Rupert Murdoch and the Corruption of the British Media

Douglas Caddy · August 16, 2011

Murdochs savaged in withering attack by their own lawyers

Harbottle & Lewis was criticised for its analysis of emails which allegedly contained 'obvious' evidence of criminality

The Independent

By Cahal Milmo, Chief Reporter

Wednesday, 17 August 2011

Rupert Murdoch's own lawyers launched an extraordinary attack on him and his son yesterday by accusing News International of misleadingly using their advice to give his company a clean bill of health on phone hacking.

Harbottle & Lewis, which has been criticised for its examination of NI emails which allegedly contained "blindingly obvious" evidence of criminality, turned on James Murdoch by saying it was "hard to credit" his explanation to MPs that the law firm's findings justified its claim that phone hacking had been fully investigated at the News of the World.

The blue-chip law firm was publicly accused by Rupert Murdoch of having made a "major mistake" when it said it could find no proof of wrongdoing beyond a single "rogue reporter" when it was asked to conduct an internal review.

In its first public comment on its role in the hacking scandal, the law firm said in evidence to the Commons media select committee that it had in fact been given a very narrow remit when it was approached by NI in 2007 to examine 300 internal emails from six NOTW executives for evidence that illegal voicemail interception went beyond disgraced royal editor Clive Goodman.

A subsequent letter from Harbottle & Lewis, which stated it had found no "reasonable evidence" that any of the executives had known about phone hacking, was provided to MPs in 2009 as part of NI's claims that its internal inquiries into the "dark arts" of newsgathering had been exhaustive.

In his evidence to MPs last month, James Murdoch said the company had relied on its external lawyers' findings when it put forward its now-abandoned defence that voicemail interception was restricted to a single "rogue reporter" in the shape of Mr Goodman. But the law firm, released from a duty of client confidentiality last month, said yesterday NI's use of its advice relating to an unfair dismissal claim by Mr Goodman was "self-serving".

In its letter to the committee, Harbottle & Lewis said: "There was absolutely no question of the firm being asked to provide News International with a clean bill of health which it could deploy years later in wholly different contexts for wholly different purposes."

In an interview with his own Wall Street Journal in July, Rupert Murdoch said Harbottle & Lewis had been taken on to find out "what the hell was going on" at the NOTW and the law firm had made a "major mistake" in its findings. Harbottle & Lewis said this assertion by the media mogul was "inaccurate and misleading".

In its support, Jon Chapman, NI's former director of legal affairs, in a letter to the select committee, said: "To my knowledge, the 2007 email review was never intended to be general internal inquiry or investigation into the issue of voicemail interception at NOTW. To characterise and hold it out as such now... seems to be very misleading."

John Simkin · August 17, 2011

James Robinson guardian.co.uk, Tuesday 16 August 2011 21.14 BST

http://www.guardian.co.uk/media/2011/aug/16/phone-hacking-letters-denials-evasion

The truth about phone hacking at the News of the World has long been shrouded in a fog of half-truths, corporate denials and misleading answers to parliament. But the letters sent to MPs by News Corp's deputy chief operating officer, James Murdoch, two of his former executives, and a leading law firm, potentially shed some light on who knew what about the practice, and when.

They also raised the stakes for those who allegedly participated in what has become one of the biggest corporate cover-ups in recent times. The key players in the phone-hacking saga, including former News of the World editors Colin Myler and Andy Coulson, the paper's ex-lawyer Tom Crone, and Les Hinton, who chaired News International until 2008, are now engaged in a Mexican standoff.

Each is in effect accusing some or all of their former colleagues of misleading parliament, the industry regulator and the public about how widespread the activity was. By the time the truth is established, some of them are likely to be facing substantial jail terms.

The most incendiary of the letters, dating from 2007, was written by Clive Goodman, the paper's former royal editor, who was once close friends with Coulson. The then NoW editor fired Goodman when he pleaded guilty four years ago to hacking into mobile phones belonging to members of the royal household.

