Britain for Sale


Saturday, May 1, 2004

LOBBYIST JON MENDELSOHN HAS BEEN RENTING HIS INFLUENCE WITH GORDON BROWN FOR A DECADE
by Greg Palast
from The Best Democracy Money Can Buy

ON THE first Wednesday of July 1998, on the floor of the House of Commons, Britain’s prime minister rose to defend himself. According to the news reports, for the first time since his election the year before, Tony Blair’s hands were shaking. The PM denounced the American reporter whose exposé of wholesale corruption in his cabinet “had not one shred of evidence”. Meanwhile, Blair’s press spokesman, a former pornographer named Alastair Campbell, grabbed every newsman he could find in the hallway to whisper that they should not trust a “man in a hat”, while Peter Mandelson, known as Prince of Darkness, and the power behind the power of the prime minister, hissed a warning about “the man with an agenda”. Note: For Britons who can stomach a full autopsy of British democracy, the UK edition of 'Best Democracy' has a much expanded chapter, 'Lobbygate: Cash for Access, Blair and the Sale of Britain" (Constable & Robinson 2003)

Unfortunately, I didn’t get to enjoy any of this. I could hardly keep my eyes open, half-passed-out after 70 sleepless hours in my “safe house” in Crouch End, a workingclass neighborhood in London. I had moved in with sympathetic friends in the middle of the night because of a crank bomb scare at my hotel and to avoid camera crews.

But that’s not why I didn’t get any sleep. My paper, the Observer, had run a front-page story with detailed evidence that cronies of the prime minister, including his princeling and other cabinet members, had bartered policies for payola, cash for access. Our Observer team described lobbyists’ special, secret access to ministers operating a flea market for favors out of 10 Downing Street.
lobbygate1.jpg Not a shred of evidence? My paper announced on page one that I had tape recordings of lobbyists explaining exactly how and when and to whom they made the fixes – for American power companies and banks, for friends of Clinton, friends of Bush, friends of Blair, for US media tycoon Rupert Murdoch, and others.

Until our story hit the headlines, Blair was seen as Britain’s incorruptible new leader. He claimed to have put an end to “Tory sleaze,” the cash pay-offs to Margaret Thatcher’s ministers that had tainted the conservative government. (When ExxonMobil wanted to get off the hook for taxes on oil extracted from the North Sea, they paid the Tory energy minister a ten-thousand pound “consulting fee.”) Prime Minister Blair’s New Labour Party avoided the cash-in-envelope lobbyists. But like his good friend Bill Clinton, Blair hoped to turn his once-progressive party into the party of business. In particular, he had an almost fetishistic desire for the affection of US corporations, the entrepreneurial stallions that would pull Olde England out if its tradition-shackled ways. What my Observer team had uncovered was a daisy chain of favors and inside access to confidential information in return for political support from these corporations (and a bit of cash for New Labour cronies). The Prime Minister’s reputation as Mr. Good Government was on the line.

Blair’s attack-masters demanded, the radio and TV stations demanded, I play the tapes. They said, the tapes are phoney. They don’t exist. Palast’s a liar. And now the business editor of the Observer, the brilliant journalistic fanatic Ben Laurance, was shouting at my friends trying to block him at the door at my Crouch End hideaway that I had to get out of bed, get to the BBC studios and confront with tape the number one New Labour fixer, Derek Draper, on another live Newsnight broadcast.

But the truth was, I didn’t have the tape.

The day before, I called my wife who was back home in the States with our one-year-old twins and told her to overnight to me the tape marked “Draper”. It was right in the middle of my desk. Linda said, “I don’t see any tape. There’s no tape here.” The next day, the entire front page of the Mirror was taken up by a photo of a balding, snearing, devious-looking man – me – under a four-inch-high screamer, “THE LIAR”.

lobbygate2.jpg

The story that became known as “Lobbygate” began innocently enough. Antony Barnett, Britain’s best investigative journalist, got a tip that lobbying firms close to Blair’s New Labour Party government were getting their hands on inside information to pass on to their clients. Antony who, with the editor, Will Hutton, had just asked if I could write for the Observer, thought I might give a couple of these guys a call, maybe hinting to our targets I needed a little influence.

At first, I said no. My idea had been to bring to journalism the full arsenal of weapons used in my official racketeering probes. No more quick and cheap.

What I had in mind would take time and it would cost thousands of pounds.

