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Sir Paul Stephenson turns on David Cameron

Britain's top police officer has resigned and turned on the prime minister in a dramatic escalation of the phone hacking scandal

By Vikram Dodd and Patrick Wintour

The Guardian,

Monday 18 July 2011

Britain's top police officer has resigned and turned on the prime minister in a dramatic escalation of the phone hacking scandal.

In a carefully-worded resignation speech that appeared aimed directly at Downing Street, Sir Paul Stephenson, the commissioner of the Metropolitan police, said the prime minister risked being "compromised" by his closeness to former News of the World editor Andy Coulson.

Number 10 stressed that David Cameron had not been pressing in private for Stephenson to stand aside. But he was caught by surprise by the attack, which came just while the prime minister was on a plane en route to South Africa.

Stephenson denied that he was resigning over allegations that he accepted £12,000 worth of hospitality from Champney's health spa, focusing instead on his decision not to inform the prime minister that the Met had employed Coulson's former deputy Neil Wallis as a strategic adviser.

"Once Mr Wallis's name did become associated with Operation Weeting [into phone hacking], I did not want to compromise the prime minister in any way by revealing or discussing a potential suspect who clearly had a close relationship with Mr Coulson," he said.

"I am aware of the many political exchanges in relation to Mr Coulson's previous employment. I believe it would have been extraordinarily clumsy of me to have exposed the prime minister, or by association the home secretary, to any accusation, however unfair, as a consequence of them being in possession of operational information in this regard."

To emphasise the point, Stephenson went on: "Unlike Mr Coulson, Mr Wallis had not resigned from the News of the World or, to the best of my knowledge been in any way associated with the original phone hacking investigation."

The shadow home secretary Yvette Cooper seized on that issue saying: "People will wonder why different rules apply for the prime minister and the Met, especially as Sir Paul said that 'unlike Andy Coulson', Neil Wallis had not been forced to resign from the News of the World."

Senior police sources confirmed the attack had been intentional and showed the anger at Scotland Yard that Stephenson has been willing to resign over the scandal while the political class has failed to take responsibility in the same way. An ally of Stephenson said: "The commissioner thought if the prime minister is happy employing Andy Coulson, and Neil Wallis has bid the lowest price, what reason would we have not to employ him?"

Stephenson had been due to appear before the home affairs select committee tomorrow. His sudden exit increases the pressure on assistant commissioner John Yates, the officer who led the phone hacking inquiry, to quit.

The crisis over hacking engulfing News Corporation began to turn toxic for Stephenson on Thursday after the arrest of Wallis, who was the News of the World's deputy editor during the period when it is alleged phone hacking was widespread at the paper. Hours after Wallis was arrested, it emerged that he had worked for the Met.

The Guardian has learned that Scotland Yard chiefs invited Wallis to apply for a senior communications post with the force in 2009, a decision Stephenson was aware of. Wallis was approached to apply for the two day a month contract by the Met, following discussions involving the forces's most senior figures.

A source with close knowledge of the Yard's thinking at the time said part of Wallis's attraction was his connection to former News of the World editor Coulson, who was a leading aide to Cameron, then in opposition and expected to become prime minister.

Part of the Met's thinking was that Wallis's connections would help the force's relationship with Cameron: "One [Wallis] is a lot cheaper and gives you direct access into No 10," the source added.

Stephenson was facing the prospect of a difficult Commons statement by Theresa May, the home secretary, and anxiety expressed by the deputy prime minister, Nick Clegg, about confidence in the Met because of the failure to tackle the scandal.

In his resignation statement , Stephenson stressed his integrity and dismissed weekend claims that it was compromised by accepting a free stay at a luxury health spa where Wallis had been hired as a PR consultant.

Stephenson said: "I have taken this decision as a consequence of the ongoing speculation and accusations relating to the Met's links with News International at a senior level and in particular in relation to Mr Neil Wallis who as you know was arrested in connection with Operation Weeting last week.

"I have heard suggestions that we must have suspected the alleged involvement of Mr Wallis in phone hacking. Let me say unequivocally that I did not and had no reason to have done so. I do not occupy a position in the world of journalism; I had no knowledge of the extent of this disgraceful practice and the repugnant nature of the selection of victims that is now emerging; nor of its apparent reach into senior levels."

John Prescott, the former deputy prime minister who had called for Stephenson to resign, wrote on Twitter: "I always thought the Met and News International were too close and now we see how close they were. Another green bottle has fallen – more to come."

Peter Smyth, chair of the Met Police Federation, said: "I think it is a sad day for Paul and a sad day for the Met. He is a very private man, I have never had any reason to question his integrity." He has come to a decision based on what he knows about himself."

The mayor of London, Boris Johnson, who last year described the hacking issue as a load of codswallop, was also furious that he had not been informed of the payments to Wallis until after his arrest last week. He was planning to launch an inquiry into the links between the Met and News International to examine whether the Met's refusal to pursue the phone -hacking saga, and the links with News International. "We need to turn over some of these big flat rocks and find out what is underneath," Johnson said last night.

He said he was sad about Sir Paul's resignation, but thought it was "the right call" since he was likely to be distracted by the speculation about his links with News International. Cameron said: "Sir Paul Stephenson has had a long and distinguished career in the police, and I would like to thank him for his service over many, many years. Under his leadership, the Metropolitan police made good progress in fighting crime, continued its vital work in combating terrorism, and scored notable successes such as the policing of the royal wedding."

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Murdoch scandal: hypocritical warmongers exposed

Sunday, July 17, 2011 By Tony Iltis

Murdoch-owned tabloid gloating over the sinking of Argentine ship ARA General Belgrano during the Falklands War in 1982. More than 300 lives were lost in the attack. The scandal engulfing Rupert Murdoch and his global media empire is giving the world a glimpse of what the face of power looks like today — and it's ugly.

The revelations of networks of patronage and power, which link politicians and the police to corporate interests that believe themselves to be above laws, ethics or scrutiny, are frightening.

However, Murdoch's reputation for deciding elections and dictating policies to governments, and the notorious right-wing bias (and looseness with inconvenient facts) of his media outlets, is not new.

Murdoch turned the Australian media empire he inherited from his father, Sir Keith Murdoch, into a global machine for disseminating propaganda and making bucket-loads of money in the process.

That appeals to sleazy voyeurism and aggressive prejudice have been central to his success is also not a new revelation.

The first revelations of the News of the World being involved in illegal phone tapping and corruption concerned invasions of the privacy of celebrities and royalty.

There was public disquiet, one arrest and a couple of resignations, and the paper's image was damaged, but it did not create a major scandal.

Prime Minister David Cameron could still employ disgraced (and now arrested) NOTW editor Andy Coulson as his spin doctor.

However, when it was revealed that teenage murder victims and their families, families of terrorist attack victims and families of soldiers killed in overseas wars had all had their phones tapped, public anger exploded.

Parliamentary enquiries were called, police made arrests and Murdoch closed the NOTW down.

He also withdrew his takeover bid for satellite TV station BSkyB, and began accepting the resignations of increasingly senior executives.

On July 16, the BBC reported: "UK national newspapers are running a full-page advert with a signed apology from Rupert Murdoch."

Politicians who once were on intimate terms with the Murdoch family and senior executives are steadily distancing themselves from him.

Some have begun speaking about their own victimisation by Murdoch — such as former Labour PM Gordon Brown, whose family's medical records were illegally obtained and reported.

One of the parliamentary enquiries will investigate why earlier police investigations failed to reveal the extent of NOTW's illegal activities. These activities included bribing police to get inside information on criminal investigations.

The attacks on teenage murder victims and their families caused the most revulsion. Not only was this victimisation of already traumatised people breathtaking in its sheer bastardry, it underlined the hypocrisy of the Murdoch media.

The Murdoch tabloids' trademark sensationalist coverage of crime, and accompanying campaigns for draconian law-and-order politics such as harsher sentences and more police powers, has always been in the framework of self-righteous claims to be the voice of victims.

Another trademark of the Murdoch media globally is Islamophobia. From Fox news' hysterical reaction to President Barack Obama's Arabic middle name, to the Sydney Daily Telegraph's current anti-Burka campaign, the Murdoch media has consistently vilified Muslims in the name of protecting Western society from terrorism.

In Australia, not only has Murdoch used his media to campaign for anti-terror laws but, in several cases after such laws have been introduced, authorities used the Murdoch media during prosecutions to spread allegations against defendants in terrorism trials.

Such allegations cannot be refuted in open court, or spoken about by the accused, because of secrecy provisions in the anti-terror laws.

At an August 6, 2009 press conference, Paul Whittaker, editor of The Australian, revealed that the Australian Federal Police tipped them off a week in advance of an arrest that took place on August 4, and they "agreed to sit on the story".

Like other arrests under anti-terror laws, the arrest was staged in front of cameras.

