Rothschild Loses Libel Suit In 'Puppet-Master' Regulatory Scandal

A London judge has ruled against a billionaire member of the Rothschild banking family who sought huge damages because a newspaper reported he was the "puppet-master" of a leading European Union (EU) leader. Reports of their relationship created a scandal in the UK by illustrating the tight ties between globe-trotting billionaires and the regulator.

In a ruling of global importance to preserve the slender media scrutiny of the powerful that exists today, the judge rejected Nathaniel "Nat" Rothschild’s $1.5 million pound lawsuit. Rochschild claimed the Daily Mail libeled him by reporting on his 2005 trip to Russia with two rich business partners and then-EU Trade Minister Peter Mandelson. The latter, since elevated to the United Kingdom's nobility as Lord Mandelson, is shown above right in a photo courtesy of Wikipedia.

Rothschild and the EU official met Russian aluminum tycoon Oleg Deripaska, whose net worth Forbes reported in 2008 as $28 billion. Deripaska (left, shown in a Wikipedia photo) is CEO of RusAl (or "Rusal"). Also, he is Rothschild's business partner. Mandelson is a UK Labor Party careerist with a history of socializing with the wealthy while holding posts regulating their businesses.

Rothschild asserted that their January visit to Siberia was merely social. Part of the evidence -- that the VIP visitors were warmed in a custom of the region by a young man who flogged them with birch branches -- has encouraged more news coverage. The headline in the UK Independent over the weekend, for example, was, Rothschild loses libel case, and reveals secret world of money and politics.

The UK's defamation laws are much more restrictive than in the U.S. for news reporters. But the judge's verdict enabled the Daily Mail to publish a column both hard-hitting and mocking in tone: The Russian oligarch, the Old Etonian billionaire and deeply disturbing questions about Lord Mandelson's integrity.

Justice Tugendhat dismissed the libel case. He found after a trial that Rothschild “had not been entirely candid throughout the different stages of the case, or in evidence” claiming that he took Mandelson on the trip to see Deripaska and Hungarian-born tycoon Peter Munk, founder of the world's largest gold-mining company, “as a friend and not for any business reason.” The judge noted their visit to a Rusal property, and continued, “I cannot accept that the position was as simple as that....I do not accept that there is a clear line between the business and the personal sides of Mr. Rothschild’s relationship with Mr. Deripaska.  They have very extensive business relationships. When asked about this, Mr. Rothschild gave what I regard as quite unrealistic answers."

As illustrated by the two news articles cited above, the story has many dimension attracting different audiences -- not a good thing for secretive global tycoons or their government friends who supposedly regulate them.

For tabloid readers and those who seek to watch Lifestyles of the Rich and Famous unfold, the original news coverage and the libel trial show Rothschild-level living. Nat Rothschild, 40, is the Eton-educated scion -- and purportedly the richest -- of the current generation of the famed banking family that's been influential throughout Europe for two centuries.

As context, the Rothschilds helped bankroll the British Government's funding of the Cecil Rhodes diamond mining operations in South Africa, for example, and then helped implement his desire after his 1902 death to create the Rhodes Scholarships at Oxford and a variety of other bodies. The late Georgetown University professor Carroll Quigley, mentor to future Rhodes Scholar and President Bill Clinton, famously traced this history in books and lectures for many years and generations of students.Some of these important organizations included Chatham House in London, and the Council on Foreign Relations, each created in 1919.

In sum, the Rothschild family and its allies have been involved in many other iconic business deals, government initiatives and non-government organizations helping shape the Western World's modern history, often working with influential U.S. financial and government leaders during recent decades. Our Justice Integrity Project has repeatedly reported, for example, that the federal corruption prosecution of former Alabama Gov. Don Siegelman was in part based on a desire by Siegelman's largely Republican political opponents to help steer to EADS a $35 billion defense contract for a next generation of Air Force tankers.

