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You Can’t Read This Book: why libel tourists love London

In an exclusive extract from You Can’t Read This Book, the Observer columnist Nick Cohen presents a damning indictment of how the English legal system helps the wealthy and powerful suppress inconvenient truths

At their best, journalists expose the crimes of the powerful and there were plenty of powerful people worthy of examination in the Britain of the early 2000s. London was awash with money as it competed with Manhattan to be the hub of global finance.

The despots challenged in the Arab Spring channelled their stolen wealth through the City. Oligarchs from around the world flocked to Britain because it offered them the rule of law, protection from assassins, luxury shops, art galleries, Georgian town houses, country estates and public schools that could train their sons in the gentlemanly style.

If journalists tried to do what they should do and investigate them, Britain also gave the oligarchs a further privilege: the power to enforce a censorship that the naive supposed had vanished with the repressions of the old establishment. Among the many attractions London offered the oligarchs was a legal profession that served them as attentively as the shop assistants in Harrods food hall.

With an aristocratic prejudice against freedom of speech, the judges imposed costs and sanctions on investigative journalism that would have been hard to endure in the best of times, but were unbearable after the internet had undermined the media’s business models. Instead of aiming its guns at the worst of British writing, the law of libel aimed at the bravest.

The system the judges upheld had its roots in feudalism. Edward I, one of England’s most barbarous kings, introduced the crime of scandalum magnatum while he colonised Wales, hammered the Scots and expelled the Jews. “Henceforth none be so hardy to tell or publish any false News or Tales, whereby Discord, or Occasion of Discord or Slander may grow between the King and his People, or the great Men of the Realm,” Edward declared in the Statute of Westminster of 1275. Although the statute fell into disuse, and was overtaken by the libel law that the Star Chamber used in the 1630s, an element of the feudal concern to defend the mighty remains in English libel law and the laws of many former British colonies.

Contrary to natural justice and common law, the burden of proof is on the defendant. Once a claimant has shown that the words in question are likely to provoke hatred, ridicule or contempt, the alleged libeller has to prove that what he or she has written is true or a fair comment based on true information. English libel law, and the laws of Scotland, Ireland and all the former British colonies that take it as its guide, works on the assumption that a gentleman’s word is his bond and that anyone who impugns his honour must prove his case.

A second archaic quirk makes wealthy litigants appreciate English law all the more. The judiciary treats a gentleman’s reputation as if it were his personal property, the defilement of which is a wrong in itself. Libel and trespass on land are the only torts the law says are actionable per se. A claimant does not have to prove that a writer has caused him to suffer financial loss or personal injury, any more than a landlord has to prove that a trespasser has damaged his land. The claimant can still sue even if no one has formed a bad opinion of him or read and remembered the offending words.

The judges invoke a quasi-feudal precedent to justify compensating claimants. The Duke of Brunswick’s Rule of 1849 states that every republication of an offending statement is actionable. It says much about how the dead hand of the past weighs on my country that I need to explain that 21st-century law takes its lead from the case of a corpulent and despised German princeling, whom the good people of Brunswick had had the sense to throw out in the revolutions of 1830.

In 1849, while living in exile in Paris, the duke sent his servant to the offices of the Weekly Dispatch in London to get an old copy of the paper, which contained an unflattering article about him. The six-year time limit on bringing a libel action had long passed. The offending issue was gathering dust in an archive. But the helpful judiciary obliged His Grace by deciding that because his manservant had been able to purchase a back copy of a 17-year-old newspaper, the publishers had repeated the original libel, even though the duke himself had instigated the repetition of that libel by sending his manservant to buy the back copy in the first place. No precedent could be more dangerous in the age of the internet, when readers can access blog posts, Twitter feeds, Facebook pages and online newspaper articles afresh with every new day. Because of a case from the 1840s, any one of the millions of people who have published on the web could be sued for something they wrote years before.

To many onlookers, the law’s biases seem reasonable. If writers produce a character assassination, what is wrong with the law requiring them to justify their words? As for putting a price on the value of a good reputation, who can measure the damage caused by smears and innuendos? English lawyers are fond of quoting Iago’s lines to Othello:

Who steals my purse steals trash; ’tis something, nothing;
‘Twas mine, ’tis his, and has been slave to thousands;
But he that filches from me my good name
Robs me of that which not enriches him,
And makes me poor indeed.