To do this right, we needed a front, for which I enlisted a top US business executive, Mark Swedlund, formerly with Booz Allen Hamilton, who mixes street smarts with boardroom savvy. We added a former Morgan Stanley executive (no name, sorry) and gave ourselves impressive legitimacy by tying up with one of America’s white shoe law firms well known to Her Majesty (no names, sorry again).

While the target was Britain’s prime minister, if Blair’s cabinet was selling, it was corporate America buying. This would give me the chance, which no American editor would dare do, to get myself inside the corporate influence machinery and see how the deals came down.

The most difficult fake-out was to recreate me. All these lobbyists knew me; it was their job to know. They knew I contributed to the Guardian, but more important, I was, before the election, one of Blair’s much displayed American policy advisers, close in with Blair’s Trade and Industry and energy ministers, “that influential American”, said a big-shot British industrialist. It was bullshit, but now it would be useful bullshit.

I couldn’t wear a false moustache and voice-coder – so I changed from Greg Palast, policy weanie and reporter, to Greg Palast, scuzz-ball, sleaze-o- “consultant” on the take ... just like them. I didn’t get my beach-front estate and stable of ponies, I told them, by writing good government advice for the Guardian. I had a damn successful consulting firm that made deals.

At no time did we offer money in return for influence or access or favors (though they would be offered to us). I was looking for something else: what had these lobbyists already done for others. My line: “The Texans I’m working with don’t want a lot of boasting horseshit, these boys need hard, no-nonsense evidence of exactly what you’ve done, for whom. Names, dates, deeds, and solid proof, if you want our business.”

And they delivered ... right to my fake office in New York and our “business suite” at the Tower of London Hotel. The spigot of evidenced first opened on June 8, 1998. A Fax for Enron

That morning, I found a surprise in my fax machine, a copy of the United Kingdom’s Trade and Industry Select Parliamentary Committee Report on Energy Policy. What made it surprising was that the report had not yet been released to the public.

Attached to the fax was a short, hand-written note to me from Karl Milner, a lobbyist with GJW Government Relations. During the 1997 general election that brought Tony Blair to power, Milner handled internal communications for Gordon Brown, now Chancellor of the Exchequer, the second most powerful man in government after Blair himself. Milner wrote, “Thought you may be interested.” I was.

I called Milner. Maybe he had not filched the documents from the government but rather had committed the lesser offense of lifting a pre-release copy from a journalist. Milner assured me otherwise. His special access to policy papers for his clients was standard operating procedure. “We have many friends in government. They like to run things past us some days in advance, to get our view, to let them know if they have anything to be worried about, maybe suggest some changes.” His operation represented US power companies, like Pacificorp of Oregon, which had bought out almost the entire British electricity industry. The document, the inside info, would be especially helpful for the client he was pitching for, Enron of Houston, Texas. What a coincidence: those were my Texans too. I was lying, but mentioning Enron was like saying, “Abracadabra.” Doors of the influential opened wide.

“I’m Very Excited”

June 11: Chancellor of the Exchequer Brown, announced new government spending caps. I was trying to end my third phone call with Derek Draper, top lobbyist with GPC Market Access. Draper had been chief aide to The Dark Prince, “Minister-without-Portfolio” Mandelson. “I’m very excited,” said Draper, “Very excited.”

What had so excited Mr Draper?

“Gordon Brown put the cap on total spending at 2.75 per cent, not 2.5 per cent, like everyone expected! And we said so! We said so last week!” This one-quarter percentage point difference may seem minuscule, but in the hands of securities traders and arbitrageurs, advance word could be parlayed into quite a windfall. Indeed, the week earlier, Draper had given the correct number to his client Salomon Brothers, the US investment banking giant. I complimented Draper on his firm’s extraordinary forecasting work. He responded, “No, I’m afraid it’s inside information.” In a voice crackling with school-boy glee, Draper added, “If they [Salomon] acted on it, they’d have made a fortune!”

Indeed they would have. And under US law, they would have risked jail time.

The Observer never asked any lobbyist to produce confidential government documents or information. We did not have to. Milner, Draper and others provided the evidence unrequested, meant to convince us they could deliver the goods from Tony Blair’s government.

Draper too quickly recognized me as a writer with the Guardian and Observer.

Yet, from our first New York-to-London call, Draper gossiped, gushed and ultimately could not resist revealing his special access to the Treasury and 10 Downing Street, Britain’s White House.