One example is our report last year, Inside Story on DoD's $35 Billion Boeing Air Force Tanker Deal. To recap, EADS makes Airbus planes, among other products. European government leaders and such private interests as those represented by Nat Rothschild supported the bid of an EADS subsidiary in the United States to win the contract. Under the plan, much of the aluminum would come from Russia, airplane engines from the UK, and so forth, for planes to be assembled in Alabama. Some of us following the decade-long contract competition marvelled at the audacity and/or brilliance of a plan whereby U.S. taxpayers would in effect buy high-tech defense equipment in one of the nation's largest defense contracts during a period of high-tech job losses in the United States. But the U.S. government and competing bidders argued at least in public that the contract should be awarded on the basis of honest competition. U.S. Sen. John McCain, R-AZ,  presided over Senate hearings showing that a high official of EADS's rival, Boeing Corp., had bribed an Air Force procurement officer. That scandal temporarily voided award of the contract to Boeing. EADS-backers then strongly supported McCain's 2008 Presidential campaign as the GOP nominee.

Alabama journalist Roger Shuler recently noted the tanker procurement and other reasons for Siegelman's still-pending prosecution in Why Did Karl Rove and His GOP Thugs Target Don Siegelman in Alabama? Those following the Siegelman case may disagree on the precise weight for each reason for the former governor's prosecution. The key decisions are made in secret, of course, and government officials have scant incentive to discuss their personal motives and any political pressures aside from asserting they as officials do the right thing at all times. But what's telling is the continued evidence that corruption-fighting -- the Justice Department's ostensible mission in the Siegelman case-- could hardly be the sole reason for such an ongoing national disgrace with somay legal irregularities. Even conservative columnist George Will has joined those urging Supreme Court review of what's now a decade-long federal jihad against the state's most prominent Democrat until his prosecution, which culminated in his 2006 convictions primarily for reappointing to a state board in 1991 a wealthy donor to a non-profit whose mission Siegelman supporetd. 

Author and investigative reporter Wayne Madsen, right, has published breakthrough reports on several of these situations. He is a former Naval Intelligence officer who publishes most frequently on the Wayne Madsen Report, a website requiring paid subscriptions. In 2008, for example, he published a column, John McCain's 70th birthday bash held on boat of Russian tycoon. It linked then-GOP Presidential nominee McCain, Deripaska, Rothschild and Munk far beyond mere social encounters. Madsen provided this context:

The 40-year old Deripaska is also politically-connected, having married the daughter of Russia's late President Boris Yeltsin. Unlike most other Russian tycoons, who now live in exile abroad and are protected by Israeli passports, Deripaska maintains close relations to Russian Prime Minister Vladimir Putin and another Russian tycoon, Roman Abramovich, who was also invested in Russia's aluminum industry. In 2000, Deripaska merged his firm, Basic Element, with Abramovich's firm, RusAl. Both tycoons maintain expensive homes in London.

Deripaska has attracted the attention of U.S. law enforcement and he has been the subject of several civil law suits filed against him because of his business practices. However, no federal criminal charges have been brought against Deripaska. That is because Yeltsin's son-in-law counts, in addition to McCain, former GOP Senator and 1996 GOP presidential candidate Bob Dole among his most ardent supporters. In 2005, Deripaska paid Dole $500,000 in lobbying fees and was granted a visa to enter the United States. However, in 2006, the Wall Street Journal reported that the U.S. government refused to grant Deripaska another visa because the FBI discovered he made "inaccurate statements" to the bureau.

In the past, the Canadian firm Magna International, in which Deripaska is a $1.5 billion investor, attempted to buy Daimler Chrysler. The deal ultimately fell through.

Madsen's account, for which the Justice Integrity Project has since independently verified some of the sourcing, goes on to report:

McCain and Deripaska first met at a dinner party held concurrent with the Davos World Economic Forum in January 2006 in Switzerland. The party was hosted by Canadian gold mining billionaire Peter Munk, owner of Barrick Gold, which has counted former President George H. W. Bush, former Canadian Prime Minister Brian Mulroney, former Senator Howard Baker, major Democratic Party lawyer/lobbyist Vernon Jordan, and former German Central Bank President Karl Otto Pohl among the members of its International Advisory Bord. The party was arranged by McCain's 2000 campaign manager Rick Davis, of the Washington lobbying group Davis Manafort. Attending the meeting in Davos was McCain, Davis, Deripaska, and Senators Saxby Chambliss (R-GA) and John Sununu (R-NH), as well as the host Munk.

