Bloomberg News

Murdoch Denies Knowledge of News of the World Phone-Hacking

July 19, 2011

(Adds police charge in Parliament attack in penultimate paragraph. For more coverage of News Corp., see EXT3<GO>.)

July 20 (Bloomberg) -- News Corp. Chairman Rupert Murdoch denied any knowledge of phone-hacking and payments to police at his News of the World tabloid, blaming “people I trusted” during three hours of questioning by British lawmakers that was interrupted by a protester attacking him with a foam pie.

“They betrayed the company, and me, and they deserve to pay, and I think that frankly I’m the best person to clean this up,” the 80-year-old Rupert Murdoch, flanked by his son James, said at a Culture, Media and Sport Committee hearing in London.

Both Murdochs said they didn’t know about employees intercepting voice mails or paying police for stories at the Sunday tabloid, the 168-year-old newspaper they closed on July 10 following a public outcry and political backlash. Allegations that murder and terror victims had their phones hacked also prompted the company to drop its 7.8 billion-pound ($12.5 billion) bid for all of British Sky Broadcasting Group Plc.

In what he described as “the most humble day of my life,” Murdoch insisted that wrongdoing at the newspaper and efforts to clear it up were far below his level. His son said he had only learned of how widespread phone-hacking had been as a result of civil litigation in 2010, and defended earlier payments to victims. He said he had been “surprised” to learn that New York-based News Corp. had been paying the legal fees of one of the men jailed for phone-hacking four years ago.

Stock Rebounds

“He didn’t make any faux pas, but he didn’t give the impression of a commanding presence and James likewise appeared very earnest, a very active executive, but not somebody who had gotten remotely to the bottom of what was going on,” said Charlie Beckett, director of the media institute Polis at the London School of Economics.

News Corp. rose 4.1 percent to A$15.10 at 10:17 a.m. in Sydney trading. The stock has dropped 11 percent in Australia since July 4, when the U.K.’s Guardian newspaper reported that News of the World hacked into the voicemail of a murdered teenager.

The company is considering elevating Chief Operating Officer Chase Carey to chief executive officer to succeed Rupert Murdoch, people with knowledge of the situation said before the testimony.

As Labour lawmaker Tom Watson quizzed Rupert Murdoch at the start of the hearing, James Murdoch, News Corp.’s deputy chief operating officer, tried to intervene. Many of Rupert Murdoch’s answers were short and came after pauses. “Nope,” he replied, when asked if he’d been informed of a 1 million-pound settlement to a phone-hacking victim in 2008.

‘What He Doesn’t Know’

“It’s revealing in itself what he doesn’t know, and what executives chose not to tell him,” Watson told James Murdoch, explaining why he was focusing his questions on his father.

James Murdoch said the company’s four-year insistence that wrongdoing had been confined to a single reporter had been based on a report by lawyers Harbottle & Lewis LLP and on the police’s failure to find evidence of wider illegality.

Assistant Metropolitan Police Commissioner John Yates, who resigned July 18, separately told Parliament’s Home Affairs Committee yesterday that “the facts appear to be that News International have deliberately covered up” what happened at the paper. On July 12, Peter Clarke, the policeman who led the original probe, said News Corp. had been “deliberately trying to thwart” the investigation.

“The News of the World is less than 1 percent of our company,” Rupert Murdoch told the committee. He said that he may have “lost sight” of the paper because it was “so small in the general frame of the company.”

Milly Dowler

The board is united in support of News Corp.’s senior management, Director Viet Dinh said in a statement after the testimony, issued on behalf of independent directors.

The phone-hacking scandal escalated after the Guardian report on intercepted and deleted voicemails of the murdered schoolgirl, Milly Dowler. Two of the country’s most senior policemen have resigned and Prime Minister David Cameron, who employed a former News of the World editor as his director of communications, cut short a trip to Africa to make a statement to Parliament today.

Lawmakers focused on legal payments made to the paper’s royal reporter, Clive Goodman, and a private investigator, Glenn Mulcaire, who went to jail for intercepting phone messages left for members of Prince Charles’s staff.

James Murdoch said he was “surprised” when he found out payments had been made to Goodman and Mulcaire after they had been convicted. Les Hinton, who resigned as chief executive of Dow Jones & Co. last week, told Parliament in 2009 he had authorized them himself.

Mulcaire’s Fees

News Corp. had been paying Mulcaire’s legal fees as he defends lawsuits from hacking victims, James Murdoch said.

“I said ‘Are we really doing that?’” he said. “The strong advice was that from time to time it’s important and customary to pay a co-defendant’s legal fees.” He couldn’t say whether the company is still paying Mulcaire’s fees. Rupert Murdoch said that “provided it’s not in breach of a legal contract,” the company will ensure it stops.

Rupert became more confident as the hearing progressed, trying to crack the occasional joke while apologizing repeatedly for what had happened. He delivered a statement at the end, saying that he is determined to “restore the nation’s trust in our company.”

‘Good Left Hook’

Rebekah Brooks, the former News of the World editor who resigned July 15 as News International chief executive officer, addressed the committee after the Murdochs. She said she didn’t know how widespread the phone hacking was until actress Sienna Miller filed a civil lawsuit last October.

The hearing was interrupted when Rupert Murdoch was attacked with a foam-like substance. A man standing behind Murdoch came from his left and leaned into him and pushed a plate of the substance into his face. Murdoch’s wife Wendi stood up and tried to protect her husband from the man, who was then escorted out of the room by police officers.

“Mr. Murdoch, your wife has a very good left hook,” Watson, the Labour lawmaker, said.

Jonathan May-Bowles, 26, of Windsor, England, was charged with an offense under the U.K. Public Order Act for behavior causing harassment, alarm or distress in a public place, in connection with an incident in the Palace of Westminster, the home of Parliament, the Metropolitan Police said in an e-mailed statement today.

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

--With assistance from Angus Whitley in Sydney. Editors: Anthony Aarons, Heather Harris

To contact the reporters on this story: Robert Hutton in London at rhutton1@bloomberg.net; Alex Morales in London at amorales2@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net.


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