Hacking scandal: is this Britain's Watergate?

 

By Oliver Wright, Ian Burrell, Martin Hickman, Cahal Milmo and Andrew Grice

Saturday, 9 July 2011

David Cameron was forced to cut Rupert Murdoch and his newspaper empire loose from the heart of government yesterday as he tried to deflect public anger about his failure to tackle the phone-hacking scandal.
Mr Cameron turned on Mr Murdoch's son James, saying there were questions "that need to be answered" about his role during the phone-hacking cover-up, and criticising him for not accepting the resignation of News International's chief executive Rebekah Brooks.

He also admitted that his desire to win support from the company's newspapers had led him to turn "a blind eye" as evidence grew of widespread illegality at the News of the World.

With a newspaper closed, five arrests and more to follow, 4,000 possible victims, a media empire shaken to its foundations and the Prime Minister reeling, the escalating scandal has become a controversy comparable to the US Watergate saga, with ramifications for Downing Street, the media and police.

Last night the media regulator Ofcom announced it would contact police about the conduct of Mr Murdoch's empire in covering up phone-hacking allegations, to determine whether it was a "fit and proper" owner of the broadcaster BSkyB, which Mr Murdoch is attempting to buy outright. He is due to fly into London today to deal with the crisis, according to reports. Shares in the broadcaster fell by eight per cent.
 
In a day of further dramatic developments it emerged that:
 
*Police are investigating allegations that a News International (NI) executive deleted millions of emails from an internal archive, in an apparent attempt to obstruct inquiries into phone hacking.
 
*Andy Coulson was arrested on suspicion of bribing police officers and conspiracy to phone hack, and Clive Goodman, the NOTW's former royal correspondent, was held in a dawn raid on suspicion of bribing police officers. Both were bailed. A 63-year-old man, thought to be a private investigator, was also arrested in Surrey.
 
*Mr Cameron's most senior officials were warned before the last election about connections between Mr Coulson and Jonathan Rees, a private investigator paid up to £150,000 a year to illegally trawl for personal information. But Mr Cameron appointed Mr Coulson as his director of communications.
 
*A judge-led public inquiry will take place to investigate phone hacking. Rupert Murdoch and James Murdoch are prepared to give evidence on phone hacking under oath.
 
*Ms Brooks was stripped of control of NI's internal investigation and faced calls for her resignation from the Deputy Prime Minister Nick Clegg.
 
*Wapping sources warned of worse phone-hacking revelations to come.

At a Downing Street press conference, Mr Cameron defended his decision to appoint Mr Coulson but admitted his relationship with senior members of the Murdoch empire had been too close.

"The deeper truth is this... because party leaders were so keen to win the support of newspapers we turned a blind eye to the need to sort this issue, get on top of the bad practices, to change the way our newspapers are regulated," he said. "I want to deal with it."

Mr Cameron said he now thought it was wrong to keep Ms Brooks at the company: "It has been reported that she offered her resignation over this and in this situation, I would have taken it."

Mr Cameron was also asked whether James Murdoch remained a fit and proper person to run a large company, following his admission yesterday that he personally approved out-of-court payments in a way which he now accepted was wrong. The Prime Minister replied: "I read the statement yesterday. I think it raises lots of questions that need to be answered and these processes that are under way are going to have to answer those questions."

Mr Cameron announced two inquires: one to deal with phone hacking and the failure of the police to properly investigate it, and another into press regulation. He said it was clear that the Press Complaints Commission had failed and the second inquiry would bringing forward proposals for an independent body.

Asked what enquiries he had made before employing Andy Coulson, the Prime Minister said: "Obviously I sought assurances, I received assurances. I commissioned a company to do a basic background check."

But the Labour leader, Ed Miliband, said Mr Cameron was still failing to restore confidence in the Government's handling of the scandal: "This is a Prime Minister who clearly still doesn't get it. He is ploughing on regardless on BSkyB. He failed to apologise for the catastrophic mistake of bringing Andy Coulson into the heart of government.

"His wholly unconvincing answers of what he knew and when he knew it about Mr Coulson's activities undermine his ability to lead the change Britain needs."