On August 29, 2006, McCain attended a dinner party in Montenegro that was followed by a champagne reception on a yacht that was hosted by Deripaska. Also reportedly in attendance was Davis, whose lobbying firm was representing the government of Montenegro; Munk; and Nathan Rothschild who, on March 20 of this year held a controversial fundraiser for McCain at Spencer House in London. The fundraiser raised questions about McCain receiving illegal "in kind" contributions from a foreign national.

Such events normally remain secret, of course. Ordinarily, the public can at most expect opaque discussions in the news pages of business deals in language understandable largely to a specialized readership. The Wall Street Journal reported Feb. 15, for instance, Peace, of sorts, has broken out at Bumi PLC, describing how Rothschild appears to be retaining his co-chairmanship of the coal company. Rothschild occasionally attracts attention from readers far beyond the business press because of his ties with world-famous models as well as to Said Gaddafi, son of Libya's longtime ruler.

But the evidence from the libel suit enables a much more thorough level of scrutiny, especially of Mandelson because of his government responsibilities and ties. He is a television producer whom Labor Party leader Neal Kinnock identified as a political talent. Kinnock's Labor successors. Prime Ministers Tony Blair and Gordon Brown, similarly supported Mandelson in years which Labor took steps, especially in Blair's "Third Way" to shed its working class roots and become more corporate-friendly, much like the Democratic Party in the United States during the same period. Thus, Mandelson has reportedly bought a home in London worth 8 million pounds following his government service, raising eyebrows. Especially after the libel trial, he may now be experiencing "Lifestyles of the Rich and Infamous."

Publishing sensitive information regarding tycoons who can bankrupt even a mainstream news outlet with legal costs and judgements is no easy matter, especially in the United Kingdom, which has harsher libel laws in general than the United States. Author and investigative reporter Greg Palast, a guest on my radio show Feb. 9, has written extensively about this. In one such column in 2001, Palast, left, cited Rothschild-Deripaska-Mandelson junket companion Peter Munk as one of the world's most aggressive and effective libel litigants. Palast is a native of California who has worked for the Observer and BBC in the United Kingdom. Among his major stories were financial connections between the Bush family and Munk's company Barrick Gold. Palast described that situation as follows in his 2001 column, in Alert: British paper faces suit over Palast investigation:

In retaliation for the investigative story about the finances of the George W. Bush campaign, Barrick Gold Mining of Canada has sued my paper, the Observer of London, for libel. The company, which hired the elder Bush after his leaving the White House, is charging the newspaper with libel for quoting an Amnesty International report, which alleged that 50 miners might have been buried alive in Tanzania by a company now owned by Barrick.

The company has also demanded the Observer and its parent, Guardian Newspapers, force me to remove the article from my US website, a frightening extension of Britain’s punitive libel laws into the World Wide Web. The company has also issued legal threats against Tanzanian human rights lawyer Tundu Lissu, one of the Observer’s independent sources and an investigator of the mine-site allegations.

The attack by Barrick and its controversial Chairman, Peter Munk, one of the wealthiest men in Canada, who boasts of his propensity to sue, also aims to gag my reporting on his company’s purchase of rights to a gold mine in Nevada -- containing $10 billion in gold -- for a payment of under $10,000 to the US Treasury.

Palast says in his book, The Best Democracy Money Can Buy, that Munk and Barrick have achieved great success in both the United Kingdom and North America in using libel actions threats to frighten news media outlets from reporting such allegations. Palast said one Barrick legal strategy was to forbid Palast from writing on his U.S.-based website about the Amnesty International report about the Tanzanian mine worker deaths because his website is visible in the United Kingdom. This kind of intimidation against reporters and their outlets is a particularly effective in the United Kingdom, Palast writes, since:

In the United Kingdom one can't complain about being sued for libel because, under their law, the paper is guilty of defamation until it proves itself innocent.

Munk's friend, Rothschild, is appealing his loss in court last week. Let's hope Rothschild stays on a losing streak. Associated Media, the defendant and parent of the Daily Mail, said the damages he's seeking would cripple news-gathering. Clearly, we need less secrecy, not more.

