John Harris: Inside the court of London's golden couple, Elisabeth Murdoch and Matthew Freud

Behind the swirl of political scandal in Corfu this summer lurked two individually powerful players - Elisabeth Murdoch and Matthew Freud. Together, they form the heart of a social web that binds the elite of showbiz, politics, media and big business. John Harris reports

On Saturday August 16 2008, Rupert Murdoch's 184ft-long yacht, the Rosehearty, was moored in the Aegean Sea, where the living was evidently easy. Murdoch, along with a gathering of family, friends and associates, was awaiting the arrival of David Cameron and his family. The Tory leader had just finished a brief trip to Georgia, where he had stolen a march on Gordon Brown by meeting the country's embattled president, Mikheil Saakashvili. In the meantime, Samantha Cameron and two of their children had been flown on a private jet from Farnborough to Istanbul, where they picked up her husband and carried on to the Greek island of Santorini.

Also on board the plane were the American songwriter Billy Joel and his wife Katie (neighbours of Rupert Murdoch in Long Island), the US TV executive Ben Silverman, and the Sun editor Rebekah Wade, along with her other half, the former racehorse trainer Charlie Brooks - though it was the meeting of the Tory leader and American-Australian billionaire that was to be that evening's main event. According to one Murdoch associate, the plan presented to Cameron was simple: "You haven't seen Rupert for six months - this would be a good marker to put in. Why don't you come, have dinner with us all, tell him about Tblisi and see how you get on?"

The jet belonged to Matthew Freud, the multimillionaire boss of the PR agency Freud Communications, and husband of Elisabeth Murdoch, the former executive at her father's BSkyB Network who these days runs the enviably successful TV production outfit Shine. They were already in Greece, making final preparations for a week-long holiday organised to celebrate Elisabeth's 40th birthday - and their yacht, the relatively compact Elisabeth F, had been moored close to the Rosehearty. Once their friends had arrived, all enjoyed drinks aboard the elder Murdoch's vessel, before a smaller group then made their way to the Elisabeth F for dinner.

For the Camerons, that was pretty much that. After dessert and coffee, they said their goodbyes, and got back in Freud's plane, which then flew them to the Turkish resort of Dalaman, where they began a sailing holiday with Samantha Cameron's family to mark the 60th birthday of her mother, Viscountess Astor. In several newspapers, the cost to Freud of the three flights for the Camerons, provided on "a personal basis", was estimated at around £34,000.

The Rosehearty and Elisabeth F soon sailed to Corfu, where no end of intrigue transpired. The following Friday, the investment banker Jacob Rothschild hosted a dinner for Elisabeth Murdoch at his family's villa on the island, where the Freud-Murdoch party mingled with the Rothschilds' house guests, including Peter Mandelson, George Osborne and the Russian tycoon Oleg Deripaska. Two days later came the run of meetings and conversations during which Osborne was alleged to have talked about the possibility of Deripaska donating to Tory funds via one of his British companies. In between, there was a dinner for about 20 people at the Agni taverna. Osborne was seated next to his old friend Nathaniel Rothschild and Peter Mandelson, who supposedly "dripped poison" about Gordon Brown, and thus sparked the run of stories that would end with Osborne tumbling into disgrace.

So there it was: sun, sea, champagne and gossip swirling around a couple whose high-powered social connections extend into the distance. Each of them is influential in their own right; together they have an impressive Brangelina effect.

Freud is 45. Down the years, he has attracted no end of nicknames: "Saint Matthew of the shadows", "Matthew Fraud", "Roland Rat in a suit". In twin tribute to the Woody Allen film and Freud's habit of manoeuvring himself into the right company, some people have been known to simply call him Zelig. As is usually the case with people of such sway and connections, fleshing out his story tends to involve strictly off-the-record conversations with colleagues and acquaintances, who can nevertheless shine a fascinating light on his life, and the social tangle that surrounds it.

Freud is extraordinarily well connected - socially, professionally and through family. He is the great-grandson of Sigmund Freud, the son of the former Liberal MP and raconteur Sir Clement Freud, and the brother of the radio presenter Emma. One of his uncles is the painter Lucian Freud, the father of two other notable Freuds: novelist Esther and designer Bella.

Freud did not go to university. After leaving school - he went to Westminster, and then spent a brief spell at Pimlico Comprehensive - he was convicted for possession of cocaine and marijuana, though he escaped with a £500 fine. After a stint as a press officer at the record label RCA, he was introduced by his father to the spoon-bender, Uri Geller, and the pair came up with a lucrative wheeze: convincing an Australian mining company to pay Geller £250,000 to dowse for gold. Freud took 10%, and he was off: Matthew Freud Associates, initially based in a flat on London's Gloucester Road, was founded in 1983.

Over time, the company - now called Freud Communications - has become a transatlantic concern with an annual turnover of £25m. Along the way, Freud has shifted his company's focus from showbiz PR - former clients have included Paula Yates, Angus Deayton, Zoë Ball and Geri Halliwell - to assisting multinational companies. Its current list includes Pepsi, KFC, Asda, the drinks giant Diageo and Nike - and the company provides a service that often seems to go well beyond PR and communications, into the jockeying and lobbying grouped under the term "public affairs".

Looking through his seemingly infinite résumé, you wonder whether there isn't a news story in which Freud hasn't played at least a minor role. Of late, he and his colleagues have worked for Northern Rock, advising the freshly nationalised company on how to reassure its customers about life under state ownership. His company does PR for the London Olympics. He also has a longtime reputation for assisting some of the most zeitgeisty charities and good causes: among them, Make Poverty History, the Live Earth concerts, and the White Ribbon Alliance - the women's health charity for whom he recently worked on a New York dinner hosted by Sarah Brown, where the latter was photographed with Sarah Palin.

Freud's making was the giddy, conspicuously consuming London of the 1990s, and relationships that quickly led him to the court of Tony Blair - though some who watched him at work claim his influence in such dizzying places was rather overrated. "I think he thought he could help Peter [Mandelson] and Alastair [Campbell] work out what to do, PR-wise," says one New Labour insider. "People would have discussions with him thinking, 'Oh my God, I bet he's going to be brilliant,' and he would come up with ideas that really weren't that good. It wasn't that he wasn't a brilliant PR man, because he is - he understands celebrity and that kind of thing really well. What he didn't really understand was ... well, politics.

"But they rapidly deduced that what Matthew is good at is contacts and fixing. He became useful because he was linked to so many people."

One former member of the circle around Blair reckons that Freud was "almost vicious" in using his contacts to push his way into New Labour's highest circles, and that "both Blairs used him greatly". Freud has claimed that he was a member of "various steering groups, some of which report to the prime minister", though his representatives, when asked to explain what this meant, said they had "no more details". His role in the Blair years seems shadowy and non-specific: there is the odd reference to him in the requisite biographies, and most of the right insiders seem to have had at least fleeting dealings with him, but nailing down exactly what he brought to the party is hard.

This much we know: Freud was, and remains, friendly with Mandelson, who appointed him to work on the Millennium Dome and sit on one of the project's most senior committees. His close relationship with Tessa Jowell meant that when her ministerial career wobbled thanks to alleged bribes paid by Silvio Berlusconi to her husband David Mills, Freud put his PR skills at her disposal, and was - to quote one expert on New Labour - "very active on the phone - a mixture of cajoling, and threatening, and all of that".

A few years earlier, Freud had a big hand in organising the party that celebrated Labour's victory at the 2001 election. As well as hyping up a supposed week-long relationship between his clients Halliwell and Chris Evans (who, he later claimed, "fell in love - but it didn't last very long"), he seems to have played some role in recruiting Halliwell to appear in a Labour party political broadcast and persuading Evans to campaign with Blair in 2005. If you look at the array of people invited by the Blairs to dine at Chequers, there are names that cross over into Freud's family, friends and client list: Evans, Halliwell, Freud's sister Emma and her husband Richard Curtis, Elton John, TV presenter Tess Daly, and Nick Jones, founder of the London members' club Soho House and husband of TV and radio host Kirsty Young.

Freud first met Elisabeth Murdoch, the oldest of Rupert Murdoch's three children by his second wife, Anna, in 1997. Both were married: Freud to Caroline Hutton (aka "Pidge"), with whom he had two sons; Murdoch to the Dutch-Ghanian economist Elkin Pianim, with one daughter and another on the way. To massed gasps from the London media elite, they became an item the following year, whereupon Freud's stock rocketed. "That took him to a whole other level," says one of the couple's New Labour acquaintances. "Suddenly, he became a conduit to one of the most important people in British politics: her dad." However, another source suggests that Rupert Murdoch is still adjusting to this new and potentially useful addition to the family. "Rupert keeps him at arm's length, and Matthew's very funny about that. He says it was two years into the relationship before Rupert said to him, hesitatingly, 'I think there's something you might be able to do for me ...'"

People who have dealt with Elisabeth Murdoch tend to sketch out the portrait of a confident, level-headed, hard-working woman who speaks in a classless transatlantic accent, fiercely driven to prove her worth outside the family firm. Educated at the Brearley School - a private, all-girls establishment on Manhattan's Upper East Side - and Vassar College, a liberal arts establishment in upstate New York, her story throws forth one key question: where exactly she sits in the estimation of her father. Rupert Murdoch is said to "adore" her, though the consensus is that her 35-year-old brother, James, currently the chairman and CEO of NewsCorp's operation in Europe and Asia, is

his chosen heir. To quote one former News International insider, Murdoch thinks that, "James is the sharpest. Elisabeth certainly has ambition, and Lachlan has charm, but James is the one who's got that extra edge."

Elisabeth's politics, according to one Murdoch-watcher, are "more leftwing than dad - more than Blair, too". In 1998, when she cut a less glamorous figure than she does today, she was involved, as general manager of BSkyB, in the company's attempt to purchase Manchester United, which was referred to the Monopolies and Mergers Commission by the then trade secretary Peter Mandelson. As was alleged in a blizzard of headlines, the two were close friends - though by the time the government vetoed the deal, Mandelson was no longer in the cabinet, and the relationship endured.

In 2000, Murdoch gave birth to her and Freud's first child, Charlotte. They then separated, during a period that found Freud at an uncharacteristically low ebb. They were reunited the following year and married in August 2001, after Murdoch left BSkyB and set up Shine - now valued at £250m, thanks partly to the acquisition of the companies behind such TV programmes as Life on Mars and Ugly Betty.

If Murdoch's branching-out heightened the couple's aura of clout and confidence, their reputation was symbolised by parties at their Notting Hill home. "When I went to one," says Danny Rogers, the editor of PR Week, "I literally walked in with Piers Morgan, Ken Livingstone and David Frost. You do think, 'Wow - this is very interesting.' It felt pretty relaxed but obviously, pretty serious conversations must have been taking place. And of course, the really big conversations don't necessarily have to happen there. They can just be introductions that can be followed up."

Livingstone, whose mayoral administration worked with Freud Communications on London's international marketing - and the city's Olympic bid - has been to at least a couple of Freud-Murdoch parties. "They're quite enjoyable," he says. "Very good food and drink, and there's interesting people there. I don't feel I'm going because I have to. Matthew Freud's a nice guy: he's completely unaffected. A lot of people with that degree of influence can be insufferably pompous. He's like anybody else you bump into at the party. I'd only go if I found his company pleasant." And when they first met, what did he make of Elisabeth Murdoch? "Very nice, and bright, and interesting. I just thought, 'Lucky Matthew.'"