Goodman mounted an appeal against his dismissal. In a letter written in March 2007, and handed to MPs by the law firm Harbottle & Lewis – beware a lawyer scorned – Goodman claimed Coulson was aware that phone hacking took place. He said the practice had been openly discussed in editorial conference until Coulson himself barred those who attended from mentioning it.

As smoking guns go, this one is still hot: there is a devastating line in every paragraph. For years, News International has insisted it had one rotten apple in the newsroom: Goodman. Now it appears that all along it has been sitting on a letter which explicitly claims that the entire newsroom was rotten. The letter also alleges that Crone and Coulson offered Goodman his job back if he did not implicate the paper or its staff in his mitigation plea. It is true that Goodman may be a man with an axe to grind, but News International, interestingly, did not try to claim that he could not be trusted.

Even more tellingly, a second copy of the Goodman letter, sent to the committee by News International itself, was censored by the company so that Goodman's reference to discussion about hacking in editorial conference was removed.

Goodman's claims, if true, undermine repeated denials from Coulson, who told the same MPs in 2009 that he was not aware of the practice.

More seriously, Coulson repeated his assertion to a Scottish court during the trial of Tommy Sheridan in December 2010 after he was called as a witness and cross-examined by Sheridan himself. The former SMP's lawyer, Aamer Anwar, has called for Coulson to be jailed. "If it is shown that people lied in the Glasgow high court they should go to prison," he said. The typical penalty for perjury is years rather than months in jail (the maximum sentence is 10 years), although Coulson denies all knowledge of the phone hacking, as he always has done.

There are serious implications for David Cameron. The more trouble Coulson is in, the worse his misjudgment in hiring him as his director of communications looks. And the more negligent his failure to check him out. Did the Tories even ask Hinton about him when they hired him? Did they know of the Goodman letter? Surely if he had been vetted for No10, someone would have spoken to Goodman?

There are also questions for James Murdoch to answer. Is it conceivable that he – an obsessive for detail – did not know about the Goodman letter?

And of course that wasn't the only smoking gun doing the rounds. In their own letters Crone and Myler repeated their assertions last month that Murdoch was wrong to tell MPs in July that he had not been told about the existence of an email that suggested phone-hacking was not limited to a single NoW journalist. An email sent by a reporter at the paper had been retrieved from News International by lawyers acting for the PFA chief executive, Gordon Taylor. It contained the text of voicemails left on Taylor's phone and was marked "for Neville". There was only one "Neville" working at the paper at the time – investigations editor Neville Thurlbeck. Asked by the culture committee last month: "Did you see or were you made aware of the 'for Neville' email?" Murdoch replied: "No. I was not aware of that at the time."

In his letter, Crone states clearly: "Since the 'for Neville' document was the sole reason for settling [the Taylor case] … I have no doubt that I informed Mr Murdoch of its existence, of what it was and where it came from. I do not recall if I produced it or showed him a copy." Myler confirmed in his own letter that Crone's recollection was correct – according to Myler, Murdoch knew about the email prior to authorising a £700,000 pay-off to Taylor to settle his hacking claim. As John Whittingdale, the Tory MP who chairs the culture committee, pointed out, the accounts given by Murdoch and by Crone and Myler are contradictory. "They can't both be right." This is crucial because if it can be shown the company authorised the £700,000 payment to Taylor in an effort to conceal the fact that a second News of the World reporter hacked into phones, it could also prompt criminal charges. Paying someone for not disclosing evidence of an arrestable offence may be an offence under the Criminal Law Act, according to legal sources.

Myler and Crone also face further questions about why they told the select committee in 2009 that a trawl through "thousands" of internal News International emails the previous year had found no evidence that phone hacking was not restricted to a single reporter. If they were aware of the "for Neville" email, as they now concede they were, they must have suspected this wasn't the case. Myler and Crone will both be recalled to give evidence in person, probably in the autumn.

It was Harbottle & Lewis, the law firm hired by News International in 2007 to examine the claims made by Goodman in his appeal against his dismissal, who sent the Goodman letter to MPs. But even it has questions to answer.

It has represented members of the royal family and questions have been raised about whether it might have had a conflict of interest when it was asked by Hinton to examine emails sent to and received by Goodman, who had just been found guilty of intercepting messages left on phones belonging to the royal household.

