Dial M for Murdoch: News Corporation and the Corruption of Britain (12 page)

Inside News Corp, Murdoch, now seventy-six, was also dealing with a fraught question: his succession. Originally the presumption had been that his eldest son, Lachlan, would take over the chairmanship, but Lachlan had resigned as its deputy chief operating officer the previous summer, August 2005, reportedly after a row with his father, and moved back to Australia (though he remained a director). Elisabeth, the most independently ambitious of Murdoch’s three children by his second wife, Anna Torv, had shunned the family business since 2000, concentrating on growing her TV production company, Shine. She and her husband, Matthew Freud, the PR specialist behind Freud Communications, were among the most powerful and glittering figures in London’s medialand.

By contrast, Murdoch’s youngest son, James, had long been a rebel. At the prestigious Horace Mann High School in New York he dyed his hair blond, got a tattoo and pierced his ears and an eyebrow. Subsequently he dropped out of Harvard to found a hip-hop label, Rawkus, keeping a gun under his table to deal with some of its Uzi-carrying stars. After a succession of business flops, in 2000 he had come back into the fold, turning around News Corp’s loss-making Asian TV operation Star, before three years later becoming the chief executive of BSkyB, where he successfully increased the number of subscribers and promoted its environmental credentials. He was aggressively bright and impetuous, and conducted business meetings standing up behind his desk. He would soon take centre stage in the phone hacking affair.

Three thousand miles from New York, in Wapping, News International still faced the problems of what to do with Clive Goodman, the ‘rogue reporter’ who was threatening to take his case to a public employment tribunal; a similar claim from Glenn Mulcaire; the Gordon Taylor legal action; and, more immediately, the parliamentary investigation by the Commons Culture Committee. On 3 July, the Culture Committee published its report. Though it was more sharply worded than the PCC’s complacent findings, executives at Wapping who knew the truth must have read it with relief. The MPs described Goodman’s hacking of the royal household as a serious breach of journalistic ethics but appeared to accept the company’s excuse that it had been the result of lax controls on cash payments. Nonetheless the MPs said it was ‘extraordinary’ that the Press Complaints Commission had failed to question Andy Coulson, and criticized Fleet Street’s ‘complacency’ towards the Information Commissioner’s disclosure in ‘What Price Privacy?’ that many reporters had bought illegal data from Steve Whittamore. It warned the press that, unless it improved its behaviour, it would undermine its unique ability to regulate itself outside of the law.

In June, News International’s executive chairman, Murdoch’s right-hand man Les Hinton, sanctioned a payment of £80,000 to Glenn Mulcaire to settle his employment case, with a further £5,000 for legal fees: Mulcaire had admitted making over 200 calls to hack phones and had been jailed for six months. In July, Hinton authorized the payment of a further £153,000 to Clive Goodman to settle his claim. Goodman’s appeal against his sacking had been dismissed internally and externally, but News International’s problem was that both he and Mulcaire could open their mouths and make accusations at employment tribunals, which would be heard in public. In total, in the six months since being jailed, Goodman had been paid £243,000; his settlement naturally included a stringent confidentiality clause. A year later, Goodman began freelancing at the
Daily Star Sunday
, a paper owned by Murdoch’s fellow proprietor Richard Desmond. Remarkably, on being released from prison, Glenn Mulcaire was contracted to give security advice to a private security company, Quest, whose chairman was Sir John Stevens, the former Met Police Commissioner.

