Lord Ashcroft complained to the Press Complaints Commission that an article headlined “Tory treasurer sued in US court” published in The Observer on 8 April 2001 was inaccurate in breach of Clause 1 (Accuracy) of the Code of Practice.

The complaint was rejected.

The article claimed that the complainant, the former treasurer of the Conservative Party, had, along with four other directors of a company called Tyco, been accused of making ‘false and misleading statements’ to the public and using deceptive accounting to boost the share price falsely. The piece made clear that the allegations were yet to be tested in court and that a Tyco spokesman had made clear that they were ‘totally without any foundation’. In addition, a spokesman for Lord Ashcroft was quoted denying the allegations and the article made clear that such lawsuits were common in America.

The complainant said that the basic proposition underlying the article – that he was being ‘sued in US court’ – was untrue. He thought that by positioning the story on the front page of the paper readers would have been led to believe that he was the subject of a recent major lawsuit and was involved in a ‘corporate scandal’. He also said that the reporting of the sequence of events was materially inaccurate. Following an investigation in 1999 by the Securities and Exchange Commission (SEC) – which itself was initiated after ‘unfounded allegations concerning Tyco’s accounting policies – a number of law suits were filed against the company in anticipation of the allegations being proven. The complainant had at the time been mentioned in only one of 39 lawsuits. In July 2000 the SEC concluded its inquiry without taking or recommending any action, and as a result most of the lawsuits had now withered away. The remaining claims had been consolidated into one outstanding action which Tyco had applied to have struck out. The SEC had not ‘forced Tyco to redo its financial accounts’ – in fact, the company had decided of its own volition to restate minor elements of its accounts. The complainant also complained that the newspaper had only approached his spokesman for comment at 11 am on the day before publication and he said that this was unreasonable. The spokesman’s comments, and those of his lawyer, were not published with sufficient prominence.

The newspaper said that its public affairs editor had discovered that there was an ongoing legal dispute between directors of the company and some shareholders that dated back to 1999. News of the lawsuit had been published in December 1999 by The Times and that story had stated that the complainant was a non-executive director of the company, and the Daily Telegraph had also revealed news of the SEC investigation under the headline “SEC probe sends Ashcroft company shares plunging”. The newspaper said that as a result of the SEC investigation the company restated its financial results for 1999 and the first two quarters of 2000. The newspaper accepted that the original lawsuits were submitted in 1999 but said that its journalist had discovered that the lawsuit was still ongoing in April 2001 and maintained that the most recent amended court documents were submitted just a few months before the article. The newspaper denied that it had been unreasonable in its preparation of the article and said that all the comments made by the complainant’s spokesman and lawyer were included in the piece. The paper accepted that it might be difficult for the Commission to reach an adjudication on the matter given that there were live legal proceedings against the complainant but suggested that it might help if it undertook to report the outcome of the proceedings, including a report if the court struck the claim out.

The complainant rejected this offer and denied that the company’s restatement of its accounts was connected with the SEC investigation.

While the Commission noted the complainant’s objection to what he saw as the staleness of the story it considered that the selection of material for publication is a matter for editorial discretion. Turning to the specific complaints of inaccuracy, the Commission noted that, while the complainant may have disputed the worth or chances of success of the legal proceedings, they were nonetheless still active as reported in the paper. There was no dispute that the complainant was a director of the company or that he had been mentioned in legal documents, some of which the Commission noted had been quoted in the piece. Regarding whether or not readers might erroneously have thought that the complainant was personally being sued in the US, the Commission highlighted the fact that it considers headlines in conjunction with the text of a piece and, examining the context of the article as a whole it did not conclude that readers would have been misled as to who was the subject of the legal action. The Commission considered that the piece made clear that the claims were untested allegations and considered that the phrase ‘corporate scandal’ would have been seen in this context. The Commission did not find any material discrepancy between the complainant’s account of the involvement of the SEC and how it was reported in the article. Given that there had been an SEC investigation and given that the company had contemporaneously restated some of its results – albeit before the conclusion of the investigation – the Commission did not consider that there was any significant inaccuracy in the article’s claim that the ‘SEC did force Tyco to redo its financial results’. The Commission noted that some of the allegations were still to be tested in court or struck out and it considered that the newspaper’s offer to report the outcome was a sensible one in the circumstances.

The Commission noted the complainant’s objections that the newspaper had initially approached his spokesman for a comment only a few hours before publication. In some cases this might be a factor that the Commission would take into account – usually if the approach was so late that somebody had no reasonable opportunity to comment on a story that, by omitting their comments, would be inaccurate or misleading in breach of the Code if published. In this case, however, the Commission noted that the article had used the comments of the complainant’s spokesman and lawyer to make the complainant’s point of view very clear. Readers could have been in no doubt that the complainant vigorously disputed the allegations. The Commission also noted that the article had explained that such lawsuits were common in America and that the company believed that lawyers were attempting to blackmail the firm. In all these circumstances the Commission could find no breach of the Code.