Civil liberties lawyer Rob Stary, who defended the case, told the August 12, 2009, Green Left Weekly: "One of the things we are concerned with is the sophisticated and calculated [attempt] to pollute public perception by deliberately leaking material through the media."

The phone tapping revelations show that the Murdoch media's concern for those affected by terrorism is as hollow its concern for murdered high school students and their families.

The targeting of terror attack victims has meant that the Murdoch empire may be investigated in the US as well as Britain.

Bloomberg Businessweek reported on July 15: "Representative Peter King, the Republican chairman of the House Committee on Homeland Security, asked FBI Director Robert Mueller in a July 13 letter to investigate whether News of the World employees tried to access voice mails belonging to victims of the 2001 terrorist attacks through bribery and illegal wiretapping …

"[uS Attorney General Eric] Holder today confirmed the existence of a US probe in public comments he made while in Sydney."

The revelations that the NOTW bugged the phones of families of British soldiers killed in Iraq and Afghanistan shows the same pattern of total violation of the rights of people that paper claimed to be crusading on behalf of.

In Britain, the US and Australia, moral blackmail about the soldiers whose lives were sacrificed is used to mute criticism of the unpopular wars. The Murdoch media leads the way.

That the unpopularity of these wars of occupation has grown in the English-speaking countries waging them is another indication that Murdoch's ability to manipulate the "ignorant" masses may not be as great as he'd like those who run for elected office to believe.

His global media empire has consistently devoted its resources to promoting support for the wars and played a large role in manufacturing the pretexts, such as Saddam Hussein's non-existent weapons of mass destruction and links to Al Qaeda and the 9-11 attacks.

Thefirstpost.co.uk said on July 15: "More than two years before the publication of the government's dodgy dossier on Iraq's non-existent WMD, News International papers were already doing their best to convince the public of the dire threat from Saddam Hussein."

"On Christmas Eve 2000, the Sunday Times published a story headlined 'Saddam builds new atom bomb' in which it was claimed that the Iraqi leader 'has ordered his scientists to resume work on a programme aimed at making a nuclear bomb'.

"A couple of months later the same paper ran another piece entitled 'Saddam has tested nuclear weapon' based on the testimony of a mysterious Iraqi whistleblower named 'Leone'…

"As war drums were being beaten louder, the pro-war propaganda became ever more outrageous.

"Just a few days before the war began, the Times ran an article by the pro-war Labour MP Ann Clwyd which claimed that Saddam used a people-shredder to dispose of his enemies.

"'See men shredded, then say you don't back war,' was the article's provocative headline."

"The Sun meanwhile published a cartoon showing French President Jacques Chirac, who opposed the war, as Saddam Hussein's whore."

A characteristic of Murdoch's pro-war propaganda has been aggressive vilification not only of the "enemies" the wars are against but of any voices opposing, or even questioning, the wars.

His US TV network Fox News is notorious for outlandish conspiracy theories and no-holds-barred abuse passed off as political commentary, outdoing even the Sun.

Fox News played a significant role in creating the far-right wing "Tea Party Movement" that has been gaining influence over the US Republican Party.

In Australia, where Murdoch owns two-thirds of major metropolitan dailies, and substantial interests in suburban, regional and rural newspapers and free-to-air and pay TV, Greens Senator Bob Brown called for a Senate enquiry into the media.

"The fact is that we do have less choice in Australia when you go to buy a newspaper, in fact you can't avoid Murdoch-owned newspapers in a number of Australian cities," Brown told ABC radio's The World Today on July 15.

The Greens' progressive stance on issues such as the wars and refugees arriving in Australia has made them the Murdoch media loathe.

When they won the balance of power in the 2010 federal elections, Murdoch's Australian outlets made no secret about intending to politically destroy them.

Murdoch may be apologising in Britain, but in his land of both the Murdoch media is unrepentant.

"Beware of Bob Brown's totalitarian media view," right-wing columnist Andrew Bolt warned in the July 16 Herald Sun.

When, in December 2010, Marrickville Council in Sydney adopted a motion in support of the global campaign of boycott, divestment and sanctions (BDS) against Israeli apartheid policies, the Murdoch media went into overdrive.

It was particularly vitriolic during Marrickville Mayor Fiona Byrne's unsuccessful ran for the Greens in the seat of Marrickville in the March 26 NSW state election.

EM>Electronic Intifada said on July 5: "Under headlines such as 'Council boycott of Israel self-indulgent' (The Australian, 13 January 2011) and 'North Korea, Marrickville: Going rogue' (The Daily Telegraph, 13 January 2011), Marrickville's mayor and councillors were accused of 'interfering in Middle East affairs,' while inflated estimates of the cost of the boycott to Marrickville taxpayers were publicised in apparent acts of scaremongering ('Marrickville Council faces $4 million bill for Israel boycott,' The Daily Telegraph, 14 April 2011)."

Accusations of anti-Semitism were a predictable feature of this campaign and may have been responsible for Byrne's narrow loss in the state election.

The BDS movement was dishonestly characterised as a boycott of Jewish businesses, a characterisation that has been repeated by non-Murdoch newspapers, such as The Age, on July 15.

Murdoch's broadsheets quipped that Marrickville was judenfrei, using the term the Nazis used in the 1930s and '40s, to describe communities they ethnically cleansed. His tabloids used the English term: Jew-free.

If Murdoch's empire collapses it will be because of the revelations of tapping phones and bribing police. There is no evidence that this has occurred in Australia.

However, the cosy relationship with politicians is the same, as is the use of a near-monopolistic control of the media for political leverage while also using the political leverage to protect the control of the media.

From GLW issue 887


Britain: Murdoch’s crisis reveals wider hypocrisy

Saturday, July 16, 2011 By Mark Steel, LondonOh this is such fun. And every few hours it gets better, but always with an announcement there’s “still worse to come”, leaving us struggling to imagine what they might have done that’s worse.

Presumably by tomorrow it will turn out they planted a bug in Heather Mills’s false leg and hacked into Stephen Hawking’s voicebox.

The only thing that tarnishes it slightly is now everyone hates Murdoch. It’s like when you follow an obscure band and they become famous.

Suddenly politicians who’ve spent their careers prostrate before him are shocked at how dreadful these revelations are. This astonishment might be reasonable if News International was run by Susan Boyle or Dame Judi Dench, but this was RUPERT BLOODY SODDING BLOODY MURDOCH YOU IDIOT.

The politicians can’t be blamed because, as Peter Mandelson said: “We feared him.”

You can understand this, because the people in Egypt and Syria who stand up to tyrants only face torture and death, but Murdoch could print a picture of you with your head in a lightbulb and no one can be expected to withstand that, especially if you’re in a humble job with no power such as prime minister.

So what else could they do but fly round the world to see him and be photographed laughing and having dinner with him over and over again? After all there’s no point in being a martyr.

Cameron ensured continuity, hiring one of Murdoch’s closest people and removing a minister in case he got in Rupert’s way.

He even had News of the World editor Rebekah Brooks round for Christmas dinner, which she explained was because she was one of his constituents.

So this Christmas all his constituents should invite themselves there for dinner, and no doubt they’ll all be let in to chat about the drains behind the local supermarket over a glass of port.

But now the party leaders are appalled and disgusted and could never have guessed, as convincing as someone who protests: “I’ve spent 10 years hanging around with a dogfighting gang, but I had no idea they were involved in dogfighting.”

The police are shocked too, because how could they know 11,000 pages of documents about phone hacking might contain evidence of phone hacking?

There should be a detective series based on Inspector Yates, who led the first investigation into phone hacking allegations. Each week would end with all the suspects together in a room and him saying: “In this box are documents proving which of you is the murderer. But I don’t have time to go through that lot so you can all go.”

Even Brooks herself is astonished, and is eager to investigate. So the newspaper will investigate itself, the police will investigate themselves and the politicians will be investigated by an inquiry set up by themselves.

They are all keen on stringent law and order so maybe this is their plan to speed up the justice system. Instead of costly trials the accused will be told to hold an inquiry into themselves, and come back in three years and let us know if they did anything wrong or not.

But despite this, every day is glorious for those who’ve watched Murdoch’s organisations bend governments, cheer wars, support massacres and smash unions, because he’s on the run, stumbling like a dictator whose rule is under threat, bewildered as to why people don’t bow to him anymore.

And as a bonus it seems every day someone else unpleasant gets dragged into trouble, so by the weekend I expect to see the DJ Chris Moyles being asked to resign, and pressure being put on the bloke who cut me up as I was turning into Streatham High Road.

And, like all crumbling despotic regimes, stories now unfold of the madness within, such as the tale of Rebekah Brooks asking a reporter to attend the news conference on the morning after 9/11, dressed as Harry Potter.

If only he’d done as he was told, and then turned her into an earwig.

[This article first appeared in the Independent.]