Harbottle & Lewis delivered a blow to News International when it refuted suggestions made by James Murdoch last month that it had been asked to give News International a "clean bill of health" in 2007 by examining internal emails. The man who took charge of that investigation, Hinton, has also been asked by MPs whether he would like to "clarify" the evidence he has given. So too have former News of the World managing editor Stuart Kuttner, and Rebekah Brooks, another ex-editor who was chief executive of News International until her resignation last month. There are plenty more questions – and answers – still to come.

Douglas Caddy · August 17, 2011

John Yates faces inquiry into links with former News of the World executive

IPCC to scrutinise claims former Met police assistant commissioner secured job for Neil Wallis's daughter

By Josh Halliday and Sandra Laville

guardian.co.uk,

Wednesday 17 August 2011 14.20 BST

The police watchdog said on Wednesday it was opening an independent inquiry into allegations John Yates might have secured a job for the daughter of a former News of the World executive.

But the Independent Police Complaints Commission effectively cleared Yates, Sir Paul Stephenson, the former commissioner, Peter Clarke, former deputy assistant commissioner, and Andy Hayman, former assistant commissioner, of carrying out any conduct that breached police disciplinary codes over their roles in the original phone-hacking inquiry and its review by Yates in 2009.

Deborah Glass, deputy chair of the IPCC, said a clear distinction had to be made between what was a "recordable conduct matter" – conduct that was either criminal or amounted to a disciplinary offence – and the public concerns over phone hacking which would be investigated during the Leveson inquiry.

She said however there were "serious issues that need to be scrutinised" about the links between top police officers and the media. The only allegation referred to the IPCC by the Metropolitan Police Authority which it will investigate fully and independently, she said, was the claim Yates secured a job at Scotland Yard for the daughter of Neil Wallis.

Yates said in a statement on Wednesday: "I strongly deny any wrongdoing and I am completely confident that I will be exonerated. I have been entirely open about this matter and I will cooperate fully with the investigation which I hope will be conducted swiftly."

He said he was pleased the IPCC had found that an inquiry into him was not required in relation to his involvement in the phone-hacking review.

The IPCC said in the case of Yates's role in reviewing the original hacking inquiry his alleged conduct was not a matter which it was within their remit to investigate as it did not amount to recordable conduct.

Glass said there would be no further investigation by the watchdog into the allegation. Yates had been questioned about this "over many hours in six separate parliamentary sessions" and she said "it is difficult to see what further investigation would achieve".

She added that the current investigation which started in January 2011 made any further IPCC inquiry unnecessary.

"We would agree that he made a poor decision in 2009. He himself has acknowledged that... he made a poor decision for which he has now taken responsibility," she said.

The same was true of the allegations against Stephenson over his alleged oversight failure of Yates during his review in 2009 of the original hacking inquiry and his alleged reluctance to take responsibilty for it.

In a statement released on Wednesday, the IPCC said that Stephenson could not be said to have committed misconduct in public office "because one of his officers may have carried out a poor investigation".

In the case of Clarke, who was in charge of the original investigation into phone hacking, the IPCC said: "He has explained the parameters of the investigation, as well as the reasons why the huge volume of material seized at the time was not subject to analysis.

"Had a complaint been made about the original investigation, fairness would require any investigation to consider whether his decision to set narrow parameters was reasonable and proportionate in all the circumstances as they existed at the time, which included some 70 live operations relating to terrorist plots."

Glass said Hayman was not responsible for the original phone-hacking investigation although it was in his command.

She said: "Although not referred to us by the MPA, his social contacts with News International and subsequent employment by the Times have been criticised.

"While there are serious issues that need to be scrutinised about the extent of contact between senior police officers and the media, and particularly around hospitality, in the absence of any actual evidence of impropriety these are, in my view, for the inquiry to explore."

Stephenson said the outcome was what he expected. "I regret resources have had to be expended on this matter," Stephenson added.

He criticised the IPCC for looking into his decision to accept hospitality – which they decided not to investigate further after their initial consideration.

