The ‘economics’ of defamation

Foreign newspapers have recently buckled under political pressure and apologize amid the government threats to sue them for defamation.Foreign newspapers have recently buckled under political pressure and apologize amid the government threats to sue them for defamation.
Foreign newspapers have recently buckled under political pressure and apologize amid the government threats to sue them for defamation.

In 2002, global business news agency Bloomberg made headlines when it issued a public apology and paid substantial damages for a contributor’s article which suggested nepotism in the appointment of then Singapore Senior Minister Lee Kuan Yew’s daughter-in-law Ho Ching as Executive Director of state-owned investment company Temasek Holdings, Inc.

[This is the sidebar story to the main article, Shaking off the fear of state censorship – youth hold out hope]

The Bloomberg apology acknowledged that the article implied then prime minister Goh Chok Tong put the Lee family’s interests above those of the country in Ho’s appointment and that her husband Lee Hsien Loong, and father-in-law were guilty of nepotism. The apology added that the writer could have implied that Ms. Ho’s appointment was made not on merit “but in order to indulge the interests of the Lee family or for some other corrupt motive.”

”We admit and acknowledge that these allegations are false and completely without foundation,” said the Bloomberg apology published on its website and subscription service. The offending story was also removed.

With the Lees having won several defamation cases against opposition politicians and media organizations, involving large monetary compensation, Bloomberg’s apology and the S$595,000 it paid in damages to the Lees without the case even reaching the courts, came as no surprise to media observers who said it actually was good economic sense.

Bloomberg joined a long list of international media giants – Financial Times, Far Eastern Economic Review, The Economist, Asian Wall Street Journal, Time and Asia Week – which have been at the losing end of expensive legal defamation actions by Singapore’s rulers. In 2010, the International Herald Tribune apologized to former prime minister Lee Kuan Yew and his son and Prime Minister Lee Hsien Loong, paying US$114,000 in damages, rather than trying to contest a defamation charge. In 1994, the Tribune had paid a record US$678,000 in damages to the Lees in another out-of-court settlement over an allegedly defamatory article.

Leading Singapore media freedom advocate Professor Cherian George says Singapore’s courts tend to disregard the standard defense against defamation that it is justified in the public interest. Based on previous judgments, he says, the courts in Singapore tend to side with the public official’s right to protect his or her reputation rather than need for open and vigorous public debate. “It’s very hard to find an argument to defend your client. In Singapore, the public interest argument has not been taken seriously by the courts,” he says.

In most cases, lawyers simply advise defendants to apologize and reach an out-of-court settlement. Nowadays, foreign publications find it makes economic sense to apologize and pay damages rather than contest the charges in court, says Prof. George. A prolonged legal battle, which they know they will almost certainly lose, will be far more expensive.

In a September 2002 report in The Australian, Sydney lawyer and journalist Stuart Littlemore who has studied several defamation cases in Singapore, said that no foreign publisher has successfully defended a libel action against a Singapore politician and when these leaders win their case, the average monetary compensation awarded is usually S$450,000, which is 12 times that when the defendant is a Singapore citizen.

In 1988, Far Eastern Economic Review paid US$175,000 after the court ruled the magazine had defamed the Lees. Eleven years later, the Review paid US$290,000 again to the Lees in an out-of-court settlement for an allegedly defamatory 2006 article. The Economist has paid a total of US$352,000 in damages in two separate defamation cases brought by the Singapore government.

International news organizations also do not want to risk expulsion from Singapore, a key global business and financial news hub, says Prof. George.  “For most foreign journalists and most foreign media operating in this region, we are one of the easiest countries to work from. I don’t think they feel that’s a problem.”

“Also, what’s happening is that the foreign media has become more commercial. The nature of foreign media has also changed. In the past, before the 1990s, these decisions of whether to challenge authoritarian practices in Southeast Asia were more of a professional and principled decision. So you fight on principle,” he added.

“Now, it’s more of a business decision. They ask themselves, ‘Does it make economic sense?’ Does it fit in with our future plan for expansion in Asia,” Prof. George explained.

A memo from Bloomberg’s New York-based chief editor Matthew Winkler to its news staff in Singapore after the agency’s apology, expressed concern that the welfare of the company’s 180 employees in Singapore was “at risk” and that the agency’s 3,000 subscribers in Singapore “might lose the Bloomberg service.”

A 2009 Court of Appeals decision upholding a High Court ruling, which had stated that “only Singapore citizens are entitled to enjoy constitutional free speech”, seems to have made it even more difficult for foreign media outfits to defend themselves in defamation cases.

Defamation is punishable with up to two years of imprisonment or a fine or both under Singapore’s Defamation Act and Penal Code.

[This article was produced for the 2013 Southeast Asian Press Alliance (Seapa) fellowship program. Marlon Alexander, an editorial director for the Filipino Connection, is one of the 2013 fellows. This year’s theme is Freedom of Expression Challenges to Internet Government in Southeast Asia. The article was originally published on in September 2013.]

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