Rothschild in libel defeat over trip with Mandelson

The Swiss-based financier had gone to court expecting "very substantial damages" from the Daily Mail.

But in a damning judgment, Mr Justice Tugendhat condemned Mr Rothschild's conduct as "inappropriate" in a number of respects.

He said the banker had "brought Lord Mandelson's public office and personal integrity into disrepute".

The judge added that Mr Rothschild had left the former EU trade commissioner open to accusations of a conflict of interest and "gave rise to the reasonable grounds to suspect that he had engaged in improper discussions with Mr Deripaska".

Lord Mandelson had been on a 24-hour visit to Siberia in 2005 arrangedby Mr Rothschild. In May 2010 the Daily Mail published an article claiming that the visit had been fixed in order to help smooth a £500 million business deal.

The newspaper went on to say the banker had encouraged an inappropriate relationship between Lord Mandelson and Mr Deripaska.

During the hearing at the High Court, it was revealed that the three men had visited a sauna where they were thrashed with birch twigs and plunged into an ice bath together.

The judge, who decided the case without a jury, ruled the article was "substantially true", although there were some "admitted inaccuracies". He found Mr Rothschild had behaved "inappropriately"" four times:

By arranging for Lord Mandelson to have dinner with the Russian minister in Moscow.

In organising hospitality for the peer by Mr Deripaska, including a flight in a private jet and entertainment at a chalet.

By arranging Lord Mandelson's presence on what was a business trip, even though the politician did not take part in any business discussions.

In setting up the peer's visit to an aluminium smelter and foil plant.

Mr Rothschild will have to pay the costs of the four-day hearing, estimated at £200,000. The judge said the banker gave "quite unrealistic answers" under cross-examination.

Mr Rothschild, 40, was not present for the judgment but issued a statement announcing his intention to appeal.

He had told the court the birch twig thrashing, also involving Canadian gold magnate Peter Munk, was the trip's highlight.

"The whole point of it was that we went there, spent a nanosecond at the aluminium smelter and then went to the most delightful banya," he said.

"We were beaten by a 25-year-old banya keeper, who had spent his life perfecting the art. Then we jumped into ice-cold water. It was incredibly enjoyable. Everyone woke up the next day feeling revitalised."

Lord Mandelson had flown out on Mr Rothschild's private jet. Mr Deripaska was in the process of signing a £500 million deal with US aluminium giant Alcoa.

Neither Lord Mandelson nor Mr Deripaska was involved in the legal action.