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>> the british government angry into allegations of phone-hacking by newspaper reporters has questioned several alleged victims of unethical old journalistic practices. in this part of angry, actress sienna miller testifies about aggressive tactics of the paparazzi. we are will also hear from the former head of the international automobile federation, max mosley who successfully sued the "news of the world" for libel. this is two hours and 15 minutes.

>> thank you very much. could we confirm that this is now live into the marquee? it is, is it? thank you. >> joining us is the order of witnesses today, ms. sienna miller, mr. mark thompson and then mr. max mosley and j.k. rowling. our first witness is ms. miller. ms. miller. i sienna miller do declare that the evidence shall be the truth,

the whole truth and nothing but the truth. thank you very much. >> good morning. >> good morning. >> could you confirm to the please your full name? >> yes, my name is jena rose diana miller. >> you provided a contract to your solicitors and you voluntarily provided the with a witness. >> yes. >> are you familiar with the contents of your witness statement? bim. >> and are the contents of your witness -- true and correct to the best of your knowledge and belief? >> as they are. >> misspell or i've said to almost all of the people who have given evidence to me before how grateful i am for taking part in this exercise. i am very conscious that you have strong views about privacy and the very act of coming to give evidence to me, exposes you and means that you are talking

about things which actually are quite key, not to want to talk about. so i understand the difficult choice you have to make and i am very grateful. thank you very much. >> before asked questions i have to ask mr. sherborne -- >> good morning ms. miller. >> good morning. >> we heard from a large number of witnesses who have already given evidence to this inquiry about the experiences they had with press photographers and paparazzi, people such as the mccann's the dollars, and a number of others and people who gave examples of such things as photographers camped outside of their homes, being stalked where but they go, jumping out of them without warning and driving dangerously and so on. are these examples which are familiar to you in terms of your experiences? >> yes, they are. >> can you give the inquiry just

a little bit of an idea of what you have personally experienced in that regard? >> yeah. at the time i actually now have an order against the paparazzi so my life is change dramatically but for a number of years, i was -- 10 to 15 men pretty much daily, and you know, anything from being spat at or up use. i think that the incentive is really to get a strong reaction as possible so you know, other people have mentioned that being jumped out when you get a shock or saying things with a ring emotional reaction, they seem to go to any lengths to try to upset you which is really difficult to deal with. >> you have given some examples about being spat at and abused to get a certain type of post graph is kate mccann said with a certain kind of caption added. we heard a lot about driving.

have you had any experiences of dangerous driving around you? >> overtaking, undertaking. a pregnant lady was nearly knocked down but this is a daily occurrence. people riding on motorcycles alongside vehicles while taking photographs and at high-speed it causes you to drive dangerously and then to drive dangerously with little regard for anyone else. and it is all in procedure, relatively little. they are desperate to find out where you are going next with regards to whether it is a meeting or some kind of inane event. it is just -- i think there is something that is very exciting. >> it may sound like a bit of a silly question but for those who have not actually experienced it first-hand, can you just give us a little idea of what it feels like to be the victim of that kind of thing?

>> well you know, it's really terrifying. it's terrifying not only experience it and family members and friends who are with me or the people driving the cars. i would find myself at midnight running down a dark street on my own with 10 big men chasing me, and the fact that they had tallies in their hand meant that it was legal but if you take away the cameras would have you got? you have a pack of men chasing a woman and obviously that is a very intimidating situation to be in. >> thank you. you have explained that what you did about it was you got an order from the court. i think that was then, should know. that was in the summer of 2008 and i think you said, but just to be clear, what happened if anything as a result of getting that order? >> went from having 20 people outside my house everyday 20 so i can now lead a relatively private and normal life, which is fantastic that it was a long and arduous and exhausting struggle to get there.

>> can we go to another topic, again just very briefly. is obviously a matter now of record that you obtain judgment. i know you have attained judgment against these newspapers in your action and we have heard from for example the dollars earlier this week about the fact that you having brought this action can and a few other people having brought this action right at the outset is what brought to being told themselves. >> i was very nervous of taking on empire but then i saw the evidence that i had seen from the police and felt that i couldn't not do something about it but it was very daunting. >> can i just ask, given understandably you have had your fill of having -- can you explain why you are giving

evidence to this inquiry? >> because you made me. >> alright. i hope you don't blame me afterwards. what do you hope to achieve by giving evidence? >> i hope that some form of change comes to our meeting. there are fantastic journalist in this country and they are all bracketed under the same name of the press and i think that's not fair given the grand differences between publications. so i hope that some change can, and i'm happy. thank you very much. mr. barr has some questions for you. >> you explained very eloquently if i may say so the -- of an accomplished actress were for you back in 2005 and 06 in terms of media intrusion. could i take you to a paragraph before your statement, please? >> yes. >> where you describe that

during this period, almost every week extremely personal matters were being published including parts of private conversations. my question to you is, how does that make you feel about those around you? >> well initially, i have a very tight group of friends in a very supportive family and to this day no one has ever sold a story on may regardless me regardless of the fact that several people have been offered large sums of money to do so so i felt very protected. but it was baffling how information kept coming out and the first initial steps i took were to change my mobile phone number and then i change it again and again and i ended up changing it three times in three months. as the stories continue to come out with private information that only a select group of people knew about so naturally having change my number and it

couldn't have been as a result of hacking even though that was my suspicion, i accused my friends and family of sending stories and they accused each other as well. >> that paragraph links with the same feeling you pick up in paragraph 7 in your witness statement where you describe one occasion where you set down with family and friends and accused them of meetings -- leaking stories to the press because the story had come out that only they agreed with that. >> there was one particular private piece of information that for people knew about and i had been very careful to not tell, to only tell my mother and my sister and my best friends. and the journalist ended up saying they knew about this and so yes, i accused my family and people who would never dream of selling any sort of information. iqs someone in that room of

sending the story. >> now in fact your friends were being hacked. >> yes, the fact that they had this information was as a result of accessing my phone and those people around me. >> how does it make you feel now knowing that you were driven to make the accusations against your friends and family as a result of this hacking? >> the family was really and i feel terrible, that i would even consider few -- accusing people, especially people who i know would rather die than betray me but it seems so intensely paranoid to assume that your house is bugged or you are being listened to somehow. it just seems so extreme especially considering i change my number so many times because i couldn't think of an alternative but it is really upsetting for them and myself that i accused them.

>> what would you say to those who did this? >> i'd own think it would be appropriate in court. [laughter] >> i won't press you then. >> it's just outrageous. it's unfathomable to feel like this, like you are just e-filed -- justifiable and behaving and the ramifications on people's lives are not considered by the people that are doing it. the effect that it had on my life was really damaging to me and to my family and friends. >> that takes us perhaps rather uniquely to paragraph 5 in your witness statement where you describe some of the other intrusions into your privacy. in particular you talk about journalists and photographers who would often turn up and meeting places and that you had arranged them on the phone and nobody else knew about it. you had men sitting outside of your house and you were convinced that they were somehow listening to your private

conversations. mr. shorebird -- sherborne has touched upon this but could i ask you perhaps to develop just a scale of the impact on your life at these -- that these events had? >> to be honest, it made it very difficult to leave the house. i did feel constantly very scared and intensely paranoid. i kind of touched on it already, but you know to the degree i and my publicist had a separate number that we would only speak on that number and supposed -- subsequently i found out that lynne mulcaire had that number as well so my life is under constant surveillance. it felt very violated in very paranoid and anxious constantly. >> and you tell us that you found photography --

photographer and journalist. resumable he you were well used to be photographed in certain circumstances but are we here talking about circumstances in which you were hoping to have some privacy? >> i think there wasn't a circumstance that existed that i didn't wish some former privacy but in some situations that was impossible. i think was more baffling was the fact that people found out before i had even arrived where i was going and so that feeling of just, people knowing everything about you was as i said before, really intimidating and scary and confusing. i didn't understand how they knew, but i felt like i was living in some sort of video game. and people kind of preempting every move i made obviously and accessing my private information. >> thank you.

moving on now more broadly to the question of photography, were photographs taken of you and published accurately, or were they altered? i understand there are particular examples. >> there were several examples. i think a story can really tell a picture. >> the other way around. >> thank you. >> we were notified of this in advance of the case in question. i have no objection to a copy. >> you are going down uncharted territory. does the -- has everybody agreed then?

it is not how i would prefer it to happen. thank you. >> in this particular situation i am the ambassadors to children and i was at the fundraising ball where many of the children were and many people who were donating money and raising money etc.. there was a very sick child that i was playing with in the corner of the room, who is pretending to shoot me and i was pretending to die, which we were playing a game. somebody took a photograph and the mirror cut the boy out of the photograph and said that i was drunk. obviously, looking at these photographs they look most amusing.

they look shocking and they were aware of the time of the situation, the real situation i was in. and so i obviously complained and a part -- printed an apology that was irrelevant a few days later but by that point the damage is done. if anybody if it in my line of work sees the photograph and here's that i was -- at a charity event it's just determined so to my career, to my reputation and i think this is sort of the problem, you know, the fact that they knew that they would need scene and have to pay damages is really not enough of it deterrent in certain situations to the media. >> this article should not go on the web site. there is absolutely no reason to do it and i'm not prepared to read hypothesized that which is

have been. >> as i read the apology that was later given by the newspaper in question, i am sorry siena on such a day the 12th of march reprinted pictures of the sienna miller who is an ambassador to the starlight children's foundation charity at the starlight -- and we said her boozy antics had shocked patrons of the event and she had behaved in an unprofessional manner. we are happy to make clear that she was not drunk and did not behave unprofessionally. in fact in the picture she was on the floor playing with a seriously ill child. we have apologized. now if i can move from photography to the question of, back to the question of phone-hacking and two bylines and to the way also in which

sources were betrayed. you say a paragraph 9 in your witness statement that the intrusive pieces about your private life often said houser appear to be closely linked to what you remember was being said to you by your family and friends. did the fact that these articles were being attributed to pals and close friends, about your friends that you described earlier? >> of course, especially when the information coming out was very similar to that which i said to specific people. >> and to those who wrote these articles and where these bylines appear, do you think that it is ethical to give a full -- to a story? >> no. >> it difficult question to

answer. >> often journalists, they are written by anonymous journalists. they wouldn't print their name, which was just an admission from that part that it was unethical. >> and if i can move on now to the time when you found out that you had been hacked and paragraph 12 of your witness statement, you say that you discovered it wasn't only do, that lots of people close to you who have been put under surveillance and mr. mulcaire had created a project under your name. how did you feel when you found out that the intrusion had gone beyond you and to those around you? >> i felt terrible. these were people who had never done anything remotely public who had been under constant surveillance by this man.

and it just seemed very crude looking at the notes, having initially been told that there were -- and then receiving a sack of evidence, hundreds of notes, with dates referring to very personal things within my life. all my telephone numbers that a change in three months, my access, pin numbers, my e-mails. they later hacked my e-mail in 2008 were on these notes. as you said, number of my friends, think about 10 phone numbers and total. so there was this web of -- which obviously makes it difficult to understand how they were getting all this information. people said we were being audited and electronically listen to. >> can i now ask about the litigation itself, just a few questions? what was your aim in taking action against the media?