Asked if Mrs Brooks should consider her position, Mr Clegg told The Independent: "Yes. The whole senior management has to ask how it could have presided over this without appearing to know what was going on. Someone somewhere higher up the food chain needs to be held to account. You can't just ask journalists, secretaries, photographers and low-paid office workers to carry the can for a failure, on James Murdoch's own admission, of corporate governance."
 
Watergate Parallels
 
The Watergate and phone-hacking scandals had small beginnings – a break-in at a hotel, and a single "rogue" reporter and private detective. The News of the World scandal is not just about phone hacking. It is also about statements made to Parliament, personally to David Cameron, and in a court of law which – as James Murdoch has now admitted – were not true. As with Watergate, which brought down Richard Nixon's presidency, the cover-up could have bigger implications than the original offence.

The great age of Britain's popular press is drawing squalidly to its close

by Ian Jack in The Guardian

Who will mourn the passing of the News of the World? The staff will, especially those not recruited by the Sun on Sunday. A pure-minded lover of Pakistani cricket might, thanking "the fake sheikh" for exposing the national team's easy corruption. This week everyone hates the News of the World, and yet only last Sunday around 2.6 million people liked it enough to buy a copy. They didn't mind what they were reading, so long as they didn't know how some of it came to be written. And they didn't mind that too much, either – if they knew about phone hacking, they overlooked it – until it came to the case of the abducted and then murdered girl, Milly Dowler.

We own what the Victorians knew as our baser selves. When the News of the World first appeared in 1843, Britain was embarking on a long age of public respectability in which salacious accounts of sex and violence were hard to find. The News of the World made this a specialism, mainly by reporting court cases no other paper would touch. The education acts of 1870 and 1880 spread literacy through every social class and hugely expanded the reading public. By 1914, the paper was selling a couple of million copies a week, all of them deliciously published on a day nominally devoted to worship and quiet reflection. In its peak year, 1949, the circulation averaged close to 8.5m and required not a parcels van or two but a whole train to take Scottish copies north from the presses in Manchester.

It was, by then, the world's biggest-selling newspaper – a publishing triumph owned by an English family, the Carrs, that exploited an otherwise unsatisfied appetite for sexual voyeurism and scandal. At 11 o'clock in church: remember the Sabbath day to keep it holy. Behind one's lavatory door at 12: Vicar Denies Weekend in Caravan. "As British as roast beef and Yorkshire pudding," was how its then editor described his paper during the takeover battle of 1969 (and everyone knew that the loser, Robert Maxwell, was a Czech).

Whether hypocrisy is a peculiarly British vice is debatable; other societies may be just as two-faced in different ways. But understanding the difference between how people were supposed to be and how they actually were became a key weapon for the pioneers of British popular newspaper journalism when universal primary education delivered new audiences in the late 19th century. Social reformers and educationalists thought of reading in terms of self-improvement and a more skilled workforce – a moral and economic good. A new breed of newspaper publishers, of which Alfred Harmsworth (later Lord Northcliffe) was by far the most inventive, saw a less worthy side. He spread the message to his staff like a preacher: roughly, to subvert the words of Philip Larkin, readers were forever surprising a hunger in themselves to be more trivial.
"Crime exclusives are noticed by the public more than any other sort of news," Northcliffe told his news editor at the Daily Mail, Tom Clarke, in 1921. "They attract attention, which is the secret of newspaper success. They are the sort of dramatic news the public always affects to criticise but is always in the greatest hurry to read. Watch the sales during a big murder mystery, especially if there is a woman in it. It is a revelation of how much the public is interested in realities, action and mystery. It is only human."

Northcliffe first put his "only human" principle to work as the 22-year-old editor-publisher of a little weekly, Answers to Correspondents, which told its readers how many MPs had glass eyes (three) or cork legs (one), and how tall Gladstone was (5ft 9ins!), and adjudicated debates over whether women lived longer than men and if snakes could kill pigs. Later he would say that his fortune had been founded on useless information, but by then he could afford to make jokes about his youth, having in the meantime launched the Daily Mail (1896) and the Daily Mirror (1903), and bought the Observer (1905) and the Times (1908). No one did more to shape the future of British journalism. Northcliffe divided news into two main divisions – reports of happenings and what he called "talking points", where his reporters would develop the topics people were discussing, or stimulate new ones. "What a great talking point," he told Clarke when he read that Paris had decided skirts should be long. "Every woman in the country will be excited about it. We must start an illustrated discussion on 'THE BATTLE OF THE SKIRTS: LONG v SHORT.' Get different people's views. Cable to New York and Paris, get plenty of sketches by well-known artists … print as many as you can … plenty of legs."

