Clauses Noted: 1
Publication: The Sunday Times
Charles Tannock MEP complained to the Press Complaints Commission via Lewis Silkin solicitors that an article headlined "Tory MEP kept energy share options secret", published in the Sunday Times on 18 December 2011, was inaccurate and misleading in breach of Clause 1 (Accuracy) of the Editors' Code of Practice.
The complaint was not upheld.
The article claimed that the complainant had "failed to declare" to the European Parliament (EP) a "lucrative package" of share options which he had "secretly received" from 3Legs Resources plc, a shale gas and oil mining group involved in the controversial extraction method known as "fracking".
In 2007, the complainant had purchased 160,000 founder shares of 3Legs Resources plc for the sum of £400 (half of which he had sold following the company's flotation in 2011), and in that year he had declared on the EP's register of members' interests that he was a "small founder shareholder" and non-executive director of 3Legs. In 2009, he had been awarded 215,884 share options in 3Legs Resources plc. In October 2011, the complainant declared that he remained a shareholder in 3Legs Resources plc; that he was the beneficiary of a share option plan in 3Legs Resources plc; and that when he had stated in various entries between 2007 and 2010 that he was "unpaid" in all his 3Legs directorships he had meant by this "unsalaried" and had not intended to imply that he had no shareholdings or share options in 3Legs.
The complainant strongly denied that his shareholdings or his share options had been "secret", "secretly received" or "kept secret", which he considered suggested entirely inaccurately an improper attempt on his part to conceal them. He said that he had declared his original shareholding to the EP in 2007 even though there had been no obligation under the rules to disclose either the shareholding or the share options at any time between 2007 and 2010; there had also been no obligation to re-declare previously declared interests in subsequent years. The share options had been publicly listed in prospectus documents when 3Legs Resources floated on the Alternative Investment Market (AIM). These were obtainable through a simple internet search, and although he could have avoided this by disposing of the options before the flotation, he had not done so. He considered that these documents were more readily accessible to the public than declarations of interest on the register of members' interests; accordingly, claims that his holdings had "come to light" or been "uncovered" by anti-fracking campaigners were inaccurate. He denied that he had "failed to declare" his share options; the relevant authorities had determined that he was under no obligation to make such a declaration, and that he had not contravened existing procedural rules.
The complainant also raised a number of other concerns under the terms of Clause 1. He disputed the reference to the share options as a "lucrative package". At the time they were granted, they had a modest, speculative value; 3Legs Resources had been an unlisted company, and the options had no "intrinsic value" because the "strike price" (the price at which the complainant was entitled to buy the shares) had been set at a value roughly equivalent to what the board believed to be their "market price" at the time. Until 2010, the complainant had not been entitled to sell or transfer the options as they had not vested. In any case, he argued, the purpose of a declaration of financial interest was not to provide information about the wealth of an MEP or the precise size of an investment but to ascertain whether an MEP had a financial interest in a company that might lead to a conflict of interest. The share options did not alter the interests he had previously declared on the register.
The complainant considered that he had informed the EP in 2007 that he was "remunerated" in his role as a non-executive director by virtue of listing his directorship in the part of the register listing "remunerated functions or activities"; he had intended this to refer to the benefit he had acquired in the form of his founder shareholding. He denied that he had subsequently contradicted himself by declaring 3Legs under the section for "paid functions" on the declaration of interests form on several occasions, while stating in the declaration itself that he was "unpaid". He had taken the view that "payment" referred to money or salary, and he had received no money, salary or wage from 3Legs. He noted in this regard the findings of the relevant authorities at the EP ( the Quaestors) that the options were not part of a salary scheme but were "simply investments which might either go up or down". He had in any event clarified any potential misunderstanding in October 2011.
Prior to publication of the article, the complainant had referred his own conduct to the Quaestors with an offer to apologise if he had misunderstood the rules. No contravention of the existing disclosure rules had been established by the Quaestors. While the complainant agreed that the existing rules were "very vague indeed", he maintained that he had nonetheless complied with their spirit and letter.