From GLW issue 887


John Pilger: A strange case of liberal censorship

Sunday, July 17, 2011 By John Pilger


How does political censorship work in liberal societies? When my film, Year Zero: the Silent Death of Cambodia, was banned in the United States in 1980, the broadcaster PBS cut all contact. Negotiations were ended abruptly; phone calls were not returned.

Something had happened. But what?

Year Zero had already alerted much of the world to the horrors of Pol Pot, but it also investigated the critical role of the Nixon administration in the tyrant’s rise to power and the devastation of Cambodia.

Six months later, a PBS official told me: “This wasn’t censorship. We’re into difficult political days in Washington.

“Your film would have given us problems with the Reagan administration. Sorry.”

In Britain, the long war in Northern Ireland spawned a similar, deniable censorship. The journalist Liz Curtis compiled a list of more than 50 television films in Britain that were never shown or indefinitely delayed.

The word “ban” was rarely used, and those responsible would invariably insist they believed in free speech.

The Lannan Foundation in Santa Fe, New Mexico, believes in free speech. The foundation’s website says it is “dedicated to cultural freedom, diversity and creativity”.

Authors, film-makers, poets make their way to a sanctum of liberalism bankrolled by the billionaire Patrick Lannan in the tradition of Rockefeller and Ford.

Lannan also awards “grants” to liberal media in the US, such as Free Speech TV, the Foundation for National Progress (publisher of Mother Jones), the Nation Institute and the TV and radio program Democracy Now!

In Britain, Lannan has been a supporter of the Martha Gellhorn Prize for Journalism, of which I am one of the judges.

In 2008, Lannan personally supported the presidential campaign of Barack Obama. According to the Santa Fe New Mexican, he is “devoted” to Obama.

On 15 June, I was due in Santa Fe, having been invited to share a platform with the distinguished American journalist David Barsamian.

The foundation was also to host the US premiere of my new film, The War You Don’t See, which investigates the false image-making of war-makers, especially Obama.

I was about to leave for Santa Fe when I received an email from the Lannan official organising my visit. The tone was incredulous. “Something has come up,” she wrote.

Lannan had called her and ordered all my events to be cancelled. “I have no idea what this is all about,” she wrote.

Baffled, I asked that the premiere of my film be allowed to go ahead as the US distribution largely depended on it. She repeated that “all” my events were cancelled, “and this includes the screening of your film”.

On the Lannan website “cancelled” appeared across a picture of me. There was no explanation.

None of my phone calls were returned, nor subsequent emails answered.

A Kafka world of not-knowing descended.

The silence lasted a week until, under pressure from local media, the Foundation put out a brief statement that too few tickets had been sold to make my visit “viable” and that “the Foundation regrets that the reason for the cancellation was not explained to Mr. Pilger or to the public at the time the decision was made”.

Doubts were cast by a robust editorial in the Santa Fe New Mexican. The paper, which has long played a prominent role in promoting Lannan events, disclosed that my visit had been cancelled before the main advertising and previews were published.

A full-page interview with me had to be hurriedly pulled. “Pilger and Barsamian could have expected closer to a packed 820-seat Lensic [arts centre].”

The manager of The Screen, the Santa Fe cinema that had been rented for the premiere, was called late at night and told to kill all his online promotion for my film, but took it upon himself to re-schedule the film for June 23.

It was a sell-out, with many people turned away. The idea that there was no public interest was demonstrably not true.

Theories? There are many, but nothing is proven.

For me, it is all reminiscent of the long shadows cast during the Cold War. “Something is going to surface,” said Barsamian. “They can’t keep the lid on this.”

My talk on June 15 was to have been about the collusion of US liberalism in a permanent state of war and the demise of cherished freedoms, such as the right to call government to account.

In the US, as in Britain, serious dissent ― free speech ― has been substantially criminalised.

Obama, the black liberal, the PC exemplar, the marketing dream is as much a warmonger as George W. Bush. His score is six wars.

Never in US history has a president prosecuted as many whistle-blowers; yet this truth-telling, this exercise of true citizenship, is at the heart of the US’s constitutional first amendment.

Obama’s greatest achievement is having seduced, co-opted and silenced much of liberal opinion in the US, including the anti-war movement.

The reaction to the Lannan ban has been illuminating. The brave, like the great whistleblower Daniel Ellsberg, were appalled and said so. Similarly, many ordinary Americans called into radio stations and have written to me, recognising a symptom of far greater suppression.

But some exalted liberal voices have been affronted that I dared whisper the word, censorship, about such a beacon of “cultural freedom”. The embarrassment of those who wish to point both ways is palpable.

Others have pulled down the shutters and said nothing. Given their patron’s ruthless show of power, it is understandable.

For them, the Russian dissident poet Yevgeny Yevtushenko once wrote: “When truth is replaced by silence, the silence is a lie.”

[This article first appeared at www.johnpilger.com.]

From GLW issue 887

Edited by John Dolva
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John Yates resigns from Met police over phone-hacking scandal

Scotland Yard's top counter-terrorism officer quits the day after his boss Sir Paul Stephenson

By Vikram Dodd, Sam Jones and Hélène Mulholland


Monday 18 July 2011 14.53 BST

The Metropolitan police assistant commissioner John Yates has become the second high-profile Scotland Yard officer to resign over the phone-hacking scandal.

The resignation of Yates – the country's top counter-terrorism officer – comes a day after his boss, the Metropolitan police commissioner, Sir Paul Stephenson, stepped down.

In a statement, Scotland Yard said: "Assistant commissioner John Yates has this afternoon indicated his intention to resign to the chair of the Metropolitan Police Authority (MPA). This has been accepted. AC Yates will make a statement later this afternoon."

His decision to quit came as the Metropolitan Police Authority's professional standards cases subcommittee held a meeting to consider a slew of complaints against him.

The mayor of London, Boris Johnson, said the resignations of Yates and Stephenson were "regrettable but right". He said: "Whatever mistakes have been made at any level in the police service, now is the time to clear them up."

The MPA disciplinary committee, which met on Monday morning, announced that it had decided to suspend Yates pending an inquiry into allegations following the phone-hacking scandal.

Cressida Dick would replace Yates in the interim, Johnson said.

Green party MPA member Jenny Jones said the resignation should have happened earlier and left Johnson with a lot to explain.

"I think it's a real pity Yates did not go before his boss," she said. "It just shows who the most honourable person is. Boris has mishandled this from the start and he obviously has lots of questions to answer."

Earlier on Monday it emerged that Yates had been recalled to give evidence before the Commons home affairs select committee on Tuesday.

Keith Vaz, the Labour chairman of the committee, said: "The committee has recalled Mr Yates to give evidence tomorrow to clarify aspects of his evidence that he gave to the committee last week and following the statement of Sir Paul Stephenson."

When he appeared before the select committee last Tuesday, Yates expressed regret at his 2009 decision not to reopen the phone-hacking investigation. He insisted he had always told the truth to MPs investigating the issue and suggested that the News of the World "failed to co-operate" with police until the start of this year.

He told the committee: "I can assure you all that I have never lied and all the information that I've provided to this committee has been given in good faith.

"It is a matter of great concern that, for whatever reason, the News of the World appears to have failed to co-operate in the way that we now know they should have with the relevant police inquiries up until January of this year.

"They have only recently supplied information and evidence that would clearly have had a significant impact on the decisions that I took in 2009 had it been provided to us."

Vaz told Yates that his evidence was unconvincing and warned him it was "not the end of the matter

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Poster's note: The last paragraph in this article is amusing. Where has the clueless FT been for the past two years? Obviously not reading John Simkin's early observations on the emerging scandal or the postings in this topic.



Brooks arrest raises risk of action in US

Financial Times

By Andrew Edgecliffe-Johnson and David Gelles in New York

July 17, 20011

News Corp is facing heightened legal risks in its home US market over the phone hacking and police bribery scandal after the arrest of Rebekah Brooks, the former News International chief executive, but legal analysts believe US authorities are unlikely to take rapid action against the company.

The debate on the chances of the largely British scandal affecting News Corp’s US directors or businesses remained split along party political lines on Sunday.

The “startling” UK allegations raised questions about whether News Corp had violated the US Foreign Corrupt Practices Act, Senate majority whip Dick Durbin, Democrat of Illinois, told NBC’s Meet the Press. He called for congressional hearings and said the Federal Bureau of Investigation needed to “follow through” with an investigation it opened last week.

On the same programme, however, Jim DeMint, the Republican senator from South Carolina, said Congress had more pressing tasks, as it wrestles with the question of whether to raise the national debt ceiling, an issue that has eclipsed phone hacking in the US media.

“We need to let law enforcement work here,” he said: “We need to handle our own business for a change.”

Concern about reputational damage spreading in the US had prompted News Corp to add a US public relations firm to its team of advisers, one person close to the group said. The identity of that firm could not immediately be confirmed.

