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James Murdoch’s Testimony on Hacking Is Challenged by Ex-Officials

The two former executives said at a parliamentary hearing that they had informed James Murdoch, chief of News Corporation’s European and Asian operations, at a 15-minute meeting in London in 2008 that the hacking of voice mail as a reporting tool went beyond the work by a lone “rogue” reporter and a private investigator that the company had acknowledged at the time. The men said they had conveyed that message as part of a plan to win Mr. Murdoch’s backing for a record $1.4 million settlement that bound a hacking victim to silence about his case.

The former executives — Tom Crone, former legal manager for the Murdoch-owned newspapers in Britain, and Colin Myler, former editor of the now-defunct News of the World — said the settlement had been intended to avoid millions in legal costs, but several members of Parliament suggested that it was part of a cover-up intended to buy the hacking victim’s silence and prevent the scandal from spreading.

The committee on culture, media and sport, which had summoned Rupert and James Murdoch to a hearing in July, said it would meet again to decide whether to call James Murdoch back for additional questioning. Committee members have said that they will focus on determining whether he testified truthfully in July when he said that there was no indication at the 2008 meeting of a pattern of wrongdoing at The News of the World, which was closed as a result of the scandal.

James Murdoch, who has denied that he was told that the hacking involved more than a single case that resulted in two men’s going to jail in 2007, almost immediately disputed the former executives’ testimony to the committee on Tuesday. In a statement, he rejected the assertions by Mr. Crone and Mr. Myler that they had told him of an internal e-mail from the tabloid’s archive — one showing that the phone hacking had been more widespread and posed a far more serious threat financially and legally — that justified a payout that would serve to contain the damage.

The meeting in 2008 has emerged as a turning point in the saga that has embroiled Britain’s news media, politicians and the police. Months of disclosures have damaged Prime Minister David Cameron, who hired a former News of the World editor as his communications chief, only to see him resign and undergo questioning as one of 15 editors, reporters and private investigators arrested in the case. The scandal prompted the resignation of the Scotland Yard commander who was Britain’s top police officer, after disclosures about his ties to the Murdoch hierarchy; and forced Rupert Murdoch to shut down The News of the World after 168 years of publication.

For Rupert Murdoch, 81, who presides over one of the world’s most powerful news organizations, the scandal has posed a more personal threat. James Murdoch, 38, has been fighting for his corporate survival, in the face of deep unease among powerful News Corporation investors. Whether James Murdoch, long considered his father’s corporate heir, can survive may depend on what the parliamentary and police inquiries reveal in the months ahead about his stewardship of the British papers as the phone hacking scandal grew.

The dimensions of the affair were captured in a closing exchange at the parliamentary hearing, when one of the lawmakers quoted from an e-mail he said had been sent anonymously to committee members by somebody who had once worked at a senior level in News International in which the writer spoke of the possibility that “a global empire could be blown apart” by the scandal. As matters stand, whether James Murdoch can withstand the mounting pressures appears to hinge, more than anything, on the differing accounts of the 2008 meeting, and what it reveals of his willingness to confront the scope of the illegal practices.

John F. Burns reported from London, and Alan Cowell from Paris. Ravi Somaiya contributed reporting from London.

Article source: http://www.nytimes.com/2011/09/07/world/europe/07hacking.html?partner=rss&emc=rss

Common Sense: A Murdoch’s Missed Opportunity

After four years of silence, and just hours after the News Corporation said it would stop paying, he stepped before television cameras outside his home to say, “I have no further comment to make at this stage.” He added, “This may change.” Mr. Mulcaire is said to employ a lawyer full time as well as several more part time, an arrangement he surely can’t afford for long on a private investigator’s income.

In Parliament, the Labour member Paul Farrelly asked James Murdoch, who heads the company’s international operations, if he understood why people might interpret paying those legal fees as an effort to buy the private investigator’s cooperation or silence.

Mr. Murdoch murmured his agreement, saying his lawyers had told him “it’s important and customary” to pay such fees. “I’ve asked for those things to cease.”

After the company cut Mr. Mulcaire loose, two former executives came forward to accuse Mr. Murdoch of being “mistaken” in his testimony to Parliament about his knowledge of phone hacking. Now Mr. Murdoch is under investigation for potentially misleading Parliament.

As Mr. Farrelly put it, “It now seems to be everyone for themselves. The edifice is cracking. They’re all fighting like rats in a sack.”

However controversial in Britain, the practice of companies’ paying their officers and employees’ legal expenses in criminal investigations is not only routine in America but has been elevated by some to the status of a constitutional right. A little-discussed but open secret among defense lawyers and prosecutors alike is that who pays the legal fees often decides the outcome of an investigation.

As John C. Coffee Jr., Berle professor of law at Columbia, told me: “Someone whose legal fees are not paid may have a strong and urgent need to cooperate with the government. The employee, if he can’t afford to defend himself, has to cut a deal, and he might, shall we say, color his testimony. Who’s going to get the benefit of that, the company or the government? Lawyers know very well how to coach witnesses on what to say without telling them to lie.”

Confronted in the 1990s with an unprecedented wave of white-collar crime at major corporations like Enron and WorldCom, Justice Department prosecutors grew exasperated with companies that made public pledges to cooperate with investigators only to unleash a phalanx of defense lawyers bent on anything but.

In 2003, when he was chief of the Justice Department’s criminal division, Larry Thompson wrote that a factor in whether a company, as opposed to individuals, would be charged with a crime would be the extent of its cooperation, one measure of which “is whether the corporation appears to be protecting its culpable employees and agents,” among other things, “through the advancing of attorneys fees.” Mr. Thompson might well have added lavish severance packages and other forms of hush money to the list.

In 2005, the accounting firm KPMG admitted to creating fraudulent tax shelters that enabled wealthy clients to evade $2.5 billion in federal taxes, and six former partners, including the firm’s former deputy chairman, were indicted. KPMG, as it had in the past, paid their legal bills. All pleaded not guilty and declined to cooperate with the government.

As an accounting firm dependent on public trust, KPMG recognized that its survival depended on the firm’s escaping criminal charges. At a meeting with prosecutors, the firm’s lawyer, Robert Bennett, emphasized that KPMG “had decided to change course and cooperate fully.” The prosecutors zeroed in on the issue of legal fees, with one saying that “misconduct should not be rewarded” and another warning that with respect to legal fees, “we’ll look at that under a microscope,” according to notes taken at the meeting.

Article source: http://feeds.nytimes.com/click.phdo?i=e50769ec3c79c874d7aa2af06d601f4b

James Murdoch’s Testimony on Hacking Is Challenged by Ex-Officials

Common Sense: A Murdoch’s Missed Opportunity

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