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Mr Desmond launched into a foul-mouthed anti-German tirade during a meeting with executives of the Telegraph Group, whose titles may be sold to Axel Springer, the Berlin-based media company.
The outburst came at a monthly finance meeting of Express and Telegraph directors at their jointly owned Westferry printing plant.
Mr Desmond, who is Jewish, greeted the Telegraph delegation saying “Guten Morgen” and “sehr gut” in a fake German accent. He asked the executives if they were looking forward to being “run by Nazis”.
Jeremy Deedes, the Telegraph chief executive, told Mr Desmond that he found his remarks offensive, and pointed out that Herr Springer is publicly committed to the reconciliation of the German and Jewish peoples.
Mr Deedes said later that Mr Desmond, who dropped out of the bidding for the Telegraph titles as the asking price rose, responded by declaring: “They’re all f****** Nazis.”
But it was when he was asked to sit down and begin the meeting that the Express proprietor really exploded. “Don’t you tell me to sit down, you miserable piece of s***,” Mr Desmond shouted.
Mr Deedes said that Mr Desmond called the Telegraph delegation “crooks, cheats, liars” and referred to Lord Black of Crossharbour, the disgraced former chairman of the Telegraph, as “a fat crook”.
Mr Desmond then began goose-stepping around the room holding a finger under his nose in imitation of a Hitler moustache and making a stiff-armed Heil Hitler salute similar to Basil Fawlty in Fawlty Towers. He also ordered his executives to sing Deutschland über Alles.
He then asked Mr Deedes if he wanted to “come outside and sort it out”. Mr Deedes said that it was at this point that he decided to abandon the meeting, but then Mr Desmond urged Express directors to make Sieg Heil salutes.
“I have been in this business for 40 years and I have never come across such a disgraceful episode,” Mr Deedes said. “If he had said any of that in public he would have been arrested.”
A spokesman for Mr Desmond did not deny the account of the meeting. He added: “It is a very interesting interpretation of what was a very productive hour-and-a-half meeting.” Mr Deedes said he had arrived at 8.40am and left 10 minutes later.
When the Telegraph executives were greeted by Mr Desmond and his colleagues with fake German accents they responded good naturedly and congratulated the Express owner on “seeing the light” over his switch of support for the Conservatives. Michael Howard has a whole page in the Express today.
Mr Desmond said that the change of backing was nothing to do with him as his editors were independent, and he was then said to have gone on to criticise Lord Black.
Things soon became more heated, with Mr Desmond allegedly launching into a stream of abuse, both personal and general, that was littered with four-letter expletives.
The two publishers have co-owned the Westferry printing works, one of the biggest in Europe, since Mr Desmond bought the newspaper in November 2000.
Mr Desmond uses unorthodox ideas at his meetings. When one of his workers comes up with a good idea he has a bell rung in recognition, but if it is a bad idea he orders that a duck hooter be sounded. He tried to introduce the idea at Westferry but it was not regarded as a good thing.
The Labour MP Gisela Stuart, a German-born former minister who has had Nazi taunts thrown at her during election campaigns, said last night: “If this is the new kind of friend Michael Howard has found, I say good luck to him.”
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