If we retained his firm, what could he deliver for our money? Could he secure a seat on one of the government’s task forces? Done! “We just got the Chief Executive of British Gas on the government’s Welfare to Work Task Force.” Draper emphasized that winning this coveted spot at the elbow of the chancellor was an enormous achievement for a company once known in Labour circles as “the Fat Cats headed by Cedric the Pig” (an unkind reference to former British Gas chairman Cedric Brown).

What if my clients had reputations far less savoury than BG? Not a problem.

In fact, Draper was about to sign up such a “challenging” client, US lottery operator GTech Corp, a company whose lucrative links to Bush allies in Texas I was also investigating. Gtech was in hot water. A jury had found Gtech’s CEO guilty of attempting to bribe British tycoon Richard Branson, hoping to buy him out of the competition to run Britain’s lottery. While running for office, Blair had committed to oust these Ugly Americans from the consortium which had exclusive rights to operate the United Kingdom’s lottery. Draper described his scheme-in-progress to waltz GTech around the official watchdogs and lure Blair’s ministers into a sticky web of agreements with his new client.

“The government needed someone to sell tickets for this ridiculous Millennium Dome thing that my old boss is building. But GTech is offering to do that via the national lottery-selling equipment. Now it doesn’t take a lot to work out that if the government thinks that GTech can sell government tickets for the Dome then it’s got to be a legitimate firm to sell tickets for the lottery.

See what I mean? Our forte, like, is to be imaginative.” His “old boss” was The Dark Prince, Minister Peter Mandelson. To call Draper and “Mandy” close would be a grievous understatement. Mandy had dedicated his book, The Blair Revolution, to the young man. In a profile in Business on Sunday Draper said his friendships with top office-holders were a “hindrance” to his lobbying business because his former workmates are “all so concerned to be ethical”. Nevertheless, Draper assured me that, if we needed to change a law to our liking, “I can have tea with Geoffrey Robinson! I can get in to Ed Balls!” When Draper spoke of reaching Blair cabinet heavyweights Paymaster General Robinson and Balls, the chancellor’s chief adviser, you could hear the exclamation points in his voice. He added, “Once someone pays us.”

The Politics of Emptiness

While fielding calls and faxes from Draper and Milner, we reached Lawson Lucas Mendelsohn, a firm less than one year old yet already the hottest lobby group in town, collecting £2 million ($3 million) in billings in one year. LLM lists 20 powerful clients including the RSPCA and Rupert Murdoch’s News International, owner of America’s Fox TV network. LLM, named for its three founders, is the definition of “inside”.

Neal Lawson advised Tony Blair on campaign strategy, Ben Lucas conducted Blair’s political briefings and Jon Mendelsohn handled the future prime minister’s contacts with business.

But LLM is no influence-for-hire operation that can be purchased by anyone with a check-book. To obtain their much-sought services, LLM clients are asked to review and embrace an eleven-page introductory statement of principles and methods, a somewhat chilling mix of Dick Morris and Nietzsche. A chart on page 3 displays two columns labelled in bold face, “The Passing World and The Emerging World”. To the Passing World belong “ideology”, “conviction” and “politicians who lead”. These will be replaced in the Emerging World by pragmatism, consumption and “politicians who listen”.

The sales brochure-cum-manifesto announces that the political terms Right and Left are now “obsolete”. LLM promises to guide clients to understand “not only new Labour but more importantly the new world”.

Partner Ben Lucas knows what government will do because “we know how they think”. But what may seem like telepathic prognosticating comes down to harvesting insider leaks. Lucas knew, for example, that on June 11 Chancellor Gordon Brown would announce the creation of a new housing inspectorate. “The reason I knew that in advance is that I was speaking to people who were writing the chancellor’s speech.” He delivered the information to an LLM client and advised them on ways to capitalize on the early warning.

Also, like his competitor Draper, Lucas had several days’ notice of details in the chancellor’s public spending announcement. Lucas offered up other examples of “intelligence which in market terms would be worth a lot of money”.

The inside track on decisions is one thing, influencing the outcome is another. Influence requires access. What could we obtain for our monthly retainer? LLM’s Lawson trumped GPC’s tea with Geoffrey Robinson by offering, if needed, to “reach anyone. We can go to Gordon Brown if we have to.” His partner Lucas commented, “We use relationships in a subtle way.”