news international in particular, were you seeking financial compensation or did you have some other purpose? >> no, it was not about financial compensation. i would rather have not gone through any of the litigation. i've had to go through -- no not for finance. i wanted to understand the extent of the information that they had on me. i wanted to know who knew, who knew if i was -- who had access to my telephone numbers and who had been listening to me. you know is that feeling of knowing people are talking about you and your back or watching you and not being able to confront them, very frustrating scott so i wanted to get to the bottom of it. speier civil claim was successful and did you think that the court procedures provided an adequate remedy for you? >> no. i am still waiting for the full

disclosure which is the only thing i really want from news international and so far to spend very unsatisfactory what i have received. i will continue to wait for it, but it is a long process. >> although this is strictly a matter between you and newsgroup news, it may be right that i tell you i am being told by counsel that order is going to be complied with. can we perhaps look at what it was that was admitted in the litigation that you brought? could we have pleased the document, the reference number which starts at 31105, and i am looking for paragraph 8 on the second page please.

it must be a wrong reference. >> no i don't think so. i think that's what you want. >> yes, that's exactly what i want and thank you. we see that this is what was admitted in a nutshell in the civil proceedings, and perhaps i can read. this meant that newsgroup accepted the confidential and private information had been obtained by the unlawful act of the voicemail messages, the confidential and private information had been published as a result and there had been an invasion of their privacy, breaches and a campaign of harassment for over 12 months. newsgroup accepted that these

activities should not have taken place and the information should have not been published. there we have it in a nutshell. could i take you now please finally to the end of your statement and paragraph 18. and an occlusion to your witness statements, amongst other things you make the point that the actions of "news of the world" made your life hell and damaged a lot of your relationships, making you never sent paranoid. i don't want you to go into anything private did you don't want to say in public, but are you able to give some insight about the type of damage that was done? >> it is really hard to kind of

quantify and words. it is more of a state of mind that you are and as a result of that method of intrusion and surveillance and interception which is just complete anxiety and paranoia. i realize that there are far more severe cases and it is alarming what has happened. compared to my life, this was too much to deal with and i had to fight tooth and nail constantly to gain the freedom which i have managed to acquire now. the relationships that were damaged, just breeding mistrust amongst all of us and it wasn't just me accusing people. was my mother accusing people and people accusing my mother. nobody can understand how this information is coming out so everybody was just very upset and confused and felt very

violated by this constant barrage of information that was being published. it was impossible to lead any kind of normal life at that time. and that was really difficult for a young girl. >> thank you. those were all my questions. >> it is this way, is that, that it is important to identify who has done wrong but it is equally important to exonerate all those who have done absolutely no wrong. >> yes. >> yes, i understand. thank you very much indeed for coming. you have a very busy life. >> thank you. >> you did say that ms. miller the proceedings you brought against the media and used internationally particularly in the context of phone-hacking, think it is quite clear that the information you are receiving solely --

>> i think that is absolutely right. thank you very much. >> thank you. >> now hearing of the british government inquiry into phone-hacking. the former head of the international automobile federation, max mosley, testified about his successful lawsuit against the "news of the world" for libel. the newspaper had published a story saying mr. mosley was part of the nazi themed sandal. this is just under two hours. >> the witness is mr. max mosley, please.

>> i swear by almighty god that the evidence is the truth, the whole truth and nothing but the truth. >> make yourself comfortable please mr. mosley and your full name pleas for the record? >> mack's group is mostly. >> mr. mosley can i thank you as well for the effort that you have put into assisting the inquiry. you must be -- even if you are one yourself, but i am very grateful. >> thank you. >> and mr. mosley, there is a witness statement which you have signed. under tab on, on the 29th page, that is your signature on the 31st of october of this year that you have signed a statement of truth. yes i have. >> in relation to yourself in

these terms you are born in 1914. you are fluent in french and german. you went to oxford to read physics and then you -- is that right? >> that is correct. >> in terms of your professional career, you didn't in fact practice full-time in the bar. you did something else altogether. tell us a little bit about that. >> while i was at the bar, i used to race as a hobby in that grew it eventually and i moved up to formula to which is just below formula one. and i met people and we decided to start a relationship so i gave up the bar after five years and entered the world of motor racing. >> what happened, because it was a very distinguished career.

it said at one point you were president of fisa which is part of the fia but in 1991, little bit late, 1993 you are elected president of the fia which is the governing body of formula one. >> that is correct. >> you remained in that role until your retirement in 2009. please just give us a thumbnail sketch of what might be said of your achievements and that role. >> well, fia is known because of motor sports and particularly governance the world federation of all the big motoring club so during the time i was there we expanded enormously. the amount of activity concerning motoring and i had a

great deal of activity particularly in brussels with road safety and the environment, and the main thing i did was, i started with other people in the new car assessment program which was a test program to improve the safety of vehicles and that led to really what could be called a revolution in the safety of road vehicles. i think this contributed to saving a great number of lives, hundreds in this country and thousands in europe and of course it wasn't just me. it was the organization which i had it but that is a side of that nobody talks about it. they talk more about formula one motorsport but it was actually the road safety, the environmental things, things like improving the emissions legislation. there is an endless list of things to do. >> road safety across the piece?

nothing to do with trying to drive fasba simply trying to drive safely on the roads in countries throughout europe? >> exactly so it was the best on the road for example in this country. about 30% of that is due to improve vehicle safety and i think what we did was probably responsible for most if not all of it so it is significant. >> the world as a glamorous world. would you say that you were -- publicity mr. mosley? >> no, never. i tried to get onto my job. is a bit like running a hotel. if it's done properly you receive -- and the people with with the stars and the publicity were the drivers. my job really was to try to run it and make sure first of all nobody got killed and secondly it was run as fairly as it

possibly could be in a very difficult technological environment. >> we should note that he received aid -- in paris the only public function that your wife attended. is that correct? >> does correct. that was entirely to do with road safety. >> observing on a personal note, this world is a long way removed from the world in which your parents inhabited. is that a fair way of describing it? >> well it is and there was an element of deliberateness about it. the first time i took part in a club race, people were standing around talking about the list of people. some said max mosley, he must be some relation of alice mosley from leicester and i thought i had found a world where it was slightly different. >> thank you.

we will move straight now two paragraphs 10 and witness statement. and the date is the 30th of march, 2008. it is an article published in "news of the world." i'm just going to give the heading. we are not going to look at the text. let me just paraphrase one matter and certainly we are not going to go further than that. but the heading is -- [inaudible] >> formula one had with five hookers. and the article itself links you with your father's. >> yes it does. >> the article appeared on the front page and then on pages four and five of the newspaper.

photographs appear which were the result of i think a covert camera in the lapel of woman e as you recall. is that correct? >> that is correct. >> the article is not in the first edition of "news of the world." it was in presumably the second edition. why do you think that was the case? >> i think that was to avoid any danger of me finding out about the article and not being able to stop it from being published. >> this is what you said. the first to know the article is when it was drawn to your attention and you were given no forewarning by anyone. >> that is correct. it was about 10:00 on a sunday morning. >> the article had two aspects, those personal aspects that goes without saying but overlaid on that was the nazi theme aspect.

the nazi theme was particularly damaging. is that right? >> well yes. the other thing was straightforward and very -- which i thought was outrageous but the the not the allegation was completely untrue and to me particularly enormously damaging. i was outraged by that. >> what happened and tell me if i've got this right. on the "news of the world" web site, the -- was placed. is that correct? was it placed, put there in a way in which it could be copied by others to your knowledge or not? >> my understanding is that there is software that prevents video being copied, but they did not for whatever reason have that software so the video was then copied all over the world. >> i think initially it was

removed by the "news of the world," however they have been notified you that they were going to put it back on line and that prompted you to apply for an emergency injunction. have i got that right? >> i think that's right from memory. we asked them to take it down and then we applied for an injunction, but they put it up again over the weekend even. >> just moving ahead little bit mr. mosley, the precise chronology that the applications in emergency conjunction were heard by the justice the friday afternoon which was the fourth of april and you indicated you had -- over the weekend and delivered it on monday morning. have i got that right? what happened over the weekend in relation to this? >> as i understand it, they then published a second story of which purported to be an

interview but we found out subsequently at the trial that mr. fell becker wrote the article had written it beforehand, ticket up to milton king and said i want you to sign this. here is a thousand pounds and intimated if she didn't sign at her picture would be published on pixel weighted. >> selectman understand this, the article is the previous weekend. >> yes sir. >> it comes with a conjunction. he reserves granting relief over the weekend. >> that is right. >> and that is when you learned of these other activities? >> yes. >> thank you. and the second article is over that weekend where you told us the circumstances in which was published.

in other words no evidence at all. >> no, i mean what happened subsequently is that the woman who was supposed to have given the interview appeared on sky television and said there was no truth to this not see allegation at all. i should've said the main purpose of a story on the sixth of april was to try to stand up against the allegation but she actually didn't turn up at the trial because she was not prepared to perjure herself and secondly, there was no truth whatever to the story. >> hang on, i'm just using chronology because the trial is much later on. >> end date sir, yes. >> sky news, i'm sorry. sky news came after the trial. i'm so sorry. she didn't turn up at the trial. >> the facts are very much in your mind that i've got them i think but i just want to be clear. >> was three years ago. >> is important to keep

chronology in mind and not to rush too far ahead. >> i think we can do without that mr. jay. >> one aspect of the second article which you draw attention to in paragraph 15 of your witness statement at the end, we don't have the article available but they made it clear that the tape was being sent to formula one chiefs, is that correct? >> that's correct. >> your feeling was when you develop this paragraph 16, that the purpose of the second article was to -- the news. is that correct? >> that is correct. >> now the judgment was given by the justice on the ninth of april which i think most of in a wednesday. it doesn't matter but in terms

of summarizing it, its it's outcome, you were unsuccessful principally because the material was already so far into the public domain that there was no practical purpose the justice felt and granting future relief. >> said the damage burst and in another place he said he didn't want to -- he was really saying there was no point in giving a junction. >> what he did order was that there should be an expedited trial of your privacy. is that correct? >> that is correct. >> and the matter was very considerably expedited because the trial itself -- >> you are going a bit too fast

mr. jay. let me just understand it. the justice took the view that there was no point in -- was something that is already happened and if you refuse to release but he did as i understand your evidence, observe there was no legitimate interest, legitimate interest served by the footage at this stage. >> that is correct. >> didn't grant relief in relation to that. if i understand what you have said, that didn't stop "news of the world" from reposting everything again. >> that is exactly correct. on the internal matter, page 11, number 3108.

it makes precisely those points. >> right, so then he orders an expedited trial. the hearing date could be placed at for days, maybe five days, the 14th of july of 2008. the judgment itself was delivered or handed down on the 24th of july of 2008. >> yes. >> we know that from page 14 which is a judgment which i will count in a moment. so this is all happening very

rapidly in the usual course of litigation if i can so describe it. 1.though, was it explained to you that if you decided to take defamation proceedings rather than proceeding to a breach of confidence, that the legal process would be much longer? >> well sir i was told that it would be about 18 months, and that for me would have been really academic because what i needed to do was have it very quickly and the allegation was completely untrue. >> in terms of the choices which were available to you, on the one hand, you were facing expensive litigation. that is obvious. were you given any idea. i'm not going to ask you about in terms where the win or lose

but were you given any idea of how much the litigation might cost? >> yes. when i had my first meeting with counsel, they explained to me very carefully at first of all there is no such thing as certainty in litigation which i was already aware of. that if i lost it would cost 1 million pounds or more. if i won, it would still cost tens of thousands of pounds. by taking the matter to court, the entire private information which i was complaining about would be rehearsed again but in public with all the press there, which would have been an absolute privilege for anything that was said and the end of all of that, no judge could remove the private information from the public and indeed by going to court i was -- to which the public was aware of. taking all that into account, i thought what they had done was

so outrageous, i want to get these people into the witness box and demonstrate that they were liars. the only way to do that was to put it -- this risky and unpleasant process which i then strive to do. >> with any other choice -- not the mike the only other choice was to retreat, and he. >> indeed and of course first of all i felt that was the wrong thing to do, because even if i went to some obscure village in the andes come in a week or two people would know about her thanks to the "news of the world" information on the internet but i also felt that this was typical of some of the things they do and i was somebody who fortunately had the means and a little bit of knowledge and within 18 months would be free to concentrate anywhere. i felt if i don't do it, who was

going to because the number of people they pick on, who have got the means to fight it is infinitesimally small and it really, i mean, one of the terrible things is unless you are very fortunate to have a bit of money you simply can't take this on. >> we will deal with the number of contextual points before we deal with the proceedings. the first is the draft of dissemination around the world with the internet of course is obvious that you touch on 22 of your witness statement. indeed you point out that the print media alone, there were 790 separate articles written in various u.k. newspapers and on

line between the 30th of march march 2008 and a third of june 2008. these articles were all commentary on articles and "news of the world." >> indeed and of course on the internet, it was even more extensive. one example -- though i have very good energetic lawyer in germany and they think they so far shut down 193 different sites which were repeating the news. not shutting down the sides, they call that removing -- >> and the matter itself is obviously of interest to the fia but they commissioned a report for leading counsel here and his report as you make clear in your evidence it has exonerated you. >> yes, he said there is no basis whatever so -- for the false allegations.

>> this is paragraph 25. it is an unedited video copy of it that was sent to the presence of the fia by "news of the world" on their instructions. is that correct? >> is correct. that was a matter of complaint in the french courts at a certain point because it was potentially criminal what they did but they simply deliberately sent the entire video inviting the fia to show it to all the members. >> and the inference said that they were putting some sort of fluke pressure on the fia to let you off. is that what you're saying? >> absolutely. i had the impression from the outset that as soon as i challenged the original story,

that the entire resources of news international, news corp. would deploy effectively to try to destroy me. argosy one way of attacking would be to send this thing to the fia and tried get them all to look at it in hopes that they would get rid of me. [inaudible] >> yes, one of the things i did at the outset was i suggested that we should have an extraordinary general assembly and by the membership to vote. they were the ones who were entitled to tell me i should resign nor should resign so i called the general assembly. everybody wants to say something was allowed to do so. at the end they voted and i won by a substantial majority. >> in relation to the evidence that was used in the civil

trial -- >> before we go on to that new topic mr. jay let me ask a new question. two minutes ago you said your energetic lawyers in germany had to shut down 193 different stories on different sites. >> yes. >> is it only in germany you have taken such action? >> oh no. i've done it in a number different countries. i think there is litigation going on in 22 or 23 countries at the moment and it is just an ongoing process because i mean, i am trying to do everything i can to get this material removed from the web and it's not easy. it's ongoing and it's very expensive. germany is actually number one of example because of the nazi thing. it got very much picked up in germany. >> how many sites have you been able to close down? if you don't know exactly and just trying to get a feel for the size?

>> the order of magnitude. it's in the hundreds. my lawyers could probably give us an exact figure. one of the difficulties is that google has these automatic search machines. if you google my google my name that will appear and we have been saying to google, you shouldn't do this. this material is illegal and these pictures are illegal. they say we are not obliged to please the web and we don't want to please the web so we had brought proceedings against them and actually in germany where the jurisprudence is favorable. we are also considering ring proceedings against california but the fundamental point is that google could stop this material from appearing but they don't. it's a matter of principle and my position is, it's the search engines where if somebody was to

stop the search engines from producing the material, the sites don't really matter because without the search engine nobody's going to find it. the really dangerous things are the search engines. >> that is part of the problem. >> indeed. >> the evidence before the justice, this is quite complicated and sometimes if i may, identify some highlights. otherwise it will get logged down in detail which people will not understand. just a number of points i would like to bring out. the first is the hidden camera which is on the lapel. had she been given any

instructions by the "news of the world"? >> well she was because they had to rehearse to show her how to fit it and how to work it. this rehearsal was actually recorded on the tape. i don't think they knew this, and at the beginning of the tape, when you are getting to do the -- get him to stand back about three meters or you get it all in the shot. and it was quite clear to me that when i saw this, that feldt was trying to shut the whole thing down from the beginning. she of course never mentioned anything to do with nazis. everyone would have been horrified. particularly the german -- because being a modern german person she would have been horrified. it is absolutely clearly there.

>> and to be clear about it, you obtained a copy of the video which is part and parcel of the disclosure in the civil proceedings? >> indeed. >> than the second and you have party already dealt with this mr. mosley it, is paragraph 33 and this was the second article on the sixth of april, the follow-up article. you were offered some more money, 8000 pounds you told us. so we understand it in sequence what was the significance of this point? what were you driving at here? >> well to me it is that they wanted a follow-up article because i had said this was untrue. they wanted to really put the boudin, so they wrote this

article purporting to be by the lady, and completely composed myself. i went back and rewrote parts of it and then during the trial, they were saying that this was the result of numerous telephone conversations, which i don't pick anybody really believes. not surprising i don't think the conversation ever took place. he simply invented the entire article. >> m. paragraph 34 and 35 explain that within the "news of the world," the story was very tightly kept. in other words very limited number of people because the risk of leaks would obviously cause a consequent risk that you might take the proceedings to injunction. is that right? >> that's right.

i think they realize publishing this article was completely illegal and therefore if i found out about it and went to a judge it would be stopped but knowing, therefore knowing it was illegal they took a number of courses including this booth as mentioned earlier to make sure that nobody in my camp as it were would find out. >> in the last evidential point i would like to deal with, and this is quite a detailed.under the heading blackmail. and it does relate to mr. -- could you tell us about this in your own words? maybe we can start with an e-mail which was sent from the second of april, 2008, three or four days after the publication of the first article. the e-mail reads, i hope you are well.

.. >> will you comment on that, but before you do, paragraph 37 of your witness statement, and just about to send you a series of pictures to perform the basic of this article this week and reveal of the identities of the girls involved because it's the only follow-up to the story. our preferred story, however,

would be you speaking directly with your dealings with max, and we'd be grateful and return you full anonymity, pixelate jr. faces and have a sum of money for you putting you in the driver's seat giving you control and preserving your an anyone times, and your names will not be used. do not hesitate to e-mail me with the thoughts, and there was an offer of money. anybody reading that, and this was just the conclusion could think this was close; is that fair, mr. mosley? >> i think so. what they said in the last e-mail is if you don't cooperate, we'll publish your pictures unpixelated, but if you

do, weave -- we'll give you 8,000 pounds. it was terrifying for the girls if their families would find out of their work. three had significant positions. one was a very serious scientist. another one had a major position in health care. another was running an office, and only one of them fairly anonymous, and they were all at risk, and this being published in news of the world was terrified them. the only admirable thing is they did not succumb to it. >> thank you. now, i'm not going to deal with the trial itself, but the justice of mrs. eddy and try to

navigate my way through it to understand the findings and reasoning because the reasoning is important in terms of article 8. now, in our bundle, the judgment starts, sir, internal number 14, and it is a lengthy judgment. let me try -- >> certainly a judgment that repays reading in full. >> yeah. >> yes. >> mr. justice eddy, having set the sign in paragraph 44 on the little internal numbers page 24, considers the factual question was there -- [inaudible] and his conclusion was there was not, although his conclusion

comes as a slightly later point in the judgment. paragraph 79, this is page 31, the justice deals with the blackmail allegation. he's absolutely clear about it, mr. mosley, paragraph 22 on page 32. the justice says this appears to contain a clear threat to the women involved unless they cooperate, their identities would be revealed. there was then cross-examination on this issue, paragraph 85.

he accepted the e-mails could be interpreted as a threat, and the justice's observation in relation to mr. miler, the end of paragraph 85 just seems to fall short of the endorsement of the reporter's behavior. >> a wonderful way of understatement. >> yeah. >> well, it's the witness, mr. miler, works out the cross- examiner is talking about plaque mail, and -- blackmail, and doesn't think it is, but it could be interpreted as a threat, and i accept that. i would love to know how else it could be interpreted. >> mr. justice then asked his own questions in paragraph 86.

his questions were directed to the obvious point. why wasn't this raised? here's him possibly blackmailing people, why didn't mr. miler raise that with him? the answer was not in the justice's view or the view of any objective read satisfactory, and what justice says at the bottom of page 33, this is effectively a non-answer from which it appears mr. miler did not consider there was anything at all objectionable to the approach of the women because he didn't query at any stage, and this remains to be a remarkable state of affairs. arguably quite a strong judicial criticism there. >> well, i mean, coming from a high court judge, i think that's

impressive, but almost more impressive is that a few months later, they applied for the title of newspaper of the year based on their ground breaking year, we believe the impact of our experience and our way forward, and following the max mosley legal ruling helped define legal tabloid reporting in britain. the mosley conclusion itself, and they said what a good job was done, and i think that's completely sentimentsal because that's their entire attitude. >> in paragraph 87, the lordship has the cross-examination on this point, not going through it

with you, but the upshot was at the end of the paragraph 87 that he didn't understand the point put to him in cross-examination or possibly pretended not to understand the point put to him. i'm not sure exactly which. >> yes, i believe his line was, "but i was giving them a choice." that's what blake mailers -- blackmailers always do. >> that's the facts we need, and to be absolutely clear, the judge makes a finding there was no nasty thieves. just before you leave that there is a point here because i go wac to the words that ring in my ears alls time, "culture, practice, and ethics," and mr. eddy said, i'm offering to pay them money, offer to pay them, not take anything from

them, so i'm not blackmailing at all. 245 thought never crossed my mind. i'm offering the choice, and the judge goes on, and it seems he did not see the point, yet he's elementary that blackmail would be committed through threatings of something which would not in itself be unlawful, so the question that's obviously going to have to be asked quite apart from any questions about it is weather that state of mind was limited to one reporter or one newspaper or is actually the state of mind of others. >> it's precisely a line we have in mind and has been asked to deal -- >> yes, yes, but my point is that it's not just him because one can reach conclusions about an individual or find a dandy and don't go very far.

the question is is this is pervasive perception, and if not, then i need to know it, and if it is, then equally. >> yeah. >> to his conclusion as a matter of law. you see whether we can chart a path through that and move to page 40 on the internal numbering in paragraph 110. he's dealing here with a public interest, and was there justification to deal with the intrusion, and he deals first with the point that i'm sure it was featured in the news of the world thinking, but whether there was underlying criminality, and he soundly objected that point. that's something we need go

into, mr. mosley, and then paragraph 112 there's a nasty themed point. there's two aspects to this. the first is paragraph 123 where he finds there was not a nasty scene and therefore self-of self-evidently it would not classify as a national public interest, and in paragraph 122, he considers, well, if i had come to the conclusion there was a nasty scene, what then? maybe his conclusion was somewhat equivocal. he didn't have to decide the point. you may or may not have had a finding of fact, which he

didn't. the third public interest issue, and this, i think is an important one, is under the heading depravity and adultery starting at paragraph 124. the argument in which mr. justice of addressing was whether there was a public interest in revealing immoral, depraveed or to an extent adulteress behavior. the lordship found that there was not. really as a matter of law, in particular paragraph 127. his analysis of the cases and

case in the house of lords campbell was given there was the human rights in play here, mainly the right to privacy, and i quote, "it's not the journalists who undermind human rights or if the judge refuses to comport them, but on the grounds of moral disapproval. everyone is approved to beliefs to the effect that certain types of sexual behavior are wrong or demeaning to those participating. it does not mean they are entitled hound those who practice them or hurt those who live life the way they choose." the point he's making given that we're in the domain of privacy, the law does not concern itself with making a moral judgment of what concerns over the domain of privacy is my understanding of what the justice is saying. do you follow that? >> i do. i think that it's entirely

reasonable because the problem is that if you could breach privacy merely because disapproved of what someone was doing or not to your taste, well, we would be all over the place because sexual behavior covers a huge variety of things, and when you start analyzing it, what i might like, somebody else might hate and vice versa, so where would it stop? the rational thing is to say provided its adults and provided itself in private and provided everybody consents, then it's nobody else's businesses. and justice, if i understood him rightly, was stating the law to be precisely that. in other words, it's the sort of john stuart mill attitude rather than the rather disapproving moralist attitude, and i think

the law recognizes the john stuart mill that if you're not doing any harm to anybody, you should be allowed to do whatever you like, and that view is the modern view, but once upon a time, people felt completely able to pillar ri somebody because they disapproved or their tastes were different. we moved oven from that, and the idea it's tabloid journalists to pillary people is distasteful, and had that not disappeared, the gay community would be at risk, and i think he's absolutely right, and i think it's extraordinary that the tabloid press doesn't recognize that, and, of course, the truth of the fact is they do recognize it, but it doesn't suit them to admit that that is actually how thanks should be.