Such enterprising devotion to the frivolous – and to women – had never before been heard in a newspaper office. In this, he prefigured the modern British editor; similarly, his close relationships with politicians made him the model for the modern British proprietor. During the first world war he met a young Australian journalist, Keith Murdoch, and adopted him as a kind of editorial pupil. Promoted to an editorship in Melbourne, Murdoch emulated the maestro's techniques and forged his own political alliances, so much so he got the nickname Lord Southcliffe. His only son, Rupert, learned the trade at his knee.

Northcliffe had an unhappy end. He became paranoid and issued bewildering instructions that his staff, trained to oblige his imperiousness, never knew how to disobey. He appointed a Daily Mail concierge as the censor of advertisements, he saw two moons in the sky at Biarritz, at Boulogne he tried to push a railway porter into the sea. Perrier water became an obsession, and on the train from Dover to London he drank 13 bottles of it. (In the spirit of Answers, I can't resist the information that his brother, St John Harmsworth, bought the French spring that was then in the custody of a Dr Perrier. St John bottled the water in bottles shaped like Indian clubs and gave a few to Sir Thomas Lipton, which the grocery magnate pressed on King Edward VII, who gave Perrier a royal warrant. Bingo.)

He died under the supervision of two nurses in a hut on the roof of a house in Carlton Gardens. Neurosyphilis has always been strongly rumoured, but never proved. It was an organic psychosis of some sort, in a mind that had been unsteadied by power. In his last days, he ordered hundreds of sackings, but he had always been a brisk sacker: "My dear Tom Clarke, Fire [name deleted]. Chief" is a memo reproduced by Clarke in his fascinating memoir. An editor who said she wasn't to blame for her paper's criminal behaviour because she'd been on holiday at the time? Her feet (I like to think) would never have touched the ground.

For the moment Rebekah Brooks stays, but all around her the great age of Britain's popular press is tumbling squalidly to its close.