And how were these relationships subtly used? On behalf of Tesco, a supermarket chain, LLM were about to derail the chancellor’s plan for a tax on car parks. LLM was holding secret negotiations that very week with Policy Unit advisers to Blair, the ones who told Deputy Prime Minister John Prescott, nominally in charge of the issue, when to jump and how high. The tax, pushed by environmentalists to discourage excessive auto use, would have cost the supermarket giant more than £20 million ($30 million) annually.

When I complimented Lawson for avoiding less reputable clients such as Gtech, the US lottery company, he countered that he had in fact lobbied for the bribery-tainted outfit. LLM used the Blair cabinet’s trust in LLM to “assure the government how [GTech] will behave”.

Lawson and Lucas were quick to point out that lobbying is not all about calls to the Treasury. Sometimes LLM recommends the indirect route, “placing things with columnists we know the chancellor reads”. They called this “creating an environment”. In addition, in deliberate imitation of US lobbyists’ methods, LLM operates a captive think tank, Nexus, to give their views (or their clients’ views) the imprimatur of academic legitimacy. Sometimes they make use of the lefty-sounding Socialist Environmental Research Foundation, which, Lucas assured me, is a purchased front for retailers.

Lawson explained how LLM plays on what they call “politics without leadership.” In a milieu in which a lack of conviction is deemed an asset, with no fixed star of principles by which to steer, policy is susceptible to the last pitch heard over cocktails. “The Labour government is always of two minds, it operates in a kind of schizophrenia. On big issues especially, they don’t know what they are thinking. Blair himself doesn’t always know what he is thinking.”

It would be a mistake to view this politics of emptiness – in which ideals and beliefs are suspect – as a British invention, unique to Blair’s “New” Labour Party. Blair and his buddy Clinton call this, “The Third Way.” The leaders of the world’s “liberal” and “socialist” parties – Blair, Cardoso of Brazil, Frei of Chile – are all products of the factory that manufactured Bill Clinton, all bionic election machines who, in Mendelsohn’s words, are “not ideologically constrained”. LLM’s manifesto dismisses “leaders who lead” as antique creatures of The Passing World. Today, markets lead. Industry CEOs lead. In the Emerging World, prime ministers and presidents merely “listen.” Without the restraints of conviction, they are free to respond to the requests of the powerful while shifting their media images as the polling gurus dictate.

Lunch at Number 10

Draper was now aware that he had competitors for our business, and he determined to display his prowess at opening the doors to power. “I took the chief executive of the House Builders Federation in to see Geoff Norris [a top Blair policy adviser] the other day, and that meeting took place in the Downing Street dining room! It’s not difficult for me to take people into these people.”

Sensing I was not impressed with merely breaking bread with ministers, he offered a story certain to leave an impression. Draper’s client PowerGen PLC has long hungered to buy a regional electricity company, a deal even the pro-business Tories had killed off. And behind Britain’s PowerGen was the secret Mr. Big: Reliant, the power giants out of Houston, which wanted to merge (i.e. take over) the whole new super-utility. The British cabinet minister who would make the decisions, Margaret Beckett, head of the Department of Trade and Industry was dead against the PowerGen proposals to create a super-monopoly in energy – especially one that would be owned by Texans. She’d publicly blasted new US takeovers of UK electricity companies. Under the law, Beckett had final say, not even the prime minister could intervene.

The PowerGen-Reliant scheme seemed lost. Now Draper told me he’d steered the chairman of PowerGen, Ed Wallis, around Beckett and brought him directly into the Treasury for a confidential meeting with Geoffrey Robinson, a top adviser to Chancellor Brown. The PowerGen merger deals are now locked, he told me. Government rejection “will not happen again”. Had Draper pulled off an extraordinary fix or was this merely hard-sell horsefeathers?

I told Draper my own clients, representing US oil shippers and power plant builders, would need exemptions from environmental rules, in effect, a licence to pollute England. Draper enthusiastically invited us over.

Two weeks later, in London, pouring sherry cocktails at my Tower of London Hotel suite – this front operation cost the Observer a pretty penny – I asked one of Draper’s competitors, Rory Chisholm, if he could match Derek’s setting up the meeting between PowerGen and Geoff Robinson to talk mergers. “Now hold on there!” Chisholm, a Director of GJW and a lobbyist of the old school, put down his drink. “That’s getting a bit illegal. It’s a judicial process. It’s like approaching a judge.” But Chisholm’s partner Milner, who learned about lobbying US-style while working for Hillary Clinton, was ready to match Draper’s offers.