They forget that Iago is a liar and never admit that the English law does not confine itself to defending the reputation of men and women of good standing, but will come to the aid of any criminal who is not behind bars.

In the 1980s, the most fevered writ-generator was Robert Maxwell, a conceited and crooked media mogul. After fleeing to Britain from his native Czechoslovakia, he established business relationships with the communist dictators of the old eastern Europe. In Britain, the Department of Trade and Industry said after one of his many dubious takeovers: “He is not in our opinion a person who can be relied on to exercise proper stewardship of a publicly quoted company.”

This condemnation, and his warm relations with tyrannies, did not prevent Maxwell from bombarding newspapers and book publishers with writs threatening to take anyone who impugned his reputation to the courts. “His purpose was to make it impossible for any editor of a newspaper or book to consider writing about him critically without considering the enormous cost both financially and in time wasted that would entail,” said his unauthorised biographer, Tom Bower. “He would come down on them with the force of a bulldozer.”

The scores of writs had their effect. When presented with leads, editors wondered whether they wanted the trouble and expense following them would involve. Those who took him on learned that sources from inside the Maxwell organisation, who had spoken to their reporters off the record, were too frightened of losing their jobs to appear in court and that Maxwell was not above bribing witnesses outside his employ to change their testimony.

The law takes no account of the difficulty of getting on-the-record affidavits from sources in dictatorial corporations and offers another benefit to litigants that Maxwell took full advantage of. The ordinary citizen might suppose that if a newspaper or a book publisher ran an unflattering portrait of a wealthy man, the wealthy man would sue the newspaper or book publisher. It was likely to have the resources to pay for damage to his fine reputation, after all.

But nothing in English law stops the wealthy man suing the author personally, so his or her home and savings would be on the line unless they retracted and grovelled, or the shops that distribute books and newspapers. Maxwell calculated that the owners of bookshops or newsagents would not stock a controversial work if standing up for the freedom of publication might cost them money and they had other titles to place on their shelves. His tactic of suing bookshops was not as violent a means of reprisal as the Islamists’ tactic of hitting bookshops that stocked The Satanic Verses with bombs during the Rushdie affair, but the intent was the same.

Which is not to say that Maxwell eased up on his direct attacks on publishers. He targeted Private Eye and won colossal damages from the courts. The Eye had the distinction of receiving his last writ, in 1991, after it reported suspicions that Maxwell was “gambling” with his employees’ pensions. Sources in his corporation told its journalists that Maxwell was reducing their benefits and sacking those who spoke out. His lawyers maintained that it was outrageous to suggest that Maxwell was a criminal, who was raiding the employee pension fund to shore up the share price of his ailing businesses. Maxwell had “suffered a very serious injury to his feelings and reputation,” they said, as they demanded an apology with the usual damages.

A few weeks later, Maxwell either fell or jumped from his yacht. His businesses went bankrupt and his employees found that he was indeed a criminal who had stolen £400m from their pension fund. The writs Maxwell issued against Tom Bower, Private Eye, the Sunday Times, the Independent and others were directed at stories covering his business activities. All those stories turned out to be true or on the right lines. If they had a fault, it was that they were nowhere near as scathing as they should have been. The judges and law officers showed no regrets. They never paused to ask why the English law had punished investigations into a man who had never had a good name and always deserved a worse one.

In 1998, the English judiciary hit its nadir when it allowed David Irving, one of Europe’s leading neo-Nazis, to sue the American historian Deborah Lipstadt for saying that he had manipulated evidence to “prove” that the Holocaust had never happened. Penguin defended its author, as it had defended Salman Rushdie, and had to spend several million pounds, money it never recovered. After a full trial, the learned judge – one Mr Justice Gray – announced that in his considered opinion, and after weighing all the relevant evidence, he had concluded that the Nazis were indeed a bad lot who had gassed millions of Jews at Auschwitz and elsewhere, and that Irving and others who said they had not were likely to be liars. Where would the English be without their lawyers to guide them?

