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A probe into the leak of a confidential $15bn takeover plan put the spotlight on the aggressive methods used by French investigators, and their growing disregard for the anonymity of journalist’s sources.
On July 23, 2014, French billionaire Xavier Niel, the founder of phone company Iliad SA, was busy putting the final touches on one of the most daring takeover offers in years when he received an email from a journalist he knew well. Five years later, parts of the private exchange with the Wall Street Journal reporter were made public by France’s markets regulator.
The publication on Monday comes as the enforcement committee of Autorite des Marches Financiers criticised Iliad for delaying several days before telling markets about its interest in T-Mobile US. The AMF fined the phone company $112 000, saying Iliad should have known the confidentiality of its offer was compromised when Niel was contacted by the newspaper.
In a series of emails, the reporter - whose name was removed from the documents - repeatedly quizzed the French billionaire concerning a rumored offer. The AMF didn’t publish Niel’s replies. The newspaper said it didn’t share any of its emails with regulators.
"We’re hearing from our sources that you might be interested in doing something big in the US,” the journalist told Niel. "I’m talking about a company called T-Mobile US. Is it true?"
Sourcing issue
Christophe Bigot, a Paris media lawyer who wasn’t involved in the Iliad case, sees the case as an indirect yet serious violation of rules protecting journalists’ sources that points to a misunderstanding or disregard for the issue from AMF investigators.
"The published emails reveal the way she quizzes her sources, who these sources are," he said in a phone interview. "It lays bare her methods as a journalist."
The Wall Street Journal said it wanted to protect the confidentiality of its reporters’ communications, and hadn’t released any of the emails in the case.
No cooperation
"At no point did the Journal hand over any correspondence to the AMF," Steve Severinghaus, a spokesman for the newspaper, said. "The Journal was not consulted before the AMF made its representation, nor was the Journal afforded any opportunity to object."
It’s not the first time AMF investigators scrutinized a reporter’s sources. They accessed full phone records - with names and phone numbers of sources - of retired Daily Mail journalist Geoff Foster for a six-year period in a case where he was fined 40 000 euros last year. Foster is appealing the fine.
In neither of the cases did French authorities consider they were treading on journalistic source-protection laws.
According to Bigot, investigators should only be allowed to overrule source-protection rules in cases where there’s a public-policy imperative, and it should be done in a proportionate way. It remains to be seen whether a possible market abuse fits the bill, said the lawyer whose clients have included Le Monde and Le Figaro newspapers.
More than requested
In the Foster case, the AMF body argued that investigators asked counterparts at the UK's Financial Conduct Authority for narrower data on the reporter and can’t be criticised for having received more than requested. Last year’s ruling also states that the AMF had already received the information needed about Foster from phone records of two other suspects in touch with the Daily Mail journalist.
Foster was fined following accusations he’d passed on insider information about the content of his articles to some of his sources, who would then trade on the news before it was published.
Representatives at the AMF and Iliad declined to immediately comment about any concerns raised regarding the protection of journalists’ sources.
The AMF looked at another leak coming from the same merger, this one involving a UBS investment banker on the Eurostar from London to Paris who caught glimpses of messages on the mobile phones of another passenger - a Lazard Ltd. dealmaker involved in the transaction.
UBS Group AG and two bankers were cleared of inappropriately obtaining the tip from the Eurostar and then approaching the French carrier to offer financing services.
The AMF enforcement committee lists in Monday’s ruling a further email from the WSJ reporter - collected from Niel’s work inbox - as evidence Iliad should have come to the conclusion that the confidential information was leaking out.
The journalist told the French billionaire she had obtained more information and heard an offer had already been made to T-Mobile US owner Deutsche Telekom AG.
"It’s possible we’re going to write that, won’t you talk to me?" she said in her email.
Niel told AMF officials he had no cause for concern about the confidentiality of the takeover plan because of his long-standing relationship with the journalist but his arguments were dismissed. According to the ruling, the billionaire said he was certain no article would be published without Iliad being warned ahead of time.
Bigot says the WSJ reporter was left without recourse to complain about a possible violation because she wasn’t a suspect.
"Until there’s a French law punishing source-protection violations, there won’t be any tools to uphold this guarantee," which is enshrined in the European Convention on Human Rights, the media lawyer said.