"The IPCC's comments about my acceptance of assistance from a friend through my family unconnected with my professional life, of services form Champneys Medical Services which they chose to examine under their powers without any external referral does in my view fall a little short of full and proper context. However this is a matter for their judgment."

The prime minister, David Cameron, said during a visit to Cheshire on Wednesday, in relation to the phone-hacking scandal: "Clearly if I had known then all the things I know now, then obviously I would have taken different decisions."

Douglas Caddy · August 18, 2011

A life unravelled … whistleblower who incurred wrath of the Murdoch empire

Relentless legal pursuit of ex-News Corp employee likened to 'Rambo tactics'

By Ed Pilkington in New York

guardian.co.uk,

Wednesday 17 August 2011 19.09 BST

Five years ago Robert Emmel was enjoying the American dream. He lived in a detached house in a suburb of Atlanta, Georgia, drove a BMW, and earned $140,000 a year as an accounts director in a highly successful advertising company called News America Marketing.

Today, Emmel is described by his lawyers as destitute. Jobless and in debt, he was discharged from bankruptcy last year. He does occasional consultancy work that last month brought in $500, and this month, court documents show, will probably produce nothing. His wife's earnings raise monthly household income to about $3,000 – half their outgoings.

This is a cautionary tale about what can happen to someone who dares to become a corporate whistleblower. Or, more specifically, someone who incurs the wrath of News Corporation, the media empire owned by Rupert Murdoch, of which News America forms a part.

Emmel's lawyer, Philip Hilder, has had a ringside seat at the gradual unravelling of his client's life. A former federal prosecutor based in Houston, Texas, Hilder is well versed in whistleblower cases having represented Sherron Watkins, who helped uncover the Enron scandal. Hilder said: "News America has engaged in Rambo litigation tactics. They have a scorched earth policy, and it's taken a huge toll on him."

News Corp has devoted the efforts of up to 29 lawyers to pursuing Emmel personally, at a cost estimated at more than $2m. Emmel, by contrast, has relied on two lawyers, Hilder and Marc Garber in Atlanta, working for no pay since January 2009.

Attention has been focused on News Corporation's activities in the UK, where the News of the World phone-hacking scandal has led to the arrest of 10 people associated with the company. In the US, oversight of News Corp is gathering pace with the department of justice and the FBI looking into the company, while senators are considering launching committee hearings into News Corp practices.

One incident that US investigators are exploring is the hacking of a website run by one of News America's rivals, an instore advertising business called Floorgraphics. The firm discovered that its password-protected site had been breached from an IP address at News America's offices in Connecticut. News America has condemned the breach as a "violation of the standards of our company" but says it does not know how it happened.

Emmel was one of the main witnesses for Floorgraphics at a subsequent trial against his old company. He worked for News America for seven years from 1999 to 2006, turning whistleblower in his final year there. The company is the leading US provider of in-store advertising services, helping to bring products from firms such as Coca-Cola, Kraft and Nabisco to the attention of supermarket shoppers. Headed by Paul Carlucci, who now publishes Murdoch's tabloid the New York Post, it enjoys annual revenues of more than $1bn and has a 90% stranglehold on the market. News America also has a record of legal disputes with its commercial rivals, three of whom have launched lawsuits against it in recent years accusing the firm of using unlawful practices.

All three lawsuits – including the Floorgraphics one and cases initiated by Valassis and Insignia – were eventually settled, but not before News America agreed to pay an astounding $655m to end the disputes. Emmel acted as a whistleblower in all three cases. He gave two days of evidence in the Floorgraphics trial after which News America rapidly settled, and was also named in the Valassis and Insignia cases.

By 2006 Emmel said he was increasingly concerned about what he alleged were improper practices on the part of his employers. He alleged that News America was engaging in "criminal conduct against competitors" and using "deceptive and illegal business practices" to defraud its retailer customers out of money owed. He claimed he had "substantial oral and documentary evidence" to support his allegation that the company had defrauded its own customers, used anti-competitive techniques against rival companies, and fraudulently inflated its reported earnings unbeknown to its shareholders.