The complainant also objected to the article's observation that when MEPs had voted on a stricter code of conduct shortly before publication, he had tried unsuccessfully to amend the rules so members would have to declare only shareholdings worth more than £70,000; he argued that this contained the misleading insinuation that he had sought to amend the disclosure rules to protect his own interests. He said that he had not acted unilaterally and that in any case his proposal, a copy of the equivalent rule in the House of Commons, would have been stricter than the previous rule. He had declared his holdings and would continue to do so.
Finally, the complainant considered that the article's claim that he had "used his role as a politician" to advocate for Europe to diversify its energy sources suggested unfairly that he was "self-serving", and objected to the claim that he "continues to promote the extraction of shale gas and oil as an ‘exciting alternative energy source'". He had never spoken in Parliament about shale or fracking. When he had spoken about energy security and diversification - as he had done long before being connected to 3Legs - he had done so in line with official Conservative and UK government policy.
The newspaper defended its article as fair, accurate and in the public interest. It said its purpose had been to demonstrate that EU rules on disclosure were so lax that an MEP could hold a substantial financial interest in a company operating in a controversial industry for a number of years that was not recorded on his parliamentary declaration of financial interests. In its view, the complainant had not established a single inaccuracy in the article, which had made clear that he had not broken any rules.
The newspaper said that the "secrecy" claim related only to the complainant's share options; although the complainant had received the options in 2009, he had not declared them until October 2011, following a complaint by a constituent and on the advice of the Quaestors. The newspaper said that had the complainant made a reasonably prompt declaration, the options could not have been described as "secret"; however he had not done so for over two years. It was entitled to report that in 2009, 2010 and the majority of 2011 these share options - worth over £500,000 at the peak of the market in June 2011 - had not been declared and had essentially been "kept secret". It was not misleading to say that anti-fracking campaigners had "uncovered" the complainant's shareholding (as well as the options); the complainant had not re-declared his shareholding since 2007, and the 2007 declaration was no longer available online.
The newspaper acknowledged that in 2011 the complainant's share options had been listed in the AIM prospectus documents; the article had made clear that the information had been obtained from "company documents". However, it said that the purpose of a register of interests was for MEPs to declare publicly any financial interest with an outside company that might be relevant to their work. Members of the public should not be required to search financial documents for evidence of possible conflicts. It also maintained that the complainant's declarations between 2007 and October 2011 had been misleading. The relevant disclosure rules of the EP required MEPs to make a detailed declaration of "their professional activities and any other remunerated functions or activities"; it said share options are widely considered to be "remuneration" and are generally granted by remuneration committees. It did not accept that there was a material distinction to be drawn between "pay" and "remuneration" in this case and stood by its allegation that the complainant had contradicted himself in his declarations.
The newspaper noted that the complainant's public clarification of the position in 2011 had followed a complaint to the European President and an investigation by parliamentary authorities. He had informed the newspaper before publication that he had "never deliberately intended to mislead", thus in its view appearing to acknowledge that his declarations had been (inadvertently) misleading. The newspaper did not agree that the Quaestors' findings could be said to "wholly vindicate" his behaviour (as he contended); the authorities had made clear that the rules were too vague to support a firm judgment and advised the complainant to declare the interest.
The newspaper denied that its reference to the proposed amendment to the code of conduct was misleading; the complainant had confirmed that he had submitted the amendment, and the article had made no comment as to whether it would have represented a weakening or strengthening of existing rules. The article had included the complainant's denial that he had used his influence as MEP to promote shale gas and had made clear that he had not spoken in favour of fracking in parliament. The newspaper maintained that its assertion that the complainant "continues to promote the extraction of shale gas and oil as an ‘exciting' alternative energy source" was accurate, noting that he had referred to the "exciting area of shale gas exploration" in pre-publication correspondence and had expressed similar sentiments in an e-mail to a constituent in March 2011.
The complainant asked that the newspaper publish a correction and apology accepting that he had complied fully with both the spirit and the letter of his obligations to the European Parliament; that he had not promoted the interests of 3Legs or shale gas exploration in his role as an MEP; and that he had acted with propriety concerning his declarations of interest.
Clause 1 (Accuracy) of the Editors' Code of Practice sets out that "the Press must take care not to publish inaccurate, misleading or distorted information, including pictures" and that "a significant inaccuracy, misleading statement or distortion once recognised must be corrected, promptly and with due prominence, and - where appropriate - an apology published".