Phone hacking: how News of the World's story unravelled

Tabloid's publisher aggressively denied scandal – until the latest revelations

• Dan Sabbagh
• guardian.co.uk, Friday 8 July 2011 20.47 BST
• larger | smaller

News of the World will print its last ever edition on Sunday July 10, 2011 – the phone-hacking scandal has forced the tabloid's closure. Photograph: Adrian Dennis/AFP/Getty Images
It was a strategy of cover-up, quarter-admission, and foot dragging that took years to unravel – beginning with the first court case brought in the wake of jailing of the News of the World's former royal editor Clive Goodman and the newspaper's £100,000-a-year private investigator Glenn Mulcaire. At the trial it emerged that five others had their phones or messages hacked into – none of whom were members of the Royal family, subjects of Goodman's work – but prominent individuals Simon Hughes, Elle Macpherson, Max Clifford, football agent Sky Andrew and Gordon Taylor, the chief executive of the Professional Footballer's Association. Nevertheless, News International chose to gloss over the glaring contradiction of a court case that prompted the resignation of Andy Coulson, as editor, taking the "ultimate sacrifice" for activities he said he was unaware of. In March 2007, the company's then executive chairman Les Hinton was clear that the hacking scandal was narrow in scope. Giving evidence to MPs on the culture media and sport select committee Hinton said, when asked if Goodman was the only person who knew about phone hacking, he replied that "I believe he was the only person" who was aware of the practice and "I believe absolutely that Andy did not have knowledge of what was going on". Despite that, though, it was Gordon Taylor's legal team pursued a court case on his behalf. News International offered Taylor £250,000 to quietly settle the case, but he fought on and as his lawyers obtained evidence from Mulcaire's notebooks and tapes seized by the Metropolitan Police, there was early evidence that hacking practice may have spread wider. Mark Lewis, who was Taylor's solicitor, recalls that it was shortly after the legal team obtained a tape of Mulcaire talking to another journalist (a tape later leaked to the New York Times), that the company's lawyer Tom Crone offered to settle at a higher price. This time Taylor won a massive £700,000 out-of-court settlement. Crucially, though, News International wanted it to remain confidential – which Taylor had little choice but to agree to, given the amount of money on offer. Documents relating to the case were sealed, and the matter would never have become public until the existence of the settlement – signed off by James Murdoch on the recommendation of News of the World editor Colin Myler and Crone – was revealed in July 2009 by the Guardian. That Guardian's report was accompanied by the revelation that private investigators had hacked into "two or three thousand" mobile phones – and the suggestion that MPs from all three parties and cabinet ministers, including former deputy prime minister John Prescott and ex-culture secretary Tessa Jowell, were among the targets. Two days later, News International responded late on a Friday afternoon with an aggressive denial, authored it is believed by Crone, with some help from Myler, and corporate communications head Matthew Anderson. It concluded there was no evidence to support the contention that "News of the World or its journalists have instructed private investigators or other third parties to access the voicemails of any individuals" or that "there was systemic corporate illegality by News International to suppress evidence". In reaching the conclusion, News International had two seeming allies. John Yates, the assistant commissioner at the Met, refused to reopen the original investigation into phone hacking, saying that "potential targets may have run into hundreds of people, but our inquiries showed that they only used the tactic against a far smaller number of individuals". Meanwhile, the regulator also chose to take News International's evidence at face value, concluding in its own enquiry in November 2009 it had "seen no new evidence to suggest that the practice of phone message tapping was undertaken by others beyond Goodman and Mulcaire, or evidence that News of the World executives knew about Goodman and Mulcaire's activities". Not everybody was so convinced. A growing number of angry celebrities and politicians began to initiate their own lawsuits in the belief their phones had been hacked. Legal actions gathered momentum in 2010, but News International fought every step of the way, while the Met was slow to share evidence with the claimants and key witnesses like Glenn Mulcaire refused to testify. It was not until December 2010 that Sienna Miller's legal action that alleged that hacking was almost certainly initiated by at least one other journalist – Ian Edmondson, then still employed by the Sunday tabloid. Even then some appeared in denial. In October 2010, Rupert Murdoch, speaking at News Corp's annual meeting, said "there was one incident more than five years ago" before taking aim at the Guardian. "If anything was to come to light, and we have challenged those people who have made allegations to provide evidence … we would take immediate action". Andy Coulson, by now working in Number 10 for David Cameron, said as recently as December of last year in the Tommy Sheridan perjury trial that: "I don't accept there was a culture of phone hacking at the News of the World.". It was not until 2011 – some say at the urging of former Daily Telegraph editor and News International's group general manager Will Lewis – that News International began gradually to soften its stance. Edmondson was dismissed, as it appeared that some of the newspaper's upper-middle ranks could also be under threat. The company stopped contesting the civil cases in April, reaching a £100,000 settlement with Sienna Miller, although that meant News International would avoid the embarassment of court cases were all sorts of additional evidence could have emerged. However, it was not until the Met chose to reopen the criminal enquiry after five years of refusal, handing the job to deputy assistant commissioner Sue Akers rather than John Yates, that News Corp had to admit more. With the police trawling over 11,000 pages of notes, suddenly officers found allegations that the phone of murdered schoolgirl Milly Dowler had been targeted by the newspaper, prompting James Murdoch to concede on Thursday that unnamed "wrongdoers turned a good newsroom bad" and that "this was not fully understood or adequately pursued" by those in charge.

• guardian.co.uk © Guardian News and Media Limited 2011

INTELLIGENT MAN

Whenever an INTELLIGENT MAN makes an important decision

He closes his eyes Thinks a lot
Listens to his heart. Uses his brain.
Contemplates pros and cons
&


Finally does what his WIFE says

Spicy beef burger

Ingredients
450g/16oz lean beef mince
2 garlic cloves, crushed
1 tsp tomato ketchup
1 tsp mustard
1 egg, lightly beaten
1 red chilli, finely chopped
1 small onion, finely diced
2 spring onions, sliced
handful basil leaves, chopped
olive oil for frying
Preparation method
1. In a large bowl mix together the mince, garlic, tomato ketchup,
mustard, egg, chilli and onion.
2. Dive in with your hands and mix until the ingredients are well
blended.
3. Just before cooking, add the spring onions and basil to the mixture
and divide into four patties.
4. Heat a little olive oil in a large non-stick frying pan and fry the
burgers.
5. Turn them once only, cooking for about 5-6 minutes each side.
(Alternatively you can cook them under a grill for the same time
turning half way through.)
6. Serve with burger buns and salad.

