Amy,
Peter is obviously correct – you can simply choose not to recover.
But I say this in all sincerity. Since when did your LA allow themselves to be held to ransom by the press? Especially in a case where due process has occurred and an independent Tribunal has found against the journalist in question.
One other consideration. Unless the law has changed overnight, blackmail is a CRIMINAL offence.
Also, if the journalist names individuals and wrongly casts aspersions on character(s), there is also the option of looking at defamation. Contrary to the headline cases in the press, pursuing a defamation case is not as scary as it may seem.
If I was a local tax payer, I would not be happy if my LA caved in to such a situation and, in any case, an LA is under a duty to look after public funds. I respectfully suggest that the Chief Exec develops some cojones….
As an aside, you say “journalist”. Is his Editor in agreement?
Regards