There Are 17 People That Count

Monday, June 23. Swedlund and I, fresh off the plane with fake business cards and references from big-name confederates, went to London’s very soul, the Sanctuary building at Westminster Abbey. Within this historic courtyard at Number 7, GPC Access’s Derek Draper guides us through the peculiarities of British democracy.

“There are 17 people who count,” Draper tells us. “And to say I am intimate with every one of them is the understatement of the century.” This intimacy is based on a web of favors of which the lobbyist keeps a careful mental inventory. At Chancellor Brown’s confidential request, he put out a supposedly independent newsletter praising Blair’s keeping the minimum wage low. Press control was especially valuable. In the Sunday Telegraph, Draper authored a 2,000-word profile of Ed Balls, a Brown aide. He’d given Balls editorial control and the Telegraph was none the wiser.

As to Jonathan Powell, the prime minister’s chief of staff, gatekeeper at Number 10, the corporate lobbyist “got him the job.” My “business partner”, Mark Swedlund, interrogated Draper. We Americans have come for access, not lessons in Labour rhetoric. We needed proof of Draper’s insider bona fides.

Draper rose to the challenge, literally. He stood up from his chair, removed a phone pager from his belt and, holding it above his forehead, read off one phone message after another, nearly two dozen, from the powerful and nearto- power. “Ed Miliband – call me, Dave Miliband – please call, Andrew Hackett ... that’s [deputy prime minister] Prescott’s office.” The recitation continued. There were several messages from Liz Lloyd of the Downing Street Policy Unit, Balls from the Treasury and others, each pleading for a moment of the lobbyist’s time for tea, advice or requests unknown.

The lobbyist was in a cheery mood. His walking the CEO of the Builders’ Federation into Downing Street the week before was already paying dividends.

Blair’s adviser Geoff Norris agreed to resurrect the Builders’ plans to dig up several greenbelt areas for houses. “Just a bloody bunch of mud tracts at the edge of town,” as Draper described the lands at issue, despite the claims of local councils.

Such favors must be returned. “Tony needed ten environmental gimmicks” for a news release to support the government’s green image. Draper rapidly provided a list, “electric cars, silly things like that”. Draper rolled his eyes. “They loved it.”


Message to Murdoch

Our next stop, Soho. There, in the trendy loft offices of LLM lobbyists Ben Lucas and Jon Mendelsohn, we endured a mind-numbing two-hour lecture on the Third Way, “analytically-driven evidence-based decision-making,” a solid wall of New Labour-speak.

But what at first seemed like an aimless think tank seminar had purpose.

Lucas and Mendelsohn’s point was to introduce us to a world in which, as their manifesto told us, message matters more than content. For their fee of £5,000–20,000 per month, these two Professor Higginses would instruct us in the political grammar of the Emerging World of Tony Blair.

Our cover story was that we needed LLM’s help in defeating environmental restrictions. Mendelsohn advised we must recast our plan for new power stations, noisy and polluting, into something that sounded earth-friendly. “Tony is very anxious to be seen as green. Everything has to be couched in environmental language – even if it’s slightly Orwellian.”

But LLM demands more of their clients than adopting new PR gloss. LLM clients are expected to “reshape their core corporate culture”, to get in sync with New Labour’s vision, as their client Tesco’s Supermarkets had done to defeat the car park tax. Part of Tesco’s cultural reshaping involved dropping £11 million ($16 million) into Mandelson’s Millennium Dome project.

Once we have changed our culture, we asked exactly how does LLM help us get a law changed? Lucas said, “This government likes to do deals.”

He gave an example. Labour’s anti-monopoly competition bill threatened LLM client Rupert Murdoch. Murdoch, the American media baron owns, besides Fox TV, Chinese satellite stations and those British tabloids with the naughty “Page Six girls” with their boobies hanging out. In Britain that made him a power to be feared. But he had a little legal problem. Anti-trust authorities were looking into Murdoch businesses alleged predatory pricing practices. LLM carried the word from Downing Street to Murdoch’s News International that, if their tabloids toned down criticism of the new anti-trust legislation, the law’s final language would reflect the government’s appreciation.

On the other hand, harsh coverage in Murdoch’s papers could provoke problems for the media group in Parliament’s union recognition debates. Kindly reporting would produce, as well, a kindly union bill (i.e. one that would kill off unions). The message to muzzle journalists was not, said Lucas, “an easy one in their culture”. However, the outcome pleased all parties.

