By Paul Bracchi
Last updated at 2:59 AM on 4th June 2011
The offices of U.S. law firm McDermott Will & Emery occupy five floors of a glass-fronted skyscraper on Madison Avenue in New York. The sharp-suited lawyers who work for the company — one of the biggest legal practices in America — won’t pick up the phone for much less than $455 an hour, and often for considerably more.
Their list of clients reads like a Who’s Who of corporate America, including supermarket giant Walmart.
To that list can now be added the names of Iain Malcolm, leader of South Tyneside Council, and three colleagues (two fellow councillors and an official from the same Labour-controlled authority).
Cash strapped: South Tyneside Council is spending thousands of pounds for the services of a U.S. law firm in a bid to smoke out a single critics
How can they afford the services of McDermott Will & Emery? Answer: They don’t have to. Their legal action is being bankrolled by the town hall. In other words, by the taxpayer.
For more than two years, South Tyneside Council has been trying to uncover the identity of an anonymous blogger known as Mr Monkey, who has mercilessly criticised and ridiculed Cllr Malcolm and his colleagues.
Many would say that comes with the territory of being a politician. Nevertheless, the case has now culminated in Twitter being forced to hand over the details of several of its account holders suspected of being behind the stream of embarrassing allegations, all strenuously denied, ranging from ballot-rigging to expense fiddling.
For more than two years, South Tyneside Council has been trying to uncover the identity of an anonymous blogger known as Mr Monkey, who has mercilessly criticised and ridiculed Cllr Malcolm and his colleagues.
Twitter’s HQ is based in California, hence the reason for using the U.S. courts. At least three partners from McDermott Will & Emery have been involved in the proceedings. Three partners, three times the fee. That’s how it works.
The bill so far? Well, that depends on who you believe. South Tyneside claim the costs are less than $120,000. We have been told that the figure is much closer to $400,000, and rising. Either way, isn’t it a scandalous use of public money?
The council serves one of the most deprived areas of the country and is facing $50million of budget cuts. Lollipop ladies and lunch vouchers for the elderly are being axed.
Yet the waste — and the arrogance behind it — will come as little surprise to anyone who is familiar with the gravy train that is South Tyneside Council and some of the individuals at the centre of this story.
First, Iain Malcolm. The Malcolms are a local political dynasty in South Shields. Five members of the family have served in the council chamber since 1949. Iain Malcolm’s older brother Ed is a former mayor. Iain Malcolm himself has been a councillor for more than 20 years, and the council leader since 2008.
Undercover: The anonymous blogger has been highly critical of the council's performance
His career has been dogged by controversy of one kind or another. Take a scandal which came to light only last year and is known locally as ‘Airportgate’.
The brief facts are these. In 2006, Newcastle Airport, jointly owned by seven councils in the North-East, was the subject of a $600 million refinancing deal with the Royal Bank of Scotland. It emerged, however, that the airport’s two executive directors were each paid a percentage of the loan as a personal bonus. Between them, they pocketed an astonishing $10million.
The decision was authorised by a five-strong remuneration committee. Guess who was on the committee? Councillor Iain Malcolm. Advice from a senior colleague urging them to think again was ignored.
‘This is very difficult to justify and may be considered imprudent,’ the colleague warned in writing.
‘We have a duty to the taxpayer to achieve the best value from our investments.’
The affair was exposed by a local paper in Newcastle in November. Nick Brown, former Labour minister and MP for Newcastle East, called it ‘one of the great contemporary scandals. The behaviour of everyone involved is indefensible.’
Cllr Malcolm said the decision to approve the loan was approved by all seven of the North-East authorities involved. He also claimed he ‘had no idea’ of the scale of the bonuses until after the deal went through.
Seeking damages: Cllrs Iain Malcolm and David Potts are seeking compensation after claiming that their reputations have been damaged
There are fears that it will be left to the region’s seven local authorities — including South Tyneside — to clear much of the airport debt before it refinances again in 2013.
