Paul McIntyre: Scalp for Stokes in billion-dollar pay TV case

Finally, Kerry Stokes is likely to have a scalp in his blockbuster A$1 billion-plus lawsuit against Kerry Packer, Rupert Murdoch & Friends in the Federal Court.

The scalp is Ian Philip, chief general counsel for News Ltd who admitted this week in the box that he lied to Telstra, "possibly" defrauded the telco and destroyed documents he feared could be used against himself or News Ltd in a later court case.

Indeed, that court case has arrived after Kerry Stokes, chairman and the biggest shareholder in TV broadcaster, Network Seven, is taking 21 parties to court over what he alleges was collusion to put his pay TV arm C7 out of business by stitching up the broadcast rights to the rugby league and Australian Rules competitions in 2000.

The case has now surpassed 50 days in the courts, often involves 30 barristers in a day and has so far cost Seven more than $20 million.

For Stokes, News Ltd's Ian Philip was always going to be a hot target - from day one he was the only individual in the mammoth lawsuit to be sued and very early on he copped plenty of attention from Jonathan Sumption, QC, one of the United Kingdom's top three silks who is on a reported fee of A$23,000 a day to lead Stokes' case in Sydney.

Sumption alleged in the opening week of the case that the National Rugby League sold six-year broadcasting rights in 2000 to a News Ltd-led consortium for at least $50 million less than it could have because of "scandalous" conduct by Philip.

He claimed the Seven Network lodged a financially superior bid but was rejected because Philip misused his position on the NRL body which awarded the broadcasting rights.

Sumption said Philip had leaked three confidential C7 offers to its rival bidder, Fox Sports (a sports channel which Murdoch and Packer own 50 per cent each, carried by Foxtel), on whose board Philip also sat, and did not withdraw from the NRL committee when it awarded the rights to Fox Sports.

"He knew he could fix the [NRL] committee and he did so," Sumption told Justice Ronald Sackville nearly two months ago.

What emerged this week by Philip's own admission was that he did indeed fiddle a few things and the assumption now in some corporate and legal circles is that once this court case is over, Philip's tenure at News Ltd might be too, along with his reputation as a top corporate lawyer.

The heart of the trouble for Philip was a handwritten fax he sent to Telstra executive Bruce Akhurst on December 9, 2000, urging Telstra to contribute up to A$14 million to help head off a C7 bid for the NRL pay TV rights.

Last week Philip filed a new witness statement saying the fax contained six statements that "I knew were untrue or misleading".

Philip also told Akhurst that unless Telstra contributed between A$9 million and A$10 million a year, the NRL Partnership would accept the C7 bid.

"If Foxtel loses NRL, the impact will be tragic,"' he told Akhurst.

Philip said he knew this was false because he had already decided to vote against the C7 bid and the NRL committee's decision had to be unanimous to pass.

In a statement last week, Philip said he wanted Telstra to stump up the extra money "to avoid News Ltd being criticised for making the NRL accept a lower bid than the C7 bid".

Philip said he asked Akhurst to destroy the faxes because he feared Telstra might leak them to Seven, which might then sue him for breach of confidentiality.

On Monday, when asked by Sumption if he had succeeded in defrauding Telstra because it had been influenced by his fax to support an increased bid for the NRL rights, Philip said: "That's possible".

"Is it your view, Mr Philip, that in pursuit of an important business objective it may be legitimate to tell lies?" Sumption then asked.

"I don't think that's the right thing to do," Philip replied. "I was desperate to try to get funds from them to facilitate the acquisition of the NRL rights, and things were moving very fast."

"Looking back on it now, I think it was a silly thing to do, a very stupid thing to do," Philip said yesterday.


* Paul McIntyre is a Sydney journalist