Dial M for Murdoch: News Corporation and the Corruption of Britain (45 page)

Nominated as a proxy shareholder by the US trade union group American Federation of Labor and Congress of Industrial Organizations, Tom Watson had flown to LA for the meeting. Determined to make the most of his minute, he stressed the scale of the allegations facing News Corp: 200 British police were investigating not just Glenn Mulcaire but Daniel Morgan’s former business partner Jonathan Rees, and the allegations involved not just phone hacking but computer hacking, perjury and conspiracy to pervert the course of justice. News Corp was facing a ‘Mulcaire Two’ [Jonathan Rees] as victims of computer hacking sued for invasion of privacy. He said: ‘You haven’t told any of your investors about what is to come, and I have to say Mr Murdoch, if I know about this, then with all the resources you’re putting in to clearing up the scandal, then you must know about this too.’

‘What happened a few years ago was absolutely wrong,’ Murdoch replied, ‘and I have said so and I’ve said that we are all ashamed of it. But these recent rumours you speak about have all been worked by us with the police. In fact 90 per cent of what the police know comes from all the searches of emails and tens of thousands of things we are supplying them with.’

The Murdochs survived the rebellion but outside the family’s holding, 67 per cent of non-aligned shareholders had voted to depose James Murdoch and 64 per cent his brother Lachlan. Non-family shareholders also opposed (unsuccessfully) Rupert Murdoch’s $33 million pay. Following the meeting, a senior analyst from Invesco, Kevin Holt, estimated that News Corp was trading at a 40 per cent discount to its true value because of its recent failures, including a 20 per cent ‘Rupert discount’ – ‘because of the acquisitions and the risk of capital destruction’.
³

In the countdown to James Murdoch’s second appearance before the Commons Culture Committee, News Corp’s policy of dumping former supporters stirred further trouble. Derek Webb of Silent Shadow revealed on 7 November that the
News of the World
had ordered him to follow more than 100 high-profile individuals over eight years – right up to the paper’s closure in July. He was disclosing his covert work, he said, because News International had refused to give him the ‘loyalty’ payment received by other freelancers after the
NoW
’s demise. Among his targets were Boris Johnson and his friend Anna Fazackerley; the former Liberal Democrat leader Charles Kennedy, and Lord Goldsmith, the Attorney General, whom he had tailed in early 2005. Others included the Chelsea manager José Mourinho; Simon Cowell; Elle Macpherson; Prince Harry’s ex-girlfriend Chelsy Davy, whom he monitored after she arrived at Heathrow Airport; and Prince William, whom he claimed he had followed for days without attracting the attention of Royal Protection Squad officers.

In an interview with
Newsnight
, Webb said: ‘Ninety-five per cent of the job, I was never rumbled, even following them for weeks on end. Basically I would write down what they were wearing at the time, what car they were in, who they met, the location they met, the times … I don’t feel ashamed. I know to a certain extent people’s lives have been ruined with front page stories but … if I wasn’t doing it, somebody else would have been.’
⁴

Days before James Murdoch’s reappearance before the Culture Committee, News International experienced another problem. As part of News Corp’s checks at Wapping, News International had passed to police information about the
Sun
’s Thames Valley reporter Jamie Pyatt, whose scoops included Prince Harry dressing in Nazi regalia for a fancy dress party. On 7 November, officers from Operation Elveden arrested Pyatt on suspicion of bribing police officers. The arrest caused serious concern among
Sun
journalists because it suggested that the management was now actively seeking to turn over reporters to the police. One colleague commented: ‘They have opened up a Pandora’s box.’
⁵
At a meeting with staff, the
Sun
’s editor Dominic Mohan, a former showbusiness reporter who had once mockingly thanked Vodafone for its help on stories,
*
reassured staff that Rupert Murdoch had committed himself to the paper’s future.

