Fri July 29, 2011
In Britain, News Corp. Remains Under Pressure
Rupert and James Murdoch appear to have won important corporate backing for their continued leadership of News Corp. amid the voice-mail hacking and police corruption scandal besetting the company in the U.K.
James Murdoch oversees the company's British, European and Asian operations, and it owns 39 percent of shares of the giant British broadcaster BSkyB. He is also that company's chairman. On Thursday, BSkyB's board delivered a vote of confidence in him while moving to mollify investors with a major stock buyback.
Yet a series of new developments are raising additional questions about how much — and how early — senior executives knew about instances of hacking.
British police have now told the mother of a slain 8-year-old girl, Sarah Payne, her mobile phone may have been targeted for hacking by a private investigator for the now closed tabloid News of the World.
Police also say that phone was given to the mother, the similarly named Sara Payne, 11 years ago by Rebekah Brooks — then the tabloid's editor. Brooks had embarked on an anti-pedophile crusade in the girl's name, and the phone was supposed to help the mother in aiding the paper.
"In reputational terms, it's a disaster," Paul Connew, a former deputy editor of News of the World, told the BBC. "The mere fact that it seems possible she may have been hacked by other people at the News of the World — of all papers — is just shocking."
The tabloid was shut down after evidence surfaced suggesting it may have targeted thousands of people for phone hacking — including celebrities, royals, politicians, and the victims and survivors of terrorist attacks and violent crimes. Soldiers killed in combat and their families were also said to be among the possible targets.
Brooks resigned two weeks ago as News Corp.'s chief British newspaper executive. She denied any knowledge of the new incident — as she has the past episodes — and called it abhorrent. Associates of Brooks, including a former spokeswoman for the tabloid, assert Sara Payne did not set up voice mail until 2009 and therefore would have been unlikely to have been successfully hacked.
However, a British police official who became friendly with Payne told reporters Friday that a senior News of the World executive threatened to publish an untrue story about his relationship with the woman. The police officer said he believed the story to be based on misinterpretations of deeply personal emails the two left for one another.
The Payne episode evokes and in some ways even eclipses the incident that sent the long-simmering scandal to front pages in the U.K. and the U.S., in which a private investigator hacked into the voice-mail messages of the cell phone of Milly Dowler, another girl who was abducted and killed.
On Friday, Glenn Mulcaire, the disgraced private investigator at the center of the case, released a statement that effectively characterized himself as an employee of the paper, and said he always acted at the behest of others there. He was paid an annual six-figure retainer by the paper.
Until this month, News International, News Corp.'s British newspaper arm, paid his legal fees and those of the tabloid's former royals editor, Clive Goodman. Both men pleaded guilty in 2007 to criminal charges of hacking into the voice-mail messages of members of the royal family.
Last week, James Murdoch testified at a parliamentary hearing that he believed the royals hacking was an isolated case. The younger Murdoch said he was unaware of a wider problem until a lawsuit in 2010. Brooks made the same statement during her testimony.
But two years earlier, in 2008, James Murdoch approved a confidential settlement that cost the company more than 1 million pounds to settle the complaints of Gordon Taylor, the chief of the professional soccer players association, that his voice mails had been hacked.
At the parliamentary hearing, Labour MP Tom Watson appeared skeptical of James Murdoch's ignorance.
WATSON: When you signed off the Taylor payment, did you see — or were you made aware of the 'for Neville email' - the transcript of the hacked voice-mail message?
JAMES MURDOCH: No, I was not aware of that at the time.
"Neville" refers to Neville Thurlbeck, the tabloid's former chief reporter for News of the World. The "for Neville" email was a damning memo, obtained by lawyers for Taylor suing the company. It is said to have shown the tabloid's senior executives to be deeply enmeshed in the common practice of phone hacking.
Watson then suggested the settlement may have been intended to hush up a wider problem.
WATSON: But you paid an astronomical sum and there was no reason to.
JAMES MURDOCH: There was every reason to settle the case, given the likelihood of losing the case and the damages that we had received counsel would be levied.
In recent days, the former top lawyer for News of the World, Tom Crone, and its final editor-in-chief, Colin Myler, say they shared that incriminating information with James Murdoch before the settlement.
James Murdoch issued a terse statement standing by his testimony. But he has been unable to explain the contradiction. Conservative MP John Whittingdale, the chairman of the parliamentary committee holding the hearing, told reporters he will seek clarity and may well call James Murdoch for additional questioning.
The corporate board of News Corp, which has its headquarters in Manhattan, has declared unyielding support for the Murdochs. And investors appear to be backing the company's leadership, too.
"If one looks at the very long-term track record, I think one has to be pretty impressed with the overall building of this enterprise," said Donald Yacktman, president of Yacktman Asset management Co. in Texas, one of the largest outside shareholders in News Corp. "Any human being will make mistakes."
Yet there were signs the investigation was starting to take hold in the U.S. Col Allan, the editor of the New York Post, told staffers to save all materials that could relate to the phone hacking investigation. Allan wrote, "All New York Post employees have been asked to do this in light of what has gone on in London at News of the World, and not because any recipient has done anything improper or unlawful."