Unlike his wheeler-dealer partners, Jon Mendelsohn, aloof and intellectual, does not have an obvious ounce of fixer in him. Rather, he is their Big Idea man with a deep understanding of the modern politicians’ obsession with corporate and media contacts. “[Tony Blair’s] super-majority in Parliament means the only countervailing force is media and the business community. So when the economy turns soft, as it naturally must, we will make certain they stay with us. If we have business and media, the people will come along.”

Lucas reviewed their awesome fee schedule, and we were on our way.

Over-Priced Claret Rush hour in Soho. We walked down the street to the Groucho Club where we would be guests of an operative with yet another lobby shop. He’d got word that these Americans were looking for political help. Over a bottle of overpriced claret, we listened to one more young Blairite make his pitch for our business.

We then detailed what his competitors had on offer: Milner’s purloined reports for Enron, Draper’s back-room deals for Reliant of Texas, LLM’s insider information from the Exchequer.

I waited for him to top their accomplishments. He put both hands over his eyes. “It’s appalling,” he said, “It’s disturbing.” If that’s what we wanted, he’d have none of our business.

Mr Liddle’s offer

The next evening, GPC held its annual bash at the Banqueting Room in Whitehall Palace. Under vaulted ceilings inset with nine canvasses by Rubens, GPC’s 200 guests washed down thin canapés with a never-ending supply of champagne (Lambray Brut) poured by discreet waiters. Lords, MPs and Downing Street powers by the dozen mixed with the nation’s business elite. It was Derek Draper’s phone pager come to life.

At the center of this swirl, Draper held court. Yet, he graciously took the time to offer us free samples of his connections, introducing us to several government luminaries who could be useful to our projects, including more than half the prime minister’s Policy Unit. From the Member of Parliament who chaired the Select Committee on Trade and Industry we endured an earnest discourse on the development of Parliament’s energy review (and we confirmed how lobbyist Milner of GJW received advance information of his committee’s report for Enron, where this investigation began).

My confederate Swedlund asked Draper to point us to someone who could vouch for his influence with government. He reached out, seeming to pull at random from the crowd the nearest figure. He grabbed a short, balding man with sweat beaded on his forehead. Derek told the official we were potential GPC clients, then walked off.

Roger Liddle is one of the more important men in government, in charge of European affairs for the Prime Minister’s Public Policy Unit, with an office near Blair’s in 10 Downing Street. We talked about our power generators for our Texans – polluting and noisy and squandering resources, if we were honest about it. We needed the rules and asked Liddle if Draper was as influential as he claimed. Liddle leaned forward. “There is a Circle.” Liddle was now whispering. “There is a Circle and Derek is part of the Circle. And anyone who says he isn’t is An Enemy.” He reassured us that, “Derek knows all the right people.”

Could Draper introduce us to key policy-makers? In response, Liddle handed us a card with his Downing Street and home phone numbers, and made this extraordinary offer. “Whenever you are ready, just tell me what you want, who you want to meet and Derek and I will make the call for you.”

Derek and I. It was a strange locution. Swedlund remarked that Liddle sounded “more like a member of Derek’s outfit than a member of the government”. It was not until the next day we learned that Swedlund was not far off. Liddle had, until the general election, been managing director of Draper’s firm.

Officially, he’d placed his 25 per cent ownership interest in GPC Access into a blind trust when he took the post at Downing Street. Any new business Liddle cooked up for Draper would go right into the minister’s “blind” piggy bank.

Jail

The next morning I received a call from the persistent lobbyist from the Groucho. He still refused to match his competitors’ offers. “If Draper and Lawson delivered half of what they promise they’d be in jail! Half of Downing Street would be in jail!”

Phone call from Tony “What I really am,” said Draper the next day, “is a commentator-fixer. Your Mayor Daley has nothing on me.” We were sitting in the exclusive Reform Club on Pall Mall, the kind of swanky, over-wrought confection which could only be built by the overlords of an old empire. Draper sipped his trademark champagne and sank into a red leather armchair under a tall painting of an aristocrat from another century.

He tossed a copy of Progress magazine on the antique table. “I own it,” he said of the Blairite journal, “100 per cent of it, all the shares.” The funds to launch the magazine came from a “Labour billionaire”, a financial arrangement accomplished by “a single phone call from Tony”. He meant the prime minister. In the lobbyists’ world, there are no last names.