Selected News Reports Referenced Above

Independent (United Kingdom), Rothschild loses libel case, and reveals secret world of money and politics, Tom Peck, Feb. 11, 2012. Thanks to billionaire's legal battle, we now know a lot more about how the super-rich work. With his long limbs and delicate gait, Lord Mandelson [left in a Wikipedia photo] could no doubt manage a quite convincing turn in Thunderbirds. He'd find Jeff Tracy most convivial: a billionaire astronaut with his own Pacific island, and now, it seems, he even has his own camera-shy friend to pull the strings. According to the High Court, Nathaniel Rothschild, scion of the banking dynasty and friend of seemingly everyone in the spheres of finance, business and politics, is indeed "puppet master" to the Baron of Hartlepool and Foy. The banker and Bullingdon boy has lost his libel case against the Daily Mail, which he sued for "substantial damages" over its account of his and Mr. Mandelson's extraordinary trip to Russia in January 2005.

Daily Mail (United Kingdom), The Russian oligarch, the Old Etonian billionaire and deeply disturbing questions about Lord Mandelson's integrity, Richard Pendlebury, Feb.11, 2012. Siberia in January is a very cold place indeed. What relief, then, for four weary travellers to be able to warm themselves in front of the furnace of an enormous smelter — all wearing hard hats bearing the corporate logo of Rusal, the world’s largest aluminium producer. One of the men is Oleg Deripaska, the controversial Russian oligarch and boss of Rusal. He owns the gigantic Sayanogorsk plant near the tundra city of Abakan. At his side is his youthful British friend and adviser, the Honourable Nat Rothschild. A billionaire financier in his own right. A third member of the party is Peter Munk, the Canadian founder and chairman of the world’s largest gold-producing corporation. Mr. Munk is a business partner of Deripaska and Rothschild.

Wayne Madsen Report, John McCain's 70th birthday bash held on boat of Russian tycoon, Wayne Madsen, June 8, 2008. John McCain's campaign is trying to make political hay out of the conviction of Chicago tycoon Tony Rezko, a one-time fundraiser for presumptive Democratic presidential candidate Barack Obama. However, the McCain campaign wants to bury the story of McCain's 70th birthday bash held on board the yacht of a Russian aluminum tycoon in the Adriatic Sea. The party was held on August 29, 2006, McCain's birthday and followed a congressional junket by McCain, left, and five other GOP senators to the Republic of Georgia. The host for McCain's yacht party off the coast of the Republic of Montenegro was, according to WMR sources with close links to the Republican Party, Oleg Deripaska, one of Russia's most powerful tycoons who made his billions in cornering Russia's aluminum market in the 1990s.

Wall Street Journal, Peace, of sorts, has broken out at Bumi PLC, Andrew Peaple, Feb. 15, 2012. The coal miner's major Indonesian shareholders have dropped their call for an extraordinary general meeting to push through sweeping changes to its board and management, including the ousting of Co-Chairman Nat Rothschild. Instead, the Bakrie family and investor Samin Tan will now take their bid to promote their appointees to Bumi's board next month after a deal brokered by two of its independent directors, Julian Horn-Smith and Lord Robin Renwick. Given that the Bakrie-Tan bloc effectively controls 43% of Bumi voting rights, it is likely get its way.  That suggests Mr. Rothschild has been granted only a temporary reprieve. Few will shed tears for the financier, who bought Bumi to London via a reverse takeover into cash shell Vallar and has since made an eye-popping 80% return on his initial investment even as the shares have slumped 25%. But he isn't the only one whose reputation has been badly damaged by this sorry saga. Vallar's bankers—primarily J.P. Morgan Cazenove—deserve criticism for having promoted the Vallar model, which appears to have been little more than a vehicle to engineer a backdoor London listing for a business that would never have survived the scrutiny of a full listing. The Financial Services Authority has now acted to close the loophole that allowed Bumi to access the London market by proposing tighter rules on reverse takeovers—a problem too in the U.S., where several low-grade Chinese companies have been able to obtain backdoor listings.