The law’s readiness to censor writers and order their publishers to pulp books and pay costs and fines weakens conservative claims that England and the rest of Europe are afflicted with an over-mighty “liberal judiciary”. The judges are not true liberals, but the successors to the aristocratic Whigs of pre-democratic Britain. William Hazlitt defined a Whig as neither liberal, nor conservative, but “a coward to both sides of the question, who dare not be a knave, nor an honest man, but is a sort of whiffing, shuffling, cunning, silly, contemptible, unmeaning negation of the two”. Modern judges prove Hazlitt’s point for him. After presiding over the false convictions of the Birmingham Six, the Guildford Four and other innocent men and women in the terrorist trials of the 1970s, they were obliged to learn to uphold the rights of defendants to fair trials in the criminal courts.

However, when citizens are not prisoners of the state, but are exercising their right to be full participants in the deliberations of society, they shut them up. British and European “liberalism” is uncomfortable with freedom of speech. Liberal judges do not have the instinctive democratic belief that citizens in open societies should be free to argue without restraint. Instead, they think they have a duty to intervene in open arguments, invariably on the wrong side. They subvert the right to freedom of speech protected by the First Amendment of the American Constitution, sanctified by custom in Britain and enshrined in the European Convention on Human Rights, as they try to create a journalism that never runs the risk of provoking the anger of the wealthy.

In Britain, money buys silence. The cost of libel actions in England and Wales is 140 times higher than the European average. If you lose a case, lawyers operating on a no-win, no-fee contract force you to pay damages, your costs, your assailant’s costs, a “success fee” for the victorious lawyers– which doubles their real costs – and a payment to cover insurance bills. In 2010, Lord Justice Jackson added these together and estimated that the costs of civil litigation in England could amount to 10 times the damages the court awarded.

A chill descended on English writing as publishers realised that punitive costs could cripple them. Libel law became the strangest branch of English jurisprudence. It was a law that lawyers hardly ever tested in court. Libel judges had to find other work for much of the year. The overwhelming majority of libel actions never ended in a hearing to determine if a work was true or its opinions fair, but remained hidden from public view. Publishers quietly settled, coughed up and withdrew offending material rather than run the risk of facing extortionate bills.

Beyond these cases of censorship lay the unknowable number of writers and publishers who self-censored. As when you contemplate religious censorship, you must always think of the books that were never written, and the investigations that were never begun, because of the overweening power of money.

Lawyers began to wonder about the point of defamation law. The London media solicitor David Allen Green said: “Almost all the statements which can actually damage a person’s reputation – employers’ references, credit searches, complaints to police and regulatory authorities – are covered by ‘qualified privilege’.” The person making the statement was free to defame – regardless of the damage caused – “as long as he or she is not being malicious”. Police officers could have records that falsely suggested that you were a child-abuser, but you could not sue them. A credit agency could erroneously claim that you were a serial debt-defaulter and you could not sue them either when a bank denied you an essential loan, unless the agency had acted with a negligent disregard for the truth.

If a newspaper, academic journal, book publisher, blogger or TV station made any kind of accusation, you could sue them and in all likelihood the case would never come to court because of the horrific costs of fighting and losing an action.

The denial of access to the courts was a final malign consequence of the English system. Censorship only made sense if judges weighed the evidence in a fair hearing. But cases rarely went to court. Therein lay the beauty of the English system for the rich litigant. He need not risk a trial in open court, where the defence could air the argument against him on the record. He could secure an apology through fear of financial loss, while sparing himself unwelcome publicity.

Instead of being a means of establishing facts, the law became a device deployed by lawyers, who tellingly began to call themselves “reputation managers”. A dubious businessman trying to make his way in English society would make a show of contributing to charities. He might buy some fine art, or donate to the opera, so he could pose as something more refined than a money-grubbing philistine. He would contribute to a political party in the hope, nearly always realised, of buying himself a peerage. And if anyone tried to query his philanthropic reputation, he could divert a small part of his fortune to a reputation manager who would manage the offender with writs and deter others from following the story.