While the complainant had raised numerous concerns about the accuracy of the article - of which the Commission had chosen to comment on those it judged most significant - the focus of the complaint, and the article, was the newspaper's claim that his share options had been "secret", "secretly received" or "kept secret". Closely related were claims that the complainant had "failed to declare" the share options, and that the options and shareholdings had "come to light" or been "uncovered" by anti-fracking campaigners. It was plain to the Commission that not only the accuracy of the article, but also the public interest in the story claimed by the newspaper, rested largely on the validity of these allegations.
The Commission acknowledged the complainant's position that information about the share options had been published in a public document which remained available online. By contrast, declarations of interest in the EP members' register were less accessible, as they were archived at the conclusion of every legislature, with the consequence that declarations made prior to July 2009 would not be available on the EP website. The Commission also understood the complainant's position that the purpose of a declaration of financial interest is not to provide information about the precise size of an investment, and that the existence of share options did not alter the basic position: that, as he had declared, he had a financial interest in 3Legs. Against this background, the Commission considered that the newspaper's reference to the complainant's options as "secret" - particularly in the headline of the article - had come very close to the line.
It ultimately concluded, however, that the article - taken as a whole - had not been misleading on this point. While the complainant had argued that records of his share options could be easily located using a simple web search, this presupposed knowledge that such a search should be conducted. Ultimately, the purpose of any register of interests is to make information about potential conflicts of interest, relating to all members of an institution, public and accessible in one location (whether online or not). The article had made clear, prominently, that the complainant had been acting within the rules in relation to his disclosures, and had noted that the information about the holdings had been obtained from company documents. Against that background, the Commission concluded that the newspaper had been entitled to present its interpretation that the complainant's decision not to disclose the grant of substantial share options until late 2011 made them effectively "secret" until that time, and represented a "failure" on his part.
In relation to the complainant's concerns about the claims that the shareholdings and options had "come to light" and "been uncovered" by anti-fracking activists, the Commission noted that the article had made clear that the shareholding had been declared in 2007, and it did not appear to be in dispute that the activists had learned of the shares and options from the prospectus documents. Against this background, the Commission did not consider that these references were misleading.
The Commission noted the complainant's concerns about the newspaper's reference to the share options as a "lucrative package" and his comments about the speculative nature of the award at the time it was made. Nonetheless, it was accepted that during the period in which they had not been declared their market value had at one point reached more than £500,000. The article had made clear that the value of the options was dependent on the value of the share price, and in the view of the Commission, it was not misleading to refer to the options as "lucrative" in this context.
The complainant was also concerned about the claim that he had contradicted himself by declaring 3Legs "under the section for paid functions on the declaration of interests form, but contradict[ing] this by saying he was ‘unpaid'". The Commission noted the complainant's position that he did not consider that his founder shares were "payment", but it was not in dispute that he had completed forms that asked him to declare "paid functions or activities" with references to roles with 3Legs and the note "I am currently unpaid in these positions." The newspaper had been entitled to refer to this as contradictory; the article had made clear the complainant's position that he did not consider share options as remuneration and did not feel it necessary to declare them.
Finally, the Commission considered the complaints about the references to the complainant's vote on the new code of conduct and the allegations that he had "used his role as a politician" to advocate for Europe to diversify its energy sources and that he "continues to promote the extraction of shale gas and oil as an ‘exciting alternative energy source'. The complainant did not appear to dispute the accuracy of the account of his proposed change or the fact that he had sponsored it. In the view of the Commission, the reference was not misleading. The complainant also objected to claims that he had "used his role as a politician to call on Europe to lessen its reliance on Russian oil and gas in favour of other energy sources". He had accepted, in comments published in the article, that he had "frequently promoted the idea of energy diversification", and the article had also made clear prominently that he had never spoken in favour of fracking in Parliament. It had also noted his position that he was "motivated solely by Conservative and EU foreign policy" and included his denial that he had "sought to enhance a direct financial interest or enrich myself or the companies I was director of by participating in foreign policy debates". In the view of the Commission, this had adequately clarified his position in this regard.
The complaint was not upheld.
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