Jeremy Hunt held on to his place in the Cabinet today, after Prime Minister David Cameron decided not to order an investigation into whether he breached the ministerial code of conduct in his handling of the News Corporation bid for BSkyB.
After watching the Culture Secretary give evidence to the Leveson Inquiry, Cameron judged that he had acted "properly" throughout the period when he was responsible for the bid, said Downing Street.
Labour deputy leader Harriet Harman said it was "frankly disgraceful" that Hunt was not being referred to the PM's independent adviser on the code Sir Alex Allan.
Downing Street sources said the top civil servant at the Department for Culture, Media and Sport, permanent secretary Jonathan Stephens, had made clear to Lord Justice Leveson that Hunt had given himself very little room for political manoeuvre by referring the BSkyB bid to independent regulators.
In taking the regulators' advice throughout the process, he took a series of decisions which were contrary to News Corp's interests.
But Harman said Hunt was "clearly already biased" when he was handed quasi-judicial responsibility for overseeing the BSkyB bid in December 2010.
Hunt had misled Parliament about his communications with News Corp and he did not obey the legal advice he was given about intervening, said Ms Harman.
She said this meant there was "no doubt" he had broken the ministerial code.
"He broke the ministerial code, he misled Parliament, and yet David Cameron is keeping him in his Cabinet. It's absolutely disgraceful.
"All of those things mean he should not be carrying on in his job."
At the end of a six-hour grilling on his role in the takeover decision, Hunt insisted there was no reason for him to quit - though he said he had considered resigning.
"I did think about my own position," he said.
"But I had conducted the bid scrupulously fairly throughout every stage and I believed it was possible to demonstrate that and I decided it wasn't appropriate for me to go."
Hunt did accept however, that chatty messages he exchanged with James Murdoch while he was responsible for deciding on the BSkyB issue were, with hindsight inappropriate.
Among messages between the pair was one congratulating the media executive on a promotion to a new News Corp job in New York, in which Hunt joked: "I am sure you will really miss Ofcom in NY!"
"Sadly I fear they won't see the back of me that easily! Hopefully we can move our other business forward soon," Murdoch replied in an apparent reference to the takeover bid.
Hunt insisted that such messages "had absolutely no impact on the process" and were "just me being courteous" but added that he would avoid such contact in similar circumstances in the future.
"I think probably now I would not take the same view and would avoid all text messages," he said.
Fresh evidence also emerged of Hunt's personal involvement in the BSkyB issue shortly before he was handed quasi-judicial responsibility for it.
Text messages handed over to the inquiry showed he texted Chancellor George Osborne to express fears the Government was going to "screw up" the deal.
He contacted Osborne after receiving a phone call from James Murdoch questioning the legitimacy of the process when secret recordings of Business Secretary Vince Cable "declaring war" on News Corporation emerged.
Timed at 4.08pm, Hunt's message to Osborne read: "Could we chat about Murdoch Sky bid? I am seriously worried we are going to screw this up. Jeremy."
He immediately sent a second, saying: "Just been called by James M. His lawyers are meeting now and saying it calls into question legitimacy of whole process from beginning. 'acute bias' etc."
A couple of minutes later, Hunt sent an email to Andy Coulson, the former News of the World editor at that time working as Prime Minister David Cameron's director of communications.
"Could we chat about this?", he wrote.
"I am seriously worried Vince Cable will do real damage to coalition with his comments."
At 4.58pm, with the formal appointment of Hunt to take over examination of the takeover bid to be announced within the hour, the Chancellor replied by text to Hunt: "I hope you like the solution."
It also emerged Hunt sent a "great news" message to James Murdoch on the same day after the European Commission said the bid had cleared legal hurdles in Europe - adding "just Ofcom to go".
In a staunch defence of his ability to "set aside any views you have" in taking the quasi-judicial decisions - and insisted his actions backed that up.
"My suitability for the role is demonstrated by the actions I took when I did take responsibility for the role because I believe I did totally set aside all those sympathies."
He went as far as to "set up a process explicitly to make sure" that happened, he added.
Hunt lavished praise on his former special adviser Adam Smith, who he had told to quit following disclosures of his close contacts with News Corp lobbyist Fred Michel during the bid process, describing him as highly intelligent and able.
He suggested his aide may have "slipped into inappropriate language" because of the sheer volume of communications he was getting from Michel as he sought to get him "off his back".
A Downing Street spokesman said: "Jeremy Hunt's evidence has shown that he acted properly while he was responsible for the BSkyB bid. He took independent advice at every turn, as well as a number of decisions which were against News Corporation's wishes.
