News Corp Chairman Rupert Murdoch is “not a fit person” to lead a major international company, UK lawmakers said, after his Britain unit misled Parliament about the extent of phone hacking at its News of the World tabloid.
Murdoch “turned a blind eye and exhibited willful blindness to what was going on in his companies and publications,” the House of Commons Culture, Media and Sport Committee said in a report published in London on Tuesday. “This culture, we consider, permeated from the top throughout the organisation and speaks volumes about the lack of effective corporate governance at News Corp.”
The report increases the chances that UK regulator Ofcom deems News Corp unfit to hold a broadcasting licence and could ask the New York-based company to reduce its 39 per cent stake in British Sky Broadcasting Group Plc. The phone-hacking scandal prompted News Corp to abandon a £7.8-billion ($12.6 billion) bid for the rest of BSkyB, the UK’s biggest pay-television provider, last year.
Three executives at the News International unit — Les Hinton, Tom Crone and Colin Myler — gave misleading testimony to the committee in 2009, the panel said.
The company failed to disclose documents and made statements that “were not fully truthful,” and Murdoch, 81, and his son James must ultimately take responsibility, the lawmakers said. The 11-member committee has been working on its report since July, when the Murdochs were summoned to testify about their roles in the scandal. They told a media-ethics inquiry last week that underlings, particularly Crone and Myler, were to blame for their failure to detect any wrongdoing at the now defunct newspaper.
“The News of the World and News International misled the committee about the true nature and extent of the internal investigations they professed to have carried out in relation to phone hacking,” the panel said. “Their instinct throughout was to cover up rather than seek out wrongdoing.”
Six lawmakers of the committee voted for the verdict that Rupert Murdoch is “not a fit person” to lead a major international company and four voted against it. Louise Mensch, a member of Prime Minister David Cameron’s Conservatives, said she and other Conservative members of the committee had opposed the verdict on Murdoch’s fitness to run a company.
“We all felt that was ultimately outside the scope of a select committee,” she said.
The committee said that, had Murdoch been “entirely open” with shareholders and lawmakers, the extent of the hacking scandal would have been discovered months earlier.
“In his testimony and also the Leveson Inquiry, Rupert Murdoch has demonstrated excellent powers of recall and grasp of detail, when it has suited him,” the committee said.
News Corp said on Tuesday it is reviewing the report and will respond shortly, adding that the company “fully acknowledges significant wrongdoing at News of the World and apologises to everyone whose privacy was invaded.”
UK telecommunications regulator Ofcom has said it will draw upon the report for its decision as to whether News Corp is fit to hold a broadcasting licence. Ofcom last week asked News Corp to provide documents from civil cases involving phone hacking as it decides whether the matter has compromised the company’s ability to run BSkyB. Ofcom said on Tuesday it will assess the new and emerging evidence.
Myler and Crone “cannot be allowed to carry the whole of the blame as News Corp has clearly intended,” the committee said. “The whole affair demonstrated huge failings of corporate governance.”
Myler and Crone, summoned before the Culture Committee last September, denied having misled it in 2009. Written evidence later sent to the committee and to the Leveson Inquiry showed that both had been told of claims that hacking had been more widely practised. Two years later, when James Murdoch accused them of keeping evidence from him, they replied that they had both known about it and showed it to him.
Police probes into phone and computer hacking and bribery have led to about 45 arrests, including former News of the World editors Rebekah Brooks and Andy Coulson, once Prime Minister David Cameron’s communications chief. News Corp closed the Sunday tabloid in July after revelations that the newspaper listened to voice-mail messages on the phone of a murdered schoolgirl.
After the hacking scandal first became public in 2006, with the arrest of a reporter, Clive Goodman, and a private investigator, Glenn Mulcaire, the company’s “containment approach” was to blame the crime on one “rogue reporter,” the panel said. It then shifted blame to “certain individual,” including Myler and Crone, “whilst striving to protect more senior figures,” notably James Murdoch, News Corp’s deputy chief operating officer.
Hinton didn’t tell the truth about payments to Goodman and the extent of his knowledge of the voice-mail allegations, the lawmakers said on Tuesday. Crone misled the panel about the significance of the first legal settlement with a victim of hacking, while he and Myler lied about their knowledge of the participation of other News of the World employees in criminal activity.
BSkyB shares rose 0.8 per cent to 683.50 pence in London trading as of 12:18 p.m.
