How will it end for Rupert Murdoch? This is one way…

Let’s cut to the chase. When London’s Metropolitan Police says it is investigating possible corporate charges against News Corp UK, the real target is Rupert Murdoch. The stakes in the hacking saga just got much, much higher..

 

Three weeks ago US gossip site Gawker.com ran a story about emails involving Rebekah Brooks and Rupert Murdoch which it said were due to emerge in Brooks’ trial that begins on September 9. Like most unproven gossip it was intriguing, offputting and horribly unfair. All parties denied it.

It was also mystifying. Leave aside the disputed provenance of Gawker’s story (that hasn’t stopped senior News Corp circles talking about it), how did references to Rupert Murdoch come to have any possible relevance in material prepared for a criminal trial? What were they thinking?

Brooks and five others are charged with conspiracy to pervert the course of justice. There’s never been any suggestion that Murdoch was connected with this. There was no narrative to explain how any emails of the sort Gawker alleged might surface in a prosecution brief.

The possibility that London’s Metropolitan Police are taking an interest in Murdoch sharpened last Saturday with revelations by Tom Harper in The Independent that the Met was considering laying corporate charges against News International (now renamed News Corp UK & Ireland). The target here would be News International the company rather than the directors.

News Corporation is reported to have claimed that such a charge would “kill the company and put 46,000 jobs in jeopardy”. That seems a little on the high side. But it would put at least one job in jeopardy.

For while Murdoch himself is not the target, the consequences of charging News International as opposed to charging News International directors including Rupert Murdoch himself may be indistinguishable—they would both spell the end of his control of at least the greater part of his split empire, 21st Century Fox.

Currently the odds seem to be against either of these things happening, but Murdoch must bitterly regret the comments he made to Sun journalists in March.

Harper’s account suggests a different narrative has been playing out for Murdoch’s empire in private in the last 16 months, beginning in mid-March 2012. That’s the date that News Corp’s British lawyers Linklaters in response to a specific query from the Met conducted a search of the database of journalists’ emails.

Justice Sir Geoffrey Vos in the High Court in July last year described a possible “old fashioned search”, using the mouse beside him to illustrate the moment of discovery of a particular email: “Bing, bang, bong . . . Gosh!”

The email was sent by a News International executive about a “well-known individual victim” of phone-hacking and contained “an instruction relating to an individual’s phone”, David Sherborne, a barrister for hacking victims, told Justice Vos. The inference here is that a News International executive told a journalist to hack someone’s phone.

Vos ordered the name of the News International executive (who was not Rebekah Brooks) remain confidential along with the message itself. But back in March 2012 it set the scene for the Met to look at News International from a broader perspective.

Fast forward to April 2012, when Rupert Murdoch appeared before the Leveson Inquiry.

What wasn’t known until now was that days before, London Metropolitan Police had asked for copies of board meeting minutes for News International (now renamed News Corp UK).

News Corporation’s Management and Standards Committee had spent tens of millions of pounds providing police incriminating emails of its British journalists, but how were board minutes going to help them prosecute reporters?

That consideration adds a certain urgency to Murdoch’s insistence at Leveson on April 25 that the Management and Standards Committee had uncovered all that was wrong at News International, and it didn’t involve senior management.

“Someone took charge of a cover-up, which we were victim to,” he said. “I think the senior executives were all informed, and – were all misinformed and shielded from anything that was going on there . . .”.

At the time it seemed that Murdoch was defending former NewsInternational CEOs Rebekah Brooks and his son James. Brooks was charged five others on May 15 2012 with conspiring to pervert the course of justice, but this is unrelated to what follows.

Three days later on May 18, according to The Independent, former Deputy Assistant Commissioner Sue Akers wrote to the barrister who chaired the MSM, Lord Grabiner, that there was “an active investigation into the corporate liability of News International”.

To be clear here, the longest serving member of the News International board—if it was a football club he would be the number one ticketholder—was Rupert Murdoch.

In 1997 a former News International director filed an affidavit in the High Court in which he recounted travelling to London to attend a board meeting:

“Mr Murdoch met me near the board room and asked why I was there and expressed surprise that I had ‘no better things to do’. The meetings were a ‘mere formality’ he said and I should have ‘not bothered’ to attend.”

In this account, News International’s board is indistinguishable from Rupert Murdoch’s express will. Subsequent developments may have reduced Murdoch’s role to some degree, but he remained the major force.

Last year’s crisis played out like this: from Akers’ letter on May 18, News and the MSM stopped supplying material to police.

