BUSINESS WITH PERSONALITY HAVE AN ALE ZUCKERBERG INKS VIDEO OF A TIME CALLS DEAL WITH SKYPE ARTISAN BEER COMES TO THE A FIRST FOR FACEBOOK PAGE 3 CITY PAGE 22 Issue 1,419 Thursday 7 July 2011 www.cityam.com FREE Chancellor NEWS CORP FEARS on hacking target list ▲ MEDIA DELAY TO SKY BID BY STEVE DINNEEN CHANCELLOR George Osborne yester- ▲ MEDIA ANALYSIS l British Sky Broadcasting Group PLC day joined the unenviable roll-call of BY STEVE DINNEEN p 827.00 people targeted by News of the World 850 6 Jul phone hackers. NEWS Corp bosses yesterday feared 845 Police visited Osborne last night to they may be forced to delay the firm’s 840 tell him that his personal details multi billion pound bid for BSkyB, as 835 appeared on notes kept by convicted the toxic political and commercial fall- 830 criminal Glenn Mulcaire and shamed out of the phone hacking scandal con- 825 former News of the World royal editor tinued to gather pace. 820 Clive Goodman. Bankers close to the deal told City It is not clear if Osborne’s name 30 Jun 1 Jul 4 Jul 5 Jul 6 Jul A.M. that negotiations have ground to and number were added to the list a halt while both sides consider the before or after he became chancellor. effects the ongoing scandal could have ANALYSIS l News Corp A spokesman for the Osborne said: on the proposed takeover. Even if the $ 17.94 “George was very grateful to the 6 Jul bid is waved through by the govern- 18.50 police. Frankly he thinks there are far ment as expected, an offer could be 18.25 more serious allegations surrounding pushed back by weeks. 18.00 the whole hacking affair and fully sup- Shares in Sky tumbled more than ports the police in their investiga- two per cent as investors worried that 17.75 tions.” He was first contacted by police the long mooted takeover – and the last week. juicy premium it carries – could now Osborne joins an ever-expanding be in jeopardy. News Corp also plum- 30 Jun 1 July 4 July 5 July 6 July list of celebrities, victims of crime and meted 3.24 per cent on the Nasdaq as public figures who appear to have had more blue-chip companies axed their The phone hacking scandal appeared to weigh on News Corp boss Rupert Murdoch yesterday, as shares took a hit their voicemails intercepted by the adverts in the News of the World. newspaper. Police are understood to be just days Ofcom is also unlikely to step in at of the World paid tens of thousands of step of publicly backing Rebekah Last night it emerged families of sol- from arresting a number of News of this stage with a “fit and proper” own- pounds to police officers for informa- Brooks, chief executive of the newspa- diers killed in Iraq and Afghanistan the World journalists and executives. ership review, despite David Cameron tion, with suggestions then-editor and per’s parent company News could be among those targeted. Despite public outcry over revela- suggesting this was a possibility. former Downing Street spin doctor International, who was editor during News of the World owner News tions the newspaper sanctioned the However, the watchdog could still play Andy Coulson authorised the pay- many of the instances of hacking. He International said it would be hacking of phones belonging to mur- an important role in the takeover saga ments. The spotlight is also on police branded the paper’s behaviour “absolutely appalled and horrified” if der victims and those killed in the 7/7 by triggering a review should News chiefs, who have had access to docu- “deplorable and unacceptable” but the revelation is true. bombings, as well as a string of celebri- Corp press ahead with a formal offer. ments created by Glenn Mulcaire, the said Brooks is still the right person to Murdered schoolgirl Milly Dowler’s ties, Jeremy Hunt is expected to give Cameron yesterday backed an inde- jailed private investigator who worked lead the group. phone was hacked after her murder the bid the green light. The culture sec- pendent inquiry into the revelations for the News of the World, but have Publisher Trinity Mirror yesterday and the parents of Holly Wells and retary says he is bound by law to exam- of widespread hacking at the UK’s only now contacted some victims. saw its shares jump 17 per cent on Jessica Chapman, both killed by Ian ine only whether media plurality biggest Sunday newspaper. His calls News Corp boss Rupert Murdoch hopes it could land adverts axed from Huntley, are also said to be victims. would be adversely affected by the bid. came amid fresh allegations the News yesterday took the unprecedented its rival. FOCUS ON HACKING: P6-7 FOCUS ON HACKING: P6-7 ▼ ▲ ▲ ▼ ▼ Certified Distribution FTSE 100 6,002.92 -21.11 DOW 12,626.02 +56.15 