Rupert Murdoch’s power and influence continued to rise unabated. On 1 August 2007, he finally won his battle for Dow Jones in a $5.7 billion deal, giving him control of the
Wall Street Journal
, whose publisher (editor, in British terms) soon left. Despite being the most important figure in British media, Murdoch had only ever been called to give evidence to parliament once, on 17 September 2007, at a private session of unelected peers on the Lords Communications Committee in New York, when – in direct contradiction of his statement to the Bancrofts just four months earlier – he had confirmed that he set the political policy of the
Sun
. An appendix to the committee’s report summarized his evidence:

Mr Murdoch did not disguise the fact that he is hands on both economically and editorially. He says that ‘the law’ prevents him from instructing the editors of
The Times
and
The Sunday Times
. The independent board is there to make sure he cannot interfere and he never says ‘do this or do that’ although he often asks ‘what are you doing?’ He explained that he ‘nominates’ the editors of these two papers but that the nominations are subject to the approval of the independent board. His first appointment of an editor of
The Times
split the board but was not rejected.

He distinguishes between
The Times
and
The Sunday Times
and the
Sun
and the
News of the World
(and makes the same distinction between the
New York Post
and the
Wall Street Journal
). For the
Sun
and
News of the World
he explained that he is a ‘traditional proprietor’. He exercises editorial control on major issues – like the party to back in a general election or policy on Europe.

In December 2007, Murdoch reshuffled his leading lieutenants, sending his most trusted executive, Les Hinton, who had approved the secret pay-offs to Clive Goodman and Glenn Mulcaire, to New York to take charge of Dow Jones. Murdoch promoted his son James to chief executive of News Corp Europe and Asia, making him responsible for News International in the UK. Business was good: in the six months to 31 December, News Corp’s sales were up by 13 per cent to $15.6 billion.

The cover-up was working. News International had brushed off the Press Complaints Commission and the Commons Culture Committee and paid off both Goodman and Mulcaire. A journalist and a private detective had been jailed. Their crimes had exposed the ease with which the security of mobile phones – increasingly widely used over the previous decade – could be breached, but despite a substantial body of evidence, the police had not followed up many leads, the watchdog had been asleep, and the newspaper industry had refrained from embarking on a period of soul-searching. After a brief period of unemployment, the editor who had resigned had found another, weightier job – as one of the most important and trusted confidants of the next prime minister.

The only outstanding issue was Gordon Taylor.

The Manchester Lawyers

In the light of these facts there is a powerful case that there is (or was) a culture of illegal information access

– Michael Silverleaf, QC for News International, 3 June 2008

In his offices in Manchester, Mark Lewis’s difficulty was that he still had no evidence that the
News of the World
had ordered the hacking of Gordon Taylor’s phone. Nevertheless, he put together a team to fight the case, bringing in Charlotte Harris, a media lawyer in George Davies’s sports department, and Jeremy Reed, a barrister at Hogarth Chambers in Lincoln’s Inn, London. Together they built an ‘inferential’ case: Mulcaire had admitted hacking Taylor’s phone; he worked for the
News of the World
; therefore the
News of the World
must have hacked Taylor’s phone; therefore it had breached his privacy and must pay him damages. News International responded with derision to the case, reserving the right to have it struck out. It continued to frustrate and obstruct Taylor’s lawyers. Under the legal process of discovery, which compels parties to court cases to disclose relevant information, Lewis and Harris had sought from News International internal documents about phone hacking. But, as Harris explained: ‘The initial disclosure from the
News of the
World
was almost nothing. It was just a load of articles about the princes and they said they had nothing to disclose.’
¹

Lewis, a cussed individual, did not give up. He demanded Scotland Yard hand over its evidence about the hacking of Taylor’s phone accrued during its investigation into Goodman and Mulcaire in 2006. The Metropolitan Police, which had thousands of pages of Mulcaire’s notes and other material, resisted disclosure, but in December 2007 a High Court judge, Nicholas Bragge, ordered its cooperation. At that hearing, according to Lewis, Mark Maberly, a detective sergeant in the Metropolitan Police, told him: ‘You’re not having everything, but we will give you enough on Taylor to hang them.’ Maberly denies saying this.