According to those who know Freud and Murdoch, it is their talent for hosting high-powered get-togethers that underpins their bond with Blair. "He parties with Liz and Matthew," says one source who has observed Blair at close quarters. "When Cherie's out of town, he often turns up in his jeans, often with Rebekah Wade, to their house in Notting Hill and the house they've got in Oxfordshire." Blair tends to go solo, says this source, for two reasons. "It's partly that she's a less welcome guest; she's less liked by that crowd. And it's partly that when she's away, he finds himself at a loose end." For Blair, apparently, part of the attraction of the Freud-Murdoch milieu is simple: "He just loves hanging out with celebs."

A Freud-Murdoch soiree held in 2006 provides glorious proof of this, complete with Blair in jeans, and the Wade connection. Back then, Freud was working with the Texan billionaire Philip Anschutz and South African casino magnate Sol Kerzner (who created the infamous apartheid-era resort Sun City). The pair had teamed up to try and win approval for a giant gambling venue at the Millennium Dome. There had already been a flurry of headlines when Freud had apparently used a private dinner to introduce the then culture secretary, Tessa Jowell, to Anschutz, but on September 20 2006, his jockeying on their behalf entered the realms of the absurd.

That evening, Blair had been having dinner with Wade at Cecconi's restaurant in Mayfair, owned by the Freud client Nick Jones. Wade apparently convinced Blair to come with her to a house party thrown by Freud to promote another of his clients: the Red credit card, launched by U2 singer Bono and American Express, and aimed at raising money to fight disease in Africa. With a year to go until he left office, Blair was - to quote one insider - "at the stage of 'Why not?'", and the pair duly arrived at Freud and Murdoch's west London home. "You go first and I'll follow," he told Wade, whereupon the pair entered a throng that included Bono, 50 Cent, Claudia Schiffer, Alicia Keys - and Kerzner. The story was, said one PR industry high-up, "classic Freud". "In one hit he publicises the restaurant and shows Kerzner rubbing shoulders with the prime minister. Blair was used."

For Freud, all this manoeuvring did not quite work the required wonders. Plans for a casino at the Dome came to nothing, and in 2007, the Anschutz Entertainment Group announced that its work with Freud Communications had ended. In the PR and corporate lobbying industry, a few people drew an obvious conclusion: that for all the dazzle, when it comes to the stuff of hard policy, Freud's clout is not as great as some people would like to believe.

As press coverage of events in Corfu proved, mapping Freud and Murdoch's connections results in a mind-boggling web of friends and contacts. First, there are the cliques and cabals of Notting Hill. More remarkably, there is a tightly knit collection of people who keep weekend homes on or near the Duke Of Marlborough's Blenheim estate, near Woodstock in Oxfordshire. They include Freud and Murdoch, Emma Freud and Richard Curtis, Wade, and the Independent's editor-in-chief, Simon Kelner. Freud and Murdoch even married in the estate's chapel, though they have since bought an ex-monastery 20 miles way in Burford, where they threw the biggest celebration of her 40th birthday. "It was an amazingly impressive party," says one guest. "But here's the funny thing: it was a manifestation of power, undoubtedly, but it was quite cosy." The guests included Blair and David Cameron; according to friends of Freud and Murdoch, Gordon and Sarah Brown were booked in for a weekend at Balmoral, and thus unable to go.

Despite Brown's supposed disdain for glitzy socialising, one friend of the couple claims that for the past eight months or so, Brown has been in the habit of seeking Freud's counsel: "When Gordon was really struggling, he looked at what Matthew had been doing for Tony, and approached him. That was a very big step." Of late, Brown has apparently been sharing Freud's company around once a month; over the summer, he and Sarah Brown had dinner with Freud, Elisabeth Murdoch, Wade, Charlie Brooks, and Rupert Murdoch and his wife Wendi Deng.

Meanwhile, Freud's close relationship with Blair continues. In the immediate aftermath of his exit from Downing Street, Freud provided Blair with offices he had recently vacated in Mayfair, and has worked with Blair's new Faith Foundation. One Blair-watcher says that at some international events - such as this year's World Economic Forum, at Davos in Switzerland - Freud "basically manages Tony and Cherie, looking after them, saying, 'I'd go to this party rather than that one,' and organising events." Having left Downing Street, Blair's former special adviser Kate Garvey became Freud Communications' head of public and social affairs in 2005, and reportedly takes care of the Freud-Blair relationship. The company has also found room for Philip Gould, the pollster and focus-group specialist who was one of New Labour's central figures, and now serves as Freud Communications' deputy chairman.

