Bloomberg News

Murdoch Blames News of World Executives for Hacking Denials

November 10, 2011

(Updates with new quotes starting in third paragraph, response from News of the World lawyer starting in fifth.)

Nov. 10 (Bloomberg) -- News Corp. Deputy Chief Operating Officer James Murdoch blamed News of the World executives for not telling him in 2008 about evidence that phone hacking at the newspaper went beyond one reporter.

Murdoch, testifying in front of U.K. lawmakers today for a second time, said Colin Myler, the newspaper’s editor, and Tom Crone, its lawyer, were responsible for denials issued by the company, including to Parliament, until January of this year and failed to pass on relevant information.

“I was given a narrower set of facts than I would have liked,” Murdoch told the House of Commons Culture, Media and Sport Committee in London during 2 1/2 hours of testimony. “They did not discuss allegations of widespread phone hacking or criminality or the like.”

Murdoch, 38, was recalled by the panel after Myler and Crone both said he was mistaken in his July 19 testimony that he hadn’t been told in 2008 about an e-mail that showed hacking into the phones of celebrities, athletes and politicians had gone beyond a single reporter.

“Their testimony was misleading and I dispute it,” Murdoch said today. Crone said in an e-mailed statement after that appearance that Murdoch “was told by us in 2008 about the damning e-mail and what it meant in terms of wider News of the World involvement.”

‘Need to Discredit’

“It is regrettable, but I can perfectly understand why James Murdoch felt the need to discredit Colin Myler and myself,” Crone said. “It seems he now accepts he was told of the e-mail, of the fact that it contained transcripts of voicemail interceptions and that those interceptions were authorized by the News of the World. Perhaps Mr. Murdoch could explain who he thought was doing the authorizing at the News of the World?”

Committee Chairman John Whittingdale said the panel, which is due to issue a report by the end of the year, is unlikely to hold any further hearings. “It’s already been very apparent this morning that there have been direct contradictions between the account James Murdoch gave to us and the account Tom Crone and Colin Myler gave us,” he told reporters. “We’re going to have to spend a long time deliberating before we reach any conclusions.”

Annual Meeting

The scandal has shaken Murdoch’s status as heir apparent to his father’s media empire. Last month, News Corp. shareholders lodged a protest vote against Rupert Murdoch, the company’s chairman and chief executive officer, and his sons, following an annual meeting at which investors called for governance changes and an end to voting practices that cement the family’s control. James received the highest percentage of votes against his election to the board, at 35 percent.

“Murdoch’s evidence was consistent and much more convincing than Myler and Crone,” Niri Shan, the head of media law at Taylor Wessing LLP in London, said by e-mail. “The big question is should he have known more about what was going on or should he have probed further. I think that is a legitimate criticism.”

Since the revelations in July that the News of the World had intercepted the voicemail of a murdered schoolgirl, the company has tried to limit the damage. It closed the newspaper, Britain’s biggest-selling, and withdrew a bid to take full control of British Sky Broadcasting Group Plc. At least 17 people have been arrested by police investigating hacking and bribing police officers at News Corp.’s U.K. papers, some on the basis of evidence supplied by the company.

‘Mafia Boss’

Labour member of Parliament Tom Watson told Murdoch he “must be the first mafia boss in history who didn’t know he was running a criminal enterprise.”

Murdoch apologized to Watson over the revelation that the News of the World had paid a private investigator to follow him after he began raising questions over phone hacking. He said he was “shocked” to learn in recent days that Crone and another executive at the newspaper had also had the lawyers of hacking victims put under surveillance. “It’s appalling, it’s something I would never condone.”

He refused to exclude the possibility of closing The Sun newspaper, the country’s biggest-selling daily tabloid, if there’s evidence reporters there broke the law. A Sun reporter was arrested last week as part of a police probe into bribery.

‘Corporate Wrongdoing’

“I shouldn’t rule out any reaction to corporate wrongdoing,” Murdoch said. “That will be a decision taken at the time, given whatever’s out there. It’s important not to prejudge any outcomes from these investigations.”

Murdoch ran News Corp.’s U.K. arm, News International, beginning in late 2007. From January 2007 until January 2011, the company denied that illegal hacking had gone beyond the newspaper’s royal reporter, Clive Goodman, and a private investigator, Glenn Mulcaire.

Murdoch said today he regretted that the company hadn’t looked into allegations about phone hacking in 2009 when the Guardian newspaper reported them, or in 2010, when the Culture Committee raised questions.

The company “at various times through this process -- and I’m sorry about this -- moved into an aggressive defense too quickly,” Murdoch said.

Myler’s and Crone’s dispute with Murdoch centers on the 2008 settlement of a privacy case bought by Gordon Taylor, the chief executive officer of the Professional Footballers’ Association, whose phone was one of those that Mulcaire admitted hacking when he was jailed in 2007.

‘For Neville’

Lawyers advised the newspaper to settle Taylor’s case when his team uncovered an incriminating e-mail. The document, a transcript of voice mails typed by a reporter at the newspaper and marked “for Neville,” were understood to be a reference to Neville Thurlbeck, the paper’s chief reporter who was dismissed this year and has since been arrested.

Murdoch told the committee in July he hadn’t been told about this e-mail. Myler and Crone said they discussed it with him in a June 2008 meeting when seeking permission to settle the case. Murdoch today said while he had been made aware of the e- mail, he hadn’t seen it and had been given only “sufficient information to authorize the increase of the settlement offers,” and that “they did not discuss allegations of widespread phone-hacking or criminality.”

Watson said Thurlbeck had recently told him that Crone had said at the time that he had shown Murdoch the e-mail.

‘Intimately Involved’

On Nov. 1, the committee released more evidence, including a trial lawyer’s opinion prepared for the company at the time, which named three reporters who may have been “intimately involved” in phone hacking, on the basis of the “for Neville” e-mail. The paper’s former outside counsel, Julian Pike of Farrer & Co., kept notes that indicated the company was willing to pay Taylor more if he agreed to keep the settlement confidential.

Conservative lawmaker Philip Davies expressed disbelief today that Murdoch didn’t ask more questions before authorizing hundreds of thousands of pounds in settlement. “This really is pretty lax,” he told Murdoch.

“The way the company has always operated is to rely on executives directly responsible for a unit of the business to go and do the things they needed to do,” Murdoch replied. “It’s impossible to manage every single detail of a company on this scale.”

Murdoch denied he’d shown himself to be incompetent, after opposition Labour Party lawmaker Paul Farrelly challenged him about his “apparent lack of curiosity in asking questions.”

Watson later told BBC television it was “plausible” that Murdoch wasn’t aware of the extent of hacking, “but if he didn’t know, he wasn’t asking the questions that a chief executive officer should be asking.”

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

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

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


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