Guardian editor Alan Rusbridger has called for an urgent reform of British libel law in order to safeguard the future of investigative journalism.
Writing in the New York Review of Books, Rusbridger said Britain’s “dubious reputation” as the libel capital of the world – and the costs associated with defending a claim – could lead to news groups shying away from important public-interest stories.
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His comments came after the Guardian settled a libel action in September with Tesco, which had sued the paper for printing incorrect allegations about the supermarket giant’s use of tax avoidance schemes.
Rusbridger said the sort of financial journalism at the centre of the Tesco case was “notoriously difficult, expensive and time-consuming”, and few reporters had the training to make sense of the information presented in company accounts, filings and annual reports.
He acknowledged that the Guardian’s initial reporting of Tesco’s tax arrangements was “quite wrong” – and the system used by the supermarket chain was so complicated that even an experienced reporter, trained in accountancy, “got it completely wrong”.
“After the Tesco legal assault, it is fairly safe to predict that almost no British paper will investigate in any detail how companies today increasingly fund and structure their overseas expansion with an eye to avoiding tax,” he said.
Rusbridger said Guardian News and Media had estimated that the total cost for both sides fighting the Tesco libel case “to the bitter end” could have been in the region of £5m.
Instead, the eight-month battle was brought to an end in September when the paper published a front-page apology. The exact terms of the settlement remain confidential.
He said there had been calls for a reform of British libel law as long ago as 1975, when a report recommended changing the law to make it more difficult for companies to sue for libel.
“There is little doubt that the effect of major corporations resorting to highly aggressive and expensive lawsuits will be to discourage investigations of complex financial affairs at the very moment when most readers might expect more and better coverage of them,” Rusbridger wrote.
“The more complicated tax avoidance measures indulged in by major companies are largely ignored by the British press, with the consequence that there is virtually no public pressure on corporate boards to behave otherwise.”
He concluded: “We need more than ever to find ways of encouraging, not penalising, news organisations that try to report matters of the greatest complexity and significance.
“The financial crisis currently facing newspapers in America and Europe is grave and comes at a time when they are more needed than ever.”