Rudy Giuliani, the Republican former New York mayor, told CNN’s State of the Union he had prosecuted people for the “serious felony” of intercepting communications, but added: “Give people the presumption of innocence. I think that just how high up it goes is a big question and it’s one we shouldn’t be jumping to conclusions about.”

He added that Rupert Murdoch, News Corp’s chairman, was “a very honourable, honest man,” saying: “This can’t be something that he would have anything to do with.”

The FBI is investigating an unverified UK report that News of the World representatives may have sought access to the voicemail messages of victims of the 9/11 attacks, but legal analysts said News Corp may be more exposed to allegations that the UK tabloid paid the police for information.

“A reporter in London who paid a few quid to a Bobby for some information about the royals would be surprised to learn he could end up in an American jail,” said Gary Stein, attorney at Schulte Roth & Zabel. “But the [Foreign Corrupt Practices Act] has tremendous reach, and it’s certainly not impossible.”

News Corp executives could also be found liable, Mr Stein said. “If they had knowledge of an illicit bribery scheme, I think there could be liability on the part of the corporation,” he said. “There could even be liability even if no one in the US was in on the scheme.”

John Dean, former White House counsel to Richard Nixon, and Carl Bernstein, one of the Washington Post reporters who led the investigation into the scandal and its cover-up, have both likened the crisis to the Watergate affair.

Watergate unfolded slowly, however. From the arrest of five men for breaking into the Democratic National Committee offices to the resignation of Richard Nixon, the US president, took more than two years

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Murdoch Struggles for Control as Scandal Grows


By Carol Hymowitz, Jeffrey McCracken and Amy Thomson - Jul 18, 2011

News Corp. (NWSA)’s Rupert Murdoch is struggling to control the destiny of the company he began building six decades ago after a trusted deputy was arrested and Scotland Yard’s top official quit over ties to a suspect in the phone-hacking probe.

Independent directors of New York-based News Corp. have begun questioning the company’s response to the crisis and whether a leadership change is needed, said two people with direct knowledge of the situation who wouldn’t speak publicly. Rebekah Brooks, the former News International chief who Murdoch backed until last week, was arrested yesterday in London.

“The shell of invulnerability that Rupert Murdoch had around him has been cracked,” said James Post, a professor at Boston University’s School of Management who has written about governance and business ethics. “His credibility and the company’s credibility are hemorrhaging.”

Murdoch and his 38-year-old son, James Murdoch, are spending most of their time with advisers preparing for tomorrow’s hearing before a U.K. parliamentary committee. They will face questions over their role in and responsibility for phone hacking that took place at their now-defunct News of the World tabloid. The company took out advertisements in national U.K. newspapers this weekend to apologize for the scandal.

Shares Slump

News Corp. (NWS) fell 66 cents, or 4.2 percent, to $14.98 on the Nasdaq Stock Market at 11:18 a.m. New York time. Before today, it had lost 13 percent since July 4, when the Guardian reported that News of the World employees had intercepted the voice mail of Milly Dowler, a schoolgirl who was later found murdered. The tabloid is also alleged to have hacked into the phones of terror victims and dead soldiers, as well as politicians and celebrities.

The slump has shaved more than $6 billion off the combined value of the Class A shares and the Class B voting stock that gives the Murdochs control over the company.

“Apologising for our mistakes and fixing them are only the first steps,” News International said in the ads. The company vowed to cooperate with the police and compensate those affected, saying it is “committed to change.”

Board Stirrings

On the board, venture capital executive Tom Perkins and Viet Dinh, a law professor at Georgetown University who was the chief architect of the USA Patriot Act, are leading the efforts of independent directors, according to one of the people. Dinh also represented Perkins, a former Hewlett-Packard Co. director, during a scandal at that company.

News Corp.’s independent directors, who hold nine of 16 board seats, have expressed frustration over the quality and quantity of information they’ve received about the scandal and concern about management’s ability to handle the crisis given how slowly the company has responded, the person said.

Some directors said Murdoch, the company’s 80-year-old chairman and chief executive officer, appeared to be in denial over the fallout from the scandal in an interview he gave last week to the Wall Street Journal, one of News Corp.’s newspapers.

“People’s faith in the family’s management is diminished,” said Claire Enders, founder and CEO of media researcher Enders Analysis in London, whose clients include the U.K. government and the broadcast regulator Ofcom. “That too may be very hard to restore quickly,” she said in an interview.

Brooks Resignation

In April, News Corp. said it would settle lawsuits and offer compensation to some of the celebrities and politicians that had sued the company. That followed a settlement related to a phone-hacking lawsuit in 2010 in which, according to the Guardian, News Corp. paid celebrity publicist Max Clifford more than 1 million pounds ($1.6 million) to drop his case.

In the past three years, News Corp. paid more than $600 million to settle cases in which it was accused of competing unfairly. In February, News Corp. said it will pay $125 million to Insignia Systems Inc. in a case related to the U.S. in-store advertising market. Last year, it agreed to pay $500 million to Valassis Communications Inc. (VCI), and in 2009 it paid $29.5 million to settle a claim brought by Floorgraphics Inc., which also compete in in-store advertising and promotions.

As allegations of phone-hacking escalated this month, Murdoch abandoned a 7.8 billion pound bid for all of British Sky Broadcasting Group Plc (BSY), shut the 168-year-old tabloid on which his U.K. media business was founded and lost the support of all Britain’s main political parties.

Brooks resigned on July 15, a week after Murdoch voiced his “total” support for the U.K. newspaper executive at a media conference in Sun Valley, Idaho, and flew to London to address the growing crisis.

Brooks Released

Les Hinton, CEO of Dow Jones and previously chairman of News International for 12 years, resigned the same day. The 67- year-old newspaper man had worked for 52 years for Murdoch, starting as a copy boy at the age of 15.

In developments yesterday, Brooks, 43, went to a London police station voluntarily by appointment, her spokesman David Wilson said in a phone interview. As head of the unit that runs Murdoch’s U.K. newspaper operations, she is the most senior News Corp. employee detained in the probe.

“Undoubtedly she should have been arrested,” said Mark Lewis, a lawyer for victims of phone-hacking including the parents of the murdered schoolgirl. “She was editor of the newspaper at the time that Milly Dowler was abducted and killed. The police undoubtedly have to ask her questions about what happened and what she knew or doesn’t know.”

Brooks was released on bail around midnight, police said.

Special Committee

Hours after the arrest, Metropolitan Police Commissioner Paul Stephenson announced his resignation over speculation about his force’s links to another former journalist at the tabloid. Neil Wallis, a former editor who was arrested last week, was a paid communications consultant for the police in 2009 and 2010. Another senior Met officer, Assistant Commissioner John Yates, resigned today.

A News Corp. spokeswoman reiterated the company’s intention to fully cooperate with the police. Brooks, in a memo accompanying her resignation, said leaving would give her “the freedom and the time to give my full cooperation to all the current and future inquiries.”

News Corp. will take over from News International a committee set up to work with police investigating the scandal. The company today appointed Anthony Grabiner, a U.K. lawyer and chairman of retailer Arcadia Group Plc, to lead the management and standards committee.

Simon Greenberg, corporate affairs director at News International, and General Manager Will Lewis will be employed full-time by the committee, which will report to Joel Klein, Murdoch’s top adviser, who in turn will report to Dinh. Both Klein and Dinh will update News Corp.’s board.

Independent Directors

News Corp. today said that Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.

With the FBI in the U.S. beginning a preliminary probe of the company, News Corp. has hired criminal defense lawyer Brendan V. Sullivan Jr. of the Washington law firm Williams & Connolly LLP, according to a person familiar with the situation. Sullivan’s clients have included former Alaska Senator Ted Stevens, ex-New York Stock Exchange Chairman Richard Grasso and Reagan White House aide Oliver North. Sullivan didn’t return a phone and e-mail messages from Bloomberg News seeking comment.

The company also began interviewing large public relations firms last week in New York to serve as its outside crisis communications adviser, said two people familiar with the matter. News Corp. has already retained Rubenstein Associates in New York and Edelman in London.

Family Control

News Corp.’s independent directors, including Dinh, Perkins and former British Airways CEO Rod Eddington, may have limited influence, given the Murdochs’ stock holdings, said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

Murdoch controls News Corp. through a 38 percent stake in the Class B voting shares, according to company filings and data compiled by Bloomberg. Those shares represent a 12 percent economic interest in the company, when non-voting shares are counted as well.

In addition to Rupert Murdoch, News Corp.’s board includes his son Lachlan, 39, as well as James, the company’s deputy chief operating officer. Murdoch’s daughter Elisabeth, 42, was set to become a director after selling her Shine Group TV production outfit to News Corp. for $673 million in February.

“Rupert Murdoch controls the votes of the company through the Class B shares,” Elson said in an interview. “He can just replace them if he wants. They may do something, but it will be temporary. Maybe he becomes chairman, but this is still his company and he can do what he wants. When he controls the stock, he controls the board.”

