Dial M for Murdoch: News Corporation and the Corruption of Britain (43 page)

Publication of the letter at 3 p.m. on the Culture Committee website dominated the TV news bulletins and front pages. (The
Guardian
headline was: ‘Explosive letter lifts the lid on four-year hacking cover-up’; the
Independent’
s: ‘Phone hacking: the smoking gun’.) While the letter itself was deeply embarrassing, it was published alongside a politely worded but venomous attack on News International from Harbottle & Lewis. Evidently, the law firm had been storing up its anger for two years since December 2009, when in answer to a question about Wapping’s internal inquiries, Rebekah Brooks had released its letter of 29 May 2007 (see p. 60) about Goodman’s employment case to the Culture Committee.

At that time News International had used Harbottle’s letter to suggest that outside lawyers had carried out a thorough review of wrongdoing at the
News of the World
. As the Murdochs came under pressure in July 2011 for their failure to investigate the criminality, they again reinforced that impression. In his interview with the
Wall Street Journal
on 14 July Rupert Murdoch blamed the lawyers for making a ‘major mistake’ in underestimating the problem, and on 19 July James Murdoch had told the Culture Committee: ‘That opinion was something that the company rested on.’

Released from client confidentiality, Harbottle & Lewis now revealed that it had never been asked to launch an internal investigation at Wapping:
*
News International had asked it to check some emails to see if Goodman had a valid claim for unfair dismissal. Harbottle & Lewis had simply reviewed and agreed with Wapping that it could not find ‘reasonable’ evidence in them that executives knew about Goodman’s behaviour, yet its letter had been presented to the Culture Committee as evidence of an inquiry. In its letter to the MPs dated 11 August, Harbottle & Lewis revealed that its bill was £10,294 plus VAT, which hardly indicated that it had been commissioned to carry out a forensic examination of the goings-on at Britain’s biggest newspaper group. And if News International really had ‘rested on’ its letter from 2007, it pointed out, it would not have paid out nearly a quarter of a million pounds to Goodman – since its review had not supported his claim that phone hacking was widespread (though there was evidence of police corruption).

The letter left committee members in no doubt that News International had deliberately exaggerated its role in Wapping’s supposed internal investigation. Even more damningly, Harbottle & Lewis delicately indicated that crucial evidence about corruption in the emails had been destroyed. It carefully explained that in 2007, after its lawyers had been given remote access to Goodman’s emails, they had printed out some for further study and, because they were unable to open others, obtained hard copies from the IT department. On concluding its review, Harbottle had filed all its work on the case, together with the printouts, in its archives for four years (during which time News International was denying all wrongdoing) until 24 March 2011, when News International asked for the file. Harbottle & Lewis told the Culture Committee that what was of ‘principal interest’ in the file was not confirmation of its remit or Goodman’s letter – but the printouts of the emails themselves. Without mentioning the deletion of emails, Harbottle & Lewis wrote: ‘It seems that the firm’s copies of these documents from News International’s own records are now the only remaining copies (on paper or in electronic form) still in existence.’ In an understated but umistakable way, it was suggesting there had been a data clean-up at Wapping.

News International’s defences were rapidly being overwhelmed. James Murdoch had said the company had been relying upon evidence provided by the police, the PCC and Harbottle & Lewis. But the police were now saying Wapping had frustrated its inquiry; the Press Complaints Commission was complaining it had been misled; and Harbottle & Lewis insisted it had never been asked to conduct a widespread inquiry. Most worryingly of all, there now appeared to be evidence of the deliberate destruction of data, apparently in an attempt to prevent the truth ever becoming known about what happened at the
News of the World
.