News America denies the allegations. In a statement, it said: "There have been three very public lawsuits about these matters and at no time during any of these legal proceedings was any evidence produced to support Mr Emmel's claims."

For a year before he was sacked in November 2006, Emmel began compiling documentary evidence that he suggested backed up the allegations, and posted it to public bodies and individuals including the US securities and exchange commission, two senators, two Senate committees and the New York attorney general.

It is not known what happened to Emmel's allegations within the regulatory bodies he approached. He posted one set of 55 pages of documents on 20 December 2006, shortly after he had been fired and a day before he signed a non-disclosure agreement with News America.

That set of documents went to Nicholas Podsiadly, an official in Washington then working as an investigative counsel at the Senate finance committee. At one point, court documents show, Podsiadly said the committee was considering referring the allegations to the justice department and the federal trade commission.

Podsiadly did not reply to a request for information. A spokeswoman for the finance committee said nothing would be done with any documents sent by Emmel until the litigation over them had ended.

Emmel today remains under a court-imposed injunction that forbids him from disclosing anything from these documents. "I cannot comment," he said.

News America learned of Emmel's whistleblowing activities after it had sacked him in a dispute over his timekeeping. It then unleashed its legal armoury against him. In April 2007 it filed a lawsuit accusing him of six violations relating to his disclosure of confidential information, pressing its case with more than 300 pleadings to the Georgia courts. The company said Emmel refused to return "tens of thousands of stolen documents" and added: "Initiating legal action was News America Marketing's only recourse to protect the company's private information."

Despite the tenacity with which it has pursued Emmel, News America has had very little satisfaction through the courts. In March 2009 the district court in Georgia threw out all of its claims against him, bar one – a claim of breach of contract relating to his posting of the 55 pages of documents the day before he signed a non-disclosure agreement. Even that count, however, has been overturned by the US appeal court, which ruled in Emmel's favour in June, although the court kept the non-disclosure injunction in place noting that a significant proportion of Emmel's legal fees had been paid by News America's competitors.

In 2009 the company made clear that it intended to go to trial to ask for $425,000 from Emmel to cover legal costs incurred in the breach of contract element of the lawsuit, as it was entitled to dothough the sum was way beyond his ability to pay. Emmel's lawyers say the move forced him into bankruptcy. News America then insisted on a deposition to extract financial information out of Emmel, a move that is allowable under the law but that astonished Emmel's bankruptcy lawyer, Danny Coleman, because he says there had been no suggestion from the authorities that anything about the bankruptcy was out of order. "In my view, that was an abuse of the legal system," he said. "They took the law to its extreme and they used it to harass my client and prolong his agony.

After months of work on the deposition, nothing irregular was found. Hilder said he was struck by an irony in the Emmel case. "Here is a company, News Corp, that is in the business of disseminating information to the public, and yet its subsidiary does everything in its power to silence him."

News America denies engaging in inappropriate litigation and insists that it only wants to protect commercially confidential information, adding that Emmel's lawyers were "once again attempting to distort the facts in this case". The company added it had "vigorously defended itself against Mr Emmel's charges against the company, all of which were dismissed by the court". It says the injunction does not prevent him from co-operating with any formal investigation into News America.

The idea that Emmel had been driven into destitution was "preposterous", it said, "given his legal fees – to the tune of $750,000 – were paid by two competitors to News America". Emmel's lawyers do not dispute that until 2009 he received legal fees from Floorgraphics and Insignia, but say that was consistent with his role as a whistleblower against his old company.

While legal proceedings continue, the injunction preventing Emmel from approaching corporate regulators remains in place. But the appeal court in June made one important proviso. Nothing in the injunction, it ruled, "prevents Emmel from complying with grand jury or court-issued subpoenas or from co-operating with law enforcement authorities in any formal investigations of News America".

Douglas Caddy · August 18, 2011

Former NOTW journalist arrested

The Independent

Thursday, 18 August 2011

Another former News of the World journalist was being questioned today by detectives investigating phone hacking.