Novak Djokovic's recipe for success

Wimbledon 2011: Novak Djokovic's recipe for success


Page last updated at

16:12 GMT, Sunday, 3 July 2011 17:12 UK

By David Ornstein

BBC Sport at Wimbledon

Wimbledon Championships

Venue: All England Club, London Date: 20 June-3 July Coverage: Live on BBC One, Two, 3D, HD, Red Button, online (UK only), Radio 5 live, 5 live sports extra; live text commentary from 0900 BST on BBC Sport website (#bbctennis); watch again on iPlayer

Djokovic too good for spirited Tsonga (UK only)

Novak Djokovic's progress to the Wimbledon final means he will become the new world number one when the next ATP rankings are released on Monday.



The 24-year-old's rise to the summit of men's tennis owes much to an incredible 43-match unbeaten streak, which spanned six months, seven tournaments and started in December last year.



It came to an end with defeat by Roger Federer at the French Open, but marked a remarkable turnaround for a player who struggled badly for much of 2010 - winning only two of 19 tournaments all season.



Djokovic's SW19 run has extended his 2011 win-loss record to 48-1 after his four-set victory over Rafael Nadal in Sunday's showpiece.



But what sparked the improvement and why is he so much better in 2011? BBC Sport spoke to Marian Vajda, a former world number 34 and the Serbian's coach since 2006.



HOW DO YOU REFLECT ON NOVAK'S WINNING SEQUENCE?



"Special, wonderful, amazing - there aren't enough superlatives to describe how this year has been for him, and for us as his team. It shows we're doing a good job and we should celebrate and admire what has happened. Since I started working with him in 2006 this has been his goal.



Continue reading the main story

We found he had a gluten allergy and since he's cut that out of his diet, he is able to breathe better and take in more oxygen. His body is much healthier and this is the key



Marian Vajda

"He found a way to play the guys, learned how to beat them, how to prepare properly, how to handle the pressure. It's a process. Before, he had lapses, nerves, we could see he often couldn't handle the pressure. Physically he was not good. Now, he's 24 years old, much stronger and his talent is coming to the surface.



"Unfortunately the loss to Federer ended his unbeaten run and stopped him from becoming world number one, so that was bitter and took away some mental strength. But my role as his coach was to get him to try to forget this defeat and prepare as well as possible for Wimbledon."



WHAT HAS HE DONE DIFFERENTLY TO MAKE SUCH A DRASTIC STEP UP?



"There was a tough period in his tennis career when, in 2009, he decided he wanted to switch to working with two coaches. Todd Martin came in, changed a couple of techniques and his serve was not working well.



Vajda (second from right) has worked with Djokovic since 2006 "At the start of 2010, he was in serious trouble. He managed to win a few matches and stay in the world's top three, but he had no serve. He had to get back to his old routines. In men's tennis, the serve is the number one issue. We worked hard and about 12 months ago he started to improve, but he was still far away from where he is now.



"You can see his serve is much better and he is so confident now that he tends to win the most important points - break points, match points etc. At the start of this year he began winning matches in straight sets, dropping very few games and even in the giant battles against Nadal and Federer he was able to dominate, which rarely happened in 2010."



WAS THERE ANYTHING ELSE YOU PAID SPECIAL ATTENTION TO?



"Yes, we also worked hard on the physical side. Novak needed to improve his endurance. He was not able to stay on the court for a long time. He would manage five sets but it would take a lot of energy away from him for the next match. Now he's able to maintain that because he's far better technically and physically.



"We did a lot of running and a bike work but, in addition, he improved his health. We found he had a gluten allergy and since he's cut that out of his diet, he is able to breathe better and take in more oxygen. His body is much healthier and this is the key.



