Posted on February 10, 2012 - by Venik

Nat Rothschild loses libel case against Daily Mail over Mandelson trip

Judge rules that conduct of multimillionare financier on Siberian trip exposed Peter Mandelson to conflict of interest claims

It was a week-long libel case which offered an intimate, if brief, glimpse into the lives of the politically powerful and super-rich: impulse trips to Russia in a pair of private jets, birch-leaf beatings in a communal sauna, and an impromptu game of ice hockey, with staff members roped in to make up the numbers.

It was resolved by multimillionare financier Nat Rothschild failing to win damages over the Daily Mail’s claims he was a “puppet master”. The paper said Rothschild took Lord Mandelson on a trip to Moscow and Siberia to impress a key business contact, exposing Mandelson, the then-EU trade commissioner, to allegations of a conflict of interest.

Sitting at the high court in London, Mr Justice Tugendhat agreed on Friday that some elements were incorrect in the Mail article from May 2010, which recounted how Mandelson had flown in Rothschild’s private jet from Switzerland to Moscow, and then on to Siberia as a guest of Oleg Deripaska, the billionaire Russian industrialist.

Notably, the paper withdrew the claim that Rothschild facilitated Mandelson’s attendance at a dinner at a Moscow restaurant which sealed a £500m deal involving aluminium plants owned by Deripaska. Mandelson had responsibility at the time for EU metals tariffs. In fact Mandelson did not attend the dinner and the deal had already been sealed.

However, this was where the good news ended for Rothschild, 40, whose closeness to both Mandelson and Deripaska first underwent public scrutiny in 2008 when the trio were together on a yacht off Corfu alongside the then-shadow chancellor, George Osborne. That gathering caused a bitter spat over whether or not Osborne tried to solicit Conservative party funds from Russia’s richest man.

Rothschild insisted that Mandelson undertook the entire Russian trip in January 2005 purely for leisure, including a one-night stopover at Abakan in Siberia, where temperatures were somewhere around -30C and the itinerary included a “fascinating” tour of one of Deripaska’s aluminium smelting plants. “As far as I was concerned this was a trip made with a group of friends, not an official business trip,” Rothschild said in evidence.

But the judge said Rothschild should have known that Mandelson travelling from Moscow to Siberia on Deripaska’s private jet and staying at the tycoon’s chalet would give “at the very least reasonable grounds” for confusion.

The Daily Mail argued that Rothschild’s conduct was “inappropriate in a number of respects”, Tugendhat said in his ruling. “I accept that submission. In my judgment, that conduct foreseeably brought Lord Mandelson’s public office and personal integrity into disrepute and exposed him to accusations of conflict of interest, and it gave rise to the reasonable grounds to suspect that Lord Mandelson had engaged in improper discussions with Mr Deripaska about aluminium.” But there was no suggestion that Mandelson had such discussions.

Rothschild’s “different and developing” accounts of the Siberia trip were confusing, Tugendhat said, adding that on this subject Rothschild had not been entirely candid.

Neither Mandelson nor Deripaska was involved in the libel case and Tugendhat said none of his ruling should be construed as a criticism of them.

Rothschild said he would appeal, arguing that claims about Mandelson attending a dinner which ultimately led to the loss of 300 British jobs was “utterly false”. “The truth is, as the Daily Mail has now accepted, that I had nothing whatsoever to do with this deal and that it had in any event been completed before Lord Mandelson and I even arrived in Moscow.

“Lord Mandelson’s trip to Russia was entirely recreational – as the court has accepted – and Lord Mandelson had obtained clearance for the trip from his office before undertaking it.

“I am disappointed with today’s ruling, although I do not regret bringing the action.”

The court heard how Mandelson joined Rothschild and others in flying to Moscow from the World Economic Forum gathering in Davos, Switzerland, on an apparent whim, to the extent that he did not even have a Russian visa. In Moscow, Mandelson dined in the same restaurant where the deal was discussed between Deripaska’s Rusal corporation and Alcoa, the US aluminium giant, but was sitting separately with a Russian government minister.

That same evening the party flew on Deripaska’s Gulfstream jet to Siberia. There, Rothschild said in evidence, they toured the smelting plant, played five-a-side football and had a floodlit game of ice hockey alongside “some of the locals who worked for Mr Deripaska”. The group enjoyed “the most delightful banya”, a traditional sauna, where a young man beat them with birch leaves, a treatment supposedly good for the circulation. Entertainments at Deripaska’s chalet included Russian billiards and a Cossack band.

Rothschild said: “I think that Deripaska’s desire to develop a relationship with Mandelson was because Mandelson was an interesting and highly intelligent and, you know, fantastic guy. That’s the way I look at it.”

This notion seemed “quite unrealistic”, Tugendhat ruled.

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