On 10 November, members of the public began queuing at 7 a.m. for a place at James Murdoch’s hearing. At 11 a.m., Murdoch took his seat in front of the Culture Committee. In place of the passive-aggressive technocrat who had given evidence in July came a more confident, assured witness, but he still answered questions in an anodyne and obfuscatory manner: he did not want to make good television.

Murdoch’s greatest difficulty was how to explain that he had no knowledge that wrongdoing had spread beyond Clive Goodman when he authorized the Taylor pay-off. In the closing moments of the hearing, he had told Tom Watson he had neither seen nor been aware of the ‘For Neville’ email. Now, he admitted he had been made aware of the email’s existence, but insisted he had not been shown it; nor told it indicated wrongdoing was rife at the
Screws
. He also denied seeing the advice from Michael Silverleaf QC. Committee members were understandably surprised at his claim that he had not read Silverleaf’s opinion, because it was the basis on which he subsequently approved the largest privacy settlement in British legal history.

Tom Watson started his questions by pointing out that last time the Murdochs and their senior staff had appeared before the committee he had had to be careful in his questioning of Rebekah Brooks because she had been arrested and he wanted to be sure he was free to ask Murdoch anything: could he say whether he had been arrested? Keeping his calm, Murdoch replied wearily: ‘I have not been arrested, and I am not currently on bail. I am free to answer questions, and I would like to.’ Murdoch insisted that he was correct to say in July that the company had only learned of more widespread wrongdoing at the end of 2010. ‘The facts did not emerge in 2008,’ he said. ‘Certain individuals were aware. The leading counsel’s opinion was there. The “For Neville email”, so called, was there. None of those things were made available or discussed with me and I was not aware of those things.’ Murdoch’s insistence that he had not misled the committee logically meant he thought that Myler and Crone had done so, but he was reluctant to say so:

WATSON: Mr Murdoch, let me just ask you again: did you mislead this committee in your original testimony?

MURDOCH: No, I did not.

WATSON: So if you did not, who did?

MURDOCH: As I have written to you and said publicly, I believe this committee was given evidence by individuals either without full possession of the facts or, now, it appears – in the process of my own discovery in trying to understand as best I can what actually happened here – it was economical. I think my own testimony has been consistent. I have testified to this committee with as much clarity and transparency as I possibly can, and where I have not had direct knowledge in the past, since I testified to you last time, I have gone and tried to seek answers and find out what happened, and where the evidence is and what is there; and that is what I am here to do.

WATSON: So was it Mr Crone, a respected and in-house legal adviser for many years?

MURDOCH: As I said to you, as I wrote to you, and I issued a public statement, certainly, in the evidence that they gave to you in 2011, with respect to my knowledge, I thought it was inconsistent and not right, and I dispute it vigorously.

WATSON: So you think Mr Crone misled us?

MURDOCH: It follows that I do, yes.

WATSON: And so do you think Mr Myler misled us as well?

MURDOCH: I believe their testimony was misleading, and I dispute it.

WATSON: There are allegations of phone hacking, computer hacking, conspiring to pervert the course of justice and perjury facing this company and all this happened without your knowledge?

MURDOCH: As I have said to you, Mr Watson, and to this committee on a number of occasions, it is a matter of great regret that things went wrong at the
News of the World
in 2006. The company didn’t come to grips with those issues fast enough …

With an eye on media coverage of the hearing, Watson countered: ‘Mr Murdoch, you must be the first mafia boss in history who didn’t know he was running a criminal enterprise.’

‘Mr Watson, please,’ Murdoch replied disdainfully. ‘I think that’s inappropriate.’

To Murdoch’s claim that he had not checked the QC’s opinion before authorizing the Taylor settlement, the Conservative MP Damian Collins remarked: ‘Honestly, it may not be the mafia, but it is not
Management Today
.’ Philip Davies MP found it ‘absolutely incredible’ that Murdoch would not have checked the QC’s opinion before settling.

