(Updates with forum comments starting in second paragraph.)
Oct. 6 (Bloomberg) -- News Corp. Deputy Chief Operating Officer James Murdoch should leave the board of the media company in the wake of a hacking scandal at its U.K. newspaper unit, according to a group of British pension funds.
Murdoch’s “continued presence on the News Corp board is causing significant reputational damage to the company and is no longer in shareholders’ interest,” the Local Authority Pension Fund Forum said in an e-mailed statement today. The group’s 54 members have assets of 100 billion pounds ($155 billion).
Murdoch, who was compelled to appear in July before a U.K. Parliamentary committee to explain how much he knew about phone hacking at the News of the World Sunday tabloid, was recalled to answer further questions later this year. Former executives at the U.K. newspaper unit News International have questioned the evidence Murdoch gave at the time.
Members of the fund forum own less than 1 percent of News Corp. shares, according to a person with knowledge of the matter who declined to be identified because the information is not public.
The body today demanded a “separation of powers at the head of the company and the appointment of a genuinely independent chair.” It has recommended that members oppose the election of Rupert Murdoch, who is News Corp.’s chairman and chief executive officer.
News Corp. was forced to shut the News of the World in July amid allegations that reporters had hacked into the phone of murdered schoolgirl Milly Dowler. The subsequent police investigation has lead to at least 16 arrests and the resignation of former News International CEO Rebekah Brooks.
The New-York based company has set up an internal panel to review phone hacking across its British newspaper titles under the stewardship of Joel Klein and board member Viet Dinh. The management and standards committee, which was given the mandate to conduct internal inquiries, said in August its objective has been to provide information to police and other government investigations.
The funds would have preferred “to see a fully independent process in place,” according to the statement.
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