The 38-year-old - reported to be ex-US editor James Desborough - was arrested on suspicion of conspiring to intercept communications after arriving by appointment at a south London police station, Scotland Yard said.

He becomes the 13th arrest of the fresh investigations into criminal activities at the Sunday tabloid.

Desborough, who joined the News of the World in 2005, moved to America in 2009 having won a British Press Award for a series of showbiz scoops.

A Scotland Yard spokesman said the suspect remains in custody over allegations of intercepting voicemails.

The arrest comes a day after allegations of misconduct against former Metropolitan Police commissioner Sir Paul Stephenson were dismissed by the Independent Police Complaints Commission (IPCC).

Scotland Yard's fresh investigation into phone hacking was launched in January.

A series of high-profile figures have been arrested, including former News International chief executive Rebekah Brooks and ex-Downing Street communications chief Andy Coulson.

The scandal has already caused the closure of the News of the World after 168 years and the resignation of Sir Paul and assistant commissioner John Yates.

Desborough, whose exclusives include TV host Fern Britton getting a gastric band fitted, was named as a suspect in a leak to the Guardian newspaper.

PA

Douglas Caddy · August 18, 2011

Phone hacking: News of the World Hollywood reporter is arrested

James Desborough is arrested by London police investigating UK hacking allegations

By Amelia Hill

guardian.co.uk,

Thursday 18 August 2011 11.12 BST

James Desborough, an award-winning reporter at the former News of the World newspaper, has been arrested by officers investigating the phone-hacking scandal.

Desborough was arrested on suspicion of conspiring to intercept communications, contrary to section 1 (1) of the Criminal Law Act 1977 after arriving at a south London police station on Thursday morning at 10.30am. He had arrived at the station by appointment for questioning about criminal activities at the paper.

The allegations are believed to relate to events prior to Desborough being promoted to be the newspaper's Los Angeles-based US editor in April 2009.

He was given the job less than a month after winning the British Press Award for showbusiness reporter of the year.

His move to the US makes his arrest, the 13th made by Operation Weeting, particularly significant. If Desborough was involved in hacking while in Britain, as police appear to believe he was, it raises the question of whether he practised those techniques in the US – and if so, whether he was the first and only News of the World journalist in the US to do so.

At the 2009 British Press Awards ceremony, Desborough was praised by judges for his series of "uncompromising scoops which mean no celebrity with secrets can sleep easy". He was presented with his award by Jon Snow, the respected Channel 4 journalist and anchorman.

Desborough continued to win plaudits after his move to America. Ian Halperin, a Hollywood author, described him as someone who "never gets his facts wrong. He's a rock solid reporter." Hollyscope, an online site, also praised Desborough for "seem[ing] to have information that not even close family members … know."

Desborough joined the News of the World in 2005 and broke stories including "Fern's big fat lie", which revealed that former This Morning host Fern Britton's dramatic weight loss was the result of having a gastric band fitted, not exercise and sensible eating as had been thought.

Desborough was writing for the News of the World up until it closed last month.

His final story for the online version of the paper was on 8 July, two days before it closed, claiming the new Duchess of Cambridge was to act in a Hollywood film.

Douglas Caddy · August 18, 2011

Phone hacking: Glenn Mulcaire sues News of the World publisher

Private investigator takes legal action against News International to force firm to pay his legal bills

By James Robinson

guardian.co.uk,

Thursday 18 August 2011 17.53 BST

Glenn Mulcaire, the private investigator at the centre of the News of the World phone-hacking affair, is suing the now defunct tabloid's publisher News International in an attempt to force the company to pay his legal bills.

Mulcaire's action comes after the company, part of Rupert Murdoch's News Corporation, announced on 20 July it would stop paying his legal costs with immediate effect.

It emerged earlier this week that News International has paid "approximately £246,000" to lawyers acting for Mulcaire.

He has issued a high court writ claiming News Group Newspapers, the News International subsidiary that published the News of the World until last month, has a contractual obligation to pay the legal bills he is running up fighting more than a dozen high court cases being brought by public figures. The company received the writ on Wednesday.

Mulcaire is named as a defendant in numerous cases, including those being fought by Steve Coogan and Labour MP Chris Bryant, along with News Group Newspapers.

It was Mulcaire who is alleged to have routinely hacked into messages left on mobile phones on the instructions of senior figures at the News of the World.

He has already served a jail sentence for illegally intercepting messages left on phones belonging to members of the royal household.

News International confirmed it had received the writ but had no further comment.

James Murdoch, who has managerial responsibility for News International as News Corp's deputy chief operating officer, told MPs on the Commons culture, media and sport select committee in July that he was surprised when he was told the company was meeting Mulcaire's legal costs and said he would end that arrangement.

Murdoch revealed in evidence provided to the culture select committee on Tuesday that News International had funded Mulcaire's legal bills to the tune of about £246,000.

Mulcaire was employed on a rolling 12-month contract by News International and it was reviewed on an annual basis. That was cited by the company as the reason it awarded him a payoff despite the fact he had been arrested for phone hacking in 2006, at which point his relationship with the company ended.

James Murdoch told MPs he was "very surprised" to learn the company was meeting the private investigator's legal costs.

Following Murdoch's 20 July comments, Mulcaire's solicitors Payne Hicks Beach wrote to News International to inform the company it was still legally liable to pay for a high court appeal he was fighting.

Mulcaire's appeal was against an order forcing him to identify who at the News of the World ordered him to hack into mobile phones

Douglas Caddy · August 18, 2011

Exclusive: News Corp execs think James Murdoch may leave

Reuters

By Peter Lauria

NEW YORK | Thu Aug 18, 2011 6:44pm EDT

NEW YORK (Reuters) - News Corp's senior management is starting to think about what the company might do if James Murdoch stepped aside, sources inside and close to the global media empire said.

With Rupert Murdoch's younger son under increasing pressure from the phone-hacking scandal enveloping the company, News Corp executives want to be prepared if he wants to "take a breather," one News Corp source said.

"The company is still trying to operate as if James isn't going anywhere," said another high-ranking insider. "But everyone is thinking about what will happen if he has to step aside."

Through a representative, Rupert Murdoch and News Corp senior management said it was "absolutely not true" the company was thinking about the possibility that James may step aside.

If James was pressured into leaving News Corp, two of the sources said the departure would not likely be permanent.

"Even if he did step out of the spotlight for a while, that wouldn't necessarily mean he wouldn't come back when things are quieter," said another source who asked not to be named because of a relationship with the family.

James, who is 38, is known for "doing his own thing", one News Corp executive noted. A tattooed, ear-pierced record label owner before becoming the last of Rupert's children to join the company, he now presents the image of a nattily dressed, conservative corporate executive.

"I'm waiting for the moment when he says, 'What the hell am I doing here, I need a breather,'" the source said.

"And I wouldn't be surprised if the people who are speaking to him and watching him aren't wondering if the time has come for him to drop the (corporate) act."

A third source close to the Murdoch family added, "There needs to be some kind of separation for James from this issue before he can run the company more broadly."

James Murdoch is News Corp's deputy chief operating officer and chief executive of News International, which oversees the company's European and Asian businesses.

Last week, during a conference call to discuss News Corp's earnings, Rupert Murdoch, who is 80, said in response to a question about any near-term succession that Chief Operating Officer Chase Carey "is my partner, and if anything happened to me I'm sure he'll get it immediately, if I went under a bus." He added: "But Chase and I have full confidence in James."

Three sources pointed to that comment as evidence that News Corp was at least considering life without James.

The sources asked not be identified because of the sensitive nature of the matter.

RELOCATING TO NEW YORK

News Corp remains insistent that James Murdoch will retain his current position and is the front runner to succeed his father in the long term.

Plans are still in place for James to relocate to New York early next year.

But the first News Corp insider characterized the move to New York as an attempt by the company to remove him from the line of fire in the UK, not as a logical step in his ascension.

The hacking scandal, which led to the closure of News Corp's News of the World newspaper, was thrust back into headlines on Monday after UK authorities publicized a letter by fired News of the World reporter Clive Goodman accusing senior executives of knowing about phone hacking by the paper.

