British Panel Finds Murdoch Unfit to Lead Media Empire
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
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.”
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.