hilmer, or the Fairfax board, before attempting to subpoena the PM or seek a brief from her.

"I don't have any comment or response to make on it ... We thought the definitive statements had been made twice last week [by O'Hara] that Fairfax would not be releasing information from the court case that had been abandoned."

He later sheeted the issue back, saying "Fairfax New Zealand acts authoritatively on all business, operational, legal and journalistic issues involving its publications".

Just days after the Doone bombshell dropped, an article by Wolpe praising Clark as a "leader of great integrity" in the Australian Jewish News was republished in the SST. Wolpe's decision to call on Israel to publicly acknowledge it had made a mistake in the passport affair and apologise could be read at face value as a work of admiration, or a simple covering-bets exercise from corporate HQ if its NZ subsidiary can not drive its arrow home.

Defamation experts question why Doone's lawyer abandoned the case when the newspaper had admitted it was wrong, the defamation was clearcut and all the SST's lawyers could put up was an academic argument over qualified privilege to instead "sue the most powerful woman in the land".

Clark's lawyers are expected to try to join Fairfax in any resultant action given the SST's published denials that she commented on the information they uncovered.

With Alley's evidence that the SST did not put to Doone the fateful phrase "That won't be necessary" - instead relying on prime ministerial hearsay - Clark should now challenge Fairfax to similarly "out" its primary police source.

Given the response to her challenge on the SIS hoax, she will be a long time waiting.