The starters guns was fired yesterday in what should be the defamation battle of the year as the $21 billion Macquarie Bank empire takes on Rupert Murdoch’s $70 billion global media conglomerate.

At stake is the reputation of the millionaire factory and the ability of Rupert’s local flagship, The Australian, to get its facts right.

“Know when to hold ‘em and know when to fold ‘em,” is a maxim that both Macquarie and Rupert are famed for, but one party has potentially made a dreadful mistake now that the four week trial is under way.

The Australian hasn’t taken a backwards step in the face of an almighty legal onslaught from Macquarie, which has even extended to a personal writ against business reporter Michael West.

West had been having a few digs at Macquarie in his old Margin Call column but then unloaded with a very hard hitting feature headlined “Mine Shaft” in March 2005, which focused on the bank’s 2002 purchase of $77.5 million in liabilities relating to the Beaconsfield goldmine in Tasmania for just $300,000.

This turned into a bonanza but the key Macquarie defence has been that creditors were not misled about the mine’s prospects – which subsequently plunged after the 2005 mine collapse – and that these deals were recommended and done by the independent administrator, Michael Ryan from Perth accounting firm Taylor Woodings.

The Australian played what is probably it’s trump card yesterday – an email from Macquarie executive Andrew Blair to his colleagues which included the following about a visit to Sydney by Ryan ahead of his appointment: “If we like what we see, we will line him up for the role”.

Blair downplayed this as “loose talk” yesterday, but The Australian raised the stakes again by kick-starting today’s front page story with that angle and then brazenly declaring that it was also relying on “truth” as a defence. Anyone who loses after going the “truth” defence risks an even bigger damages payout.

Regulators such as ASIC, APRA and the Reserve Bank will take a keen interest in the case, because Macquarie is licensed and its conduct is expected to be exemplary.

Investment banks are largely just capitalised reputation, so a big judgment ripping into the bank would also have all sorts of implications.

Macquarie launched its defamation action before new national laws were introduced which ban companies from suing – but even so, West specifically named two executives, Warwick Morris and Jonathan Rourke, and they’re also suing News Corp.

West’s coverage of this issue went on to win the Walkley for business reporting in 2005, but this won’t count for much if he goes down.