Legal Schnauzer, Why Did Karl Rove and His GOP Thugs Target Don Siegelman in Alabama? Roger Shuler, Feb. 6, 2012. (1) Why did Karl Rove [right] and his pro-business GOP thugs target Alabama Democratic Governor Don Siegelman? (2) Why did the Bush administration proceed with what has become the most notorious political prosecution in American history? Those questions are particularly powerful now because Siegelman last week filed a petition with the U.S. Supreme Court for review of his 2006 convictions on bribery and obstruction of justice charges. This appears to be Siegelman's last crack at appellate review, and if it is denied, he probably is headed back to federal prison. I've probably written more words about the Siegelman affair than just about anyone on the planet, so I might as well take a crack at answering those questions.

Washington Post, Is it bribery or just politics? George F. Will, Feb. 10, 2012. All elected officials, and those who help finance elections in the expectation that certain promises will be kept — and everyone who cares about the rule of law — should hope the Supreme Court agrees to hear Don Siegelman’s appeal of his conviction. Until the court clarifies what constitutes quid pro quo political corruption, Americans engage in politics at their peril because prosecutors have dangerous discretion to criminalize politics. Siegelman, a Democrat, was elected Alabama’s governor in 1998 and was defeated in 2002. In 2006, he and a prominent Alabama businessman — Richard Scrushy, former chief executive of HealthSouth — were convicted of bribery.

Justice Integrity Project, Inside Story on DoD's $35 Billion Boeing Air Force Tanker Deal, Andrew Kreig, Feb. 25, 2011. The Department of Defense Thursday announced its choice of Boeing for a $35 billion contract to build the Air Force’s next generation of mid-air refueling tankers. Boeing’s selection, subject to any challenge by the losing bidder EADS, could end a decade-long, scandal-ridden process that became one of the controversial and important in modern U.S. procurement history. The Justice Integrity Project has tracked the proceeding closely for a year and a half after learning from reliable sources details about industrial espionage and skullduggery in the contract battle. This went far beyond even the scandals showcased in Senate oversight hearings led by Sen. John McCain (R-AZ). Those scandals sent a Boeing executive and former Air Force procurement officer to prison on bribery charges and led to DoD revocation in 2005 of the initial award to Boeing.

Greg Palast.com, Alert: British paper faces suit over Palast investigation, Greg Palast, June 29, 2001. In retaliation for the investigative story about the finances of the George W. Bush campaign, Barrick Gold Mining of Canada has sued my paper, the Observer of London, for libel. The company, which hired the elder Bush after his leaving the White House, is charging the newspaper with libel for quoting an Amnesty International report, which alleged that 50 miners might have been buried alive in Tanzania by a company now owned by Barrick. The company has also demanded the Observer and its parent, Guardian Newspapers, force me to remove the article from my US website, a frightening extension of Britain’s punitive libel laws into the World Wide Web. The company has also issued legal threats against Tanzanian human rights lawyer Tundu Lissu, one of the Observer’s independent sources and an investigator of the mine-site allegations. The attack by Barrick and its controversial Chairman, Peter Munk, one of the wealthiest men in Canada, who boasts of his propensity to sue, also aims to gag my reporting on his company’s purchase of rights to a gold mine in Nevada -- containing $10 billion in gold -- for a payment of under $10,000 to the US Treasury. My Observer story, "Best Democracy Money Can Buy," looked into the activities of several corporations linked to the Bushes. It was in that article I first disclosed that over 50,000 Florida voters, most of them Black, were wrongly tagged as ‘felons,’ and targeted for removal from the voter rolls. My follow-up reports in Salon.com, The Nation, and the Washington Post as well as on BBC-TV’s Newsnight provided the basis for the US Civil Rights Commission finding of massive, wrongful voter disenfranchisement in Florida.