At the same time the career of another executive embroiled in the scandal, Andy Coulson, was being cast in an ever less flattering light. At the end of August the BBC’s Robert Peston divulged that David Cameron’s friend had received large payments from News International after leaving the
News of the World
. Few nights were better to slip out embarrassing news than 22 August, when TV bulletins were reporting the triumphant entry into Tripoli of Colonel Gaddafi’s opponents. At 9.50 p.m. on his BBC blog, Peston disclosed that News International had paid Coulson six-figure sums while working for the Conservatives:

As I understand it, after Mr Coulson resigned News International said it would pay him his full [leaving] entitlement under his two-year contract as editor of the
News of the World
– although the money would be paid in instalments. I am also told that Mr Coulson also continued to receive his News International work benefits, such as healthcare, for three years, and he kept his company car.

Coulson had been receiving large sums of money from Britain’s most powerful media group while occupying a senior position in Her Majesty’s Loyal Opposition, in direct contradiction of his testimony to the Culture and Media Committee on 21 July 2009 (see page 93). The Conservative Party, which had denied that Coulson had any other source of income,
*
issued a statement saying it had been unaware of the payments until the night of Peston’s story. While he was at Number 10, Wapping also reimbursed Andy Coulson’s legal bills for his evidence at the perjury trial of Tommy Sheridan. The following day, 23 August, News International’s new chief executive, Tom Mockridge, informed Coulson that it would no longer pay his legal fees in any litigation arising from phone hacking. Coulson appealed to the courts to force News International to pay. He lost, and is appealing once more.

Scotland Yard was experiencing its own problems, despite receiving some good news. On 17 August, after just twenty-two working days, the Independent Police Complaints Commission’s inquiry had cleared Sir Paul Stephenson, John Yates, Andy Hayman and Peter Clarke of any misconduct in their handling of the phone hacking investigations. However, the IPCC added the public would ‘make its own judgements’ about the wisdom of Stephenson’s acceptance of a free stay at Champneys. It also began an investigation into possible misconduct by Dick Fedorcio, the director of public affairs who had arranged the lunch and dinners with
News of the World
executives.
*

At the same time the Met was worried that some officers were still too friendly with the press. In August it had arrested an unnamed 51-year-old male detective on suspicion of making ‘unauthorized disclosures’ from Operation Weeting. Shortly afterwards, in the week beginning 29 August, officers questioned Amelia Hill, the
Guardian
reporter who had co-written the Milly Dowler story and who had broken news of several arrests and the recovery of the bag found outside Rebekah and Charlie Brooks’s home (which was still being held by police).

On 16 September, four days after Merseyside’s police chief Bernard Hogan-Howe became the Met’s new Commissioner, Scotland Yard announced its intention to use the Police and Criminal Evidence Act, and possibly also the Official Secrets Act, to force Hill and the
Guardian
to hand over her notes on the Dowler story and others. The Met said: ‘We recognize the important public interest of whistleblowing and investigative reporting, however neither is apparent in this case. This is an investigation into the alleged gratuitous release of information that is not in the public interest.’

The suggestion that the Milly Dowler story had not been in the public interest staggered journalists, lawyers and MPs – it had prompted the furore which had exposed the full extent of Wapping’s wrongdoing, led to the establishment of the Leveson Inquiry (yet to start) and sank Rupert Murdoch’s attempts to seize full control of BSkyB. Index on Censorship and the National Union of Journalists condemned the move – which irritated all Fleet Street papers, including those owned by News International, to which heavy-handed action by a police force said to have been in its pocket was unwelcome.
The Sunday Times
urged the Met to ‘call off its legal dogs’. The Met briefed that a superintendent in its Professional Standards Directorate had fired the legal salvo without the knowledge of Hogan-Howe, and the Attorney General, Dominic Grieve, and the Director of Public Prosecutions, Keir Starmer, made it known that they had not been consulted either. Three days before the planned hearing on 23 September, Scotland Yard backed down, maintaining it had not intended to target journalists or disregard their duty to protect sources. The decision was welcomed but the Met had once again demonstrated that it was susceptible to political and media pressure.