When Taylor’s legal team finally received the police evidence in January 2008, it astounded them. Reed phoned Harris at home and said: ‘I’ve got the disclosure in. It’s dynamite.’ Scotland Yard handed over three items seized from Mulcaire’s home in August 2006: one was an audio recording of Mulcaire discussing phone hacking with an unnamed sports reporter; the second a contract from February 2005 signed by the
News of the
World’
s news editor, Greg Miskiw, promising to pay Paul Williams (Mulcaire’s pseudonym) £7,000 for a story about Gordon Taylor; and the third an email dated 29 June 2005 from the
News of the World
to Mulcaire’s address ([email protected]) ‘Hello, this is a transcript for Neville.’ The ‘For Neville’ email, as it became known, was devastating. It had been sent by a
News of the World
reporter, Ross Hindley, to Mulcaire on 29 June 2005 and contained the transcripts of thirty-five voicemail messages, including seventeen left by Taylor on Armstrong’s phone and thirteen vice versa. The messages were simply casual exchanges between two colleagues, but the significance was that they had clearly been hacked – and had now been disclosed to their victim. On one, Armstrong had told Taylor: ‘Thank you for yesterday. You were great.’
*
At the same time Lewis had obtained from the Information Commissioner News International’s orders for illegal searches from Steve Whittamore.

In April, News International’s executives received copies of the police disclosures. They were alarmed. The ‘For Neville’ email – sent by one
News of the World
journalist, Ross Hindley, with a title referring to another, Neville Thurlbeck – was clear proof that Goodman was not the only
Screws
reporter who knew about Mulcaire’s hacking, while the Whittamore material showed its journalists had requested illegal searches.

On 24 May, Tom Crone, the
News of the World’
s lawyer, emailed Colin Myler with the bad news: the ‘For Neville’ email, though Crone did not refer to it by that name, contained a large number of transcripts of voicemails from Taylor’s telephone, while the Information Commissioner’s material included a ‘list of named
News of the World
journalists and a detailed table of Data Protection Infringements between 2001 and 2003 …’ Crone pointed out: ‘A number of those names are still with us and some of them have moved to prominent positions on
NoW
and the
Sun
. Typical infringements are “turning round” car reg, and mobile phone numbers (illegal).’
²
The executives Crone was referring to included the
Sun
’s Rebekah Wade, who at the
News of the World
had ordered a ‘mobile conversion’ (finding a mobile phone number’s registered owner) from Whittamore. Having to make this point must have been difficult for Crone since by this time Wade had a close working relationship with the Murdochs.

Under the heading ‘Where we go’, Crone stressed:

This evidence, particularly the email from the
News of the World
, is fatal to our case. Our position is very perilous. The damning email is genuine and proves we actively made use of a large number of extremely private voicemails from Taylor’s telephone in June/July 2005 and that this was pursuant to a February 2005 contract, i.e. a 5/6 month operation. He [Taylor] has no evidence that the
News of the World
continued to act illegally after that but he can prove Mulcaire continued to access his mobile until May 2006 (because Mulcaire pleaded guilty to it). We will be getting guidance from a senior QC next week about our next step. Inevitably this will be at the very least an admission of liability to a large part of the claim and an attempt to put Taylor under costs pressure by making a formal offer of substantial damages and his costs. He is claiming both ordinary damages and exemplary (punitive) damages and will succeed on both claims. His case will be expensive.

Mark Lewis told Julian Pike, partner at News International’s law firm Farrer & Co, that his client wanted to be ‘vindicated [in court] or made rich’. Taylor was effectively demanding a massive payment in return for silence, and such a big pay-off would have to be approved by News International’s new chairman, James Murdoch. News International asked a leading QC, Michael Silverleaf, for an opinion. At Wapping on 27 May, Pike recorded Myler’s position: ‘Spoke to James Murdoch – not any options – wait for silk’s view.’

On 3 June, the legal opinion arrived – and it was horrendous for the company. Silverleaf said the ‘For Neville’ email, the Greg Miskiw contract and the illegal searches ordered from Steve Whittamore were ‘overwhelming evidence’ that a number of News International journalists had broken the law to write stories. Silverleaf wrote: