April 28, 2024

James Murdoch to Be Called Before Parliament Again

Committee officials said they expected to schedule the hearing for November, and a spokeswoman for Mr. Murdoch said he would comply. “James Murdoch is happy to appear in front of the committee again to answer any further questions members might have,” she said.

The committee’s decision seemed likely to bring further drama to an unfolding story that has reached deep into British society, raising questions about the behavior and power of the press and the once-intimate cross-ties between the media, the political elite and the police.

John Whittingdale, chairman of the House of Commons select committee investigating the scandal, told Sky News that Mr. Murdoch, 38, would be recalled after the committee had heard testimony from Les Hinton, a former top executive at The News Corporation, and Mark Lewis, a lawyer representing individuals who were targets of the phone hacking.

Mr. Hinton, who became the chairman of Dow Jones and publisher of The Wall Street Journal after the paper was acquired by the News Corporation, was the most senior Murdoch executive to quit as the hacking scandal unfolded this summer. Mr. Whittingdale said he expected James Murdoch to appear at the inquiry for a second hearing as part of the committee’s efforts to tie up “one or two loose ends” left after earlier testimony. In testimony last week, former News Corporation executives disputed Mr. Murdoch’s claims that he was unaware of widespread phone hacking at his papers.

Another major figure in the investigation, Andy Coulson, a former editor of the Murdoch-owned tabloid The News of the World who later served as Prime Minister David Cameron’s media director, told the committee through his lawyers last week that he would not accept an invitation to testify again because of concerns about the potential impact on a police investigation into the scandal and a separate judge-led inquiry appointed by the government. Mr. Coulson, who resigned from the prime minister’s staff in January, is one of more than a dozen former editors, reporters, lawyers and executives from the Murdoch newspapers in Britain who have been arrested in recent months. All were released on bail after hours of intensive questioning, pending decisions by prosecutors on whether to bring charges.

In another development, The Guardian newspaper reported that lawyers for the News Corporation’s British newspaper group, News International, had told a court hearing on Tuesday that the company had discovered “two very large new caches” of documents and e-mails in its archive that could contain evidence of the scale of phone hacking by The News of the World. A judge preparing to hear civil cases arising from the phone hacking told a high court hearing that there was “some important material” in the new archive, whose discovery followed on a previous instance in which a huge tranche of e-mails potentially relevant to the investigations were found by the Murdoch papers after initially being reported lost.

The scandal over unlawful intercepts of voice mail has been rumbling for several years, but it built to crisis pitch this summer with reports that The News of the World ordered the hacking of the phone of Milly Dowler, an abducted teenager who was found murdered in an outer London suburb in 2002. As the scandal exploded this summer, News International closed down the newspaper after 168 years of publication, causing dozens of reporters, editors and other staff members to lose their jobs.

The Murdoch family was drawn personally into the inquiry in mid-July when the House of Commons committee on culture, media and sport questioned both Rupert and James Murdoch, with both men expressing regret over the phone hacking but denying any knowledge that it had been a widespread pattern before the rush of revelations this year.. The hearings resumed last week when two former senior employees of News International appeared before the committee to challenge James Murdoch’s version of events.

Their testimony centered on a 15-minute meeting in London in 2008 when, they said, James Murdoch, chief of the News Corporation’s European and Asian operations, was told that the hacking of voice mail was more widespread than the company had acknowledged. It was on this basis, they said, that Mr. Murdoch approved an out-of-court settlement with Gordon Taylor, a leading soccer executive whose voice mail had been hacked, that eventually ran to $1.4 million, including legal costs. But that account has been disputed by Mr. Murdoch, who has denied that he was told at the 2008 meeting that there was a wider pattern of hacking involved.

The News Corporation has maintained for years that the hacking was an isolated affair carried out by a “rogue” reporter, Clive Goodman, and a private investigator, Glenn Mulcaire. Both men served jail terms in 2007 related to phone hacking. But some members of the parliamentary committee have focused on the payout to Mr. Taylor as evidence of an attempt to “cover up” the affair.

Article source: http://www.nytimes.com/2011/09/14/world/europe/14hacking.html?partner=rss&emc=rss

Top Tabloid Editors Endorsed Hacking, Letter Says

In light of the new evidence, the panel also announced that it was summoning at least four former News of the World figures for questioning at a hearing next month and could possibly ask Mr. Murdoch’s son James, the head of the Murdoch conglomerate’s European operations, back for more testimony as well. Both father and son testified at a dramatic televised hearing last month.

The disclosures threatened to push the scandal back to the forefront of public concern, raising worrying questions for Mr. Murdoch and for the British prime minister, David Cameron, who hired Andy Coulson, a former News of the World editor, as his director of communications and has been taunted by the opposition for poor judgment in doing so.

Tom Watson, a Labour lawmaker and member of the panel, also said Mr. Coulson may be among those summoned to give further evidence.

The newest allegations are contained in a four-year-old letter released for the first time from Clive Goodman, the News of the World’s former royal correspondent who served a jail term for hacking the mobile phones of members of the royal family, to a senior human resources executive who had informed him that he was being dismissed.

In addition to the Goodman letter, the parliamentary panel released a letter from Harbottle Lewis, a law firm hired by the Murdochs, which they have repeatedly cited as having given the News of the World a “clean bill of health” in reviewing a cache of e-mails in 2007. The law firm’s letter contradicts that assertion and says that its own investigation had been limited strictly to advising the company in its employment dispute with Mr. Goodman.

The scandal has already spread through Britain’s public life and media world. Mr. Coulson quit his job with the prime minister in January as the hacking scandal spread. Rupert Murdoch closed down the 168-year-old News of the World after the scandal exploded last month with reports that the newspaper had ordered the hacking of the cellphone of an abducted 13-year-old schoolgirl, Milly Dowler, who was found murdered in 2002.

The correspondence, made public by the House of Commons select committee on culture, media and sport, is likely to embarrass former senior officials in the Murdoch empire who denied that phone hacking was widely practiced.

When both Rupert and James Murdoch testified at the committee hearing last month they said they were appalled by the hacking, in dramatic appearances punctuated by a bizarre episode when a prankster attacked the older Mr. Murdoch with a foam pie.

In Mr. Goodman’s letter, dated March 2, 2007, Mr. Goodman challenged his dismissal, saying that his actions “were carried out with the full knowledge and support” of other senior journalists. He also said another senior journalist arranged for payments to a private investigator who carried out the hacking.

Mr. Goodman also asserted in his letter that the practice of phone hacking was “widely discussed in the daily editorial conference” at the newspaper until “explicit reference to it was banned by the editor.”

Mr. Watson said the committee had seen two versions of the letter, one more heavily redacted than the other. One version sent to the committee by News International, the British newspaper subsidiary of the Murdoch family’s News Corporation, had been redacted to black out references to “editorial conference” and “the editor.”

The News of the World had long insisted that the phone hacking was restricted to Mr. Goodman, a single rogue reporter.

But Mr. Watson said the letter offered a “devastating” rebuttal to Mr. Coulson, the former editor and prime ministerial aide, who has always denied knowledge of the phone hacking. Mr. Watson said it was now “likely” that the panel would recall both James Murdoch and Mr. Coulson.

“We have written to Andy Coulson to ask him whether he would like to amend his previous evidence,” Mr. Watson said. “Clearly if Clive Goodman’s account is accurate, it shows the evidence he gave us was at best misleading and probably deceptive.”

Mr. Goodman, the former royal reporter, also claimed that he had been promised his job back after serving a four-month prison term starting in January 2007.

He wrote that Mr. Coulson and Tom Crone, the newspaper’s senior legal counsel, had “promised on many occasions that I could come back to a job at the newspaper if I did not implicate the paper or any of its staff in my mitigation plea. I did not, and I expect the paper to honor its promise to me.”

News International said through a spokesman that it “recognized the seriousness” of the material disclosed to the police and Parliament and was committed to working in a “constructive and open way” with all the relevant authorities.

The parliamentary committee said that on Sept. 6 it would recall Mr. Crone, as well as the News of the World’s former editor Colin Myer, the News International human resources director, Daniel Cloke, and its former legal director, John Chapman.

The committee also said that “depending on their evidence under questioning, the committee may also have further questions for James Murdoch and others.”

Sarah Lyall and Ravi Somaiya reported from London and Alan Cowell from Paris.

Article source: http://www.nytimes.com/2011/08/17/world/europe/17hacking.html?partner=rss&emc=rss

DealBook: Murdoch’s Board Stands By as Scandal Widens

Rupert Murdoch's News Corporation has been under fire since a phone hacking scandal erupted in Britain.Facundo Arrizabalaga/European Pressphoto AgencyRupert Murdoch’s News Corporation has been under fire since a phone hacking scandal erupted in Britain.

The board of the News Corporation might as well be named “Friends of Rupert.”

The independent directors — who have a fiduciary responsibility to the company’s shareholders — have remained silent amid the widening scandal at Rupert Murdoch’s media empire.

Despite multiple arrests stemming from the phone hacking accusations so far, not one independent board member has made a statement denouncing the company’s dubious activities. Not one has publicly called for the resignation of top officials at the company. And not one has pushed for an outside investigation, although the company has started its own.

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“This is a board that qualifies for an ‘F’ in every category,” Nell Minow, a member of the board of GovernanceMetrics International and founder of the Corporate Library, a governance firm, said without any hesitation. “It is the ultimate crony board.”

A spokeswoman for the News Corporation declined to comment.

