British Panel Finds Murdoch Unfit to Lead Media Empire
By ALAN COWELL and JOHN F. BURNS
Published: May 1, 2012
LONDON — In a startlingly damning report after months of investigation into the hacking scandal at Rupert Murdoch’s
British newspapers, a parliamentary panel here concluded on Tuesday
that he was “not a fit person” to run a huge international company,
amplifying a public outcry against him, but threatening further bruising
divisions within the political establishment.
Uli Seit for The New York Times
Rupert Murdoch in Oyster Bay, New York, in March.
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The conclusion about the world’s most influential media tycoon went much
further in lambasting Mr. Murdoch than had been expected from
Parliament’s select committee on culture, media and sport, which has
conducted several inquiries into press standards in recent years, the
most recent starting last July as the hacking scandal burrowed ever
deeper into Britain’s public life.
But the impact of the report by the all-party committee was blunted by
divisions within the panel itself. Presaging further disarray within
Britain’s strained coalition government, the committee said it had
split, 6 to 4, on party lines, with the dominant Conservatives opposing
the censure of Mr. Murdoch while the Liberal Democrats, the junior
partner in Prime Minister David Cameron’s government, joined the Labor
opposition in supporting it.
“On the basis of the facts and evidence before the committee,” the
report said in one passage, “we conclude that, if at all relevant times
Rupert Murdoch did not take steps to become fully informed about phone
hacking, he turned a blind eye and exhibited willful blindness to what
was going on in his companies and publications.”
“This culture, we consider, permeated from the top throughout the
organization and speaks volumes about the lack of effective corporate
governance at News Corporation and News International,” its British newspaper subsidiary.
“We conclude, therefore, that Rupert Murdoch is not a fit person to
exercise the stewardship of a major international company,” the report
said.
In a statement from its New York headquarters, News Corporation said it
was “carefully reviewing the select committee’s report and will respond
shortly.” It also said the company “fully acknowledges significant
wrongdoing at News of the World” — the now-shuttered Sunday tabloid at
the heart of the scandal — “and apologizes to everyone whose privacy was
invaded.”
Louise Mensch, a Conservative member of the panel, said the division had
come about because of “the line in the middle of the report that said
that Mr. Rupert Murdoch was not a fit person to run an international
company.”
“We all thought that was wildly outside the scope of a select committee” and “was an improper attempt to influence” Ofcom,
the British media regulator, which is already investigating whether
News Corporation is “fit and proper” to hold a broadcast license.
Another dissenting conservative, Philip Davies, told reporters: “To me,
very clearly, Rupert Murdoch is a fit and proper person to run a major
company,” arguing that Mr. Murdoch had spent decades building the
world’s most powerful and successful media company, employing tens of
thousands of people.
News Corporation owns 39.1 percent of BSkyB. A $12 billion bid to
acquire full ownership collapsed last year after the hacking controversy
unfolded. In addition to its stake in BSkyB, News Corporation’s
newspapers in Britain account for between 30 and 40 percent of the
country’s newspaper readership, giving Mr. Murdoch and his editors
enormous political influence, especially at elections.
In a statement after the report was published, Ofcom said it had a legal
duty “to be satisfied that any person holding a broadcasting license
is, and remains, fit and proper to do so. Ofcom is continuing to assess
the evidence — including the new and emerging evidence — that may assist
it in discharging these duties.”
In its report, the committee did not use the full term “fit and proper”
in its condemnation of Mr. Murdoch, a distinction that John
Whittingdale, the Conservative who was the committee’s nonvoting
chairman, told the BBC was significant, though he did not say why.
Labor members of the committee, and the party’s parliamentary leaders,
said they would press for the regulator to find against the Murdochs on
the “fit and proper standard,” a move that media analysts have said
could imperil News Corporation’s existing 39.1 holding in BSkyB.
The parliamentary panel’s report on Tuesday said that, by ignoring
“evidence of widespread wrongdoing,” News Corporation and its British
newspaper subsidiary News International exhibited “willful blindness,
for which the companies’ directors — including Rupert Murdoch and James Murdoch — should ultimately be prepared to take responsibility.”
While the full consequences of the panel’s findings were not immediately
clear, the panel raised the possibility that three senior former
managers at News International, Colin Myler, Tom Crone and Les Hinton,
could be cited for contempt of Parliament for misleading the panel in
their testimony.