US lawyer Joel Klein, who had been overseeing the MSM, went back to running News Corp’s education unit and News chief counsel Gerson Zweifach took over all police hacking queries. William Lewis’s role running the MSC was also now superfluous.

Akers met Grabiner and New Corp lawyers—presumably including Zweifach—on June 1. There was some sort of agreement reached, because from June 14 the MSM resumed providing material to police.

Akers told the Leveson Inquiry in July: “In mid-May this year, following a development in our investigation, it caused the MSC to reconsider their position and they decided that they would prefer the meetings to be on a more formal basis with lawyers only.”

The Independent says that a month after Akers’ May 18 letter—which would make it some time around June 14 when the MSC resumed relations with the police—Lord Garbiner wrote to the Leveson Inquiry outlining News International’s position, arguing that it would be a “dereliction of duty” to continue co-operating with the Met if they planned a “corporate charge” against the company.

Grabiner said the company was “co-operating” but was “obliged to proceed with some care”.

By July 23 when Akers appeared before Leveson she was able to say, “[The] co-operation continues and we have recently received a substantial amount of information.”

What isn’t clear is what if any representations the Met gave to News Corp about how hard they would pursue a corporate prosecution.

By June 15 the News Corp board meeting in Italy was considering splitting off the newspaper arm.

The mystery March email with the “instruction” about hacking by a News International executive was not turned over to the civil litigants against News until mid-July, apparently an oversight by Linklaters for which they apologised. The email was reported in British papers on July 18 here and here.

On July 20 Rupert Murdoch resigned from the News International board, ending more than 40 years as director. No explanation was offered.

At this point, with News International (renamed News Corp UK) part of the new split-off News Corp, a corporate prosecution against News Corp UK should not damage 21st Century Fox.

The only contagion would be shared directors. It should be clear that no adverse inferences against either Rupert or James Murdoch or other directors are suggested. However as directors of a company which has seen more than 100 people arrested as a result of actions by its employees, which has subsequently been convicted of a corporate charge, it is difficult to imagine that Rupert and James Murdoch, as former directors of News International, could retain their board seats on 21st Century Fox. If they stayed on the board, 21st Century Fox would risk US action against the company and its US broadcasting licenses. How would News Corp CEO Chase Carey cope? I imagine he would manage to restrain his grief.

This is predicated on British authorities going through with a corporate prosecution, which at present on balance seems unlikely. The odds are that Murdoch will come through this unscathed.

News Corp chief general counsel Gerson Zweifach has dismissed the entire phone hacking saga as a product of bad corporate governance—more akin to poor judgement than anything more sinister. He did a video interview with the Wall Street Journal on May 8 2013 to emphasis how profoundly News Corp’s governance had changed. Zweifach didn’t know that his boss had been taped by Sun journalists in March.

As the hugely well-connected contributor on Brown Moses’ blog notes:

Corporate charges would not normally be brought until after all relevant individuals’ prosecutions/convictions have concluded. But first there would be an assessment on whether or not to prosecute. It is striking how the criteria to be met for NOT prosecuting read like a textbook checklist for News Corporation’s re-structuring since the launch of Operations Weeting and Elveden:

Additional public interest factors against prosecution:
A genuinely proactive approach adopted by the corporate management team when the offending is brought to their notice, involving self-reporting and remedial actions, including the compensation of victims… This will include making witnesses available and disclosure of the details of any internal investigation… lack of a history of similar conduct involving prior criminal, civil and regulatory enforcement actions… The existence of a genuinely proactive and effective corporate compliance programme… The offending represents isolated actions by individuals, for example by a rogue director… the company in its current form is effectively a different body to that which committed the offences…all of the culpable individuals have left or been dismissed, or corporate structures or processes have been changed…

The release last month of the tape of that March meeting, where Murdoch belittles the offences his employees are charged with, questions the scope of the police investigation and asserts he knew bribery went on for many years (though he was not speaking of any of the events under police investigation), overwhelms the News Corp effort’s at damage control.It’s exactly the reverse of what News has been trying to say.

If there is “pandemonium” in News Corp UK management ranks at the possibility of a corporate prosecution, as the Independent reports, it’s the potential effect on Murdoch which is the real issue.

It still looks an outside chance. But if the damage control fails, for Rupert Murdoch, after 60 years in newspapers, this is one possible ending.

3 thoughts on “How will it end for Rupert Murdoch? This is one way…

  1. Pingback: Hackgate: Met And Murdoch – Covert Deals And Registered Concerns | Inforrm's Blog

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