The honourable face of muckraking: Simon Garfield finds the men who produce Scallywag determined to fight all the way

THE HEADLINE in the evening paper read, 'Major: my libel row is dead and gone.' The editor and managing editor of Scallywag supped a pint or three in a north London pub and said, 'Er . . . not quite.' The case is over for the New Statesman, but after months of anguish it is just getting interesting for the magazine that claims it is 'published by the gifted, inebriated and insane'.

John Major and Clare Latimer have learnt a lot about Scallywag since they sued it for reporting rumours of a supposed affair, not least the fact that it is unlike almost any other publication. From the start Scallywag has played as though it had nothing to lose, a wild card confounding logical libel practice - which may explain why a tiny, scurrilous magazine with little financial backing is still in business despite the best efforts of some of the most powerful legal brains in the country.

Angus James, Scallywag's managing editor, yesterday vowed to give Mr Major his day in court. 'There is no way we are going to take any more of this lying down. We'd be quite happy for there to be an end of it if (Mr Major) formally withdrew in court and settled our costs. Until that happens, we're determined to go all the way.' Mr James believes that the Prime Minister totally misjudged the tone of the offending article. 'He reacted emotionally to it. He could have laughed it off, shrugged his shoulders and said it was a load of nonsense.

'It was a piece meant in fun, but the last six months haven't been any fun whatsoever. He's almost put us out of business. We've had to suffer extreme personal problems. I'm very sure he hasn't enjoyed it either.'

The resolve of Simon Regan, the editor and Mr James's half-brother, has also been strengthened by the heat of the battle. 'When I woke up one morning and was told that we were being sued, I was happy as hell: woweee, see you in court] But there's been real trauma. I've had quite a bit of experience of hard libel battles, but this is quite unprecedented.'

The Old White Lion in East Finchley has grown used to these raffish men with their crimson neckscarfs and roll-your-own. Their cramped office is over the road, but it is here that they hold court, hacking out tales of past victories and disasters. Later this lunchtime they will drink here with two people from the New Statesman, the first time they have compared notes. Shortly before this, a barmaid comes over to our table and sees a copy of January's offending issue: 'Is this the one?' she asks. 'The one that got you into all that trouble?'

The trouble is now extreme. Despite the great publicity the case has brought the magazine, sales have been choked by lack of efficient distribution, every company fearful of receiving a fresh writ (Time Out Distribution, which handled the relevant issue, recently settled out of court in the plaintiffs' favour). Mr Regan claims that before the writ, his magazine was selling upwards of 30,000 per issue. 'We had hopes that we would soon reach 100,000.' As to present sales, he says that the libel case has dealt them 'a severe blow'.

Two weeks ago, it looked as if the whole issue would be settled agreeably for Scallywag. The magazine's solicitor declined to comment yesterday, but Mr James said: 'We were advised that, provided we make a statement through a lawyer saying we accepted John Major's assurance that he never had an affair and we never intended to say so, then we would not have to pay any costs, not have to pay any damages, and that would be the end of it. That was a position we were prepared to take at a certain stage. However, Clare Latimer's solicitors, on the instructions of Clare Latimer, refused that deal. They said 'she's out for blood'.

'By taking us to court, she can bankrupt me and Simon, but she won't put the magazine out of business, and we'll continue to publish. For Clare Latimer, bankruptcy is an absolutely terrible dishonour. In our mind it's an occupational hazard.'

Mr Regan came out of bankruptcy only a year ago; he says he still lives frugally. He once worked at the News of the World and has looked to the tabloid milieu for financial support. His magazine was once partly financed by a company owned by David Sullivan, publisher of the Daily Sport and Sunday Sport; it is now partly bankrolled by John Blake, a former editor of the People.

More coverage of the Major-Latimer story is being lined up for the next issue of the magazine, including a possible link with Max Clifford, the show-business PR. Mr Regan says that he still has no regrets about his original story. 'I knew when I wrote the story what I was getting into. I didn't think it was libellous, but I thought it was going pretty close to the bone, but we are a newspaper that takes risks. Most of the media have gone very tame, including Private Eye. We do not only do satire, we do real stories, real muckraking - and I mean muckraking in an honourable way.'

(Photograph omitted)