In 2006, reporters on the Danish newspaper Ekstra Bladet decided to investigate the stunning rise of the Icelandic bank Kaupthing, which was buying assets across Denmark. How, they asked, had a bank from a volcanic island without the resources to support a huge and voracious financial sector become so powerful? The newsdesk decided they should concentrate on the links between the bank, Russian oligarchs and tax havens. Kaupthing was furious. It was accustomed to receiving praise from the financial press for the entrepreneurial dynamism of its managers. It threatened to sue Ekstra Bladet in Copenhagen and at the same time filed a complaint with the Danish Press Council, which handled cases of breaches of press ethics.

The paper defended its journalism and the Danish Press Council rejected the bank’s complaint. Kaupthing withdrew its Danish lawsuit and the argument seemed to be over until Ekstra Bladet‘s bewildered editors heard that the bank was now suing them in London. The costs were beyond anything they had experienced before. In Denmark, lawyers consider a libel action that costs £25,000 expensive. In London, lawyers for Kaupthing and Ekstra Bladet ran up costs of close to £1m before the case came to court. Ekstra Bladet could not run the risk of doubling, maybe trebling, the bill if it lost. It agreed to pay substantial damages to Kaupthing, cover its legal expenses and carry a formal apology on its website.

A few months later, Kaupthing, along with the other entrepreneurial, go-ahead Icelandic banks, collapsed. Iceland’s GDP fell by 65%, one-third of the population said they were considering emigration and the British and Dutch governments demanded compensation equivalent to the output of the entire Icelandic economy for the lost deposits of their citizens in Kaupthing and other banks.

Two points are worth flagging. The Danish journalists did not predict the collapse, but instead showed they had the nose for trouble that all good reporters possess. They could sense that there was something wrong with banks from a country with a population no larger than that of Coventry, buying overpriced foreign assets and acquiring the debts to match without having a government capable of acting as a lender of last resort in an emergency. Kaupthing went for the paper in England – not just because it wanted to kill the original story, but because it also wanted to deter others from spreading the idea that Iceland was not a safe place for investors. The English legal profession obliged. It placed the bank off-limits. Newspapers lawyers thought once, twice… a hundred times before authorising critical stories.

As events were to turn out, the English legal profession had also stopped the British investors who were to lose deposits worth bn in Iceland from learning that there was a whiff of danger around the country’s banks, although no lawyer showed any remorse about that.

A second point staggered foreigners. Even though Kaupthing was an Icelandic bank challenging a Danish newspaper, it was able to go to London to find a legal system willing and able to provide the coercive pressure it required. Most people would assume that what Danes wrote about Icelanders was none of England’s business. England’s lawyers thought differently.

On 21 July 2008, the United Nations declared that the practical application of English libel law “has served to discourage critical media reporting on matters of serious public interest, adversely affecting the ability of scholars and journalists to publish their work”. England’s authoritarianism was not a local concern, but created the global danger that one country’s “unduly restrictive libel law will affect freedom of expression worldwide on matters of valid public interest”.

Libel law was making England look like a pariah state. The internet ensured that all online publications everywhere on the planet could be read in England. Thanks to the Duke of Brunswick and his obedient servant, a single view of a web page in the UK constituted a publication of the libel in England, however old the offending words were. True, wealthy men could sue only if they had a reputation in England that critical reporting could damage. But as many oligarchs had a London home, or had business dealings in the City, they could overcome that obstacle with ease.

The courts retained the option of saying that a rich man should sue in the country where the offending article was published, but the judges wanted to catch passing trade and on most occasions welcomed plutocrats to the courts of old London town.

The first casualty was the British reading public, which could not buy works published in free America in their bookshops. The threat of legal action either banned or ensured the mutilation of Kitty Kelley’s muckraking biography of the royal family, virtually every American discussion of the funding of Islamist terrorism and The Best Democracy Money Can Buy, Greg Palast’s account of the dark side of corporate life.

