Dial M for Murdoch: News Corporation and the Corruption of Britain (38 page)

In his resignation statement, Stephenson insisted he had done nothing wrong, but said that the speculation about the links between senior officers and News International was distracting him from his job. He had known Neil Wallis since 2006, but had ‘no reason’ to suspect he might have been involved in phone hacking. ‘I do not occupy a position in the world of journalism,’ Stephenson said. ‘I had no knowledge of the extent of this disgraceful practice and the repugnant nature of the selection of victims that is now emerging; nor of its apparent reach into senior levels.’ He pointed out that while his force had employed a
News of the World
executive who had not resigned over phone hacking, David Cameron had personally employed a man who had done so, Andy Coulson. The country’s most senior police officer had not informed the Prime Minister he was about to resign.

Saying he understood Stephenson’s decision, Cameron – on a tour of Africa which he abruptly cut short to return to the UK – stressed the importance of ensuring the police investigations proceeded with full confidence and ‘all the necessary leadership and resources’.

On Monday 18 July, politicians were content to let the spotlight fall on Assistant Commissioner John Yates. Boris Johnson, who had failed to challenge the Met over phone hacking when it mattered, said that questions would now be asked about Yates’s relationship with Neil Wallis. Brian Coleman, a fellow Conservative member of the London Assembly, said: ‘The Commissioner has done the right thing by resigning and accepting the error of judgement in employing Neil Wallis. Yates, who has shown that his stewardship of the original hacking inquiry was to put it bluntly, inept, should go – and go now.’
⁷

Yates tried to cling to his post, telling Sky News at 11.30 a.m.: ‘I’ve done nothing wrong.’ But his position became untenable. The BBC’s political editor Nick Robinson reported that Yates had been in charge of carrying out ‘due diligence’ on Wallis before he was hired by Scotland Yard (though this was not technically correct); the Home Affairs Committee announced that it was recalling Yates to give evidence; and the Metropolitan Police Authority began examining his decision not to reopen the investigation after the Gordon Taylor story in July 2009.

Shortly after 2 p.m., John Yates bowed to the inevitable and resigned. He expressed some regret that victims of phone hacking had not been dealt with appropriately by the Met, but added: ‘Sadly, there continues to be a huge amount of inaccurate, ill-informed and on occasion downright malicious gossip published about me personally. This has the potential to be a significant distraction in my current role as the national lead for counter-terrorism.’ The Independent Police Complaints Commission opened an investigation into all the senior Scotland Yard officers whose conduct had been questioned: Sir Paul Stephenson, John Yates, Andy Hayman and Peter Clarke.

Scotland Yard’s links with News International were shown to be even deeper, when it disclosed that Alex Marunchak, the
News of the World
executive who had handled Jonathan Rees’s stories from corrupt police, had for the twenty years between 1980 and 2000 – while a crime reporter and news editor at the
Screws
– worked for the Met as an interpreter for Ukrainian victims and suspects, giving him inside information on police investigations. With a degree of understatement, Scotland Yard said: ‘We recognize that this may cause concern and that some professions may be incompatible with the role of an interpreter.’
⁸
A few days later the Yard revealed that no fewer than ten of the staff in Dick Fedorcio’s Directorate of Public Affairs had previously worked for News International.

A series of personal and professional relationships had connected Britain’s biggest news group and its biggest police force. The chief reporter of its Sunday newspapers, Neville Thurlbeck, was being slipped criminal records by the police, while its news editor interpreted for criminal inquiries. Its quality daily,
The Times
, had employed Andy Hayman after he headed the failed hacking inquiry in 2006 (where he voiced his opinion that there had been only a ‘handful’ of victims). And one of NI’s most senior executives, Neil ‘Wolfman’ Wallis, had long been friends with Dick Fedorcio, who ran the media unit, John Yates, who reviewed the failed inquiry, and the Commissioner, Sir Paul Stephenson – who had all complained to the
Guardian
about its coverage. Wallis had then been employed by Scotland Yard at exactly the same time it was maintaining that the original inquiry had been a success. All the while, NI’s journalists had been bribing Met officers for tips, leaks and telephone numbers.