Murdoch said News International’s surveillance of the lawyers Mark Lewis and Charlotte Harris was ‘just not acceptable’. Asked about surveillance of members of the Culture Committee, he said: ‘I am aware of the case of the surveillance of Mr Watson; again, under the circumstances, I apologize unreservedly for that. It is not something that I would condone, it is not something that I had knowledge of and it is not something that has a place in the way we operate.’

The Liverpudlian MP Steve Rotherham, a campaigner for victims of the Hillsborough disaster (fans had been slurred by the
Sun
), asked Murdoch whether, if the
Sun
had been hacking phones too, he would close that paper too? To the shock of committee members, the media and the paper’s journalists, Murdoch replied: ‘I don’t think we can rule, and I shouldn’t rule, any corporate reaction to behaviour of wrongdoing out.’

By sticking to his defence, no matter how questionable, Murdoch had successfully avoided incriminating himself but in doing so had been forced to plead gross ignorance of the working of his company and that he had not bothered to read crucial documents. This was not good for the reputation of the deputy chief operating officer of a multibillion-dollar media conglomerate.

In its leading article the next day,
The Times
nonetheless rallied to the corporate flag:

James Murdoch yesterday came to Parliament to answer two sets of questions. The first were about his personal integrity. The second were about the culture of the company in which he is a senior executive. Mr Murdoch was recalled by the MPs to answer allegations that, when he had last appeared as a witness, he misled them. On this, as on other questions that touched on the integrity of his personal conduct, he was clear, consistent and convincing.

Opinion was divided as to whether Tom Watson was right to liken him to a mafia boss.

21

The Press on Trial

Are these all real headlines?

– Lord Leveson, 29 November 2011

For decades reporters had been drawn through the imposing Victorian stone archway of the Royal Courts of Justice in London by the prospect of scandal-packed cases. In its light and modern Court 73 on 14 November, a judge began a hearing with a sensational mix of celebrity, sex, power and crime; this time the press itself was on trial. The inquiry was launched in July under pressure by the Prime Minister, who tasked Lord Leveson to inquire, not specifically into News International, but into the ‘culture, practice and ethics’ of the whole industry, with a view to establishing a better system of regulation which would banish once and for all phone and computer hacking, blagging and bribery, and the associated issues of intrusion, exaggeration and fabrication. Although the scandal had begun with a single Wapping title, the Prime Minister had put all newspapers in the dock. Lord Leveson said his task was to answer the question: ‘Who guards the guardians?’

On 14 November, Robert Jay QC, the inquiry’s counsel, outlined its concerns about the press and the failure of the police, politicians and the Press Complaints Commission to control its sometimes overweening and destructive power. He made plain the chasm which separated the suspected scale of News International’s phone hacking and the charges brought during the original investigation in 2006. There were twenty-eight ‘corner names’ in Glenn Mulcaire’s notes (one referring to the
Mirror
). Some were more prolific than others. Of the 2,266 ‘taskings’, 2,143 of them, 95 per cent, were by four prolific individuals: 1,453 for ‘A’; 303 for ‘B’, 252 for ‘C’ and 135 for ‘D’. According to the Metropolitan Police, the
Screws
’ hacking operation had begun by 2002, Milly Dowler being the first named victim. ‘We, however, have recently seen a document which emanates from May 2001. The police believe it continued until 2009,’ Jay said: ‘It is clear that Goodman was not a rogue reporter. Ignoring the private corner name and the illegibles, we have at least twenty-seven other News International employees. This fact alone suggests wide-ranging illegal activity within the organization at the relevant time …’

One of the tasks before the inquiry, he explained, was to consider the regulation of the press. The Press Complaints Commission had failed – and the press had been given second chances before, a long time ago. In 1991, the cabinet minister David Mellor had warned newspapers were ‘drinking in the last chance saloon’. The PCC, Jay pointed out, lacked the power to fine newspapers or make them print apologies on the same page as the offending story: ‘All of this gives the impression that the PCC is operating largely without teeth and that in the ruthless world in which it is forced to operate, something sharper is required.’