Draper had just filed his weekly column published in the Express newspaper. His writings are edited in an unusual manner. “I don’t write that column without vetting it with [Minister] Peter. They say, Oh [Chancellor] Gordon [Brown] will be mad at Derek, but he won’t because his press secretary has vetted it.”

It was June 25. For Draper, it was a day of miracles he had prophesied. Only two hours earlier, the government released its energy review. The coal industry would be saved if PowerGen agreed to sell a few generating plants. Simultaneously, newspapers reported PowerGen would buy Midlands Electricity for £2 billion, if the government approved. The suspicious alignment of the two announcements forced Trade Minister Beckett to deny categorically that a secret deal had been struck. “There has been no wink or nod to anyone about anything.” But then, how would she know? The PowerGen meeting at the Treasury was a quiet affair, no record of it was kept and, as an LLM lobbyist assured me, Beckett is “out of the loop”.

Draper should have been pleased with his success. But his mood was philosophical.

“I don’t want to be a consultant,” he said. “I just want to stuff my bank account at £250 an hour.”


Beer at Crouch End

From the Reform Club, Swedlund and I took a cab for a get-together with Will Baker, another lobbyist of sorts. We joined up with Baker at a friend’s flat in Crouch End. Baker works as an for a large non-profit organization based in Liverpool. The group was pleading Blair to eliminate electricity, and gas heating disconnections, and this puts them squarely up against Draper’s and Milner’s key clients, the American-owned utility companies. The anti-poverty group lacks the £8,000 a month to hire an LLM or other professional consultants, so Baker and his colleagues must themselves act as lobbyists on behalf of their low-income constituents.

Over Budweisers at the kitchen table, Baker said his group failed to get a meeting with a single key minister during the government’s Utility Review, not even contact with junior civil servants. “We can’t get in the door. They tell us to submit our comments in writing. We are just totally excluded.” He could not imagine an invitation to sit on a Task Force.

Ultimately, the government, despite campaign promises, chose to continue the system permitting private electricity, gas and water companies to disconnect poor customers behind in their bills – a big victory for Draper’s and GJW’s clients over Baker’s group of clerics and poor people. Special access is not a victimless crime.

The curtain comes down It’s hard not to like Draper, Milner and Lawson. They each have that Bart Simpson charm: mischievous, a bit immature, yet endearing. And they exude New Labour’s enthusiasm for the New Britain. Do any of these young men harbour misgivings about renting out their contacts? They see no reason for apology. It’s their world after all. They are convinced that they crafted New Labour and now, through GPC, GJW and LLM, they are merely charging admission to enter the show they produced.

But even the best players of the game fear for its future. Derek Draper, in an unusually reflective moment, said he had worried thoughts about the inside access to government that goes under the rubric “public–private partnership”.

Draper said, “I think there will be a scandal here eventually. The curtain is going to come down. I’m sure it will happen.” Then he returned to discussion of fees and lunch. And inside the newsroom ...

Just before the story hit the streets, the Observer contacted Roger Liddle for his side of the story.

Liddle was the squat little man who offered to get “what you want and who you want to meet” at Downing Street. This was no small fish in the net. Liddle and Peter Mandelson had co-authored the book The Blair Revolution . The three of them were the key architects of that revolution-in-reverse, the program to seize the Labour Party, yank it to the right, and rename it “New” Labour. That was step one; step two was The Project – to merge New Labour with the Liberal- Democrats, Liddle’s political bailiwick. Big business would provide the gilded glue, shepherded by the lobbying firm set up by Liddle and Draper, GPC.

Blair moved Liddle right into 10 Downing Street, and made him the real power on European affairs. Liddle’s equity in Draper’s lobby shop went into a “blind trust”. Liddle’s wife was a dear friend of the wife of my editor Will Hutton. When Liddle heard the story was about to break, he called Hutton at home, knowing full well that Will was about to turn Liddle’s career into garbage with a pen stroke. Liddle begged. He claimed he was drunk, and when he’s drunk he’s a fool, everyone knows that, and he shot his mouth off, didn’t mean it, didn’t know what he was saying.