To contact the reporters on this story: Carol Hymowitz in New York at chymowitz1@bloomberg.net; Jeffrey McCracken in New York at jmccracken3@bloomberg.net; Amy Thomson in London at athomson6@bloomberg.net

To contact the editors responsible for this story: Cesca Antonelli at fantonelli@bloomberg.net


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Wall Street Journal hits back over phone-hacking scandal

Wall Street Journal accuses Guardian and BBC of driving phone-hacking story for 'commercial and ideological motives'

By Ed Pilkington in New York


Monday 18 July 2011 04.52 BST

The Wall Street Journal has attempted to redirect the criticism that has been levelled against its owner, Rupert Murdoch, against the journalists who uncovered allegations of illegal phone-hacking at the News of the World.

In an angry, unsigned editorial, the paper accuses the Guardian and the BBC of driving the phone-hacking story for "commercial and ideological motives". It implies the Guardian did not have the right to make "lectures about journalistic standards" because of the newspaper's involvement in publishing the WikiLeaks embassy cables.

At the end of a weekend in which Murdoch and top News Corporation executives have made a round of apologies for the illegal behaviour of News of the World, the Wall Street Journal's editorial takes a strikingly opposing posture. It adopts a peevish tone, noting "the irony of so much moral outrage devoted to a single media company, when British tabloids have been known for decades for buying scoops and digging up dirt on the famous".

The investigative website ProPublica's disclosure in the Guardian that some members of the Bancroft family harboured regrets about selling the Journal to Murdoch is also criticised. The editorial ridicules ProPublica's reporting of the former owners' opinions as an act of "righteous hindsight".

The editorial writer runs to the defence of Les Hinton, the Journal's former publisher who resigned as chief executive of Dow Jones on Friday. Hinton is praised for presiding over four years of investment in the newspaper since Murdoch took it over in 2007.

"We shudder to think what the Journal would look like today without the sale to News Corp."

The editorial also accuses the Guardian and other unnamed publications of trying to smear News Corporation journalists, saying "they want their readers to believe, based on no evidence, that the tabloid excesses of one publication somehow tarnish thousands of other News Corp. journalists around the world". The editorial gives no evidence behind its own statement.

Members of Congress who have called for official inquiries into News Corporation affairs under the Foreign Corrupt Practices Act that prohibits US-based companies from engaging in bribery abroad also incur the Journal's wrath. The editorial dismisses Barbara Boxer, Peter King and other prominent politicians from both main parties who have asked for investigations as "the political mob".

The editorial provoked an instant outpouring of comment on Twitter, much of it unfavourable. As one tweet, by Jesse Elsinger, put it: "Best adj to use for this WSJ editorial: delusional, oedipal, sycophantic or craven

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Former Fox News producer claimed network’s ‘Brain Room’ led to phone hacking


By Stephen C. Webster

Monday, July 18th, 2011 -- 9:32 am

A former producer with Fox News claimed in a lengthy essay gaining new traction this week that the conservative television station has a "Brain Room" in its New York headquarters which enables employees to view private telephone records with ease.

Though published years ago, the allegations have returned to relevance in the wake of the phone hacking scandals that have rocked News Corporation to its very core, threatening to topple one of the world's largest and most powerful media conglomerates.

According to former Fox News executive Dan Cooper, whose gripes with his former employer run quite deep, Fox News chief Roger Ailes allegedly had him design the so-called "Brain Room" to facilitate counter-intelligence efforts and other "black ops."

In a lengthy 2008 diatribe said to have doubled as a book pitch, Cooper claimed his own phone records had been hacked by Fox News employees, who he says used them to pinpoint him as a source used by David Brock, who founded liberal watchdog group Media Matters.

"Ailes knew I had given Brock the interview," he wrote. "Certainly Brock didn't tell him. Of course. Fox News had gotten Brock's telephone records from the phone company, and my phone number was on the list. Deep in the bowels of 1211 Avenue of the Americas, News Corporation's New York headquarters, was what Roger called the Brain Room. Most people thought it was simply the research department of Fox News. But unlike virtually everybody else, because I had to design and build the Brain Room, I knew it also housed a counterintelligence and black ops office. So accessing phone records was easy pie."

That wasn't the last time word of Ailes's "Brain Room" surfaced: in a recent piece for Rolling Stone, journalist Tim Dickenson discusses Cooper's allegations too, focusing on the man Ailes allegedly picked to run the secretive office.

"Befitting his siege mentality, Ailes also housed his newsroom in a bunker," Dickenson wrote. "Reporters and producers at Fox News work in a vast, windowless expanse below street level, a gloomy space lined with video-editing suites along one wall and an endless cube farm along the other. In a separate facility on the same subterranean floor, Ailes created an in-house research unit – known at Fox News as the 'brain room' – that requires special security clearance to gain access. 'The brain room is where Willie Horton comes from,' says Cooper, who helped design its specs. 'It’s where the evil resides.'

TAKE ACTIONPetitions by Change.org|Get Widget|Start a Petition »"If that sounds paranoid, consider the man Ailes brought in to run the brain room: Scott Ehrlich, a top lieutenant from his political-­consulting firm. Ehrlich – referred to by some as 'Baby Rush' – had taken over the lead on Big Tobacco’s campaign to crush health care reform when Ailes signed on with CNBC."

While none of these claims have been substantiated, they seem increasingly plausible given the widening coverup of Murdoch's British hacking scandals, which have grown from the desk of just one allegedly "rogue" journalist to topple some of Murdoch's top deputies, including the former publisher of The Wall Street Journal and the chief of News International, which oversees News Corp.'s British newspapers.

Cooper's phone records as well would not be the first time Fox News or U.S. News Corp. employees have been accused of hacking. According to The New York Times, a New Jersey company called Floorgraphics accused News Corp. in 2009 of hacking into their password-protected computer systems to obtain proprietary information, then allegedly spreading "false, misleading and malicious information" about the firm, causing them to lose important contracts.

News Corp.'s response to the scandal was to buy Floorgraphics outright, after offering a $29.5 million settlement.

Cases like Floorgraphics' are hardly unique: in recent years, the Times noted, News Corp. has paid over $655 million in settlements and hush money to keep allegations of anti-competitive and illegal behavior under the rug.

The Federal Bureau of Investigation and the Department of Justice have launched their own investigations into whether News Corp. participated in the hacking of 9/11 victims or U.S. officials.

(H/T: The Nation)

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News of the World phone-hacking whistleblower found dead

Death of Sean Hoare – who was first named journalist to allege Andy Coulson knew of hacking – not being treated as suspicious

By Amelia Hill, James Robinson, Caroline Davies


Monday 18 July 2011 18.04 BST

Sean Hoare, the former News of the World showbiz reporter who was the first named journalist to allege Andy Coulson was aware of phone hacking by his staff, has been found dead, the Guardian has learned.

Hoare, who worked on the Sun and the News of the World with Coulson before being dismissed for drink and drugs problems, is said to have been found dead at his Watford home.

Hertfordshire police would not confirm his identity, but the force said in a statement: "At 10.40am today [Monday 18 July] police were called to Langley Road, Watford, following the concerns for the welfare of a man who lives at an address on the street. Upon police and ambulance arrival at a property, the body of a man was found. The man was pronounced dead at the scene shortly after.

"The death is currently being treated as unexplained, but not thought to be suspicious. Police investigations into this incident are ongoing."

Hoare first made his claims in a New York Times investigation into the phone-hacking allegations at the News of the World.

He told the newspaper that not only did Coulson know of the phone hacking, but that he actively encouraged his staff to intercept the phone calls of celebrities in the pursuit of exclusives.

In a subsequent interview with the BBC he alleged that he was personally asked by his then-editor, Coulson, to tap into phones. In an interview with the PM programme he said Coulson's insistence that he didn't know about the practice was "a lie, it is simply a lie".

At the time a Downing Street spokeswoman said Coulson totally and utterly denied the allegations and said he had "never condoned the use of phone hacking and nor do I have any recollection of incidences where phone hacking took place".

Sean Hoare, a one-time close friend of Coulson's, told the New York Times the two men first worked together at the Sun, where, Hoare said, he played tape recordings of hacked messages for Coulson. At the News of the World, Hoare said he continued to inform Coulson of his activities. Coulson "actively encouraged me to do it", Hoare said.

In September last year, he was interviewed under caution by police over his claims that the former Tory communications chief asked him to hack into phones when he was editor of the paper, but declined to make any comment.

Hoare returned to the spotlight last week, after he told the New York Times that reporters at the News of the World were able to use police technology to locate people using their mobile phone signals in exchange for payments to police officers.

He said journalists were able to use a technique called "pinging" which measured the distance between mobile handsets and a number of phone masts to pinpoint its location.

Hoare gave further details about the use of "pinging" to the Guardian last week. He described how reporters would ask a news desk executive to obtain the location of a target: "Within 15 to 30 minutes someone on the news desk would come back and say 'right that's where they are.'"

