U.K. Phone Hacking Report: News Corp. CEO Rupert Murdoch 'Not Fit' to Lead Major International Company

3:37 AM PST 05/01/2012 by Georg Szalai , Stuart Kemp

UPDATED: A parliamentary committee also condemns Murdoch, his son James Murdoch and the conglomerate for having shown "wilful blindness" amid allegations.

LONDON -- A committee of the U.K. Parliament on Tuesday unveiled a highly anticipated report on the News Corp. phone-hacking scandal, criticizing CEO Rupert Murdoch as "not a fit person to exercise the stewardship of a major international company."

It also criticized the conglomerate's News International U.K. newspaper unit and some of its executives for not being proactive or misleading probes into the hacking scandal. His son, News Corp. deputy COO James Murdoch, and former Dow Jones CEO Les Hinton were among those criticized.

James Murdoch used to oversee the conglomerate's U.K. newspaper unit News International, which published the now-shuttered News of the World tabloid that has been the focus on the phone-hacking probes, as chairman. He showed "willful ignorance," said the report from the select committee on culture, media and sport that is made up of members of all political parties represented in Parliament.

As expected, the report stopped short of accusing the Murdochs of misleading Parliament about their level of knowledge about the hacking activities.

Hinton was criticized by the committee for his past evidence. "Les Hinton misled the committee in 2009 in not telling the full truth about payments … and in the extent of his knowledge of allegations of widespread phone hacking," it concluded.

Individuals who mislead Parliament can be called to the House of Commons to apologize, but members of the committee said Tuesday they would refer the report to the Parliament, which can decide any disciplinary actions.

The parliamentary committee also heaped blame on former News of the World editor Colin Myler and top lawyer Tom Crone. Both Murdochs told a media ethics panel last week that they had been in charge of editorial standards at the paper.

"Tom Crone and Colin Myler misled the committee in 2009 by answering questions falsely about their knowledge of evidence that other News of the World employees had been involved in phone hacking," the committee report said. "Whatever the reason, Tom Crone and Colin Myler ought to have acted upon the information they had on phone hacking, and in failing to do so, they misled this committee."

Former NOTW editors Rebekah Brooks and Andy Coulson were not singled out in the report as they were arrested as part of the hacking investigations. The committee is expected to report on their roles if and when it is free to do so.

"Corporately, the News of the World and News International misled the committee about the true nature and extent of the internal investigations they professed to have carried out in relation to phone hacking, by making statements they would have known were not fully truthful and by failing to disclose documents which would have helped expose the truth," the report concluded. "Their instinct throughout, until it was too late, was to cover up rather than seek out wrongdoing and discipline the perpetrators, as they also professed they would do after the criminal convictions. In failing to investigate properly, and by ignoring evidence of widespread wrongdoing, News International and its parent News Corp. exhibited willful blindness, for which the companies’ directors -- including Rupert Murdoch and James Murdoch -- should ultimately be prepared to take responsibility."

In a first statement, News Corp. said: "News Corporation is carefully reviewing the select committee’s report and will respond shortly. The company fully acknowledges significant wrongdoing at News of the World and apologizes to everyone whose privacy was invaded."

A press conference with members of Parliament who had worked on the committee report showed some disagreement between the Conservative Party members and others about whether to include the phrase that Murdoch was "not fit" to run a company.

Labour Party lead member Tom Watson, a longtime critic of Rupert Murdoch who had suggested the inclusion of the line, said the mogul was mostly to blame for setting a culture that allowed phone hacking. "More than any individual, he is to blame," he said. "It is his company, his culture, his people, his business, his failures, his lies, his crime."

Conservative Damian Collins said that four committee members voted against the description of Murdoch as unfit, arguing there was no evidence connecting him to knowledge of what went on at News International. He said he and his colleagues felt that the description was based on personal opinions and that U.K. media regulator Ofcom was the only authority that should make such decisions.

Another Conservative representative, Philip Davies, said Murdoch has run his company since before he was born and has employed thousands of people. He also emphasized that there was "absolutely no evidence" that he knew about the phone hacking. "We all make mistakes," he said.

Davies said not all Conservative members of the committee agreed on all the amendments but voted in different ways on different topics.

Adrian Sanders, the only Liberal Democrat to vote, said he voted for the final report because "we all have a collective responsibility to seek the truth." The Liberal Democrats are the Conservatives' coalition partner in the current British government.

Committee chairman John Whittingdale emphasized, though, that despite the disagreement over the wording on Murdoch's fitness to run a company, "a very large part of this report was unanimous." He said that the committee was calling on News Corp. to reveal its internal hacking-probe findings and conclusions.

Asked what News Corp. shareholders should do following the report, Conservative Party member Louise Mensch said it was not her job to advise shareholders but emphasized that there were "clear corporate governance" failures at News Corp. Highlighting that Myler is now the editor of the New York Daily News, she said she hopes "a little bit of attention will be paid" to that.

Mensch later told Sky News that Watson's push to describe Murdoch as not fit might focus too much attention on the fact that this one section of the committee report was hotly debated. She argued that this ultimately will allow News Corp. to get off the hook.

E-mail: Georg.Szalai@thr.com

Twitter: @georgszalai

 

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