Cllr Malcolm survived a vote of no confidence in his leadership in December after his role in ‘Airportgate’ came under the spotlight. He is still involved in the board which oversees Newcastle Airport; just one of the many strings to his bow.
Another is lobbying firm Sovereign Strategy, which he runs with Alan Donnelly, former leader of the Labour group in the European Parliament.
One of the companies on Sovereign’s books is Durham-based Premier Waste. Premier Waste has a contract with . . . you guessed it, South Tyneside Council. For the past eight years it has a run a multi-million-pound scheme collecting kerb-side recycling boxes from residents.
As recently as last year, Sovereign was also acting for Tyne Tunnels 2, who are managers of a $427million project for a second traffic tunnel under the Tyne. This group relied on planning permission from South Tyneside. Iain Malcolm is leader of South Tyneside, remember. Cllr Malcolm lists Sovereign in the register of members interests at the town hall.
There is no suggestion Cllr Malcolm played a part in the decision to grant planning consent for the tunnel or award the recycling contract to Premier Waste. But we can’t tell you precisely what the process was because Cllr Malcolm did not respond to our calls.
There is no suggestion Cllr Malcolm played a part in the decision to grant planning consent for the tunnel or award the recycling contract to Premier Waste. But we can’t tell you precisely what the process was because Cllr Malcolm did not respond to our calls.
South Tyneside Council say Cllr Malcolm has fully complied with the requirement for councillors to declare at meetings if they have a business relationship with a party that is directly affected by the decision that is being made.
The council also say that Cllr Malcolm did not serve on their planning committee at the time the then Secretary of State for Transport granted planning permission for Tyne Tunnels 2.
Cllr Malcolm — in his early 40s — was perhaps the most persistent target of the Mr Monkey blogger who introduced himself on June 22, 2008, promising to provide a ‘unique glimpse of the world I inhabit. A world of intrigue, secrets, cunning, deceit, scheming treachery, debauchery, power struggles’.
The most serious accusation he levelled against Iain Malcolm is highlighted in the papers filed at the court in California. The following claim on the Mr Monkey blog has been categorically dismissed as a ‘false and defamatory statement’ by the people it targets:
‘Mr Monkey has been approached by a woman who claims to have an interesting story about councillor Iain Malcolm and some postal ballot papers. She claims that both she and her late husband witnessed Cllr Malcolm tampering with (postal) ballot papers at their house …’
The ballot papers were collected, it is alleged, on behalf of elderly residents in sheltered accommodation and residential homes during the May 2000 local elections. The couple who supposedly witnessed the ‘tampering’ were members of the local Labour party.
Geraldine White, then chair of the South Shields Constituency Labour Party, and her sister Karen Jones, also a Labour party official, spoke to the couple.‘Both myself and Karen then reported the matter to the police,’ Mrs White told the Mail last night.
Yet the couple, Mrs White said, later withdrew their complaint.
Cllr Malcolm’s lawyer told the Mail last night: ‘Our client was completely exonerated by the police investigation, and no further steps were taken.’
Mrs White and her sister subsequently left the Labour Party, and Mrs White is now an independent councillor. So far, so very murky.
On to David Potts, 28, former leader of the Conservative group, who is another of the councillors being represented by U.S. lawyers — although one has to wonder what sort of reputation he has to protect.
For no one epitomises the ‘gravy train’ culture on South Tyneside more than Cllr Potts, who, aged 21, became one of Britain’s youngest councillors in 2004. In September 2010, Cllr Potts went to South Africa. He told his Conservative colleagues he was on holiday, the council that he was away on business, and the local paper that he was in South Africa for a mixture of ‘business and pleasure’.
In fact, he was in a rehab clinic being treated for alcoholism.
Even so, he still claimed the standard £602.17 allowance plus £401.42 ‘special responsibility’ payment for his role as vice-chairman of the authority’s appeals committee — a total of roughly $1,650 a month.