The letter was written four years ago by Goodman as an appeal to News Corp's then head of human resources, Daniel Cloke, against his dismissal from the tabloid. Goodman had been fired after being accused of phone hacking.

Goodman, a former royal reporter at News of the World, said in the letter that the practice of hacking had been openly discussed until then-editor Andy Coulson banned any reference to it.

Until earlier this year, News of the World's parent company News International, a unit of News Corp, had maintained that Goodman was a "rogue reporter" acting on his own. Goodman spent four months in jail in 2007 for hacking.

James Murdoch, who took charge of News International shortly after Goodman and private detective Glenn Mulcaire went to jail, has repeatedly claimed that he only learned recently that phone hacking by the newspaper had gone beyond those two individuals.

On Thursday, however, James Desborough, a former Hollywood reporter for News of the World, was arrested on suspicion of phone-hacking, the 13th arrest made as part of the investigation in the scandal.

The Parliamentary committee overseeing the phone hacking investigation has said it plans to question additional News Corp executives next month, and there is speculation that James Murdoch will be called back to give additional testimony.

"Legally, it's clear this stuff has got to get sorted with him," said a third source involved with the company.

"His position does appear to be getting weaker," one investor in BSkyB where James is chairman, told Reuters, though he added that he was not aware of any institutional pressure for action to remove Murdoch from his role. News Corp was forced to drop its bid for full control of the satellite broadcaster after the scandal broke.

FAMILY TIES

Murdoch's children have moved in and out of the company at various times. Elisabeth Murdoch, Rupert's daughter, recently reemerged when News Corp bought her company, Shine Group, and her father has expressed his desire to bring eldest son Lachlan back into the company's fold. Lachlan, who once held the deputy COO position now held by James, left News Corp in 2005.

Two of the sources said that when Lachlan was in London a few weeks ago helping his father and brother prepare for their appearance in Parliament, Rupert again asked him if he would accept a position in the company.

Lachlan declined, the sources said.

"He's happy where he is," one of the sources said. Lachlan Murdoch owns an Australian investment firm called Illyria. He is also interim chief executive of Australian television company Ten Network Holdings.

One of the sources even thought the scandal could end up helping James in the long run. This source said that James was a forward-thinking executive with a lot of credibility in the business world, and that the strong performance of News Corp's Indian and German assets, along with BSkyB, Sky Italia and the Times newspaper's digital strategy, is owed to him.

"When he gets through this he will be a better executive and a better candidate for CEO. He will have been battle-tested like his father," the source said.

Ultimately, James' fate rests in the hands of his father.

"There's only one decision maker, of course, and he is often willing to hold his course against public opinion," said one of the sources close to the family, referring to Murdoch senior.

Though the Murdoch patriarch is loath to bow to public opinion, he has already been forced to sacrifice two of his closest executives, Les Hinton and Rebekah Brooks, as a result of the phone hacking scandal.

(Additional reporting by Yinka Adegoke and Jennifer Saba in New York, and Sinead Cruise in London; Editing by Toni Reinhold and Ted Kerr)

John Simkin · August 19, 2011

James Robinson guardian.co.uk, Thursday 18 August 2011 17.53

http://www.guardian.co.uk/media/2011/aug/18/phone-hacking-glenn-mulcaire

Glenn Mulcaire, the private investigator at the centre of the News of the World phone-hacking affair, is suing the now defunct tabloid's publisher News International in an attempt to force the company to pay his legal bills.

Mulcaire's action comes after the company, part of Rupert Murdoch's News Corporation, announced on 20 July it would stop paying his legal costs with immediate effect.

It emerged earlier this week that News International has paid "approximately £246,000" to lawyers acting for Mulcaire.

He has issued a high court writ claiming News Group Newspapers, the News International subsidiary that published the News of the World until last month, has a contractual obligation to pay the legal bills he is running up fighting more than a dozen high court cases being brought by public figures. The company received the writ on Wednesday.

Mulcaire is named as a defendant in numerous cases, including those being fought by actor Steve Coogan and Labour MP Chris Bryant, along with News Group Newspapers.