An admirably vulgar episode of South Park highlighted the absurdity of banning material in one part of the democratic world that was freely available elsewhere. In an episode entitled “Trapped in the Closet”, Scientologists decide that the child character Stan is the reincarnation of L Ron Hubbard, the herder of credulous souls, who founded a sci-fi cult in the 1950s. Celebrity Scientologists John Travolta and Tom Cruise join the crowd on Stan’s lawn in South Park that has gathered to worship him. When Stan tells Cruise he does not think he’s as good an actor as Leonardo DiCaprio, but is “OK, I guess”, the despairing Cruise buries his face in his hands. “I’m nothing,” he says. “I’m a failure in the eyes of the Prophet!” He runs into Stan’s wardrobe and locks himself in, allowing assorted characters to shout: “Tom Cruise, come out of the closet!” with all the false but funny innuendo that implied, for the rest of the show.

In the final scene, Stan refuses to become the Scientologists’ new guru and renounces L Ron Hubbard and all his works. Hearing this blasphemy, Cruise comes out of the closet and cries: “I’ll sue you… in England!” To make the joke complete, the Scientology episode was the one episode of South Park British television managers dared not show, in case they were sued… in England.

English broadcasters’ fear of the law spared the producers of South Park an experience common to human rights campaigners and investigative journalists around the world: the bewilderment that came with receiving a letter threatening to initiate proceedings in the high court in London. Far from being a beacon of liberty, a place where people from authoritarian regimes or working for authoritarian corporations could hear arguments about their masters aired, England was liberty’s enemy. Saudis who could not investigate a petro-billionaire in Riyadh for fear of punishment found that London punished exposés when they were printed elsewhere. Ukrainian and Russian journalists, who took no small risk when they confronted their native oligarchs, discovered that the English legal system was as willing as their native jurisdictions to punish them for insubordination.

I still recall the shame I felt when the legal director of Human Rights Watch in New York told me she spent more time worrying about legal action from England than from any other democratic country when she signed off reports on torture, political persecution and tyranny. In the late 1990s, her colleagues had collected eyewitness testimony and Rwandan government documents and named those who played a role in the Rwandan genocide. In 2005, one of the men named in the report threatened a defamation suit in the UK, although only a few readers had accessed the report online from Britain. Her colleagues had to go back to Rwanda, reconfirm facts and relocate sources and amend the report to avoid a full-blown legal case, even though the new Rwandan government was investigating the complainant and he had gone into hiding.

It was a familiar pattern. English judges allowed Boris Berezovsky to sue the American Forbes magazine for accusing him of being involved in the gangsterism that marked the arrival of Russian capitalism. The magazine sold around 780,000 copies in the United States, while readers accessed about 6,000 copies in print or via the net in the UK. Among the reasons the judges gave for allowing Berezovsky to avail himself of the services of the English rather than the Russian or American law was that his daughter was studying at Cambridge. Forbes retracted.

The Ukrainian oligarch Rinat Akhmetov successfully pursued Kyiv Post, which had just 100 British subscribers, and a Ukrainian website that did not even publish in English.

The son of the ruler of the Republic of the Congo tried [and failed] to sue NGO Global Witness for a breach of privacy after it published details of how he was spending a fortune on luxury hotels and goods, while the country’s inhabitants suffered from miserable poverty.

These were mere part-time litigants when set against the foreigner who exploited the reach of the English libel law more than any other: Sheikh Khalid bin Mahfouz, a Saudi banker, whom I think I can write about now because he is dead – and the dead cannot sue, not even in England. “Behind every great fortune there is a great crime,” Balzac is meant to have said. And as with so many other oligarchs, bin Mahfouz’s fortune had a whiff of the gutter about it. He was a Saudi banker and worked with the Bank of Credit and Commerce International. In 1992, after BCCI’s spectacular collapse, the New York district attorney indicted him as a front man for a “Rent a Sheikh” fraud.

Bin Mahfouz was a principal shareholder and director in the BCCI Group, whose presence on the board reassured trusting investors, the DA said. Without their knowledge, he withdrew his investment, an action that resulted “in a gross mis-statement of the true financial picture of the bank”. Luckless investors, who did not realise that bin Mahfouz had got out before the balloon went up, suffered “larger losses when BCCI’s worldwide Ponzi scheme finally collapsed”. Bin Mahfouz denied all allegations, but he agreed to pay a fine of 5m and accept a ban on any further activities in the American banking system. England did not hold it against him. When investigative journalists began to talk about his alleged links to al-Qaida, London lawyers pounded them with writs with a ferocity not seen since Robert Maxwell’s day.

