The Financial Times was yesterday accused of a “hatchet job” and “muckraking” in a potentially record-breaking defamation claim by Collins Stewart Tullett, a City stockbroking firm.
The broker is at the centre of a row over allegations of insider dealing and share ramping made by a former employee. Collins is run by outspoken chief executive Terry Smith, who is using £128m as a reference point for its claim; that is the fall in the company’s value on the stock market since the day before the FT published the article on August 27 and the value at the end of last week.
Collins’ shares fell by 15% to 379p during that period but yesterday, after it released the details of its plan to begin legal action against the FT, they rose 31p to 410p.
The defamation claim by Collins against the FT, which strongly denies the claim, could pitch Mr Smith, who has a reputation for being hard-nosed, against the FT’s editor, Andrew Gowers.
Mr Gowers would only say last night: “We stand by our story and believe there was public interest in reporting the allegations in a balanced way.”
The figure of £128m being used a “starting point” is regarded by libel experts as one of the largest ever sought in Britain. Dan Tench of the City law firm Olswang said: “This ranks high. With libel claims you can recover general damages where the top limit is around £200,000.
“But if the allegations can be shown to have caused actual loss to the claimant, such as loss of business, the claimant can in addition recover special damages for this loss, for which there is no limit. This is what Oryx did against the BBC.”
The BBC last year faced a claim for £12m from Oryx National Resources over a report that wrongly linked the African diamond company to Osama bin Laden. The corporation eventually paid out £500,000.
Collins, which denies all of the allegations, made it clear last night that the decision to take action against the FT had been taken by its board. Smith has maintained his aggressive style since, more recently questioning methods used by Pearson, the publishing group that owns the FT, Penguin books and a large educational division.
In beginning its legal action against the paper, Collins took the unusual step of announcing its intention to the London Stock Exchange. It wants the FT to retract the article and is demanding an apology in open court.
The broking firm also made it clear that its claim for “substantial damages” was not only based on the August 27 article that dealt with the allegations made by former Collins analyst James Middleweek, who is claiming unfair dismissal.