Some councils do not allow members to claim their allowance if, say, they are abroad — but not so South Tyneside. There is only one qualification: every six months, councillors have to attend just one meeting — yes, just one — to receive the full allowance, which is paid into their bank account monthly.
They could be on the moon — or in a clinic — for the rest of the time, it doesn’t matter; as long as they attend one meeting every six months.
Cllr Potts returned to Britain in December and subsequently turned up at the town hall for a meeting. By doing so, he ensured he was paid his full entitlement. The following month, Cllr Potts admitted he had a drink problem and announced his retirement from politics.
‘I have realised it is too difficult to deal with my alcohol problems and remain in public life.’
Public life? David Potts seems to spend a great deal of his time on Twitter (and living off the taxpayer).
Earlier this year, he was roundly criticised for a foul-mouth outburst on Twitter against David Miliband, after the South Shields MP and former foreign secretary was linked with a boardroom role with Sunderland football club. ‘If I knew he was that cheap, I’d have offered him 50k myself years ago. What a w****r.’
So Cllr Potts is a hypocrite as well as a drain on the public purse. He was among the first to complain, after all, when Mr Monkey was rude to him. (‘Tory Boy’ is one of the more polite nicknames the blogger used.)
Oh, and did Cllr Potts actually resign? No chance. He put in another appearance at the town hall last month — which means he is entitled to his allowance for the next six months.
Whether the precise Twitter allegations are true or not, such behaviour surely deserves proper public scrutiny, instead of being hushed up with the help of rapacious U.S. lawyers.
So who is Mr Monkey? Some fingers point at 49-year-old Ahmed Khan, who owns a shop in South Shields (Simply Workwear) specialising in protective clothing.
He has been an independent councillor for the past three years and is among those who have been targeted by the U.S. lawyers.
Cllr Khan, whose father was born in India, insisted he was not the poisoned-pen blogger when we went to meet him, but as the scourge of the political establishment, he might be forgiven for sympathising with the mystery blogger. It was Cllr Khan who obtained documents about ‘Airportgate’ and gave them to the local newspaper. ‘I think some of the politicians on the council are an absolute disgrace,’ he said.
‘Orwellian’ is how he described the council’s tactics to try to shut him up, too. That process began in April when he received an email from the social networking site that began: ‘Dear Twitter User. The legal process requires Twitter to produce documents related to your account.’
When Cllr Khan, who is married with a 21-year-old daughter, responded with a number of questions, he was informed that: ‘Unfortunately, we cannot provide you with advice other than to contact an attorney regarding this request.’ In any event, the details have now been handed over to the council’s U.S. lawyers.
Mr Khan says he has been in touch with council whistleblowers eager to expose their concerns, but denies he is ‘Mr Monkey’.
‘Because of concerns about emails being monitored on the council’s systems, I encouraged these individuals to use Twitter to communicate with me and set up meetings,’ Mr Khan said.
‘This was done via open tweets and direct messaging, and I am concerned that the information may help identify some or all those who used Twitter to communicate with me. An inevitable consequence of this would be that they could face disciplinary action and could be fired.’
Might this be the ulterior motive for such ‘Orwellian tactics’? For, make no mistake, Iain Malcolm and his cronies want to umask ‘Mr Monkey’ so they can sue him, and possibly anyone linked to the controversial blog, for defamation.
Papers lodged at the Superior Court of California spell out, in black and white, their intention to seek an ‘award of money’ for ‘damage to their reputations’.
This, despite a 1993 Law Lords ruling that councils should not be allowed to take action for libel because of the ‘inhibiting effect on freedom of speech’. Individual councillors and employees can choose to do so, but not local authorities with taxpayers’ money.
Doesn’t the role of South Tyneside in this increasingly grubby tale — namely its decision, taken in secret, to fund the entire cost of these ill-judged proceedings — make a mockery of the Law Lord’s ruling?
For whoever Mr Monkey may be, surely the real scandal here is that taxpayers’ money is being used to defend the reputations of controversial politicians like councillors Iain Malcolm and David Potts.
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