Confidence in the integrity of the police had been badly shaken. In the House of Commons, Theresa May announced three inquiries: Elizabeth Filkin, the former Parliamentary Commissioner for Standards, would investigate Scotland Yard’s relationship with the media; Her Majesty’s Inspectorate of Constabulary would investigate police corruption; and a body yet to be announced would investigate the powers and effectiveness of the Independent Police Complaints Commission.

After many years of denial when no one in authority took responsibility for wrongdoing at News International, there were now no fewer than twelve inquiries under way: Lord Leveson’s public inquiry; the Press Complaints Commission review; News International’s Management and Standards Committee; the inquiries by the Commons Culture and Home Affairs Committees; the three new ones into policing; and four criminal inquiries: Scotland Yard’s Weeting, Elveden and Tuleta, and Strathclyde’s Operation Rubicon into phone hacking and perjury.

As the clock ticked down to the Murdochs’ appearance before the Commons Culture Committee, the first journalist to speak out about phone hacking was found dead at his house in Langley Road, Watford, twenty miles from central London. More than any other former
News of the World
reporter, Sean Hoare had exposed the paper’s dark arts, and now he had paid the price. He had been spurned by former colleagues who had been friends – one ex-
News of the World
executive slammed down the phone on him, saying: ‘Don’t ever call me on this number again’ – and he had been treated as a suspect rather than a witness by the police. A day before Hoare was about to see his old boss account to Parliament for his conduct, Hertfordshire police began investigating the whistleblower’s death. His inquest later ruled that he had died of liver failure, seven months after he started drinking again because of stress.

Shortly after news of Hoare’s death, the
Guardian’
s Amelia Hill, who had co-authored the Milly Dowler story, revealed that the Metropolitan Police were examining a laptop computer found in a bin at London’s Chelsea Harbour, the riverside apartment complex where Rebekah and Charlie Brooks lived. At around 3 p.m. that day, the day after Rebekah Brooks had been released from twelve hours’ questioning, the computer had been handed to a security guard. Charlie Brooks had tried to reclaim it but had been unable to prove it was his and the guard had called the police. Within half an hour, two marked police cars and an unmarked forensics vehicle had arrived at the scene.

18

Democracy Day

I do not have direct knowledge of what they knew and at what time, but I can tell you that the critical new facts, as I saw them and as the company saw them, really emerged in the production of documentary information or evidence in the civil trials at the end of 2010

– James Murdoch, 19 July 2011

On the morning of 19 July, all eyes were on the showdown between Rupert Murdoch and his son and the Commons Culture Committee. Since taking over the
News of the World
and the
Sun
in 1969, forty-two years previously, Rupert had dominated the media and politics in Britain but he had never appeared before a parliamentary inquiry in public.

As he arrived at Westminster shortly before midday, he had reason to fear not just for his reputation but for his business. Investors were now as concerned about his company as the public were about his ethics. Two big business deals had gone sour. In February 2009 News Corp had to write off $2.8 billion from its top-of-the-market $5.7 billion acquisition of the
Wall Street
Journal-
owned Dow Jones in 2007. MySpace, too, had been a disaster: Murdoch had paid $580 million for it in 2005 but had been outwitted by Facebook’s 24-year-old computer programmer, Mark Zuckerberg. In June, News Corp had disposed of the loss-making MySpace for $35 million, while analysts valued Facebook at $100 billion.

Rupert Murdoch’s faltering instincts were forgiven, at least by the board, because he packed it with associates and family members, including his sons Lachlan and James, and because the family owned 40 per cent of the voting shares. With the support of his close ally Prince Al-Waleed bin Talal Al-saud, who owned a further 7 per cent, the Murdochs had effective control, even though they actually owned only 12 per cent of the share capital. Investors undervalued News Corp by billions of dollars because of the imbalance. For eight years on the trot between 2003 and 2010 the business ratings company Governance Metrics International had given News Corp’s corporate governance its lowest F grade, complaining: ‘This isn’t a dysfunctional board, it’s a nonfunctional board.’
¹
In March 2011, two small US shareholders, the Amalgamated Bank of New York and the Central Laborer’s Pension Fund, had filed a lawsuit accusing Murdoch of running the company like ‘a family owned candy store’.
²

There were also signs of disharmony within the Murdoch clan. At a book party hosted by Matthew Freud and the
Times
editor James Harding, on 9 July, Elisabeth Murdoch was reported to have said Rebekah Brooks had ‘fucked the company’.
*

In the days running up to the meeting, James and Rupert Murdoch were coached by public relations professionals. Rebekah Brooks – who was due to appear at the committee after the Murdochs – was seen in a ‘distressed state’ visiting the offices of the former Met Commissioner, Sir John Stevens.