>> thank you. i think one has to be careful to distinguish this position, which, of course you're quite entitled to give us, and we can agree or disagree with that, and that legal analysis, and mr. justice eddy may not share that view, but he was saying analyzing article viii of the convention, the concept of privacy means, and this is how the courts interpreted it, that you do not conduct a moral judgment of what is occurring in the domain of privacy. it is just off limits. you see that? >> i see that completely. it makes absolute sense. >> yes. i know of no case in strausberg or domestically that contradicts that part of the justice's reasoning. it is core to the inquiry.

>> i think it is, and if i may say so, had he got that wrong, it would have been at the court of the appeals, and the fact it didn't go to the court of appeals, i think that strongly suggests that he got it right. >> well that's certainly a fair point since we know the case was not appealed. the only other point of principle that we gather from the judgment is, and this is paragraph 135 -- the point of who decides the public interest and the lordship makes it clear, and, again, this has to be right because it's the matter of the basic law that it's for the court to decide ultimately, if the cation come -- case comes to the court. >> yes, i think that must be right as well >> we'll accept

this the court has to have regard in judgment in tastes of expression of concern. i'm merely just reading on. at the end of the day the nasty theme allegation having fallen to the ground and the immorality point being a point which couldn't be taken, there was no public interest justification to be played, and you won; is that right? >> yes. >> you were not successful in the obtaining exemplary damages. probably isn't necessary to explore why, but he made findings of fact, which meant that whatever the law was in the second head of exemplary damages

law, you with respect able to obtain them in these circumstances? >> that's correct. >> in terms of damages the award was 60,000 pounds, which was -- perhaps still is the highest award of damages in the privacy case. do you know whether it still is? >> i believe it still is. >> awarded by a court. >> i think i'm right in saying, since my case, there's only one fought privacy trial, and it was lost, and of course, people don't for the reasons i explained earlier that you have to be eccentric or determined before you bring the purpose of the action because it's lose, lose, lose. >> well, we don't know how many settled. we don't know how many have settled. >> no. >> maybe you do. >> i don't know, no, but i think

what happens is if somebody finds out therein as application for an -- there's an application for injunction which will usually be granted, that's the end of the case, and if there's an application of injunction that fails, then the information will be published, and that's the end of the matter so to speak, so i think somebody being awarded damages, i don't think -- certainly, none of the settlements i heard of, of course, the famous taylor and clifford settlements, but that's another matter, and there's reasons there, but i have not heard of large sums of money changing hands. >> mr. justice at the end of the judgment recognizes two obvious things. the first is, and it's always there, that no amount of damages can fully compensate you for the damage done. that would always apply whatever

the context, and secondly, he says in relation to you, he is hardly exaggerating when he says that his life was ruined, and this is the genie out of the bottle point. >> it is because you work all your life to try and achieve something or do something useful, and i've got -- when this came up, i got to the age of 68, and i'd achieved things i was proud of, anyway, to do -- that had i been doing, and suddenly something like this happens, and that's what you are remembered for, and however long i live now, that is the number one thing that people think of when they hear my name, and, of course, it really matters, and sometimes if i could just make this point, it sometimes said, yes, but it's the same with personal injuries. if you have an injury, you lose your arm, the courts can do nothing. they can only compensate you

financially, and, of course, that's true, but the difference in the fundamental difference is this that if you could go to a high court judge and say i'm about to have an accident, i'm going to lose my arm, will you please stop the accident because this is all you have to do, make an order, it's inconceivable that he'd refuse the order. the problem with accidents is every possible precaution is taken to stop them from happening, but in the end, they happen. whereas any revolution of privacy can be stopped by a judge. the only thing that's absolutely essential is that you should know that you can go to a judge. as soon as you know about it, it goes to an independent assessment where the judge weighs your right of privacy to somebody else's right to free speech or whatever, and he takes a decision, but if they ambush you ark and it's out there, no judge on earth can save you. that's really what it comes to. >> the testament was handed down.

there was not an appeal. we know that as a matter of record. there was a public statement or prepared statement delivered by mr. miler on the steps outside here accusing the courts of introducing a privacy law by the back door, and that's paragraph 50 of your witness statement, but to be fair to mr. mielg e that's -- miler, that's his right, isn't it? to comment on the judgment. would you agree? >> i think he's got an absolute right to comment on the judgment. >> whether he should have commented without appealing may be for others to judge, but there was some fairly -- certainly bad taste, and i may be forgiven for describing it in that way, reporting -- well 52 of your judgments -- >> just a second. >> of your statement, pardon me. some newspapers couldn't resist

the rather freedom craft. >> yes, this is sort of typical of the steady stream of that sort of thing coming from the gutter press, and, you know, i think one just has to put up with it. once it was out they were going to do this, but it's not just the sun. >> but, again, they have the right to comment and whether they do so in a high minded way or some different way is a matter for their hostile. >> indeed. i think it reflects more on them than on me. >> okay. well, actually, it's one o'clock. >> yeah, before we finish, you quoted, mr. mosley, from a document which you described as news of the world put themselves forward for or otherwise being put forward for an award.

is that in the bundle of documents. >> i'm really sorry, sir, it's not, but i have a copy, and we can make copies of it. i forgot to put it in. >> no, that's fair enough, but i'd like to see it, and just so i make it clear why i want to see it because it goes back to whether this is one reporter or, indeed, one journal, but what is happening in the industry as a whole. >> as you will see, this makes it clear they were very proud of what they had done. >> all right. that's the point. well, i'd be grateful if you could make that available. thank you so much. two o'clock. [inaudible conversations] [inaudible conversations]

>> i believe i was about to take you to paragraph 53 of your witness statement, please. you suggest they agreed to launch a campaign against mr. justice eddy. >> yes, that's correct. >> was that a joint campaign or a several campaign? >> it's my understanding it's joint in agreement. my understanding is they got together, but then decided the justice was to be attacked. >> yes. well, i am asked to put you this, and it's probably no surprise that associating this position is that whatever stance he took, and he was quite entitled to take it, it certainly was not fair in any collusion with ms. brooks. he did it of his own back. do you have any comment? >> i would not find that

surprising, but i must say in general about these people, and by that, i mean, brooks as well, and in rebecca's case, she could deny for england because they denied the e-mail. they denied that they'd had more than one journalist involved in hacking. they denied it again until it became absolutely obvious and mr. edmondson was fired, and april of this year they admitted it could have happened between 2004. i could go on and on. >> fair enough. i get the picture. >> i get the picture of your view and you are entitled to your view as other people are entitled to your view, but the question is does the basis of your understanding have an evidential foundation? >> it does. i was told this by a senior --

former senior employee of news international. it would be wrong for me to announce the name because this is confidential, but i can write it down for you, sir. >> well -- >> if that would be helpful -- >> so you got it from a source, and you can't go any beyond it? >> correct. i'm very confident that i was told the truth. >> well, fair enough. >> before i deal with the very serious issue, paragraph 54, you refer to another piece in the daily mail which has a chilling title, and another example, though, of comments rightly or wrongly on a decision, isn't it? >> well, one could say that. i would say that this is calculated to intimidate the judge. if i put myself in the position

of the justice, somebody's who a distinguished judge and jurorrists woo are not used to being attacked with public domain. i would find that offensive. i would find that worrying. if you think those sort of articles are going to appear, it must influence you to some degree. you must realize just the way the so-called celebrities realize that they are going to be attacked. it's highly unmrs. eddy cant, and i can't believe it's done for any other reason other than to intimidate. >> let me assure you, mr. mosley, that although went -- we don't hit the headlines real frequently, we are used to being criticized and saying nothing about t and that may require biting one's tongue, but we recognize that goes to the

territory and does not alter what we do. >> i'm sure it has no esk, sir. >> i have to deal with impact, and it's a serious issue. i was touching on paragraph 57. appreciate a personal matter, but tell us in your own words about that, please. >> well, yes. my son was a drug addict, and he was one of these people -- extremely intelligent. had a mathematics ph.d., co-authored a paper on economics. he had written open source software. intelligent. like a lot of intelligent people, he suffered from depression, and his way of dealing with this, the only effective way he found was drugs, and he was getting to the age where he knew that if he didn't get off -- he made several attempt to get off the

drugs, and if he didn't, this would end badly. he was struggling with it. he had overcome his problem, and the news of the world story had the most devastating effect on him. he really couldn't bear it. i mean, it was just so awful, and one can imagine that. it's bad for me, but for my son to see pictures of your father in that sort of situation all over the newspaper, all over the older, all your friends seeing it, also my wife, and he really couldn't bear it. he went back on the drugs, and it would be wrong to say he committed suicide. he didn't. that was clear from all the circumstance, but like many people on hard drugs, it's extremely dangerous, and you make a small mistake, and you will die, and that's what happened. >> that was in may of between? >> it was. >> and you deal with it -- some of the other effects of that in

paragraph 58 that you went to your late son's house to sort out his personal things, and there was one journalist on the doorstep, and then frankly more arrived within a short bit of time. >> this is correct. what was to me, i don't want to sort of overdo it, but what, to me, was so horrifying is there was no sense of this matter or that he's a human being. these people actually -- it's a terrible situation to be in. it's a story so let's be there, and they had the photographers there, and i called my solicitor. he arrived on the scene, and gave them all a letter and they left because they knew very well -- they were called there -- obviously all on the mobile phone, but they were probably told that we have a rerun of -- i think it's called

happenover versus germany. i would have -- i thought it was absolutely outrageous to take pictures of somebody this that sort of situation. it was a desperate situation. they have no human feeling at all. >> thank you. now, we've already touched on some of the other consequences of internet publication, and the next section of the witness statement deals with that in some detail. internet use in the united kingdom through the news of the world, and so you win your case, and then there's the effects throughout the world, really, with the worldwide web, and you've already told us you instructed, as you had to have done, firms of lawyers in 20 different jurisdictions in order to try to close this down. >> that's correct. we have not succeeded. all we can really do is