He said: "You'd just go to the news desk and they'd just come back to you. You don't ask any questions. You'd consider it a job done. The chain of command is one of absolute discipline and that's why I never bought into it, like with Andy saying he wasn't aware of it and all that. That's bollocks."

He said he would stand by everything he had told the New York Times about "pinging". "I don't know how often it happened. That would be wrong of me. But if I had access as a humble reporter … "

He admitted he had had problems with drink and drugs and had been in rehab. "But that's irrelevant," he said. "There's more to come. This is not going to go away."

Hoare named a private investigator who he said had links with the News of the World, adding: "He may want to talk now because I think what you'll find now is a lot of people are going to want to cover their arse."

Speaking to another Guardian journalist last week, Hoare repeatedly expressed the hope that the hacking scandal would lead to journalism in general being cleaned up and said he had decided to blow the whistle on the activities of some of his former News of the World colleagues with that aim in mind.

He also said he had been injured the previous weekend while taking down a marquee erected for a children's party. He said he had broken his nose and badly injured his foot when a relative accidentally struck him with a heavy pole from the marquee.

Hoare also emphasised that he was not making any money from telling his story. Hoare, who has been treated for drug and alcohol problems, reminisced about partying with former pop stars and said he missed the days when he was able to go out on the town.

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Troubles That Money Can’t Dispel

The New York Times

July 18, 2011


“Bury your mistakes,” Rupert Murdoch is fond of saying. But some mistakes don’t stay buried, no matter how much money you throw at them.

Time and again in the United States and elsewhere, Mr. Murdoch’s News Corporation has used blunt force spending to skate past judgment, agreeing to payments to settle legal cases and, undoubtedly more important, silence its critics. In the case of News America Marketing, its obscure but profitable in-store and newspaper insert marketing business, the News Corporation has paid out about $655 million to make embarrassing charges of corporate espionage and anticompetitive behavior go away.

That kind of strategy provides a useful window into the larger corporate culture at a company that is now engulfed by a wildfire burning out of control in London, sparked by the hacking of a murdered young girl’s phone and fed by a steady stream of revelations about seedy, unethical and sometimes criminal behavior at the company’s newspapers.

So far, 10 people have been arrested, including, on Sunday, Rebekah Brooks, the head of News International. Les Hinton, who ran News International before her and most recently was the head of Dow Jones, resigned on Friday. Now we are left to wonder whether Mr. Murdoch will be forced to make an Abraham-like sacrifice and abandon his son James, the former heir apparent.

The News Corporation may be hoping that it can get back to business now that some of the responsible parties have been held to account — and that people will see the incident as an aberrant byproduct of the world of British tabloids. But that seems like a stretch. The damage is likely to continue to mount, perhaps because the underlying pathology is hardly restricted to those who have taken the fall.

As Mark Lewis, the lawyer for the family of the murdered girl, Milly Dowler, said after Ms. Brooks resigned, “This is not just about one individual but about the culture of an organization.”

Well put. That organization has used strategic acumen to assemble a vast and lucrative string of media properties, but there is also a long history of rounded-off corners. It has skated on regulatory issues, treated an editorial oversight committee as if it were a potted plant (at The Wall Street Journal), and made common cause with restrictive governments (China) and suspect businesses — all in the relentless pursuit of More. In the process, Mr. Murdoch has always been frank in his impatience with the rules of others.

According to The Guardian, whose bulldog reporting pulled back the curtain on the phone-hacking scandal, the News Corporation paid out $1.6 million in 2009 to settle claims related to the scandal. While expedient, and inexpensive — the company still has gobs of money on hand — it was probably not a good strategy in the long run. If some of those cases had gone to trial, it would have had the effect of lancing the wound.

Litigation can have an annealing effect on companies, forcing them to re-examine the way they do business. But as it was, the full extent and villainy of the hacking was never known because the News Corporation paid serious money to make sure it stayed that way.

And the money the company reportedly paid out to hacking victims is chicken feed compared with what it has spent trying to paper over the tactics of News America in a series of lawsuits filed by smaller competitors in the United States.

In 2006 the state of Minnesota accused News America of engaging in unfair trade practices, and the company settled by agreeing to pay costs and not to falsely disparage its competitors.

In 2009, a federal case in New Jersey brought by a company called Floorgraphics went to trial, accusing News America of, wait for it, hacking its way into Floorgraphics’s password protected computer system.

The complaint summed up the ethos of News America nicely, saying it had “illegally accessed plaintiff’s computer system and obtained proprietary information” and “disseminated false, misleading and malicious information about the plaintiff.”

The complaint stated that the breach was traced to an I.P. address registered to News America and that after the break-in, Floorgraphics lost contracts from Safeway, Winn-Dixie and Piggly Wiggly.

Much of the lawsuit was based on the testimony of Robert Emmel, a former News America executive who had become a whistle-blower. After a few days of testimony, the News Corporation had heard enough. It settled with Floorgraphics for $29.5 million and then, days later, bought it, even though it reportedly had sales of less than $1 million.

But the problems continued, and keeping a lid on News America turned out to be a busy and expensive exercise. At the beginning of this year, it paid out $125 million to Insignia Systems to settle allegations of anticompetitive behavior and violations of antitrust laws. And in the most costly payout, it spent half a billion dollars in 2010 on another settlement, just days before the case was scheduled to go to trial. The plaintiff, Valassis Communications, had already won a $300 million verdict in Michigan, but dropped the lawsuit in exchange for $500 million and an agreement to cooperate on certain ventures going forward.

The News Corporation is a very large, well-capitalized company, but that single payout to Valassis represented one-fifth of the company’s net income in 2010 and matched the earnings of the entire newspaper and information division that News America was a part of.

Because consumers (and journalists) don’t much care who owns the coupon machine in the snack aisle, the cases have not received much attention. But that doesn’t mean that they aren’t a useful window into the broader culture at the News Corporation.

News America was led by Paul V. Carlucci, who, according to Forbes, used to show the sales staff the scene in “The Untouchables” in which Al Capone beats a man to death with a baseball bat. Mr. Emmel testified that Mr. Carlucci was clear about the guiding corporate philosophy.

According to Mr. Emmel’s testimony, Mr. Carlucci said that if there were employees uncomfortable with the company’s philosophy — “bed-wetting liberals in particular was the description he used” Mr. Emmel testified — then he could arrange to have those employees “outplaced from the company.”

Clearly, given the size of the payouts, along with the evidence and testimony in the lawsuits, the News Corporation must have known it had another rogue on its hands, one who needed to be dealt with. After all, Mr. Carlucci, who became chairman and chief executive of News America in 1997, had overseen a division that had drawn the scrutiny of government investigators and set off lawsuits that chipped away at the bottom line.

And while Mr. Murdoch might reasonably maintain that he did not have knowledge of the culture of permission created by Mr. Hinton and Ms. Brooks, by now he has 655 million reasons to know that Mr. Carlucci colored outside the lines.

So what became of him? Mr. Carlucci, as it happens, became the publisher of The New York Post in 2005 and continues to serve as head of News America, which doesn’t exactly square with Mr. Murdoch’s recently stated desire to “absolutely establish our integrity in the eyes of the public.”

A representative for the News Corporation did not respond to a request for comment.

Even as the flames of the scandal begin to edge closer to Mr. Murdoch’s door, anybody betting against his business survival will most likely come away disappointed. He has been in deep trouble before and not only survived, but prospered. The News Corporation’s reputation may be under water, but the company itself is very liquid, with $11.8 billion in cash on hand and more than $2.5 billion of annual free cash flow.

Still, money will fix a lot of things, but not everything. When you throw money onto a burning fire, it becomes fuel and nothing more.

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IPCC to probe four senior officers

The Independent

Monday, 18 July 2011

The police watchdog has been asked to investigate four former and serving senior Metropolitan Police officers over their handling of the phone-hacking scandal.

This includes an allegation that former assistant commissioner John Yates "inappropriately" secured a Scotland Yard job for the daughter of hacking suspect Neil Wallis, a source said.

The conduct of ex-commissioner Sir Paul Stephenson will also be examined. Both he and Mr Yates announced their resignations after coming under intense pressure as the hacking scandal widened.

Five separate issues have been referred by the Metropolitan Police Authority, which oversees Scotland Yard, to the Independent Police Complaints Commission (IPCC).

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News of the World phone-hacking whistleblower found dead

Death of Sean Hoare – who was first named journalist to allege Andy Coulson knew of hacking – not being treated as suspicious

Yes, the police already say that the death is not suspicious. There is nothing to see here.

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News of the World phone-hacking whistleblower found dead

Death of Sean Hoare – who was first named journalist to allege Andy Coulson knew of hacking – not being treated as suspicious

Yes, the police already say that the death is not suspicious. There is nothing to see here.