Over the weekend, Tom Watson had also been working through lines of questioning. At the offices of Max Mosley’s solicitors Collyer Bristow on Monday, the day before the hearing, he had spent four hours role-playing the questions with Mosley and others. He expected News Corp’s advisers to the Murdochs would try to protect Rupert by getting James to answer most of the technical questions. Watson believed the way to keep the focus on Rupert was to concentrate on questions of corporate governance. Watson hoped that Murdoch would either have to admit that he had known about the criminality at the
News of the World
or that he hadn’t known about it at a corporate level – either way he was arguably unfit to run the company. Watson assumed the Murdochs would try to begin by reading out an opening statement, which would almost certainly apologize for the wrongdoing, express regret and outline measures to ensure it never happened again. Just like the attempt to remove Watson from the committee in 2009, this opening gambit, an apology, would then become the main story for the rolling news channels and divert attention away from the examination of who was culpable for the wrongdoing. Commitee members determined not to let this happen. At midday, Watson shut the door of his office in Portcullis House, put on the Doors album
LA Woman
at full blast and paced around rehearsing questions.

At 14.34 in the Wilson Room of Portcullis House, James Murdoch led his father to his chair, which Rupert’s wife Wendi Deng pulled out for him. She whispered something in his ear and poured him a glass of water.

James Murdoch could be impetuous, aggressive and arrogant, the multimillionaire son of a billionaire. Rupert Murdoch could humiliate his editors, shouting and swearing at them. At the committee, the well-coached Murdochs were not brash or arrogant, but contrite and respectful. James Murdoch – as expected – took the lead. He began with a note of disappointment, even anger. In his British-American accent, he said: ‘Our understanding was that we would be afforded the opportunity to make an opening statement, and we prepared on that basis.’ Appealing to the chairman, John Whittingdale, he said: ‘We would like the opportunity to make that statement. Would you allow us?’ Whittingdale explained that the members had discussed that and the answer was no: ‘We feel that we have a lot of questions.’

Whittingdale started by pointing out that the Culture Committee’s last report in February 2010 had found it ‘inconceivable’ that phone hacking had been down to a single rogue reporter, pointing out that it was now obvious that Parliament had been misled. He turned to James Murdoch and referred to his email to staff announcing the closure of the
News of the World
: ‘You made a statement on 7 July in which you stated that the paper had made statements to Parliament without being in full possession of the facts, and that was wrong. You essentially admitted that Parliament had been misled in what we had been told. Can you tell us to what extent we were misled, and when you became aware of that?’

James Murdoch started reciting what sounded like the statement he had planned to make, referring not to phone hacking (too pithy) but ‘illegal voicemail interceptions’. ‘First, I would like to say as well just how sorry I am,’ James said, ‘and how sorry we are, to particularly the victims of illegal voicemail interceptions and to their families. It is a matter of great regret to me, my father and everyone at News Corporation …’

Rupert Murdoch stretched out his right hand and placed it on his son’s forearm. ‘Before you get to that,’ he told his son, ‘I would just like to say one sentence. This is the most humble day of my life.’
*
The statement flashed up on the rolling news channels.

With his fierce eyes, politeness and strained management-speak voice (which the following day prompted an unkind suggestion that he was ‘half Harry Potter, half Hannibal Lecter’),
⁴
James responded to Whittingdale’s question: ‘I do not have direct knowledge of what they knew [Wapping’s executives] and at what time, but I can tell you that the critical new facts, as I saw them and as the company saw them, really emerged in the production of documentary information or evidence in the civil trials at the end of 2010 … It is a matter of real regret that the facts could not emerge and could not be gotten to my understanding faster.’