Bloomberg News

News Corp. Evidence Points to Cover-Up, Leveson Reports

November 29, 2012

News Corp. (NWSA:US)’s testimony about how a phone-hacking scandal was handled points to a possible cover-up at multiple levels within the organization, according to the findings of an inquiry into media ethics.

Judge Brian Leveson collected evidence from newspaper owners, reporters and people who counted themselves victims of bad behavior by U.K. media. His report today called for the formation of an independent media regulator, backed by legislation, that would have the power to impose fines of as much as 1 million pounds ($1.6 million).

News Corp.’s managers showed a lack of curiosity and urgency in sharing information about claims that reporters had been hacking into voice mails for stories, Leveson said. Chief Executive Officer Rupert Murdoch and son James Murdoch, who ran the U.K. publishing business, said that they weren’t aware that phone hacking and bribery were used frequently by reporters and said that they had relied on police investigations and an internal probe to assure them that the activity was limited.

“Questions were there to be asked and simple denials should not have been considered sufficient,” Leveson said in his nearly 2,000-page report. “This suggests a cover-up by somebody and at more than one level.”

A News Corp. spokeswoman declined to comment.

Governance Failure

James Murdoch said in a letter to the U.K. Parliament this year that he regretted not digging deeper into hacking allegations and that he had relied on Colin Myler and Tom Crone, the editor of the News of the World and the tabloid’s lawyer, to keep him abreast of developments at the publication. Myler and Crone said they warned him about the potential that hacking was more widespread when they asked him to approve a settlement with a phone-hacking victim that ultimately cost 700,000 pounds.

James Murdoch said that while he had received an e-mail in 2008 that may have tipped him off to wider allegations, he didn’t read it because it came on a Saturday. Leveson said that while Murdoch may have been ignorant of the facts “as a result of chance,” there is no evidence that Myler and Crone tried to conceal information. There was also no indication that upper management pushed to find out what was going on.

“If News Corporation management, and in particular Rupert Murdoch, were aware of the allegations, it is obvious that action should have been taken to investigate them,” Leveson said. “If News Corporation were not aware of the allegations which, as Rupert Murdoch has said, have cost the corporation many hundreds of millions of pounds, then there would appear to have been a significant failure in corporate governance and in particular in the effective identification and management of risks.”

Civil Settlements

News Corp. has spent more than $315 million on civil settlements, legal fees and costs of closing the News of the World.

More than 1,000 submissions were made to the inquiry from interested parties as diverse as the actor Hugh Grant, Prime Minister David Cameron and the family of Madeleine McCann, a missing child, while its website had more than 1.8 million hits and 652,000 unique visitors from more than 200 countries, according to the report.

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

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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