In Britain the police investigation and the number of civil cases were growing, but News Corp’s greatest problem lay in the United States, where amid the flurry of news in July, the Department of Justice had ordered an FBI investigation into whether the company had breached the Foreign Corrupt Practices Act. Under the Act News Corp’s directors could be jailed for five years if they had authorized or known about bribery in the UK but had failed to stop it. By now the American directors had become thoroughly disenchanted with the British newspapers. The
Sun
and the
News of the World
had thrown off cash from the 1980s onwards, but now profits were dwindling and they were causing serious reputational and shareholder damage: in 2010 globally newspapers contributed only $6 billion of revenue while TV and film made $22 billion.

The company decided on a three-track approach. Firstly, it would cooperate fully with the police. In the past it had paid lip service to helping the police while deliberately obstructing their inquiries; that strategy was no longer working because the company was no longer the toast of policemen and politicians and a humiliated Scotland Yard was mounting a proper investigation. News Corp’s Management and Standards Committee called in lawyers from the City firm Linklaters to root out criminality at all NI titles, including the
Sun
,
The Times
and
Sunday Times
. Up to 100 lawyers began interviewing staff on the three titles and combing through old expenses claims, invoices and emails dating back years. Up to twenty police officers from Operation Elveden were embedded with the lawyers and asked them to search the company’s computer database, which had been forensically recovered, including all the deletions. They were also able to begin examining all the emails on the second server which the IT whistleblower had alerted Tom Watson to in 2010 and about which Watson had subsequently informed Sue Akers.

Secondly, the company stepped up its efforts to settle the rising number of phone hacking cases in the civil courts. On 18 August, it paid Leslie Ash and Lee Chapman a ‘healthy six-figure sum’ and, on 19 September, it struck a deal to settle the most embarrassing case of all – that of the Dowlers. Mark Lewis had negotiated a vast settlement – £2 million from the company for the Dowlers and £1 million directly from Rupert Murdoch for a charity of their choice. The settlement – fifty times the
News of the World’
s record non-hacking privacy payout to Max Mosley – suggested that the £20 million Wapping had notionally set aside in April for dealing with the scandal would fall well short of what was needed. The company also decisively cut its ties with those it deemed had acted wrongly. Previously, during the cover-up, Wapping had helped erring members of its family, paying off Goodman and Mulcaire and remunerating Andy Coulson while he was working for the Conservatives, but now it said it would ‘vigorously contest’ employment tribunal claims from the
News of the World’
s former news editor Ian Edmondson, who had launched an unfair dismissal claim in April, and its chief reporter Neville Thurlbeck. In his first public statement since his arrest, on 30 September Thurlbeck indicated that the blame for hacking lay with others: ‘I say this most emphatically and with certainty and confidence that the allegation which led to my dismissal will eventually be shown to be false. And those responsible for the action, for which I have been unfairly dismissed, will eventually be revealed.’ Ominously, he added: ‘There is much I could have said publicly to the detriment of News International but so far have chosen not to do so.’

Thirdly, while seeking to cooperate with the police in their inquiries, the company stuck by its chief executive, James Murdoch, despite growing questions about his role arising from the evidence of two of Wapping’s recently departed executives, Colin Myler and Tom Crone. Appearing before the Culture Committee on 7 September, Myler and Crone (in line for large pay-offs
)
appeared reluctant to launch a full-frontal attack on News International, but equally they did not wish to be held culpable for the cover-up. They were adamant that James Murdoch had known about the ‘For Neville’ email when he signed off the payment to Gordon Taylor. ‘Mr Murdoch is the chief executive of the company,’ Myler said. ‘He is experienced, I am experienced, Mr Crone is experienced. I think everyone perfectly understood the seriousness and significance of what we were discussing. There was no ambiguity about the significance of that document.’ Looking every part the urbane lawyer with his silvery hair and sharply cut suit, Tom Crone stated laconically: ‘We went to see Mr Murdoch and it was explained to him what this document was and what it meant.’ Within hours, News Corp released a statement from James Murdoch saying bluntly: ‘Neither Mr Myler nor Mr Crone told me that wrongdoing extended beyond Mr Goodman or Mr Mulcaire.’ The Culture Committee decided to recall News Corp’s deputy Chief Operating Officer, meaning that he would face another showdown with MPs and undergo hours of questioning about his recollection of events.