Fairfax insiders say the real story behind the company’s failure to run some of the past fortnight’s key terror news lies in the hands of management, and an ill-fated deal brokered with NSW Police Commissioner Ken Moroney.

Well placed sources tell us that following John Howard’s press conference, the day after the Melbourne Cup, blowing the lid off the nationwide police operation, a worried NSW Police Commissioner Ken Moroney called Fairfax editor-in-chief Mark Scott.

“Moroney pleaded with him not to run the stories The Herald had ready to go on the terror cells in Melbourne and Sydney,” says an insider. “Scott reluctantly agreed, but only after Moroney vowed that News Ltd had agreed to pull the stories also.”

Alas, either News hadn’t made the deal, or reneged – and next day they had their “scoop” (see right), infuriating police.

A Fairfax insider says: “It is clear to us at The Sydney Morning Herald that Howard’s press conference last week announcing the rushed legislation alarmed the police in Victoria, NSW and Canberra. At Howard’s presser – and in subsequent backgrounders to journalists – the operations in Victoria and NSW were blown.”

Forward to the weekend, when Howard and Philip Ruddock got on their bikes and pedalled backwards furiously, declaring the amendment may never be used, and that there was nothing on the boil at that time. So why the big rush?

The Heralddutifully reported Howard and his Attorney-General’s words, but reported nothing of the paper’s own secret side-deal with the police.

But behind the scenes, the police were so worried their months of covert surveillance were unravelling they decided they had to move. Cut to Friday’s news: a burnt-out four wheel drive in Sydney containing mysterious liquid. Police say driver or owner is believed to have fled the country.

Why? Possibly because Howard and Ruddock tipped them off by overselling their rushed amendment the week before.

Yesterday, we emailed Mark Scott, asking him about the terms of his agreement with Moroney and whether he agreed on the basis of News giving similar undertakings. The Fairfax editor-in-chief replied this morning:

From time-to-time, editors of all newspapers are contacted concerning stories that are being prepared on issues related to investigations or national security. On occasion, senior authorities may request that certain elements of a story be withheld. We weigh each request considering the implications of our story, the nature of the omissions sought and the public interest. Our default position is to publish. Before and after 9/11, we have on occasion, but not always, delayed publication when urgently requested by the government. Every paper will have done so.

I will not give any specific details on the case you mention, nor am I in a position to speak for News Limited. Our journalists do an outstanding job in reporting these national security stories, breaking news and writing in a way that is detailed, fair, balanced and analytical. Our readers can trust our coverage.

Mark Scott

There you have it: the “non-denial denial”. It seems Fairfax has attempted to do the right thing, but has been dudded by its major competitor. It’s a lose/lose dilemma for an editor: publish and be damned, and face allegations of endangering national security. Or agree to official censorship, and see your competitor scoop you.