"But most of all, when you have a good serve you shorten games and hold easily - and that makes you stronger mentally. There are still areas to work on - he can improve his approach to and position at the net - but he's getting better and better."



HOW PLEASED WERE YOU WITH HIS PREPARATION FOR WIMBLEDON?



"Novak recovered really well from Paris. He went straight to Monte Carlo to be with his girlfriend Jelena for a couple of days - to have some time off, relax, do different things that would take his mind completely away from tennis.



Final dream 'comes true' for Djokovic (UK only)

"He went to the beach, did some swimming, saw his family and helped Jelena ahead of her graduation for an economics diploma on Sunday 12 June. Then we came over and practised at Aorangi for the first time on Monday 13 June.



"From the moment he stepped on to the grass he looked unbelievable. He played two practice sets against Richard Gasquet at an incredibly high level, as if Wimbledon was only two days away.



"In his only pre-Wimbledon warm-up match, against Gilles Simon, it was scary how good he was. He was relaxed and looking happier on grass than ever before. That made me feel pretty confident.



"The Federer defeat was bitter but champions like Novak realise that it's no shame to lose matches like that and unbeaten runs have to come to an end. Emotionally it stayed with him for a while, but he's experienced enough to get over it and regain his focus. To become world number one was something we were all focused on achieving. We prepared in a very professional way. He was ready.



WHY IS THIS TOURNAMENT SO SPECIAL TO NOVAK?



"It's a tradition. As a young kid, everyone watches Wimbledon. When I was a young kid I remember when we didn't have that much sport on TV, but we always had Wimbledon.



"You want to reach for that trophy, you want to see it high above your shoulders. This is the most exciting moment of your career. You work for this. It's the biggest tournament in the world. The history, the tradition, the champions. It's unique."



DID YOU FEEL HE ARRIVED AT SW19 UNDER LESS PRESSURE?



"Yes, and I was really pleased about that. The unbeaten run coming to an end released him. This was the tournament for Andy Murray, for Federer, for Rafael Nadal. Rafa was defending champion and had to defend all his ranking points from last year.



"Novak recovered well and came here in good condition, but we knew the relative lack of pressure could help him go far."

How to prepare a Public sector firm for Privatisation - the Air India story

Air India, India’s national carrier-turned-cadaver, is waiting for its last rites. When last heard of, the airline had turned in a loss of Rs 7,000 crore in 2010-11, and was investing in an oversized hat to hit the government for yet another bailout masquerading as a turnaround package.




Only, the amounts this time are too staggering for Pranab Mukherjee to agree to without a fight. According to a report in The Times of India, the airline will need equity support of Rs 43,255 crore just to stay afloat over the next 10 years. Mukherjee is hoping to raise that kind of money by selling public sector equity this year. If he agrees to bail out Air India, it’s as good as kissing goodbye to this moolah.



With liabilities of over Rs 47,000 crore, the airline is on the verge of defaulting on its loans. Mukherjee will thus have to chip in with some money willy-nilly – even if he is not asked for the full sum that SBI Caps has suggested as part of its revival plan for the airline. The newspaper says Air India will require Rs 8,372 crore this year itself – Rs 6,600 crore to pay its bills for 2011-12 and Rs 1,772 crore to keep up with loan payments.




But for all this, the airline still won’t be able to make a profit till 2017-18. Air India, it seems, has been fixed – and fixed for good – by former Civil Aviation Minister Praful Patel, who has often been accused by the unions of batting for Air India’s rivals till the ministry was prised away from his grip last January.



When Patel took over as Minister of State for Civil Aviation in 2004, the domestic carrier (then Indian Airlines) was market leader with a 42% share, but slipping. Today, it is No 5 – behind Jet, Kingfisher, IndiGo and SpiceJet – fighting extinction.



Here’s how Praful Patel did it – ruin Air India that is – and there’s nothing his successor Vayalar Ravi can do to rescue it.



First, load it with debt so high that it can never raise its head again. It is now clear the Air India’s financial problems began in 2004 when Praful Patel chaired a meeting of the board in which the airline suddenly inflated its order for new aircraft from 28 to 68 without a revenue plan or even a route-map for deploying the aircraft, says an India Today report.