Gould first met Freud when they worked on Frank Dobson's ill-starred candidacy for London mayor in 2000. He describes Freud as "exceptionally able", and pays tribute to his links with charities and not-for-profit groups. When it comes to his enduring links to Tony Blair, Gould says their dealings are mainly bound up with broad matters of "strategic advice - I don't think there's ever been a public relations relationship". His characterisation of Freud's politics is somewhat hesitant: as Gould sees it, he's a "natural, modern progressive who wants to move forward". He goes on: "He's always looking for change. He's seriously drawn to cause-related issues ... a big part of it is fairness."

Within the details of Gould's various professional roles, there lurks one example of the way that Freud bridges the worlds of business and politics. Pepsi - which also own Walkers Crisps, and is one of Freud Communications' most long-standing clients - has recently created senior advisory roles for Gould, and his fellow former Blair insider and former health secretary Alan Milburn, though Gould claims the two things are unrelated. "I'm on the Pepsi advisory board, which is not connected to my work with Freud. Pepsi's a big client here, but it's an independent thing: it comes together and meshes in a way, but there's no direct relationship." His response to the idea that Freud lurks somewhere in Pepsi's recruitment of Milburn (who is paid £25,000 a year to sit on the snacks-and-drinks company's "nutritional advisory board") is similarly dismissive: Milburn, he says, "has nothing to do with Freud at all".

As well as their ties to New Labour and the Cameroons, there are also lines to be drawn between Matthew Freud and Elisabeth Murdoch and Barack Obama. In May, Murdoch threw a £1,000-a head fundraising dinner at the family home that raised $400,000, and received an appreciative phone call from Obama the same night (interestingly, the Murdoch-owned New York Post backed John McCain). Freud has also tapped into the milieu of the new president: he handles the US PR for Blue State Digital, the new media company that worked such online wonders for the Obama campaign and is about to set up a base in London. It is considering office space in Freud Communications' HQ.

All that said, there are voices who claim that even if Freud and Murdoch still look mightily well connected, the spirit of the times is moving against them. "Look back at when he made his name," says one senior figure from the corporate lobbying industry. "Politically, we were in the age of the cult of personality and huge majorities. Blair was here for ever; New Labour was the new establishment; people like Freud and Murdoch were part of all that, and there was an idea around that it would go on for ever and ever and ever. But Gordon Brown is rather different, and in a strange way, Cameron is very different too."

Notwithstanding the trips on Freud's jet, this source claims that the Tories are desperate to avoid charges of glad-handing the wealthy, as their allergic reaction to the Osborne episode proved. The Blair experience suggests that excessive schmoozing leads to disaster, and besides, the Cameroons' silver-spooned backgrounds only heighten their sensitivities. "Everything that Cameron has been doing in terms of advisers, chiefs of staff, officials - they are absolutely determined to be hair-shirted and puritanical," he goes on. "If one of my guys meets one of their guys and offers to buy him a cup of coffee, they'll say, 'No, I'd rather buy it myself.' It's a very different culture now."

Other people, however, think Freud's golden touch will continue. "He's done pretty well over his career," says Danny Rogers. "He's been operating for - what? - 25 years now, and he seems as powerful as he ever was. The demand to be close to money, power and celebrity is fairly permanent."

As with so many observations of Matthew Freud and Elisabeth Murdoch, the words once again bring to mind the fictional whirl portrayed by F Scott Fitzgerald, and passages set in the roaring 20s that might just as well describe London high society of the 90s and noughties. Turn the pages of The Great Gatsby and there it all is: elegance, privilege and parties, and people "agonisingly aware of the easy money in the vicinity, and convinced that it was theirs for a few words in the right key".


John Harris

The GuardianTramp

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