Don't blame the messenger - the media did well to expose Rock crisis

It did not take long for Northern Rock to lay into the media for causing the queues of people who removed their money from the stricken bank.

Soon after the story broke in September, its then chief executive and chairman, Adam Applegarth and Matt Ridley respectively, attributed the run on the bank to the BBC having dared to broadcast a leak.

They told a Treasury Select Committee that the report had "caused immense difficulty". Clearly, they believed that their application to the Bank of England to cough up £20 billion in emergency funding should have remained secret.

Nor were they alone. The Lord Mayor of London, Alderman John Stuttard, confided at a Hong Kong meeting: "The press overplayed it terribly. They love a scandal."

In its seemingly infinite lack of wisdom, the bank also saw fit last week to take legal action against two newspapers because they obtained copies of a memorandum sent to the companies that had shown some interest in buying the bank.

Let me deal separately with these two remarkable, but worrying, attacks on press freedom. In the first case, I have little doubt that the BBC's story did contribute in no small measure to the panic, which saw people rapidly flocking to withdraw their cash.

But consider the problem from the BBC's perspective. Once the information was leaked to its business editor, Robert Peston, what were he and his editorial bosses supposed to have done?

Imagine if they had sat on the story. It would have meant that an enormous tranche of taxpayers' money would have been pledged without taxpayers knowing about it. It would have been a dereliction of duty for the nation's public service broadcaster to have censored itself.

Then, of course, there is the practical consideration. Peston and his colleagues would have been aware that other news outlets might well have received the leak, if not straightaway, quite plausibly soon after it became clear to the leaker that the BBC was unwilling to run the story. Does anyone really believe this story could have been hushed up?

It is impossible to imagine that the news, once relayed to a journalist, would have remained a secret indefinitely. Imagine the scandal if a newspaper, say a week later, was able to reveal that the BBC had known about it and sat on its hands.

Anyway, the BBC did not broadcast without giving the problem a lot of thought, as its newsroom head has revealed. "We needed to ensure we broke this dramatic news in a responsible fashion", explained Peter Horrocks. "And, as part of that responsibility, we needed to explain the causes of the crisis in a way that audiences unfamiliar with financial markets would understand."

That did not stop some viewers criticising the decision, but this was surely a case of damned if you do and damned if you don't. That is often a dilemma that faces editors, and the overriding criterion should always be to act with the public interest in mind.

That was certainly the underlying reason for the failure of the bank's applications to gag the Daily Telegraph and the Financial Times when they revealed details from the "information memorandum" to would-be buyers.

There was an even greater public interest justification for publication because, by that time, the Government was committed to risking taxpayers' money on a scale which, if the worst were to happen, could result in a colossal loss to the public purse. Mr Justice Tugendhat appeared to agree, up to a point. He had no intention of closing the door after the horse had bolted. Indeed, as he was making up his mind, this newspaper had already gone to press with similar revelations from the memo.

Sadly though, the judge did grant a partial injunction against the FT on the understanding that it was necessary to protect commercial information.

This was a flawed decision because the public had a right to know what was being cooked up by a bank relying on public funds. I am sorry that the FT decided yesterday to give up its legal defence because the principle was worth fighting for.

In truth, the BBC and the press have behaved well over Northern Rock. The people may have panicked, but the media did not.