“I refute these accusations utterly,” Mr. Hinton said in a statement
reported by The Wall Street Journal, where Mr. Hinton resigned as
publisher last year. “I have always been truthful in my dealings with
the committee and its findings are unfounded, unfair and erroneous.” Mr.
Hinton said he planned to write to the committee’s leader “to object
formally.”
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News International had long maintained that hacking had been the work of
what was termed a single “rogue reporter” — an argument that the panel
found on Tuesday to be “simply astonishing.”
Indeed, the report said, throughout the scandal, the instinct at News
International had been to “cover up rather than seek out wrongdoing and
discipline the perpetrators.”
The 121-page report also singled out Mr. Murdoch’s son James Murdoch,
who until recently was head of the family’s media interests in Britain,
for failing to act much earlier. “Had James Murdoch been more attentive
to the correspondence that he received at the time, he could have taken
action on phone hacking in 2008, and this committee could have been told
the truth” during an earlier inquiry in 2009, the report said.
It also said News Corporation had tried to blame lower-ranking
executives while “striving to protect more senior figures, most notably
James Murdoch.”
“Even if there was a ‘don’t ask, don’t tell’
culture at News International, the whole affair demonstrates huge
failings of corporate governance at the company and its parent, News
Corporation,” the report said.
The scandal exploded last year after disclosures that, as long ago as
2002, the mobile phone of an abducted and subsequently murdered
teenager, Milly Dowler, had been hacked after she disappeared but before
her body was found.
The committee’s findings appeared certain to set off a new storm in
Parliament, with the Labor opposition signaling that it intended to
press for a vote finding Mr. Hinton, Mr. Myler and Mr. Crone guilt of
contempt of Parliament, a rarely used sanction in modern times that
Labor supporters said would do serious damage to the men’s reputations
and professional careers. The report on Tuesday came less than a week
after both Rupert Murdoch, 81, and James Murdoch, 39, testified before a
separate judicial inquiry into the affair. They insisted, as they have
done throughout the scandal, that they had no direct initial knowledge
of the extent of the hacking.
Rupert Murdoch accused top managers of The News of the World Sunday tabloid of staging a cover-up of the practice.
His son said last week that, when he took over News International in
late 2007 — months after a News of the World reporter and a private
investigator were jailed for hacking into the voice mail of members of
the royal family — he believed that the affair had been settled.
But that version has been challenged by Mr. Myler, a former editor of
The News of the World, and Mr. Crone, the newspaper’s former legal
manger — the executives accused by Rupert Murdoch of a cover-up. The men
have testified that they told James Murdoch in June 2008 of the extent
of the hacking, but Mr. Murdoch has said he did not learn of the extent
of the practice until last year.
On Tuesday, Mr. Myler, who is now the editor of the New York Daily News,
said he stood by his testimony. “I have always sought to be accurate
and consistent in what I have said to the committee,” he said in a
statement.
In a measure of the damage to his interests since the scandal broke,
Rupert Murdoch closed the 168-year-old News of the World and the family
withdrew a bid to assume full control of BSkyB. For his part, James
Murdoch has severed many business ties with Britain, although he remains
on BSkyB’s board.
The ramifications have continued to spread.
Apart from the separate parliamentary and judicial inquiries, British
police have started three separate investigations into phone hacking,
e-mail hacking and bribery of police officers. More than 40 people have
been arrested and questioned — though not charged — including senior
editors and executives at News International. They include Rebekah
Brooks, the former chief executive of News International, and Andy
Coulson, a former editor who left the company to become Prime Minister
David Cameron’s media adviser — a job he has now quit.
The chairman of the parliamentary committee, Mr. Whittingdale, said on
Tuesday that the panel had been careful not to publicize conclusions
that might prejudice criminal proceedings against any of those involved.
The committee criticized Scotland Yard and the Crown Prosecution Service
as failing to take action soon enough. As the political fallout from
the scandal widens, it also has threatened Jeremy Hunt,
Mr. Cameron’s culture minister, who was in charge of overseeing the
BSkyB bid. As culture minister, Mr. Hunt had the power to waive
regulatory scrutiny that could have doomed the takeover.
Mr. Hunt’s aide, Adam Smith, resigned last week after e-mails presented
at the separate judicial inquiry depicted a cozy relationship between
the minister’s office and the Murdoch family. The Labor opposition has
called for Mr. Hunt’s resignation, accusing him of protecting the prime
minister’s own ties to the Murdoch empire.