"As the Permanent Secretary of the department made clear, Jeremy Hunt set up a process which left him with a 'vanishingly small' chance to 'manipulate' the bid for 'political or other ends'.
"There are some lessons to be learned from this process and that's why the Cabinet Secretary has already written to all departments regarding the way quasi-judicial decisions are taken.
"The Prime Minister will not be referring Jeremy Hunt to Sir Alex Allan."
Labour will ensure that question marks over Mr Hunt's position are raised in Parliament after the House of Commons returns from its recess break on 11 June, said a party source.
Thursday's evidence has reinforced Labour's belief that the Culture Secretary should never have been given quasi-judicial oversight of the BSkyB bid in the first place and should not hold on to his job now.
The source also questioned why Osborne had become involved in the BSkyB issue on the day when Cable was stripped of responsibility.
"Why should the Chancellor of the Exchequer be involved in something which is a quasi-judicial role for a media merger?" asked the Labour source. "It is nothing to do with Treasury policy.
"That can only be because it is clearly a very, very high-level political decision. George Osborne wasn't doing it with his Treasury hat on, he was doing it with his Conservative campaign chief hat on."
Harman accused the Prime Minister of trying to sweep the issue of Mr Hunt's behaviour "under the carpet".
"Jeremy Hunt should never have been given the quasi-judicial role in the first place as he was biased in favour of the bid," she said. "David Cameron knew this to be the case because of the memo Hunt had sent him where he had expressed clear support for the bid.
"Jeremy Hunt should not be in his job now, as he has broken the ministerial code and misled Parliament. At the very least, David Cameron should refer him to the independent adviser on ministerial interests.
"David Cameron said he would stand up for high standards but he is sweeping this matter under the carpet."
What The Other Witnesses Have Said
DCMS Permanent Secretary Jonathan Stephens: Hunt Urged Cameron To Back News Corp Bid
Ken Clarke: The Press Is More Powerful Than Parliament
Michael Gove: Rupert Murdoch Is A 'Impressive And Significant' Man
Tony Blair: I Chose Not To Take On The Press
Dr Evan Harris
Jeremy Hunt says he considered his position after the Fred Michael claims first emerged, but decided it would be inappropriate for him to quit.
He tells Leveson that the claim from Michel that Hunt didn't want the bid to go to the competition commission because it would "kill the deal" was nonsense and wasn't his private thinking.
Hunt says his actions with regard to the deal suggest the exact opposite - he was prepared to let the Competition Commission weigh in, if necessary.
Hunt says he wished he'd "spelt out" in terms to Adam Smith that he had to be careful when dealing with News Corp, and also wishes that Smith had revealed the pressure he was coming under from Fred Michel.
Hunt says that Smith "broadly understood" the role he was playing as special adviser to the man making the quasi-judicial decision, but says Smith came under a "barrage" from News Corp, and that caused the problem.
Hunt says Smith did not give News Corp "Any substantive help", but says under constant pressure and a bombardment of messages from Fred Michel, Smith's language occasionally strayed into improper territory.
When James Murdoch was promoted to a position in News Corporation's New York Office Hunt sent him a "tongue in cheek" text message.
"I am sure you will really miss Ofcom in New York," he said.
Hunt says he was "pulling his leg" that in New York Murdoch would be away from Ofcom, which he hated.
Hunt planned to go for a drink with Andy Coulson after the former News of the World editor resigned his post in Downing Street.
His adviser, Sue Beeby, told him that it would not be wise to meet Coulson until the BSkyB process was complete.
Leveson hears of Hunt's reaction when he heard Rebekah Brooks resigned from News International in the wake of the phone hacking scandal.
He sent a text to Smith reading: "About bloody time".
Hunt says Smith is the "most decent straight most honourable person one could imagine".
He tells Leveson that he did not realise how Michel's 'cheeky persistence' in contacting himself and Smith would affect his adviser.
Smith was asked to resign his position after being deemed to have had inappropriate levels of contact with Michel.
Hunt is listening to messages that were sent between himself and News Corp lobbyist Fred Michel.
The culture secretary describes Michel as "cheeky" in the tone and frequency with which Michel talked to him.
Hunt is back up after a lunch break. He is being asked about what the atmosphere was like in the wake of the Milly Dowler phone hacking revelations.
Hunt says Downing Street was worried that Labour would win a vote on the issue in the Commons.
"Number 10 are getting worried that the phone hacking issue is getting big, they wanted to be sure the public would undesrtand that we couldn't link the two issues [hacking and BSkyB]," he says.
Hunt has some nice words for his former adviser, Adam Smith.
He says he was a "uncomplaining, decent, hard working person". Still told him to resign though.
Hunt is asked about the revelation that News Corporation was given advance notice of a statement he made to parliament about the bid.