As with the JFK assassination, the witnesses are beginning to die. Sean Hoare was only in his mid-40s.

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Police examine bag found in bin near Rebekah Brooks's home

Former NI chief executive's husband denies bag – containing computer, paperwork and phone – belonged to his wife

By Amelia Hill


Monday 18 July 2011 20.54 BST

Detectives are examining a computer, paperwork and a phone found in a bin near the riverside London home of Rebekah Brooks, the former chief executive of News International.

The Guardian has learned that a bag containing the items was found in an underground car park in the Design Centre at the exclusive Chelsea Harbour development on Monday afternoon.

The car park, under a shopping centre, is yards from the gated apartment block where Brooks lives with her husband, a former racehorse trainer and close friend of the prime minister David Cameron.

It is understood the bag was handed into security at around 3pm and that shortly afterwards, Brooks's husband, Charlie, arrived and tried to reclaim it. He was unable to prove the bag was his and the security guard refused to release it.

Instead, it is understood that the security guard called the police. In less than half an hour, two marked police cars and an unmarked forensics car are said to have arrived at the scene.

Police are now examining CCTV footage taken in the car park to uncover who dropped the bag. Initial suspicions that there had been a break in at the Brooks' flat have been dismissed.

David Wilson, Charlie Brooks's official spokesman, told the Guardian that Charlie Brooks denies that the bag belonged to his wife. "Charlie has a bag which contains a laptop and papers which were private to him," said Wilson.

"They were nothing to do with Rebekah or the [phone-hacking] case."

Wilson said Charlie Brooks had left the bag with a friend who was returning it, but dropped it in the wrong part of the garage. When asked how the bag ended up in a bin he replied: "The suggestion is that a cleaner thought it was rubbish and put it in the bin." Wilson added: "Charlie was looking for it together with a couple of the building staff.

"Charlie was told it had gone to security, by which stage they [security] had already called the police to say they had found something.

"The police took it away. Charlie's lawyers got in touch with the police to say they could take a look at the computer but they'd see there was nothing relevant to them on it. He's expecting the stuff back forthwith."

Rebekah Brooks was arrested on Sunday under suspicion of conspiring to intercept communications, and of corrupting police officers. She is due to appear before the Commons culture, media and sport select committee today on Tuesday afternoon.

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Murdoch Aides Long Tried to Blunt Scandal Over Hacking

The New York Times


July 19, 2011

LONDON — Two days before it emerged that The News of the World had hacked the cellphone of a murdered schoolgirl, igniting a scandal that has shaken Rupert Murdoch’s media empire, his son James told friends that he thought the worst of the troubles were behind him. And he was confident that News Corporation’s $12 billion bid for the British satellite company British Sky Broadcasting would go through, according to a person present.

Now, with their most trusted lieutenant, Rebekah Brooks, arrested on suspicion of phone hacking and paying police for information, the broadcasting bid abandoned, the 168-year-old News of the World shuttered, and nine others arrested, Rupert and James Murdoch are scheduled to face an enraged British Parliament on Tuesday.

It is a spectacle that Rupert Murdoch’s closest associates had spent years trying to avoid.

Interviews with dozens of current and former News Corporation employees and others involved in the multiple hacking inquiries provide an inside view of how a small group of executives pursued strategies for years that had the effect of obscuring the extent of wrongdoing in the newsroom of Britain’s best-selling tabloid. And once the hacking scandal escalated, they scrambled in vain to quarantine the damage.

Evidence indicating that The News of the World paid police for information was not handed over to the authorities for four years. Its parent company paid hefty sums to those who threatened legal action, on condition of silence. The tabloid continued to pay reporters and editors whose knowledge could prove embarrassing even after they were fired or arrested for hacking. A key editor’s computer equipment was destroyed, and e-mail evidence was lost. Internal advice to accept responsibility was ignored, former executives said. John Whittingdale, a Conservative member of Parliament who is the chairman of the committee that will question the Murdochs, said they need to come clean on the depth of the misdeeds, who authorized them and who knew what, when.

“Parliament was misled,” he said. “It will be a lengthy and detailed discussion.”

Mr. Murdoch has indicated he wants to cooperate.

“We think it’s important to absolutely establish our integrity in the eyes of the public,” he said last week. “It’s best just to be as transparent as possible.”

Ms. Brooks’s representative, David Wilson, said she maintained her innocence and looked forward to clearing her name, but declined to answer specific questions.

As a trickle of revelations has become a torrent, the company switched from containment to crisis mode. Ms. Brooks and others first made the case, widely believed to be true, that other newspapers had also hacked phones and sought to dig up evidence to prove it, interviews show. At a private meeting, Rupert Murdoch warned Paul Dacre, the editor of the rival Daily Mail newspaper and one of the most powerful men on Fleet Street, that “we are not going to be only bad dog on the street,” according to an account that Mr. Dacre gave to his management team. Mr. Murdoch’s spokesman did not respond to questions about his private conversations.

Former company executives and political aides assert that News International executives carried out a campaign of selective leaks implicating previous management and the police. Company officials deny that. The Metropolitan Police responded with a statement alleging a “deliberate campaign to undermine the investigation into the alleged payments by corrupt journalists to corrupt police officers.”

Mr. Murdoch was attending a conference in Sun Valley, Idaho, in early July when it became clear that the latest eruption of the hacking scandal was not, as he first thought, a passing problem. According to a person briefed on the conversation, he proposed to one senior executive that he “fly commercial to London,” so he might be seen as man of the people. He was told that would hardly do the trick, and he arrived on a Gulfstream G550 private jet.

Inquiries on Several Fronts

The storm Mr. Murdoch flew into had been brewing since 2006, when the tabloid’s royal reporter and a private investigator were prosecuted for hacking into the messages of the royal household staff in search of juicy news exclusives. For years afterward, company executives publicly insisted that the hacking was limited to that one “rogue reporter.”

Andy Coulson resigned as editor of The News of the World after the prosecution, but said he knew nothing. “If you’re talking about illegal tapping by a private investigator,” Rupert Murdoch declared in February 2007, “that is not part of our culture anywhere in the world, least of all in Britain.”

But it turns out that almost from the beginning, executives of News International, the British subsidiary that owns the tabloid, had access to information indicating other reporters were also engaged in the practice.

The information came from thousands of pages of records containing names of thousands of possible hacking targets that Scotland Yard seized during the royal hacking case from the home of the private investigator, Glenn Mulcaire, who worked for the tabloid. While the police largely limited their investigation to the royals, lawyers representing suspected victims of hacking fought for access to Mr. Mulcaire’s records and made them available to the tabloid executives during the litigation.

In the initial cases, News International saw documents naming other journalists, according to details of those cases obtained by The Times. Notes in Mr. Mulcaire’s files contain the names “Ian” and “Neville,” apparent references to the news editor, Ian Edmondson, and the chief reporter, Neville Thurlbeck.

James Murdoch, who oversees Europe and Asia operations for News Corporation, signed off on a £700,000 settlement with Gordon Taylor, a soccer union boss who was first to sue. One condition of the payment was confidentiality.

This month, James Murdoch acknowledged he was wrong to settle the suit, saying he did not “have a complete picture of the case” at the time.

Ms. Brooks personally persuaded Max Clifford, a celebrity publicist, to drop his case in return for even more compensation, Mr. Clifford said. He was paid to provide story tips to the paper — a deal he said totaled £1 million.

Beyond Mr. Mulcaire’s files, another likely source of information about hacking by The News of the World are its internal e-mails.

Even as the company faced a flood of claims over the last several years, News International has acknowledged that it did not take any steps to preserve e-mails that might contain evidence of hacking until late last fall. When The News of the World moved offices late last year, the computer used by Mr. Edmondson was destroyed in what the company describes as a standard procedure.

The company asserted in court that a vast amount of its e-mails from 2005 and 2006 — believed to be the height of the hacking activity — had been lost. Company officials blamed the erasures on bungling, not conspiracy.

News International has subsequently acknowledged that some messagesmight be recoverable on backup disks, and the police are trying to recover that information now, said Tom Watson, a Labour Party member of Parliament. Last year, a forensic computer specialist the company hired to help it comply with a court order to turn over documents made a surprising discovery: three e-mails sent to Mr. Edmondson containing PIN codes that could allow access to voice mail, as well as names and telephone numbers, one official said.

The paper fired Mr. Edmonson and turned over the e-mails to the police. That prompted the new Scotland Yard inquiry into hacking, according to its head, Sue Akers. Mr. Edmondson referred questions to his lawyer, who did not respond.

In April, the police arrested Mr. Edmondson, along with Mr. Thurlbeck. A few days later, News International issued a blanket apology, saying: “It is now apparent that our previous inquiries failed to uncover important evidence.”