mitigate, but we have reduced it. that must be said. >> you told us how much that's cost you? >> i dread doing it, but it's well over half a million pounds, well over, and it's ongoing. >> i'd like to deal with a related issue, namely, the economics of lit gages of -- litigation of the particular case, and paragraph 76 of your witness statement. >> yes. >> something any civil lawyer will understand immediately, but public at large would be forgiven for not understanding why if you went a case you're not left out of pocket, but you are left out of pocket because you get your 60,000 pounds damaged awarded by the justice. your legal costs are your

obligation to pay your lawyers whatever they charge you, and that's a matter of contract between you and them. you get an order of assessment of costs from the judge which you had your case, and then another judge assesses the cost, and the end of that exercise all by agreement you ended up with a very good result, 80% of all your costs were paid by the losing party, news international. is that the fair summary of what happened? >> that's the exact summary because i think the difficulty is this that the -- you never accept -- you never get all your costs, and it's true of the lawyers, but you don't, and that means there's a difference from what the courts give you and what you have to pay. they have your damages, and in this case, they exceeded the damages. i mean, virtually any other case, they would exceed the damages. >> we actually learned about

this yesterday because mr. louis was making the point in connection with the settlement of one of his actions that he received every single penny piece of his costs. that was the taylor investigation. >> yeah. that may or may not had one or two unusual features, but in your case with the good result, a short fall, and that's 30,000 pounds out of pooing, wasn't it? >> exactly, exactly. i think that mr. louis in the taylor case was astone ired at the level -- >> he made that point. he made that point. >> i'd like to come back to a point which i know you regard zings treemly -- recorded extremely important, prior to the notification, and 234 your own -- in your own words, give us the nutshell of the point you wish to impress on this inquiry

please, mr. mosley. >> in a nutshell, the point is that in a privacy matter, once the information has been made public, it can never, ever be made private again; therefore, the only effective remedy is to stop it from becoming public, and what is needed is 5 mechanism to get -- is a mechanism to get it to stop it, and that is completely doen if you know it's about to be public, and the only gap in the law is if the newspaper managed to keep secret their intent to publish the information, and then out it comes, and it's too late, and there's nothing more to be done, and what follows from that is there should be prime notificationment one quick point on that is that in evidence, in 99 cases out of

100, the individual has noticed because the newspaper would normally approach something and ask them for comment. now, he may have been slightly exaggerating, but i can't believe he would not tell the truth. it's a minority of cases, but there's the very cases where the newspaper knows that if you did find out, you'd get an injunction, so they keep it secret knowing that they -- once they published it, no one in their right mind, say of that myself, no one in their right mind would sue because it costs you money, you get information published all over again, and you don't solve the problem because the information can't be made private again. it's the 1% that are really dangerous, but without prior notification, a newspaper, if they have information that's absolutely outrageous or outrageous pictures, if they can only publish them before the

person finds out, there's no remedy unless one says well 30,000 pounds in repetition is remedy, but the repetition in court is only like suing -- because you have a broken leg, going to court, and then they break the other leg with absolute privilege as well because it just makes it worse, so, sorry, that was not much of a nutshell, but in a nutshell, it's the very case where there's an egregious breach of privacy. that are the ones where they don't tell you and where prior notification is essential. >> there's another argument that might serve as the board, and the prior notification, if a legal requirement, would lead to a rapid hearing before a judge, and the legal costs will be kept within reasonable bounds, and the second point is that you only get the injunction as a claim unless you show on balance your privacy has been violated,

and there's no public interest justification. so, in practice call terms, if you win the prior notification injunction, you, in effect, will win the case, but the other way around, if you lose it, the newspaper will public with impunity, perhaps rightly, baa they know they're in the right. it's all self-contained in a more rapid, and cheaper process. do you agree or disagree with that? >> i agree completely. my information is to seek an up junction, the costs are something less than five-tenths of a full trial, and, of course, that also drives the newspaper, and if i may, as you say, under, i think it's section 12-3 of the act, you have got to show you're more likely than not to win the case, and you have to satisfy the judge that you're more likely than not. well, what can be wrong with that? if an independent judge thinks

you're more likely or not to win, then you should have the injunction because if it's out, although you win the case, you win nothing because the information -- >> that answer's not only going to satisfy the inquiry, but although, privacy proceedings, half a million pounds to each side is really on the for the very wealthy, and proceedings, injunction proceedings, are for the wealthy involved, and prenotification does not deal, if i way say so, to the ordinary person with limited means. do you agree with that? >> completely, and i very much believe that what would be an alternative mechanism, and there should be some form of tribunal, some form of enhanced regulatory body. it's a big question, but to which you could go, and i think it's absolutely essential that such a body should be free of

charge because otherwise you -- however cheap it is, even if you go to the county courts like the academics suggested, it's still beyond the means of a great many people. another reason it should be free, if i may say this, invasion of privacy is worse than burglarly because if somebody robs your house, you can replace the things that have been taken. you can repair the damage. if somebody breaches your privacy, you can never put it right again. it matters. with burglarlies, there's a burglar in your house, you call the police. they don't say, oh, are you rich? if you're not rich, we're not going to come. they come and arrest him, and there should be a similar mechanism to stop people breaching the privacy of an ordinary person not in the position to find the money to ask for injunction. >> to say it should be free of charge begs to question as to who is going to pay for it.

>> well, indeed, sir, but the -- if you had a body that was similar to the press complaints commission, which is free, but independent, both of the press and the government and everybody else, and which made the essential decision often not talked about, the decision between making the rules and enforcing the rules, and the only -- at the moment, the rules, themself, are not bad. what is missing with the pcc is the ability to enforce them. now, if you had a body that could enforce the rules, it welcome -- you don't necessarily have to have super qualified people. i prefer to have anyone deciding whether my privacy should be breached or not -- >> the other argument is that it would smack censorship, wouldn't it? >> no more than the existing procedure.

the only difference between that, sir, and the existing procedure is it would be available free of charge. people don't say -- i if had the knowledge and asked for injunction, i suppose news of the world might have said it was censorship, but i don't think any reasonable person would have. >> let me put another situation to you. forgive me if i take your example because it's actually allowing the point to be made and the justice was unsure whether he was satisfied with the underlying allegation, and whether that would have been in the public interest or not, and now what concerns me thinking through the point as i was reading your statement and mr. justice's judgment was how you're going to resolve issues. you will go along the to the judge and those who don't

understand, these are comparatively short hearings saying my privacy's being infringed, and this is what they want to say about me, and it's outrageously untrue, and they will come along and said, oh, no, it isn't. it's absolutely true. then suddenly you have to have a trial because the balance of whether you grant injunction depends on whether it's -- whether you think the allegation is true or accurate. >> well, indeed, and, of course, that situation already exists, and as far as number one prior notification, and number two, a very inexpensive, free of charge tribunal is another issue, but on the issue you just raised, it will always be different. normal injunctions --

[inaudible] the lobby for the standard higher in privacy, but i think those very difficult questions are what judges are for and what they do, and what's dangerous is to allow the editor of the tabloid to weigh this up when really all he wants to do is sell newspapers, and in the particular case you mentioned probably what the justice would have done is say he can see no public interest in this. he did actually say that in the judgment -- >> yes, well, maybe i have to change your facts a little bit, but i want to get to a situation where there is a real argument about public interest which requires a proper invest -- investigation. >> well, then the judge should lean slightly, if i may put it like that, in article 12-3 because it's a little bit like

the situation where i've got a tree at the bottom of my garden, and mr. jay says he's entitled to cut it down. well, the court would normally say, well, he may be right, mr. jay, but once you cut it down, you can't put it up again, so we'll leave it there pending trial, and what the judge would like to do in the difficult case is say this is a difficult case, it needs a trial. i'll grant injunction, but i'm giving an extra trial. >> all right. >> there's submissions of law on it, but it's fair to say in your case in paragraph 20 and 36, the judgment of the 9th of april of 2008, and if not for the bursting point, you would have got your injunction. that's my reading of it, and you don't have to comment to me or not, and it's a matter of -- but i've given you that assurance.

what happens in the case where the public interest is more debatable, that could be dealt with by legal submission in due court. i would like, however, to dwell just very briefly on the reasons that the human rights chamber gave for rejecting were argument. now, in this very fat bundle, i'm going to go straight to the discussion or conclusion of the european court, page 410 on the small numbering. now, this document, of course, is in the public domain, and not going to ask for it to be -- [inaudible] for those who don't understand, in relation to prior notification, you took a case, and it went to the grand

chamber. >> it went, sir, not to the -- to the small chamber. >> oh, the small chamber. >> i tried to go to the grand chamber. >> and they refused. >> that's it, yes. >> thank you. i'm going to summarize this as briefly as i can. at paragraph 120, they said that the general rule is that damages after the event will satisfy article viii. do you follow me? they considered paragraph 121 notwithstanding that there's good reasons for requires prenotification as an add junket -- adjunct to article viii, and there's an appreciation argument that means in essence, well, the european court leaves it to the

domestic court, wide margin as discretion as to how to organize the procedures, but then there is an interesting section of the judgment i drey to your -- i draw to your attention because it is perpetrated by others. page 412 at the bottom paragraph, paragraphs one through six. however, the court is persuaded that concerns regarding the effectiveness of the pre-notification duty and privacy are not unjustified. two considerations arise. first, it's generally accepted that any pre-notification obligation would require some form of public interest acception that the newspaper could not summon a subject if they could defend its decision on the basis of the public interest, and in order to prevent the chilling effects on freedom of expression, a reasonable belief there was a

public interest at stake would have to be sufficient to justify no notification, even if subsequently held that no notification arose. can i suggest to those who write it that it's arguable at least that two matters are conflated. first, there's the public interest in not notifying you because you might be a criminal, you might destroy evidence or whatever, and then there's the public interest in justifying the publication in due course. what arguably the court had done here is use these arguments that pertain to the second consideration to the first, and therefore have entered into error, the same error which you would say, perhaps, infiltrates the reasoning of the select committee when they come to address the same issue. is that a fair summary of your position? >> that's a precise summary. the issue that matters is is the

prior notification argument in relation to the notification itself, and when it gets to the subject matter, the judge will look at that. >> the other point which they make with great respect again -- [inaudible] they say well, if they were an injunction, the newspaper might break it because they're happy to pay the punitive fine, which seems to me to involve a bit of a misunderstanding of what the rule of law entails. if you got the injunction, you're in attempt of court and it would be unthinkable that a newspaper would ever take that risk. that could be the complete answer to the europern court's second reasoning. >> it might be an argument to find, but it's an argument saying it's okay to breach somebody's privacy. >> however, one republics the

judgment. it is the law coming from the grand chamber were invited by you to reconsider, and they have not gone to give you the privilege to do so, the matter now rests with this decision. >> that is correct. >> that doesn't mean, of course, that you'd say domestic law could not move further than european law and provide you the protections which you say should apply namely by notification because it's within the gift of parliament to provide for that if so advised? >> i mean, the only reason that i went to strausberg is i thought there was no chance of convincing a u.k. government to bring in the necessary legislation because to put it bluntly, they were enthralled with mr. merdoch and other big