In one respect, however, bin Mahfouz differed from the old brute. He defended his “reputation” in the English courts while not being a British citizen. Nor, somewhat surprisingly, was he a Saudi citizen. In 1990, the billionaire acquired Irish passports for himself and 10 members of his family over a convivial lunch at the Shelbourne Hotel in Dublin with the taoiseach, Charles Haughey. Bin Mahfouz promised to invest in the country. Haughey promised him citizenship. A subsequent inquiry found that Haughey breached statutory procedures in the interest of pleasing bin Mahfouz.

Time and again, bin Mahfouz used the law or the threat of legal action to ban books that tied him to Islamist violence. It was not that he denied the charge in its entirety. He admitted that he had given money, but said it was only when Islamists were fighting the Soviets. Writers seeking to test his assertions, and see if there were grounds for the relatives of the dead of 9/11 naming him in their lawsuits, or the US Treasury department treating him with suspicion, were clobbered. The serial litigant did not allow any disobliging reference to him, however hedged with lawyerly caveats, to go unpunished. Terrified publishers pulped rather than run the risk of a trial.

To be fair to the ghost of the billionaire, he could raise legitimate doubts about some of the claims against him. In a normal country, an argument would have taken place, freely and in the open, about the merits of the case. But in this respect, Britain was closer to Saudi Arabia than a free country, and bin Mahfouz was a man only Private Eye dared write about. The legal actions went on without a hitch – he launched 33 suits – until bin Mahfouz lawyers issued a writ against Funding Evil: How Terrorism is Financed – and How to Stop It by the American author Rachel Ehrenfeld.

In truth, Ehrenfeld’s was not the best book on the subject – that distinction belonged to Alms for Jihad: Charity and Terrorism in the Islamic World by J Millard Burr, a former USAID relief co-ordinator in Sudan, and Robert O Collins, a history professor, which Cambridge University Press pulled to avoid a libel trial.

Ehrenfeld’s case stood out because of where her book was published rather than what she said. She published in New York, not London. No British publisher bought the rights for fear of the law and that fear denied the British public yet another book others could read. Bin Mahfouz still sued, because 23 copies reached Britain via Amazon. Despite this paltry sale, the courts allowed his action to proceed and ordered that Ehrenfeld should withdraw her book and pay him 5,000, even though bin Mahfouz was not English, Ehrenfeld was not English and her book had not been published, publicised or reviewed in England.

The imperialism of the English judiciary, its belief that it could punish books whose connection to England was virtually non-existent, finally made the world wake up to the danger London posed to freedom of speech. American writers, from leftists to neocons, realised that the availability of books on the net was overriding their constitutional rights. English law “constitutes a clear threat to the ability of the US press vigorously to investigate and publish news and information about the most crucial issues before the US public,” said a coalition of American publishers. England was organising “book burnings” added a Republican senator, not entirely hyperbolically, because chastened publishers withdrew defamatory books from the shelves and pulped them.

Rory Lancman, a stout member of the New York state assembly, stood on the steps of the New York Public Library and began a campaign to make English verdicts unenforceable in America with a magnificent speech: “When American journalists and authors can be hauled into kangaroo courts on phoney-baloney libel charges in overseas jurisdictions who don’t share our belief in freedom of speech or a free press,” he said, “all of us are threatened.”

In the run-up to the UK general election of 2010, all three main political parties made a manifesto commitment to reforming the libel laws, after 50,000 voters signed a petition defending free speech and free inquiry. Important though the modest reforms of the Conservative/Liberal coalition will be if they get through Parliament, the new government did not offer the freedoms Americans enjoy. They would not allow the British to write what they wished about public figures and matters of public interest as long as they wrote without a reckless disregard for the truth. Despite the power of money stopping journalists and bloggers providing the smallest warning that the banking system was about to collapse, despite London teeming with shady oligarchs, the British establishment had yet to learn that the free debates of a democracy are too important to entrust to wealthy lawyers and their wealthier clients.

© Nick Cohen 2012

Extracted from You Can’t Read This Book: Censorship in an Age of Freedom by Nick Cohen (Fourth Estate) © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds