Bloomberg News

News Corp.’s Hinton Says Hacking Account Was Wrong

October 25, 2011

(Corrects word to “unenquiring” in 10th paragraph of story published Oct. 24.)

Oct. 24 (Bloomberg) -- Les Hinton, who resigned from New York-based News Corp. in July, told U.K. lawmakers today that information provided by executives about a hacking scandal was inaccurate.

Hinton, one of Chairman Rupert Murdoch’s closest associates for half a century, was asked why he told lawmakers in 2009 there was “never any evidence delivered to me” that suggested phone-hacking was widespread at the News of the World tabloid.

“It’s clear that based on events, particularly in the last 12 months or so, that some of the answers which were given were not accurate,” Hinton told the Culture, Media and Sport Committee today. “Whether to call them untruthful is appropriate, I don’t know.”

Hinton was executive chairman of News International, the publisher of News Corp.’s British papers, during the period when its reporters intercepted mobile voicemail messages and paid police for stories. He resigned as chief executive officer of the Dow Jones & Co. unit after revelations that the News of the World deleted messages left on the phone of murdered schoolgirl Milly Dowler.

Hinton told lawmakers today that he has received a severance payment from News Corp. and declined to comment on the amount or structure of payments, saying that he was subject to a confidentiality agreement.

He also said that he had not been questioned by police or the company’s own internal investigators, the Management and Standards Committee. More than 16 people have been arrested in connection with the case so far.

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

James Testimony

Still, investigators don’t seem to be making any progress if they want to establish blame for covering up hacking at the tabloid, said Claire Enders, an analyst at Enders Analysis in London. With executives continuing to claim that they didn’t know that hacking was taking place, lawmakers will have little ammunition when Rupert’s son James Murdoch appears before the committee for a second time next month, she said.

James Murdoch’s earlier testimony has been contradicted by former employees. Still, his claims that he didn’t know that hacking was widespread at the company until late 2010 may hold up when he appears before Parliament again next month, Enders said. Investigators may have to rely on inquiries by police and Lord Justice Brian Leveson, who was appointed by the Prime Minister to investigate the country’s media in the wake of the scandal, she said.

‘Not Getting Anywhere’

“On the basis of where we’ve gotten to now, the worst that James Murdoch can expect going into his own session would be that they continue to find it curious that the senior management of the organization seems to be unenquiring,” Enders said in an interview. “They’re not getting anywhere.”

Hinton was in charge at the U.K. publishing unit when the News of the World’s Royal editor, Clive Goodman, was jailed in 2007 for phone-hacking. At that point, Hinton wrote Goodman to tell him he was dismissed with a year’s pay of 91,000 pounds ($145,000). Goodman challenged his dismissal, arguing that hacking was practiced and discussed widely in the newsroom, and Hinton approved a further payment of 153,000 pounds.

At his last parliamentary appearance in 2009, Hinton stuck to the company’s line that phone hacking at the News of the World had been restricted to Goodman and private investigator Glenn Mulcaire. Hinton said he had agreed to payments for both men after they were released from jail, insisting this was on the advice of lawyers.

Goodman’s Letter

At the time, Jon Chapman, News International’s director of legal affairs, confirmed this version of events and denied it was a cover-up.

The most recent parliamentary investigation has uncovered documents that may contradict earlier claims by the company and Hinton. In August, the committee released a letter Goodman wrote to Hinton in 2007 as part of his wrongful termination case. In it, Goodman claimed that hacking was widespread at the News of the World.

“I don’t think I do regard Mr. Goodman’s letter as evidence of anything,” Hinton told lawmakers today. “They were accusations and allegations by an employee who had been dismissed for gross misconduct. We acted very responsibly the way we responded.”

Murdoch Testimony

In a hearing in September, Chapman said Hinton had told him to settle the Goodman case. Chapman told the parliamentary committee that while the company had believed Goodman’s allegations to be untrue, it had agreed to pay him more money to avoid going to a tribunal where he could make them in public. He said it was concerned about “reputational damage.”

Hinton, 67, started working for Murdoch under the executive’s first paper, the Adelaide News, as a copy boy in 1960. He rose through the ranks as Rupert Murdoch built his empire, overseeing magazine and publishing units and finally the Dow Jones division, which ran the Wall Street Journal.

In July, Rupert Murdoch appeared before the committee to explain how much he knew about hacking. The 80-year-old was emphatic that he didn’t blame Hinton for what had gone wrong at News Corp.’s British unit.

“I worked with Mr. Hinton for 52 years, and I would trust him with my life,” Murdoch said.

News Corp. investors challenged the role of the chairman and CEO and his sons at the media company’s annual meeting on Oct. 21. The phone-hacking allegations at the now-closed News of the World tabloid in London have raised questions about News Corp.’s management and the board’s independence.

Settlement

Mark Lewis, a lawyer for phone-hacking victims, told the committee this month that he believed a 425,000-pound-settlement to one of his clients, former Professional Footballers’ Association boss Gordon Taylor, was designed to keep evidence of phone-hacking quiet.

“There was no way the case was worth that amount,” Lewis said.

That payment in 2008 was approved by James Murdoch, after News International’s lawyers Farrer & Co. advised the company that evidence uncovered by Lewis suggested “there was a powerful case to support a culture of illegal accessing of information in order to obtain stories.”

Farrer & Co., whose clients include Queen Elizabeth II, said it knew News Corp.’s U.K. business had lied to Parliament in 2009 after evidence was uncovered during internal investigations and chose not to take action.

Hinton said today that in the Taylor case “it would be better for the company to settle and get it behind us” than to go ahead with the trial. Taylor was obliged to sign a confidentiality agreement as part of his settlement, which other former News Corp. executives have said was designed to prevent others from suing.

--Editors: Robert Valpuesta, Simon Thiel.

To contact the reporter on this story: Robert Hutton in London at rhutton1@bloomberg.net; Amy Thomson in London at athomson6@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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