newspapers, and any reason why a law should not be brought in, the case of prior notification to my rare thinking is unanswer baling. i think it's just so absolutely clear that it's the right way to do it. the only understanding issue is how you arrange the tribunal to do this without it being costly. that's the only issue, but you need prior notification, an independent person to decide in a difficult place whether it be published or not seems to be unanswerable. >> thank you. well, towards the end of your statement, you deal with the wider picture and the views and we're going to come to that, but there are some specific points i would like to raise with you. the first point in relation to

to -- you are well aware that he has stated publicly that mr. justice's decision is incorrect. i think you referred in 2008 to the objective and relative view of mr. justice eddy, and then the select committee which we have available. he expects a similar view, and i don't interpret your evidence of saying other that he's quite entitled to express that opinion. >> i think that's fair. >> in a nutshell, what he may be saying, of course, you say it much better than me, and i should not be power phrasing here, but saying, look, this is immoral conduct. many people would judge it such. surely, therefore, there is a part of the newspaper's right of

fair comment under article x or whatever for the matters to come to light because of the nature of the subject matter. now, i've expressed that in the way i'm sure he would not, but the general concept i sought to get across. may i have your comment on it, please? >> well, what was said, i think in the speech to the society in the editorial, he said that i was guilty of unimaginable depravity. well, first of all, it reflects badly on his imagination, but apart from that -- [laughter] it's not a simple comment because i wouldn't -- i had no idea what his sex life is. all i know is that he has this sort of preoccupation with

schoolboys' smock in rise website and his ex in her bikini and ect., he may have a strange sex life, but the point is it's not up to me to go into his bedroom, film him, and then write about it. it's his business. if someone as an unusual sex life, the same thing applies. the law is clear, and i think it's quite right that it's private, it's adults, and it's consented, and then it concerns nobody else. the moment you go into an area where you say, well, i don't like that what person's doing, lots of people do things i don't like. it's not up to me to tell them not to. all i can object to is say please don't do it in front of me. please make sure everybody consents, and that's the end of the matter, and i think i said this before, and sorry to repeat myself, but it's a completely old-fashioned idea. it dates from the days, for example, when i was young, where it was illegal to be gay, and

sort of sexual activities, which some people find normal, i don't, but others do, where it was criminal, and even between a man and a woman, and all that's been changed. the world -- the only person who did not move on is him. >> he said to the select committee, and he -- this is on the 23rd of april 2009, he said this, "with the greatest respect to you, the committee, i think a lot of us were very surprised at the soft time you gave him, and max to present himself as a knight in shining armor in his crusade to clean up the place is an insertion of normalized values in society, and it's like being the ripper campaigning against men who batter women."

>> i mean it's really quite fair, actually, that he should say things like that to the committee because what he's merely saying is he doesn't like or didn't like something i did sexually in private with consenting adults, and the fact that he didn't like it should prevent me from saying the press should not invade people's privacy. it was an absolutely crazy argument and sad thing that every time i'm asked to debate, -- >> he crystallized the point later on. ..

y their private lives with their partners. that's how they are. and the fact is we live in a civilized society where grownups should be able to do what they please. it's not up to him to decide who can do what between consenting adults. >> so the position is clear, the article certainly not an article

would publish because of its nature. you probably recall that part of his evidence, do you? >> i do well. he is in a position, he is like the crocodile kills the animal and then the hyenas come along and scarf venge, and he is the scavenger. >> the agenda is a matter of human rights he is entitled to pursue and certainly not part of his objective he would say to undermine mr. -- what he is doing is exercising his democratic rights. would you accept that much? >> i can't really accept that. what he said was this is an amoral judgment. i think those are the words. it isn't. it's a judgment that recognizes that consenting adults are

allowed to do by the law of this country what they wish in private. he may criticize the law. what he should not do is criticize a judge for imposing the law or applying the law. and what is hypocritical about the thing is that if this were not the law, they could appeal. and he should recognize the reason didn't appeal is because they knew they would lose. he is attacking the judge, playing the man rather than the ball. the ball is the law. if he doesn't like the law, he should change it. meanwhile, all the judge can do is apply it, and that's what he did. >> i think i have taken that point as far as i need to, mr. moseley. can i look now at the wider picture for your evidence? this is part of your witness statement. it starts at 100.

first of all, you deal with the pct. what you say about the p.c.t. is not unfamiliar to the inquiry. you make the various point that no power to sanction. bcc working -- didn't present this most scandalous abuse, and you name them. you mention some positive aspects, paragraph 105-106. cue tell us a little bit about those matters and perhaps how

they fell on you? >> absolutely. the complaints commissioned in my case were helpful when it came to trying to stop press harassment when -- after the death of my son. they did cooperate there. and i believe that i know from personal experience they have had some success in preventing the publication of stories that shouldn't be published. and they have done a lot in that right quite successfully. but the fundamental point is you don't know the stories coming out, you can't bring the pcc for help. that's why it's vital. >> thank you. and then you make the point, which is made -- and the conflict of interest point which, again -- i would ask you,

please, to develop your point of suggested alternatives? i know you touched on this a little bit in your own words, mr. mosely. help the inquiry with your -- >> it is a subject i could talk about for hours, but briefly, i think a tribunal bit of some kind is needed, and the basic principle of the pcc is it is free, that is right. it is paid for by the press -- i think is right -- but i would give the new body -- make it slightly different. i would divide it into one sections. one which would make the rules and one which would enforce them. that would be great deal of work. fundamentally the rules are not that bad. what is needed is a body that can enforce them.

so the body has the power to order a story not to come out if it were justified under the law, would have the power to fine. would have various powers like a judge would have, and i would add to that, the power to stop the press from harassing somebody. not ask them as the pcc does but tell them. but those points could be worked out and i would be very, very happy to submit to the inquiry a detailed proposal. but fundamentally you should be able to go very simply and say, i think my privacy is about to be invaded, and i would add to that, even defamatory statements. i know about the rule but i think there is a case of trying to mediate these things at the beginning. if somebody went with their complaint, either defamation or breach of privacy, and the other side were made to turn up as

well and you have a mediator, a large portion of these would disappear before the started, and most case are quite simple. you have to have some mechanism for the complicated cases to to go to high court and have ways of paying for that. but the overwhelming majority of cases could be dealt with by a simple adjudicator, the two parties sitting there, the issues explained briefly no big, expensive lawyers and all the rest of it. most of these issues are really quite simple. it's just the capacity, the greatest respect to the legal profession. the capacity of the legal profession to make things complicated, of course, is great and that's very expensive. >> thank you, mr. mosely. journalistic practices now. paragraph 120. this is to some extent, if i can be forgiven for saying so,

commentary, when it comes to operation motorman. do you understand, we're dealing with a lot of detail next week, and the inquiry will be able to reach its own conclusion about that. you make one night the context of blackmail, paragraph 124. i'm sure you would like to bring this stuff out. delivered judgment on 24th of july 2008. criticisms that dispelled that. you wrote to mr. rupert murdoch in new york, drawing it to his attention. did you receive a reply to that letter? >> no, i didn't. that letter was written on the 10th of march, and i sent it by the court of delivery, and i have evidence from the united states postal service it was

delivered. i also sent two e-mails. and i was astonished because all i was asking him to do was to order an inquiry into this. i got no reply. and i have to say that i cannot imagine rising to a proper international company a letter alleging serious criminal conduct by a senior employee and get no reply. and i'm sorry to say this, but i think i will, if i may. that's conduct you suspect if -- expect if you wrote a letter to a mafia leader about one of the soldiers. but if it was a serious offense, you would expect it from the ma

mafia, not a large company like this. >> your legal team will remind me in due course to get the reply, which you have been seeking because it may be possible to do that. >> thank you. >> i hope you don't mind, mr. mosely, if i leave off operation motorman. no that's just my opinion. >> the internet is a big issue. you have touched on it. is there anything else? any practical solutions, any ideas you wish to share with us to deal with the proliferation of information literally at the

speed of light globally? >> i think this is something that would probably require certainly national laws, but it would probably better require european laws and, in the end, an international convention. what i think can be done at quite an early stage, is to -- could be done would be to require the service providers and the search engines not to prolive -- prolive rate information that is illegal. i would be happy to put together a detailed proposal to submit to the inquiry.

>> the second time you have offered to do something, mr. monday lee, -- monday -- monday lee, -- mosely, and at te end of the day i've not reached a conclusion as to what will work. but i might make an exception in your case for this reason, depending on what you say about this. you have experience of international governance in motor racing. so i don't know whether that gives you any additional underring of the potential pitfalls to be faced either in trying to do something nationally, let alone internationally. so, if you want to submit an event to the inquiry, then you can rest assured it will be

considered, but you will equally understand i'm making absolutely no promises. >> i mean, what i submit may well turn out to be inadequate or no good for all sorts of ropes, -- reasons, but we have given at it great deal of thought, and it will be up to the inquiry whether it wants to adopt any or part of it. >> as long as the basis upon which you're doing this is an effort -- as long as the basis on which you're doing it is well understood. >> very happy to do that. >> final point, mr. mosely. the whole of your statement i think has already gone online. atpeople may have already read paragraph 131, which takes on "the daily mail." of course, you're entitled to

your opinion in the context of operation motorman, you say in the middle of the paragraph, it's inconceivable "the daily mail" and others did not know they were encouraging a criminal act. that is strongly denied by them, and they will say, when they have the opportunity to do that, that the information commissioner's office in september 2001 -- 2011 -- pardon me -- that there was no evidence that any journalist asked mr. whittmarsh to obtain anything illegally. and to make clear that the rights and wrong of the issue are being investigated by the inquiry. so, let's wait and see what happens next week. are you content with that?

>> may i say a word on that? i would just like to say that of course they would say that. i had hoped they won't consider this -- all i'm seeing is the fact that no journalists asked for an illegal act is note same as saying that no journalist would have realized that the information they were getting had to be illegally obtained. that's a matter for the inquiry. >> you're reaching your conclusions based upon your study of the -- of what price privacy. >> indeed. >> the inquiry is extremely grateful to you. have we covered all the ground you wish to? >> i think so. some of it twice. >> if that's the case, that would be my fault. so thank you very much,

mr. mosely. >> thank you. thank you. >> it's probably sensible to have five minutes for the short-hand writer and for all of us, but i repeat, a 5:00 actually means 5:00, or perhaps in this case 7:00 but not longer. thank you. >> tonight, merck ceo kenneth frazier discusses health care

and the pharmaceutical injury, and the british phone haacking hearings. >> next, merck's crowe kenneth frazer. he was recently interviewed at an event in new york and has led the pharmaceutical company, merck, for a year. before that he was in charge of the company's defense concerning vioxx. in november, the frazier was put

in charge of the investigation of child abuse at penn state university. this is an hour. >> and thank you, ken frazier, for being with us here this morning. it's great to have you here. you have been in this job as ceo for one year. >> about one year. a long one year. >> i was going say. how is it going? >> i think it's going relatively. we it's been a challenging time for our entire industry. there are a number of important challenges that we face, including a fundamental challenge around research, productivity. but on the whole, i think things are going well for merck. we have had a strong year, very strong top line performance of 5% growth on our top line. we have introduced new products into the market. we have 19 products in

development, eight that will be filed in the next couple of years. so things are going relatively well. >> i want to talk about research and innovation. but there's an interesting book written by a business school professor, marshal gold -- smith, called, what got you here won't get you here. >> i read that. >> so you're an interesting case because what got you here is your defense of the company, to a large degree, from vioxx claims. what will get you there is overseeing innovation. a new generation of innovation in drugs. seems like very different skill sets. >> i think you're completely right on that. i guess i would say a couple of things about that. first of all, the defense of vioxx was ultimately the defense of innovation at the end of the day. many people saw it as a tactical war around courtrooms and

lawyers and things of that nature. when you're interested a company like merck, company that is committed to scientific excellence and research integrity, defending how we handle vioxx was critical to who we say we are as a company, and vioxx is one of the most studied drugs in the history of pharmaceutical industry, and so the charge that we are in some way trying to cover up what the true profile of the drug was, was belied by the data, and we were fortunate when the cases were tried to juries and they could hear both sides, they most often sided with us. but back to your question. i've been very fortunate in my career at merck. i have worked for three ceos going back to the early 1990s. and i was hired out of the law, and he insisted i not be in the legal department. so for my first six years in the company i was responsible for public policy and communication.