The culture secretary says there was nothing wrong with this.
"It is standard practise when you make an announcement to parliament [about a company] that they do have notice in advance," he says.
Again, Hunt seems more at ease now the focus has moved onto phone hacking.
He tells the inquiry that the only way the phone hacking scandal would affect News Corp's bid to take over BSkyB would be if there was an issue of trust.
"You had to be confident you could trust the people you were doing a deal with," he says.
He says the closure of the News of the World was a "very, very significant moment" for him as it suggested there might be a management issue.
"Is this a company that doesn't have control of what is going on in its own company?" he asked himself.
Jeremy Hunt is sounding more confident now as he explains how he stood up to James Murdoch over the terms News Corp would be able to take over BSkyB.
One of the changes made, he says, would have been that Sky News would have become "massively more independent" of the Murdochs.
Hunt says he was surprised at how many texts and phone calls Michel sent to Smith during the bid.
But Hunt says Smith's role was "to keep News Int on board with the fairness of the process," and says.
Jeremy Hunt claims that Smith should not have needed to have been told expressly that he was not a spokesman for the Culture secretary.
"I doubt there is a minister who worked more closely with is special adviser," claims Hunt, saying he and Smith were close colleagues for six years.
However he says this is not to assume that Smith was Hunt's mouthpiece.
Hunt suggests that Smith could and should have know what he should or shouldn't do without needing to be told.
Robert Jay suggests that contact between News Int and Smith amounted to the same thing as contact with News Int as hunt.
Jeremy Hunt says this is not the case and says Smith's role was to "reassure them that the process was fair."
Hunt says Smith was present at all meetings where Hunt was taking legal and official advice. It was "understood he would be a point of contact."
Hunt is on thin ice here. He says he wouldn't have sent the 'Congrats on Brussels, just Ofcom to go' text to James Murdoch, had he already been appointed as the person in charge of judging the BSkyB bid.
However Hunt has already indicated he thought he might get that role.
In a text message between the chancellor and Jeremy Hunt, the latter worries the BskyBid was not being conducted fairly under Vince Cable.
Osborne replies "I think you will like the solution", indicating the solution was that Hunt would takeover the BskyBid.
Hunt says he had a reasonably good idea this would happen before he received that text.
In a message from Jeremy Hunt to James Murdoch when it became clear Europe would not block the BSkyB takeover.
|@ benfenton : [Sharp intakes of breath in the press room as Hunt admits he didn't understand a key part of the bid process.] #leveson|
Robert Jay reads out a draft of a memo from Hunt to the PM. Hunt acknowledges that he drafted it himself.
Jay notes that Hunt initially wrote that Vince Cable's decision to refer the bid to Ofcom might "put us in the wrong place, not just politically."
Hunt says he took out "not just politically" from the final draft, but that it suggests the Tories were free-market and anti-bureaucracy. "The approach the government was taking felt inconsistent with that."
Robert Jay says the call between Hunt and Murdoch was "successful" because some reassurance was given by Jeremy Hunt.
"I wouldn't have given any reassurance... that was something I coudn't get involved with," Hunt insiststs.
"I probably gave him a sympathetic hearing," says Hunt.
Robert Jay suggests a contact from Fred Michel where he says he will "continue to send helpful arguments" through Adam Smith, and which was acknowledged by Jeremy Hunt, suggests that Hunt new Smith and Michel were in fairly constant dialogue.
Hunt agrees this is correct, but says Smith was his conduit to most external stakeholders.
Hunt says as long as officials were present and it was made clear, that he couldn't intervene on a matter being handled by Vince Cable, there seemed no reason for him to not meet James Murdoch.
Hunt says he had a phone conversation with James Murdoch, where the latter vented about how annoyed News Corp was.
Robert Jay QC suggests this amounts to the same thing has having a meeting.
Jeremy Hunt says Murdoch was using "colourful language" on the phone.
Hunt is asked whether he was frustrated that the bid was having trouble under Cable. Hunt says he might have been.
He says he did so because he thought he shouldn't get involved with the process as Vince Cable was overseeing it.
Someone in the DCMS department - not Jeremy Hunt - told News International that the legal advice was that the meeting could prejudice the judicial process.
Robert Jay QC suggests this person was special adviser Adam Smith. Jeremy Hunt says "It's possible that that's something they would have to say happened or not."
Clearly the two men weren't speaking when they attended Cabinet every Tuesday.
Hunt says he was "concerned" that the BSkyB bid - which he broadly supported - was encountering difficulties with Cable.
By a freak coincidence their babies were born at the same time and in the same hospital, which is how they got to know one another. But they never socialised together, their families never socialised together