Given the Murdochs’ tight rule over the company, crossing the family might seem futile. In reality, its directors serve at the pleasure of Mr. Murdoch, since the company was purposely set up with a dual-class stock structure that gives him 38 percent of the votes. (The New York Times Company also has two classes of shares.) Legally at least, the News Corporation directors are supposed to serve the interests of all shareholders.

Of the 16 board members, nine are technically considered independent. But few would truly qualify under any definition of good corporate governance.

One supposed independent voice, Kenneth Cowley, is a former News Corporation executive who has been on the board since 1979. Natalie Bancroft, an opera singer, was named to the board when the company acquired Dow Jones, mainly as a way to way to placate its former owners, the Bancrofts. Incidentally, the News Corporation picked Ms. Bancroft.

That’s not to say the company board doesn’t include some heavyweights — if they ever decide to use their muscle. There’s John Thornton, the former president of Goldman Sachs; José Maria Aznar, the former prime minister of Spain; Viet Dinh, a professor at Georgetown University and former assistant attorney general under President George W. Bush who helped draw up the Patriot Act; Sir Roderick Ian Eddington, the former chief executive of British Airways; and Thomas J. Perkins, the billionaire venture capitalist who co-founded Kleiner Perkins Caufield Byers.

But those directors, too, have not criticized management — even Mr. Perkins, who knows a thing or two about phone hacking. In 2006, he stepped down from the board of Hewlett-Packard during a “pretexting” scandal in which the company secretly obtained the telephone records of reporters. At the time of his resignation from H.P., Mr. Perkins wrote to the board, “I resigned solely to protest the questionable ethics and the dubious legality of the chairman’s methods.”

So it is somewhat surprising that Mr. Perkins defended the News Corporation top management in an interview with The New York Times on Monday.

Fred Tannenbaum, a lawyer at Gould Ratner who specializes in governance issues related to family-run companies, said, “You have to expect that the directors are carefully reading their D.O. policies,” referring to the insurance policies that companies take out to protect directors and officers from civil and criminal lawsuits. He said that the News Corporation board “allowed the fox to guard the chickens.” Yes, the pun, he said, was intended.

Governance experts say that the board should at the very least develop, if not publicly articulate, a succession plan. As James Murdoch seems to have been increasingly pushed to the sidelines, speculation is emerging that the board may ultimately name Chase Carey chief executive.

The meekness of the company’s directors has been questioned by shareholders before.

“The fact that the board has been so passive despite years of misconduct is a testament to how lacking in independence its members are from the Murdoch family. This has led to a ‘Murdoch discount’ in the marketplace,” a small group of shareholders wrote in a lawsuit earlier this year. The investors are suing to block Mr. Murdoch from acquiring Shine, a production company run by Mr. Murdoch’s daughter, Elizabeth, who is now a News Corporation board observer and, before the recent scandal, was expected to formally join the board.

It is hard to argue with the shareholders about the “Murdoch discount.” Over the last five years, the company’s stock has fallen precipitously after a series of strategic missteps that appeared to be more about indulging Mr. Murdoch’s personal interests than helping the company.

The acquisition of Dow Jones is, mathematically at least, an unmitigated disaster. The News Corporation has written off $2.8 billion of the acquisition, or nearly half the value of the deal. For a brief moment, Mr. Murdoch’s acquisition of MySpace seemed genius — then it didn’t. He paid $580 million in 2005 and sold it last month for slightly more than $30 million.

The stock continues its decline today. As the scandal has unfolded, shares of the company have dropped 7 percent in the last month.

In an effort to placate shareholders, the company announced on Monday that it had named Lord Grabiner, a commercial lawyer, to head an “independent” committee to address the myriad government investigations.

But there should be an asterisk next to the word “independent.” Lord Grabiner will report to Joel Klein, the former assistant attorney general in the United States Justice Department. Despite that solid credential, Mr. Klein is now an employee and director of the company. Mr. Klein, in turn, will report to Mr. Dinh, the “independent director.” And there’s one more footnote: the committee’s only mandate is to deal with the newspapers in Britain, not the rest of the company.

Somewhat sadly, the News Corporation has a history of setting up independent committees that do little more than provide cover for Mr. Murdoch.

When it acquired Dow Jones, it pledged to create an editorial oversight committee to keep Mr. Murdoch from trying to install his own people at The Wall Street Journal. However, within a year of the takeover, Mr. Mudoch had negotiated a hefty payout for the paper’s top editor, Marcus Brauchli, in exchange for his resignation. Mr. Murdoch then tapped his own editor, a longtime friend from the News Corporation.

It’s no secret that buying shares of the company is a direct bet on Mr. Murdoch. After all, he controls it lock, stock and barrel.

But the role of the board — even for a company controlled by a family dynasty — is to provide a modicum of oversight. Now is the time for its directors to try to be “Friends of Investors.”

Article source: http://feeds.nytimes.com/click.phdo?i=b67d77488b531980ac4f149571573ae3