UK Murdoch 'Hacking' Scandal

New York Times, Hacking Cases Focus on Memo to a Murdoch, Sarah Lyall and Ravi Somaiya, Feb. 11, 2012. As dozens of investigators and high-powered lawyers converge on Rupert Murdoch’s News International in the phone hacking scandal, attention has focused on the printout of an e-mail excavated three months ago from a sealed carton left behind in an empty company office. Addressed to Mr. Murdoch’s son James, it contained explosive information about the scale of phone hacking at The News of the World tabloid — information James Murdoch says he failed to take in because he did not read the whole e-mail chain. The e-mail returned to cause trouble for News International, the British newspaper subsidiary of News Corporation, several weeks ago when the company said that it had been deleted from Mr. Murdoch’s computer. Even as people familiar with the investigations said the e-mail and its convoluted history will form a crucial part of the inquiry into allegations of a cover-up, the scandal appeared to be widening on Saturday, as senior journalists at News Corporation’s Sun tabloid were arrested.

AGI (Italy), Anonymous attacked Putin's Party, raising havoc on Webpage, Feb. 11, 2012. The Anonymous hacker group, now very active, attacked 2 regional offices of United Russia, Vladimir Putin's party. The hackers raised havoc in Moscow's regional er-region.ru Webpage and the party's udm-er.ru page in the Udmurt Republic. The hacking was reported by the group through a now customary message on its Twitter profile. It is Anonymous' 3rd attack on Russia, which they blame of having tampered with the final results of last December's parliamentary elections. Two Web pages of the Russian Premier's party have been blacked out since Wednesday while the Website of the party's branch office in Kaluga, a city close to Moscow, was put out of service on Thursday.

CNN, Sun newspaper staff among eight arrested in police probe, Per Nyberg and Laura Smith-Spark, Feb. 10, 2012.  Authorities arrested eight people Saturday -- including five journalists of Britain's bestselling Sun newspaper -- as part of an inquiry into alleged illegal payments to police and officials. The other three are a police officer, an employee of the Ministry of Defense and a member of the armed forces, the Metropolitan Police said. A search was carried out at News International's offices in east London, the police said, as well as the homes of those arrested. News International, which owns the Sun, is a U.K. subsidiary of media mogul Rupert Murdoch's News Corp. Following the arrests, Murdoch, chairman and CEO of News Corp, issued a personal assurance to one of his executives to continue to own and publish The Sun newspaper, according to an internal staff memo sent by News International Chief Executive Tom Mockridge. Mockridge also said he was "very saddened" by the arrests of deputy editor Geoff Webster, picture editor John Edwards, chief reporter John Kay, chief foreign correspondent Nick Parker, and John Sturgis, who is a news editor. The five journalists were arrested at their homes, police said.

Jersey Journal, Federal judge dismisses all charges against former Jersey City Assemblyman, Michaelangelo Conte, Feb. 17, 2012. A federal judge today dismissed all charges against former Jersey City Assemblyman Lou Manzo. In a stunning blow to federal prosecutors, a federal judge in Newark has dismissed all charges against former Jersey City assemblyman Lou Manzo, one of 44 people arrested in the massive corruption sweep of July 2009. In a 60-page ruling released today, Judge Jose Linares granted Manzo’s motion to dismiss all counts in his indictment. Manzo is accused of accepting more than $20,000 from a government informant, Solomon Dwek, who was posing as a developer seeking favors. Manzo, who was not an elected official at the time, but was running for mayor of Jersey City, was charged with two counts of extortion of under the Hobbs Act and two counts of violating the Travel Act, meaning he crossed state lines to commit a crime.

Washington Post, An unfair forfeiture; Motel owner faces asset forfeiture despite innocence, Editorial Board, Feb. 17, 2012. The Motel Caswell, a modest motel just outside of Boston, has been owned by proprietor Russell H. Caswell’s family for 60 years. Now he may lose it, if the Justice Department gets its way. The motel is the target of an asset forfeiture proceeding that entitles the federal government to seize property that has been used in the commission of a crime. This is true even if the owner is not accused of criminal wrongdoing. Local law enforcement groups that team up with the federal government may be awarded up to 80 percent of the proceeds from such seizures. According to the Institute for Justice, which is representing Mr. Caswell, such “equitable sharing” payments from the federal government to states have increased dramatically in recent years, from $200 million in 2000 to roughly $400 million in 2008. A potential windfall is not the only reason local law enforcement organizations join in these proceedings. In many cases the federal law allowing civil asset forfeiture is more relaxed than local laws, which often set much higher bars before an owner may be stripped of his property.