Hutton told me this on Sunday morning over croissants at a little bistro in the tony Belsize Park section of London. “Lobbygate” was on the streets, but we talked mostly, as we prefer, about industrial regulation and the political economy of Brazil. He was off that afternoon to São Paolo to meet President Cardoso – reluctantly, because of our influence-peddling story. I said, “Go. Brazil’s the future, Britain’s history.” In Hutton’s view, Liddle was pathetic and sincerely remorseful. So Will gave him the benefit of the doubt and did not call for Liddle’s resignation in our paper’s editorial. And besides, Liddle told him, he couldn’t gain from swinging business to Draper: the blind trust had sold off his interest in Draper’s lobby firm.

Hutton’s as smart, maybe smarter, than his formidable reputation as Britain’s leading intellect. So I paused to let him work it out himself. Liddle knew his interest had been sold? “So, Will, the blind trust ain’t so blind.” Hutton, a big man, laughed so hard he almost knocked over the metal table. He’d been had.

Liddle was a weasel and a liar. But not a very good one.

In the newsroom the next day, I met the deputy editor. With Hutton away, the wan young corporation man now in charge preferred to meet surrounded by a guard of lawyers and marketing people. By Monday afternoon, the full force of the New Labour government and their running dogs at the other papers were tearing our journalistic flesh. And the deputy wanted to throw them something to chew on. Preferably me.

In the meantime, he’d hand over our tapes to the government. I said, “Well, that’s nuts, that’s just straight fucking insane nuts.” But he’d made an Executive Decision. “So give us the tapes.”

I explained about my wife. Didn’t have ’m. He looked ready to die on the spot. He figured he would lose his job. (He did.)

In the meantime, he had another brainwave: he’d tell Alastair Campbell, Blair’s press python, which accusations we had on tape, and which were “merely” backed up by witnesses and contemporaneous notes. How brilliant.

I opined: “The sleazy little shit-holes will talk away with excuses anything we have on tape then flat-out deny anything from notes, say we made it up.” But there was no stopping him from stepping on his own dick.

At 4 am London time, I reached my editor Hutton in Rio. “There’s a Concorde leaving São Paolo tomorrow. For Christ’s sake, Will, get on it.”

Too late. The Observer showed our cards to Campbell and immediately, the government’s guardians talked away what we had on tape, flat-out denied what we had from notes and witnesses, even though Swedlund – he was with me at the meetings with Draper, in the hugger-mugger with Liddle – gave us a sworn affidavit under penalty of perjury.

Liddle was no longer the pathetic drunk contrite over his corrupt offer. At first, he announced he couldn’t remember meeting me, certainly couldn’t remember what was said. Once he knew we had “only” a sworn affidavit of a witness, he grew bolder, and in his third version, he suddenly remembered it all clearly. And what he remembered was that I was a liar; I’d fabricated his words.

Then the next morning, a hand-scrawled note came through the Observer’s fax machine, no signature. “I’ve got your tape. What’s it worth to you?” Linda thought she was quite droll.

Lobbyist Ben Lucas, smugly assured that I had no tape, flatly denied to BBC Newsnight’s cameras that he had detailed to me passing on advance information from the Treasury to his client, the Government Association. Meirion Jones, one very smart producer at the program, let Lucas swallow that grenade – then played on air my tape of him saying the words he denied.

Then it was Draper’s turn to step on a landmine. Assuming I had no tape of our chats, Draper denied the words I attributed to him, but that day, Linda relayed the tape via phone, and anyone could hear Draper’s incriminating statements about Downing Street cronies on the Guardian’s web-set. Draper lost his job, but got a payout which will keep him in Lambray Brut for another decade. For two weeks, every paper in Britain ran nothing but Lobbygate stories on their front pages.

And yet, in that first week, while I was The Liar and Blair’s hands were shaking, I was sure I’d nailed Liddle. The mendacious little scamp was drunk, was he? Didn’t remember me, did he? Never offered to bring me into Downing Street, give me his private numbers? In fact, the next day after his offer, and sober as a deacon, Liddle called me from 10 Downing Street to set up a time to get together, to seal the deal. He denied it, and that stunned me. Now I had him! All I had to do was go over the Downing Street phone records and point to my mobile phone number ... when I discovered that, in Great Britain, telephone records of a public servant from a public phone were “private”, or confidential or some kind of state secret. I was screwed. Liddle walked away smelling like a rose; and Blair rewarded him with the highest increase in salary awarded anyone in government.

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View Greg Palast's Investigations For BBC Television Newsnight at www.GREGPALAST.com

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