Bloomberg News

Ex-News Corp. Executives Will Seek to Shift Blame in Testimony

September 04, 2011

Sept. 5 (Bloomberg) -- Four former News Corp. executives testify in the U.K. Parliament tomorrow after questioning the veracity of parts of News International Deputy Chief Operating Officer James Murdoch’s testimony over a phone-hacking scandal two months ago.

Colin Myler, editor of the News of the World tabloid until News Corp. shut it down in July, and Tom Crone, a former company lawyer, will be among those questioned by the House of Commons Culture Committee in London. James Murdoch told the panel July 19 that underlings were responsible for ethical lapses. Within days, Myler and Crone issued a statement casting doubt on his version of events.

James and his father, News Corp. Chief Executive Officer Rupert Murdoch, shouldn’t have given so much information during their evidence session, according to Niri Shan, the head of media law at Taylor Wessing LLP in London, who isn’t involved in the matter.

“The problem with saying too much is that you then have a version of events on the record that can be scrutinized and picked apart, and that’s what happened,” Shan said in a telephone interview.

Revelations that the News of the World intercepted the voicemail of a murdered schoolgirl prompted the closure of Britain’s biggest-selling newspaper and forced News Corp. to withdraw a takeover bid for British Sky Broadcasting Group Plc. Fifteen people have been arrested. Prime Minister David Cameron, facing questions about his judgment for hiring another former News of the World editor, Andy Coulson, as his communications chief, has set up a judge-led inquiry into media standards.

Bonus Declined

James Murdoch, 38, said Sept. 2 he will forgo a $6 million bonus because “it was the right thing to do” in light of the phone-hacking scandal. He was paid a $3 million salary and $8.3 million in stock awards, according to a proxy filing.

Separately, News Corp. said that it couldn’t confirm a report in the Independent newspaper Sept. 3 that officials at its U.K. unit used investigators to gather information on lawyers who represented victims of phone hacking. No current executives at the U.K. unit approved such conduct, News Corp. said in an e-mailed statement.

James Murdoch told the Parliamentary panel in July that News International, the U.K. publishing unit of News Corp., had acted in good faith in previous assertions that phone-hacking had been limited to a single reporter, Clive Goodman, and a private investigator, Glenn Mulcaire, both jailed in 2007.

Harbottle Rebuttal

Myler and Crone will be questioned about a meeting on June 10, 2008, at which they say they told James Murdoch about an e- mail that suggested at least two more reporters on the paper had been involved in phone-hacking. Murdoch denied in July that they had done so.

Murdoch said the company’s stance rested on three “pillars”: an initial police probe that stopped at Goodman and Mulcaire, an examination of some of Goodman’s e-mails by law firm Harbottle & Lewis LLP, and an investigation by the Press Complaints Commission.

In written evidence to the committee published last month, the PCC said its probe consisted solely of writing to the newspaper’s editor. Harbottle said in a 24-page reply that its work had been limited to defending an unfair dismissal claim from Goodman and “was simply not one which was designed to bear the weight News International now seeks to place upon it.” The police have said the company obstructed their work.

Cloke, Crone

During tomorrow’s hearings, Daniel Cloke, a former News International human-resources director for News International who’s now in the same role at Vodafone Group Plc, and Jon Chapman, once head of legal affairs at News International, will also be questioned about how they handled Goodman’s dismissal and his subsequent allegation that others at the paper had been involved.

In written evidence to the panel after the Murdoch hearings, Crone said he and Myler met James for “no more than 15 minutes” in 2008, to discuss settling a privacy lawsuit from Gordon Taylor, chief executive of the Professional Footballers’ Association, whose phone had been hacked by Mulcaire.

‘For Neville’

Crone said the company decided to settle after Taylor’s lawyer found a transcript of Taylor’s voicemails typed up by a reporter and marked “for Neville,” an apparent reference to Neville Thurlbeck, the paper’s chief reporter.

“My invariable practice when seeking authority for settlements would be to take a file of the relevant documents with me to such meetings,” Crone wrote. “Since the ‘for Neville’ document was the sole reason for settling and, therefore, for the meeting, I have no doubt that I informed Mr. Murdoch of its existence. I do not recall if I produced it.”

Myler confirmed Crone’s account in his own submission.

Asked by the committee to respond, James Murdoch wrote that both were wrong.

“Neither Mr. Myler nor Mr. Crone told me that wrongdoing extended beyond Mr. Goodman or Mr. Mulcaire,” he wrote. “There was nothing discussed in the meeting that led me to believe that a further investigation was necessary.”

‘Illegal Procedures’

Crone will also face questions about his dealings with Goodman. Among the documents published by the committee last month were two copies of a letter Goodman sent Cloke in 2007, after his dismissal, one submitted by News Corp. and the other by Harbottle & Lewis.

The letter stated that “other members of staff were carrying out the same illegal procedures” as those for which he had been jailed. While both copies obscured the names of individuals at the request of police, the Harbottle & Lewis version contained two paragraphs missing in that submitted by News Corp.

In those paragraphs, Goodman wrote that Crone had been present at “virtually every meeting of my legal team” and that he and Coulson “promised on many occasions that I could come back to a job at the newspaper if I did not implicate that paper or any of its staff.”

Cloke may be asked about a decision to have Myler hear Goodman’s appeal against dismissal in private, rather than using the company’s usual practice of a panel with staff and management representatives. In a 2007 letter to Goodman, Cloke said the more public option would be “clearly inappropriate” given the reporter’s allegations.

‘Good News’

Chapman and Cloke responded to Goodman’s appeal by going through e-mails between him and executives on the newspaper and then asking Harbottle & Lewis to certify that they contained nothing that proved his allegations.

Myler said in his written evidence that Cloke told him at the end of the review there was “good news; there is no smoking gun or silver bullet in the e-mails.”

Ken Macdonald, a former director of public prosecutions appointed by News Corp. earlier this year to help deal with the renewed police probe into hacking, told Parliament’s Home Affairs Committee in July that it took him less than 10 minutes to conclude that the e-mails showed evidence of illegal payments to police officers, a crime Goodman was never accused of.

Chapman and Cloke may also be asked whether they took other actions to investigate Goodman’s claim that phone-hacking was “widely discussed in the daily editorial conference, until explicit reference to it was banned” by Coulson.

For Myler the question is whether he was made aware of the full extent of Goodman’s allegations. It’s not clear whether the dismissal hearing ever took place.

The company settled Goodman’s unfair-dismissal claim in July 2007, paying him 153,000 pounds ($248,000) on top of 90,500 pounds he’d already received when he was fired. James Murdoch said in his evidence the decision to settle had been made by Chapman and Cloke.

--With assistance from Erik Larson in London. Editors: Eddie Buckle, Anthony Aarons.

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

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


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