An airline with revenues of Rs 7,000 crore was being asked to take on a debt of Rs 50,000 crore. Today, it’s losses themselves are Rs 7,000 crore. And the bailout it is seeking is as big as the cost of those 68 aircraft. The government might as well have gifted those birds to Air India.



Second, Patel presented a merger of Air India with Indian Airlines as the panacea for all ills. It is surprising how often ministers suggest mergers when public sector companies head for ruin. When telecom company MTNL was sliding, then Communications Minister Dayanidhi Maran was suggesting a merger with Bharat Sanchar Nigam Ltd. That didn’t happen, but both MTNL and BSNL are in the sick bay anyway. Praful Patel used the losses of Air India and Indian Airlines to push for their merger, claiming there would be cost savings from synergies. Worldwide, mergers usually destroy value. The Air India-IA merger has been the biggest man-made disaster in aviation history – thanks to their varying cultures and employee costs.



Says Gustav Baldauf, former COO of Air India who fell foul of Patel’s successor and had to quit: “The management never resolved the pending human resource (HR) issues related to the merger. I had warned the Chairman-cum-Managing Director and the Aviation Ministry of the consequences of introducing a single code without resolving issues first. But they never listened,” he told Mid-Day.


Third, Patel seemed to be batting for Air India’s rivals. He handed over lucrative routes to private players. Though Air India had no birthright to every lucrative route, Patel’s overnight manoeuvres in this regard suggested that he had a clear conflict of interest by being both Aviation Minister and board member in Air India.




A Tehelka report quotes Capt Mohan Ranganathan, an aviation expert, as saying that the airline handed over “flying rights on lucrative sectors in the Gulf to foreign airlines, including Etihad Airways, Qatar Airways, Air Asia, Singapore Airlines and several others…” One glaring instance of a sudden handover could not have come without Patel’s nod. Tehelka says that in October 2009, the airline sent “letters…to its stations in Kozhikode, Doha and Bahrain stating that it was withdrawing operations on the route” – a route in which the airline was making money hand over fist. Very soon, Jet and Etihad stepped in to fill the gaps, and so did Emirates.



Fourth, Praful Patel’s own airline preferences made it clear who he favoured. According to replies received under the Right to Information Act by one Jagjit Singh, Patel used mostly private airlines. Between June 1, 2009 and July 2, 2010, 26 of the 41 flights he took between Delhi and Mumbai were with Kingfisher. “It is intriguing that the minister who stresses the need for revival of the national carrier himself chooses to ignore it,” said Singh. And this happened just when the Finance Ministry was asking all government employees to use Air India for their official travel to help revive the carrier.




Patel’s haughty reply when asked about this preference of private airlines: “I am the Union Civil Aviation Minister and not the minister in charge for Air India. As a minister, it is not binding upon me to fly only one particular airline. I fly according to my convenience.” But when he ordered so many places for Air India, was he acting as Minister or superboss of the airline?



Fifth, Patel used his clout with Air India often for personal ends. Another RTI query showed that Patel’s kin used the Air India Managing Director’s office to regularly upgrade from economy to business class. Business class is a cost Patel’s family, which is rolling in wealth, can easily afford. So what does this say about Patel’s attitude to the airline?



But is the new Civil Aviation Minister going to reverse the rot set off by Patel?



According to a Financial Express report, the new turnaround plan does not look any more viable than the deadweight Patel cast on Air India by getting it to buy planes it could not afford. The newspaper quotes a Deloitte review of the SBI Caps revival plan which says it’s simply not viable.



Reason: Air India again wants to buy too many aircraft, just like Patel did. “Aviation consultancy Simat Helliesen & Eichner, which carried out a detailed route planning and capacity exercise, has suggested 87 narrow-body aircraft for Air India by 2015, but the carrier has proposed 143, according to Deloitte’s report dated February 11, 2011,” says the newspaper.



Deloitte’s comment: “The only justification that one can have for going in for such capacity expansion can, therefore, be the adoption of a strategy of buying market share through deploying high capacity into the market (with corresponding lower yields and consequent financial implications).”



This means Air India is planning to sink further into losses for years to come.



Over to you, Mr Ravi. Do you want to go down the same path Praful Patel pushed Air India?



The government’s best bet now is to cut its losses. Air India should be privatised or closed down.