sally rogers, one of our board members, from my standpoint one of the great communicators of our time, and i learn about the need to communicate, and what we were communicating was the value of pharmaceuticals and the importance of innovative. and then i worked in the legal department on vioxx, and our past ceo retired, bill clark, allowed me to run the business of merck for three and a half years. so i had some experience outside the legal department and i think that was very helpful. >> is legal training itself helpful in being a ceo. >> that's a hard question for me to answer. i think that some aspects of it can be helpful. the ability to sort of cut through the clutter of discussions and try to find what is fundamentally important. i think that is helpful. but i don't think that by and large business and law are very close to one another. i think the way that business

people think is very different. i think the way that lawyers think about protecting businesses is a different thing. so i don't think it's perfect preparation but i was fortunate at merck that the majority of my anytime company was spent outside the legal department. >> so you started about a year ago. you made a strong statement shortly after starting, that research and development was the core of the company, and you intended to focus on that. you had a new ceo at pfizer around the same time. made some very different statements at the time, talking about slashing costs, slashing the r & d budget in the 12 months since, pfizer has increased about 20% in terms of its stock price, and merck has stayed about the same. >> uh-huh. >> what's the marketplace telling you. >> i have to say, first of all, i'm very pleased we stayed about the same, because for a long period of time we were very much down in terms of our stock prices. >> because of vioxx?

>> this year. i think initially the issue had to do more with an issue that came up in our drug called paxar. i would say this about r & d. i think that at merck, science and translating cutting-edge science into medically important products, has always been sort of the core of what merck defined as its purpose in the world, and without commenting on anyone else's strategy, i think that the position that i took was consistent with merck's core values and consistent with what merck's strengths are. and so i think that when one runs a company like merck, that has long lead times in terms of development, i think it's important to keep in mind that you're not necessarily running the company for the immediate reaction of the stock market.

obviously i can tell you, it's better to have your stock go up than down. but what we're really trying to do is run the company, to create sustainable long-term value for the shareholers. and so from my perspective, and my management team agrees -- the market place will try very hard to come modtyize and you have to do innovation. >> there are clearly people out there, investors included, who think the big pharmar & d model is broken. a company like merck can't productively invest -- what is it -- 8 billion. >> -- $8 billion in a way that will get a deposit -- get a

decent return. >> i would back up a minute and say if we were sitting here four years ago, in 2007, merck would have been at the tallon of introducing eight new important products, including our cervical cancer vaccine, and at that time no one was saying, you shouldn't invest in r & d. the problem with r & d is it's not always consistent. it's not like engineering where you can incrementally innovate and make another version of the ifoafnlt the -- iphone. when we try to do something in our industry, we have to reinvent ourselves every ten years and come up with a completely new molecule, a new compound that works at a different molecular target, different patient population, provide benefit in terms of

unmet medical needs. that doesn't happen regularly. it happens up and down. and if you look in the past there have been other fallow periods for r & d. but on the long term, baselike science has always made progress, and there's a lag time between basic science and the ability of companies to apply what we learn from the basic science and come up with new drugs. so what i'm saying is having look ted past, having seen these stages and step changes in the past, i'm confident that if we focus on cutting-edge science, and put into place the kind of environment inside merck, where world-class scientist want to make it a career at merck, i believe over the long term the return on investment will come back. >> what can you do and what have you done to maximize that return over the long term? >> i would say my colleague,

dr. peter kim, who runs the research lab, is focused on this question as much as anybody is, and what we have done is -- for example we looked at the disease areas we were in, and we have made some decisions to narrow the therapeutic areas we're going focus or basic research dollars going forward. we continue to hire the best talent. we continue to work internally, organizationally so we can make, i think, better decisions to kill compounds earlier, because the cost of failure is what you're managing, 98% of your projects are going to fail. the question is can you make it 98 and not 99. so it's really important if you're going to fail, you fail early before you expend a lot of money. so those are the kinds of things we're focused on internally to make sure we improve our return on investment. >> one of the things that has probably soured people on medical r & d is the fact that

ten years ago we had this decoding decoding of the human genome and there was so much excitement and a feeling that would revolutionize medicine, and ten years out it really hasn't. nothing seems to have changed that much. what do you say to people who tell you that? >> well, i say a couple of things. they have to be patient. you look back, in the late 1970s, the predominant way to discover drugs was in vitro testing and then we learned how to synthesize molecules. but the step changed between the inzito porch and the chemistry approach didn't happen overnight. it took awhile to figure out how

to apply them, and the same thing is happening right now with the human genome. i'm not a scientist but i talk to my scientific colleagues and they look at areas like oncology and immunology, what used to be a black box. they are now understand that multiple targets are involved in cancer or asthma or other conditions. it will take some time before people can master that and really pick the right target and find the right interventions, whether they're small molecules or biological. i'm sure it will happen. >> next decade? >> absolutely. >> you mentioned cancer. it's been, what, 40 years since the war on cancer was declared, and it sometimes feels like the war in afghanistan or -- progress is very hard to measure. are we going to see that change the next decade?

>> we have seen a couple of drugs this year that have made a real impact on certain tumor types. and i think that gives us reason to believe that if we continue to apply the science in that context, we will be able to conquer specific types of cancer. the cancer is an interesting word that describes a lot of diseases that actually involve tumors. so, i think one of the issues we're dealing with is, it's not something like a hypertension or high blood pressure where medication can treat a very broad population of people. what we're learning is how to find drugs that effect specific tumor types, and i see progress, again, a couple of drugs had phenomenal impact on specific cancers. >> can you quantify that? ten years from now? how many types of cancer will have effective treatments? how much of a reduction in -- >> i can't.

as i said here today. i would just be making a wild guess. i can say that -- >> we're fine with wild guesses. >> late me just say this -- >> a whole bunch. >> i'm convinced, when you look at the progress we have made in the last ten years, that you see an acceleration of our understanding in oncology, and i think that, as we begin to understand the molecular targets, we can target compounds as we move forward to specific tumor types. >> we have made it this far without you making any reference to public policy. you wrote a tough piece in the wall street journal this summer, i guess it was, attack something of the aspects of the healthcare bill and saying they would prevent innovation in biosciences. >> well, i would say that one of the big challenges the industry

faces -- i just spent the last few minutes telling you how excited we are about the science, and we're very excited by the science, where the science can go. one of the challenges we have is what kind of market place will there be when we couple with new drugs and that's where public policy comes in. so globally, before we get to the united states, governments tend to be our customers outside the united states. and so when you're dealing with public policy challenges, dealing with the economies around the world, it's really important that there be a public policy environment that is conducive to the kind of innovation that we're talking about. our business requires significant investment over long period of time. we face significant amounts of scientific and regulatory uncertainty. it's hard for us, on top of that. to have a marketplace where public policy doesn't really support new drugs that actually have a profound impact on -- >> are you saying that by and large the governments governmeno

procure drugs in most other countries don't give you the incentives for innovation? >> i think over time the incentives have been lessened. for example in europe right now, where countries are facing major problems, which we know about in terms of the deficits they have and the lack of economic growth that goes along with those def sits -- many countries are struggling in their social welfare systems, to afford health care at the level that would help the population. and one of the impacts is they tend to focus on one part of the healthcare bill, which is what i call the ingredient cost. the drug cost. >> partly because it's a big cost. >> well, it's actually generally 10% of healthcare costs are actually the drug costs. so the 90% has to do with other ways of providing health care. hospitals, physicians, diagnostic procedures, and frankly, a lot of inefficiency

in how those services are provided. so we are 10% of the healthcare bill, and i think, frankly, when you look at the use of drugs, the proper use of drugs extends to be cost effective, but it's an easy target. it's one segregated part of the health budget and it's growing because there are new drugs and people say, let's keep that static. so i'll give you an example. we introduced a hepatitis c drug, and the importance of that drug is that with previous therapies, only a third of patients were able to clear the virus. in other words, effectively have a cure. now the cure rate is up to 7 or 80%. i was just with the german health minister, young man looked like he was 35 years end of the fact of the matter we were talking about the fact that in germany, the health technology assessment agency has determine that this change from a third to about 70-80% doesn't

represent a real innovation that has to be paid for. if that's the case, then it's hard to have an industry like ours, and i think what is happening is people are putting their finger on the scale because they know there's an economic problem. so it's important for us -- for ceos and others to be loud about the importance of paying for innovation, real innovation when it occurs. >> one of the things that frustrates americans who have looked at this question is that we seem to be paying for innovation for the world. we're delighted to have the most innovative pharmaceutical companies in this country, but the cost of innovation seems to be baked into the cost we pay for drugs and everybody else is getting it at a discount. >> let me start by saying -- before we get to the cost of the drugs -- recognize that the u.s. does have the benefit of a very strong pharmaceutical industry. european countries have their

pharmaceutical industries in the united states. it's one of the few net exporting industries we have left in the united states. so let's not forget the benefit it provides the carbon dioxide along -- provides the country, along with the computer industry in silicon valley. but getting to the cost side of things, that's the challenge. there's a great deal of transparency in the cost of drugs, and germany wants to pay the same price that croatia pays and bulgaria pays. if that's the world in which you live two things happen. first of all, you take away the incentive for innovation, and the second thing is you remove the incentive for differential pricing, because if people who can afford to pay more are forced to pay the same amount of wealthy people, you're going

discourage the use of drugs in poor countries, and that's not a moral position to take. so i understand the frustration of looking at other price controlled environments and say, we wish we had those prices. one more thing i think that people should recognize. let's go back to the victrola story. the other problem in many of those price control regimes is that the newest drugs take longer to get to patients in a lot of those countries. so you also want to have a situation where you have a free market where physicians can make individualized medical judgments about whether this new drug is actually going to provide a salient benefit for a patient. you can't have away. you channel. cheap prices and the most innovative industries in the world, and you have to know how many vital industries in the united states. >> your fear is that the united states is -- with this latest healthcare law moving in the direction of germany or other

companies. >> i wouldn't say near germany, but what you can see is a process by which, as the u.s. government becomes more and more of an important customer to us and as the u.s. government has its own financial chang -- challenges, we have to find sensible ways to produce healthcare costs. i completely support the idea. so generic drugs should be used for patients for whom those drugs work effectively. but if you say i'm going to put a cap on what innovation can provide, if we started off at the beginning, investors are already restive. >> do you think that's pulling the -- >> i know that -- i've talked to our largest investors, notwithstanding the announcement we were going to cult research,