News International has for years said a 2007 internal investigation showed that hacking was not widespread, but recent interviews with company officials indicate that the inquiry had a different purpose. It was aimed at defending the company from a lawsuit filed by Clive Goodman, the paper’s royal reporter who had been fired for hacking. He claimed that the dismissal was unfair since others were hacking as well, according to two company officials with direct knowledge.

Colin Myler, who succeeded Mr. Coulson as editor of The News of the World, told Parliament in 2007 that News International had turned over as many as 2,500 e-mails to the law firm of Harbottle & Lewis, which the company had retained in the matter. In a letter to Parliament at the time, the firm said it did not find anything in the e-mails linking hacking to three top editors — Andy Coulson, Neil Wallis or Mr. Edmondson.

But a company official speaking on condition of anonymity said that the 2,500 e-mails given to the law firm related only to Mr. Goodman and represented only a small portion of the company’s e-mail traffic.

Since Scotland Yard began its new investigation late last year, with access to more internal documents, all three of the editors, who are no longer at the paper, have been arrested.

Two company officials said the 2007 internal inquiry was in fact overseen by Les Hinton, then executive chairman of News International and who resigned Friday as chief executive of Dow Jones. Mr. Hinton told Parliament in 2007 that Mr. Myler “went through thousands of e-mails.” But Mr. Myler was not given direct access to the e-mails, the company officials said. Mr. Hinton did not respond to a message, but in a statement announcing his resignation, he said he “was ignorant of what apparently happened.”

While the e-mails reviewed for the internal inquiry in 2007 showed no direct evidence of hacking, according to three company officials they did contain suggestions that Mr. Coulson may have authorized payments to police for information. Yet News International turned over those documents to the police in recent months, prompting yet another investigation, this one into possible police bribery.

It is not clear who at News International saw the e-mails in question, nor whether the law firm flagged them. The firm, citing client confidentiality obligations, declined to comment, as did News Corporation.

More recently, as lawsuits and arrests mounted, dissension grew inside News International, interviews show.

After Mr. Edmondson was fired and arrested, Ms. Brooks pressed to pay him a monthly stipend, according to a person with knowledge of the transaction. After an internal disagreement, the payments were moved from the newsroom budget to News International’s. The company put other journalists on paid leave after their arrests, reasoning that they were innocent until proven guilty, a company spokesperson confirmed.

By the middle of last year, News International’s lawyers and some executives were urging that the company accept some responsibility, said two officials with direct knowledge. Ms. Brooks disagreed, according to three people who described the internal debate. “Her behavior all along has been resist, resist, resist,” said one company official.

Scandal Erupts

Over the last several months, Ms. Brooks spearheaded a strategy that seemed designed to spread the blame across Fleet Street, interviews show. Several former News of the World journalists said that she asked them to dig up evidence of hacking. One said in an interview that Ms. Brooks’s target was not her own newspapers, but her rivals.

Mr. Dacre, The Daily Mail editor, told his senior managers that he had received several reports from businesspeople, soccer stars and public relations agencies that the News International executives Will Lewis and Simon Greenberg had encouraged them to investigate whether their phones had been hacked by Daily Mail newspapers . “They thought it was unfair that all the focus was on The News of the World,” said one News International official with knowledge of the effort. The two men have told colleagues they did not make such calls, but two company officials disputed that.

Mr. Dacre confronted Ms. Brooks over breakfast at the plush Brown’s hotel. “You are trying to tear down the entire industry,” Mr. Dacre told her, according to an account he relayed to his management team.

Ms. Brooks, whose tenacity is legendary, was not deterred. At a dinner party, Lady Claudia Rothermere, the wife of the billionaire owner of The Daily Mail, overheard Ms. Brooks saying that The Mail was just as culpable as The News of the World. “We didn’t break the law,” Lady Rothermere said, according to two sources with knowledge of the exchange. Ms. Brooks asked who Lady Rothermere thought she was, “Mother Teresa?”

The scandal that smoldered for years ignited this month with news reports that the tabloid had hacked into the messages of Milly Dowler, a missing 13-year-old girl who was subsequently discovered murdered. Ms. Brooks, who was News of the World’s editor during the Dowler hacking, issued an apology, saying that she would be appalled “if the accusations are true.”

In the last two weeks, a series of leaks landed in other British news media that appeared intended to shift blame from News International’s current leadership and onto Mr. Coulson and the Metropolitan Police. According to political aides and News Corporation executives, the leaks most likely came from within the company.

Leaks to The Sunday Times, the BBC, and to outlets like Mr. Greenberg’s former employer, The London Evening Standard, gave details of Mr. Coulson’s alleged payments to the police and blamed previous News International management.

Mr. Greenberg did not respond directly to messages seeking comment. But a News International spokeswoman referred reporters to a statement from Ms. Akers, the head of the police investigation, praising him and Mr. Lewis for their cooperation with the police.

The Metropolitan Police said it was “extremely concerned” that the release of selected information “known by a small number of people” present at meetings between News International and the police “could have a significant impact on the corruption investigation.”

Late last week, Rupert Murdoch told The Wall Street Journal that News Corporation had handled the situation “extremely well in every way possible,” except for a few “minor mistakes.”

This weekend, as Mr. Murdoch was coached to face Parliament on Tuesday by a team of lawyers and public relations experts, a full-page advertisement from News Corporation appeared in every major British newspaper. “We are sorry,” it said.

Don Van Natta Jr. contributed reporting from London.

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News Corp faces global investigation into bribery

Pressure mounting in US for a full-scale inquiry into News Corporation under the Foreign Corrupt Practices Act

By Ed Pilkington and Dominic Rushe in New York


Monday 18 July 2011 19.18 BST

News Corporation faces a global investigation of all its businesses to ascertain whether they engaged in the same acts of bribery revealed to have taken place in the UK between News of the World reporters and police.

With pressure mounting in the US for the launch of a full-blooded inquiry into News Corporation under the Foreign Corrupt Practices Act (FCPA), the daunting consequences of such a move are becoming evident. Mike Koehler, a law professor at Butler University who is an expert in the act, said a costly and expensive worldwide investigation into possible bribery activities on the part of the company's subsidiaries in America, Australia, Europe, India and China was now almost inevitable.

"Once the US authorities have started investigating the UK phone scandal, their next question is where else?" he said.

A full-scale FCPA investigation could also see News Corporation forced to hand over to US authorities its most sensitive legal documents, even those covered by lawyer-client privilege. US investigators have the right to call for a waiver to the privilege in order to obtain key documents including witness statements and all legal advice given to the company.

The US attorney general, Eric Holder, has confirmed that a preliminary investigation is under way into News Corporation's activities.

Several members of Congress have called on the justice department to launch investigations under the FCPA and anti-phone-hacking legislation, and Holder said he was "progressing in that regard using the appropriate federal agencies in the United States".

It is too early in the proceedings to know precisely in which direction the justice department will take its investigation, or possibly multiple investigations. A justice department spokesman said: "Any time we see evidence of wrongdoing, we take appropriate action. The department has received letters from several members of Congress regarding allegations related to News Corp and we are reviewing those."

Experts in US company law believe it is increasingly likely that an FCPA inquiry will now follow. The law was introduced in the 1970s to penalise US-based companies from profiting from the spoils of bribery and corruption in other countries.

Brad Simon, a white-collar defence lawyer with Simon and Partners who has represented several FCPA defendants, said the spate of resignations in the UK, including those of two of the most senior police officers in the country, would boost the case for an full-blown investigation.

"The US justice department traditionally responds to fast-breaking news developments and the fact that there have been resignations and arrests in the UK make it more likely than not that the US authorities will pursue this matter," he said.

In anticipation of any legal action, Rupert Murdoch has begun assembling a crack legal team to represent him before the US authorities, suggesting he is readying himself for a bitter legal battle in America as a result of the phone-hacking scandal.

At the centre of the team is Brendan Sullivan, one of America's most experienced lawyers, who during 40 years in litigation has acquired a reputation for taking on difficult and sensitive cases. He represented Oliver North, the US marine corps officer, in congressional hearings over the Iran-Contra affair.

At the time of the hearings in 1987, Sullivan was described by the Washington Post as "the legal equivalent of nuclear war". A fellow lawyer said: "He asks no quarter and gives no quarter."

Koehler said a full investigation would be likely to last for up to four years and cost News Corporation tens of millions of dollars. "The Department of Justice has a very sharp stick at its disposal," he said.

The US authorities can bring criminal charges against a firm they believe is not co-operating. Criminal charges were brought against accountant Arthur Andersen after the collapse of the energy firm Enron. The case in effect killed the accountancy firm.

Speculation has also focused on whether News Corporation employees have engaged in any phone hacking within the US. A US liberal campaigning group, ProtectOurElections.org, has put up a sum of $100,000 as a reward for any information leading to the arrest and conviction of "News Corp employees who hacked the phones of American citizens in the US, or bribed officials or others for information about Americans." The group promised to pass any hard evidence it received to the FBI.

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