NASDAQ 2,834.02 +8.25 £/$ 1.60 -0.01 £/¤ 1.11 unc ¤/$ 1.43 -0.01 02/05/11 till 29/05/11 is 103,467 2 News CITYA.M. 7 JULY 2011 EU guilty of credit rating hypocrisy NEWS | IN BRIEF Linklaters to open in Abu Dhabi Magic circle law firm Linklaters will this morning announce plans to open a wrong, but rating agencies got much time their debt is downgraded; but agencies as tools of American imperi- stand-alone office in Abu Dhabi, of what they deserved. there is an even bigger issue in alism. A new EU-controlled body, of responding to client demand in the Since then, however, they have Europe. The European Central Bank course, would have zero credibility as region. The office will be led by Middle upped their game. The repeated down- can’t accept the worst kind of debt as it would merely end up being a propa- East managing partner and project grades of sovereign debt in the collateral when engaging in liquidity ganda machine. There is, however, a finance specialist Sarosh Mewawalla, Eurozone have been spot on. So it beg- operations – but the economies of sev- case for drastically shaking-up the supported by New York finance partner gars belief to see the governments in eral Eurozone countries depend on it. rules. Rather than relying on a small Paul Kruger and Dubai corporate part- question – all of which were quick to Hence why it too has been dismissing oligopoly of officially approved credit ner Nick Garland. EDITOR’S LETTER condemn the agencies’ past over-exu- the judgment of the rating agencies, rating agencies, governments around berance – reacting with mock outrage bending the rules and diluting its the world should deregulate the mar- Goldman and RBS aided in crisis ALLISTER HEATH whenever anybody is downgraded. If standards to keep the show on the ket and move the onus back on Goldman Sachs, Lehman Brothers, RBS anything, the US agencies are still road. The whole thing is a mess, based investors to make their own decisions and UBS were the biggest beneficiaries SOME people simply can’t win. The being too soft. Dagong, the Chinese on self-deception about the real, disas- as to the riskiness of an asset. This of very short-term Federal Reserve loans largest credit rating agencies – agency, cut the UK’s rating from AA+ trous state of countries such as would reduce the influence of credit extended at the height of the financial Moody’s, Standard & Poor’s and Fitch to A- earlier this year; it previously Greece, Portugal and others. A major, rating agencies, which have become crisis, according to data out yesterday. – were rightly pilloried for providing downgraded the US. Such blunt, fresh terminal solvency crisis – with coun- embedded within the regulatory sys- The Fed’s figures showed Goldman took ridiculously optimistic advice in the thinking is to be welcomed (though tries that will never be able to repay tem since legal changes in the US in $15bn in exchange for securities ranging run-up to the financial crisis, deeming Dagong’s rating of China looks a tad their debts – is being dressed up as a the 1970s, while allowing companies from Treasuries to mortgage bonds. bundles of sub-prime mortgages to be optimistic, so nobody is perfect). The liquidity crisis – a temporary cash flow that are able to provide value-adding UBS, RBS and Lehman took $10bn each. as safe as the debt of very cautious and Big Three US agencies ought to down- problem that can be resolved via analysis to prosper. It would also send successful companies or governments. grade even more of the Eurozone’s handouts or liquidity aid. a strong signal to investors that the Buffett joins bid for Citi unit It was nonsense, based on wrong- sovereign debt, as well as that of sever- In typical delusional fashion, the ultimate responsibility to take the Warren Buffett’s Berkshire Hathaway headed models and assumptions, and al other nations. That this doesn’t suit Europeans are mulling setting up right decision lies with them – and has joined the group bidding for it helped make the bust much worse. the various political agendas at play their own credit rating agency to pro- confirm that ratings are merely one Citigroup's consumer lending unit Many of the claims made about finan- should be of no relevance. vide “another opinion” on the worthi- opinion among many. OneMain. Buffett is thought to have cial players’ role in the crisis have Governments hate the fact that ness of their debt. Bizarrely, many [email protected] teamed up with Centrebridge Capital been exaggerated or are downright they have to pay more in interest each French socialists still see the large Follow me on Twitter: @allisterheath Partners and Leucadia National Corp.