but investors say we think that's the right think to do. they say you have to work on the roi, and you have to promise us you're going to engage the public policy environment, to make sure if we do get a drug across the finish line it can get reasonable reimbursement. >> how are you doing on that score? have you talked to the president about it? >> i have actually had the honor of being received in the oval office earlier this jeer to meet with the president, and i did have an opportunity to express my views on some specific issues in terms of the healthcare law and the fda. he was incredibly gracious to me. provided me a half hour of his time. so i did do that. but at the same time -- >> did you get a good response? >> i did get a good response. i don't know that it has actually been translated into action but it was certain lay good conversation, and i think the president understands the need maintain a strong, viable

industry here. but the other issue is, how much time can you spend with the congress? that's sort of -- we spend a lot of time on the hill trying to persuade people that, for example, putting additional rebates on the part d benefit -- a benefit which has the -- two virtues. very well received by seniors. i say seniors with some hesitation because i'm now possibly being viewed as one. but also it's one of the few government programs that has come in under budget. because it has used the private market. and so i think it's a mistake to tamper with a benefit that provides such satisfaction to people and comes in under budget. if we start putting tight controls in the united states that are like the ones in germany and other countries, i think we're taking away a huge amount of inventive for innovation. >> we had last year on this

stage an official from ibm and he met with the president and had a whole list of ideas how the government could save money. and i said give us an example. and he said i told the president that it the government would buy -- negotiate for its drugs directly from the pharmaceutical companies it could get a better price and save billions of dollars. what do you think about that? >> i think it's a terrible idea, obviously. i think the concept, having had the experience of, quote, negotiating with european governments -- that's not what the word means. not a negotiation, they set the price and that's it. and secondly, i go back to what i just said. the part d benefit is one of the few benefits that has come in way under the way it was scored by the cbo. the reality of the world is there are lots of people out there who are employers who go to health plans that provide the

right balance between cost effectiveness and the benefit to their employees. so, for most -- in fact the congress has a private benefit, the federal employee's health ben fest fitte -- benefit plan. i think the private market has worked pretty well when it comes to prices. we provide rebates on our products in order to get them on formulae. >> the problem is price. >> when you say the problem is price you're saying, you don't want new drugs. i can't be in a business where i take this much risk, i spent $8 billion, on going after new targets, and huge uncertainty around them. guess who -- i then get it through a regulator, costs a billion-two, according to the most recent stud dies to bring a new drug to market, and say the

problem is price. the reality of the world is every drug on the market in the year 1995 is already generic. so either the american people want to live with today's standard of care or they actually want a drug for alzheimer's. we have four programs on alzheimer's. one of the most important programs that tested one of the fundamental hypotheses, is a program that we're spending a significant amount of time on it. if that's successful, we will have a drug in ten years. we can't possibly charge enough in terms of the price to not make that drug a net benefit to our society. but if you say drugs cost too much. you have to be intellectually honest enough say, i think the drug wes have today are good none enough and i don't need the

ones you're going could come up with tomorrow. >> ow were talking about the importance of merck engaging in public policy. we had a flap about merck engage independent public policy in texas. >> i heard about that. >> where the governor mandated gardicil in the state, and then there was a lot made about his former chief of staff became a lobbyist for your company. >> first of all, the story is many years old. >> it wasn't under your watch. >> the point i'm making is it got recycled in the context of a political campaign where, among other things, we were told this drug, which prevents most cases of cervical cancer, -- actually cause retardation in girls so the level of the political discourse is low. the fact of the matter is that

governor perry did sign an executive order -- texas legislature is an interesting innovation in that it meets only every other year, and maybe that's a good thing. i'm not sure. might be some texans here. but in the interim he decided that given what he had learned, not just, bill the way, from the lobbyist but from his own health people about the importance of this vaccine to save people, that he would sign an executive order. it created a huge firestorm in texas, because this cervical cancer is caused by a virus that is transmitted sexually, so, again in the discourse of the country it becomes whether you're promoting promiscuity versus protect girls from cancer, and that blew up in the governor's face and he immediately retracted that. the discussion this year, frankly, was what happens when people are running for president

and people revisit those issues and i do think that at the end of the day the concept that the governor of texas would sign an executive order providing for the vaccination of every girl the state simply because somebody was later going to back lobbiest for merck is a little bit indirect. >> so it doesn't trouble you too much. >> doesn't trouble me. although the appearances -- i have to say, do get why with respect to the american people. people are concerned that various elements of society have too much access through the political system by political contributions and lobbying efforts. but what merck has always tried to do, and we're known for this, is they lobby for what we believe to be sound public policy principles because what is good for the patient is ultimately good for news the long run jurick but -- long run.

>> but you do make significant contributions. >> absolutely. and they're disclosed. the reality of the world is the political system is a difficult one in this country. if you run for office and congress, whether you're in the house of representatives or the senate or governor or anyone else, your challenge is to stay elected and the cost of staying elected keeps going up. so we think it's highly appropriate for our political action committee finds ways to contribute so we can support those people who support innovation. >> we have had the spectacle of seemingly endless now republican debates. i've lost count. we're over a dozen. and the standard line about healthcare is to repeal the obama healthcare plan. is that the right approach? >> i don't think so. there are a lot of things about the obama healthcare plan that it think are really positive. the focus on prevention, for example, is something i would point out. no reason why we shouldn't give

people first dollar coverage for vaccine. such a cost effective intervention. i think it was highly appropriate to get to a position where we could take the uninsured and provide some basic level of coverage for them. there are aspects of the obama care -- i don't want to call it that -- the affordable care act, because obama care is one of those political slogans -- that we actually have some concerns about. chief among them is a body of people that is not accountable to congress necessarily whose job it would be to decide which drugs -- whether they ought to be reimbursed. which drugs ought to be reimbursed. >> like the german health minister? >> i'm worried about that. one of the geniuses about the american system is we believe by and large that decision made by broader groups of people are

better than decision made be concentrated sets of people and physicians are able to decide whether a new drug or intervention makes sense for a particular patient and that's -- >> we know -- there's lots and lots of evidence that -- a lot of physicians out there and they're not all up to the state of the art of best practices. they don't have the best information on what drugs and what treatments are most effectty. do you really believe that distributing those decisions over all the physicians -- >> yes, i do. i absolutely do. >> can't we do a better job of informing them, perhaps? >> i think we should provide medical education. no question. >> a lot of their information right now seems to come from -- as the drug companies spend a fair amount of time on that but it's not clear -- >> it's interesting -- >> -- the best way to do it. >> what is happening on the outside world with social media, there was more access to information today than there's ever been in the history of mankind, and if you go and

look at data around what people seek when they go to the internet, health is one of the primary thing that people seek information for. so actually the critique that they're dependent on our sales representatives for information actually is sort of, i think 50, years too late to affect critique because everyone has access. >> what would you do to raise the level of knowledge and education about new treatments that physicians have, if you're going leave those decisions in the hands -- >> i think continuing medical education is important. we just talked about the -- -- the pace of society is changing faster and faster and it's important for people to have access to unbiased, independent continuing medical education. i think that's the way people need to keep up with their art and with the science. >> turn the focus for a minute

to china, and then i want to open it up to questions in a minute here. you have just announced -- recently announced a major investment in china for research and development. >> yes. >> why take that research and development to china? >> well, first of all, i think that we have to recognize that we live in a global society. and merck is a global company. and emerging markets are big part of the business from the standpoint of sales we anticipate. 25% of our sales to be in those markets in china is the leading market by 2013. at the same time you look at the low cost, example, human genome sequencing in china, it's revolutionizing medicine. so i think if we're going to be an important player in global health, we have to seek the best

medical and scientific talent available. so in the united states, something like 60% of our biostatisticians at merck are native born chinese that we brought into the united states to work in the statistical department. so we have to access that talent where it is. >> last november we brought together our ceo council, about 100 ceo's from different parts of the world, and the survey prior to that of that -- talk to them about their concerned about china. the number one concern was intellectual property protection. number one concern about china and chinese public policy. does it bother you to be doing research in china when there are concern about the protection of intellectual property, which is obviously critical to the survival of your company?

>> a very valid question. i would say we have chosen specifically which part of the research value chain we want to do in china. we have done that with ip protection in mind. >> in certain industries china has been clear about a quid pro quo. of you want to operate in this country you must do certain high-end research and development in this country. there is something like that in your case? >> there is something like nat china in every sector but it didn't relate to this installation. the issue in china as it relates to market access has to do with, for example, if we want to sell vaccines to chinese children, it's a huge market -- merck is one of the first western companies to provide vaccines to chinese market, going back to the '80s when they had a huge hepatitis b problem.

we saved tens of millions of lives in terms of children not having hepatitis b. so we have a long history there but as we deal with the chinese government in terms of access to their children, there are some demand being made on us around manufacturing of vaccines in china, and we're negotiating with them and with their chinese own vaccine companies to see if we can come to an agreement about technology transfer that makes sense. >> and the final question i want to ask before i open it up, as if reviving merck weren't a big enough challenge, you have also taken on the challenge of investigating the jerry sandusky situation at penn state and what it says about the culture of penn state and why it wasn't spotted earlier and dealt with earlier. why in the world would you do that? >> a question my wife asks all

the time. she hassle's of things she would prefer i do, and -- she has a list of things she would river do and that's not on it. i was already on the board of trustees. this is my al ma mutterer, school that, frankly, i grew up in philadelphia, i had four years of free education at penn state and it changed my life, and people looked around in the boardroom and said, there is anyone in this room who has had experience with this kind of wide-spread public situation before, and i didn't raise my hand. and then the second question was, is there anyone here who has handled vioxx? [laughter] >> and at that point i guess it was clear i had been outed, as they say. and so it's really hard to step away from an institution you have pledged your support for in its hour of need so i took that on. we were able to get the former

fbi director, louis freeh, to take over the investigation, and now that i have gotten someone who i think the public would agree is a pretty able investigator to take over, it should take less time. >> some people have been critical of the choice for precisely that reason. they say your -- debt what you did at vioxx was protect the company from excess liability and what should happen at penn state is not a focus on liability but what went wrong. >> when you say we defended the company, you know, people on the outside tend to look at the fact that, for once they were saying that liability to be as high as 40-$60 billion, and it was much less than that. >> six billion. >> 4.85, not be too specific. but as shelly and others will tell you, inside the company it was the defense of the institution. i'm a big believer in institutions. i think institutions are what

allows to us have continuity in our civilization, and merck is an important institution because of what it can do, 20, 30, 40 years from now, in terms of alzheimer's and cancer and things of that nature. so, too, is penn state, an important institution. and so i took on that responsibility because i believe in the institution, and i believe it's important to maintain institutions. this is a horrible situation that occurred, but it doesn't define the university. i don't know what the facts will ultimately be but i think it's important in times like this that people step up and remind people of the value ofen institution to the country, and that's how i see my responsibility. >> questions. >> yes, please. >> you mentioned the independent

advisory board as part of the obama health care law that bothers you. the court may strike down the mandator the medicaid expansion. if not, the nation may elect a republican president and congress and push for repeal. tell us what parts, aside from first dollar coverage for vaccines, you would like to keep in the obama health law, and what other parts trouble you? for example, the controls on doctors who treat privately insured patients. section 13.11. cue tell us more about what you're thinking? >> spend some time on this. >> i thought that was 13.12. i think that things that concern us most i talk about the independent payment advisory abort. the other thing is the advent of additional rebates. another big thing that concerns us in the law. i think the benefits of the law -- i think i hit the big ones.

providing medical access for a broader percentage of our population. i think it's very important for people. >> is the mandate essential to that in your view? >> i don't think it is. >> you think you can achieve that goal and get rid of the mandate? >> i believe you could. >> can you be in favor of that? >> i would be. ...