James Murdoch

LONDON — A committee of British lawmakers called Rupert Murdoch unfit to run his global media empire — a finding that reflects just how deeply the phone hacking scandal born of his defunct News of the World has shaken the relationship between the press and politics.

The divisive ruling Tuesday against Murdoch, his son James and three of their executives also exposed the waning influence of the media tycoon, and could jeopardize his control of a major broadcaster.

Parliament’s Culture, Media and Sport committee — a panel that scrutinizes the standards of Britain’s press and sports authorities — began an inquiry amid disclosures about widespread tabloid hacking of voice mail, concerns over bribes paid to police for scoops, and politicians who may have overstepped the bounds by cozying up to key players in the Murdoch empire.

Tarring the credentials of both the 81-year-old media mogul and James Murdoch, a former executive chairman of News Corp.’s U.K. newspaper division, the committee’s scathing words on the Murdochs could affect their controlling stake in British Sky Broadcasting.

Britain’s broadcasting regulator Ofcom acknowledged it was studying details of the report, which unanimously agreed that three key News International executives had misled Parliament — a verdict that can see offenders hauled before legislators to make a personal apology.

“We conclude, therefore, that Rupert Murdoch is not a fit person to exercise the stewardship of a major international company,” the report said.

In a message to News International staff, Murdoch said he found the findings “difficult to read” and that he deeply regretted what took place.

“We certainly should have acted more quickly and aggressively to uncover wrongdoing,” he wrote. “There is no easy way around this, but I am proud to say that we have been working hard to put things right.”

Among the 11-member committee, four lawmakers from Britain’s Conservative Party — which Murdoch’s flagship The Sun tabloid now supports — refused to endorse the report. It was supported by one Liberal Democrat and five members of the opposition Labour Party, which Murdoch ditched before Britain’s 2010 national election.

The chairman, a Conservative, did not vote in line with parliamentary convention.

Philip Davies said the conclusion on Murdoch supported by Labour members was “not only over the top, but ludicrous.”
The fallout has jolted Prime Minister David Cameron, who lost his top media adviser over the scandal and is fighting demands to sack a Cabinet minister over the links his office had to some of Murdoch’s key staff.

Cameron may also face new embarrassment if, as expected, Britain’s media ethics inquiry orders him and ex-News of The World editor Rebekah Brooks to disclose scores of text messages they exchanged while she ran the tabloid.

Murdoch closed down the 168-year-old News of the World in July amid a public outcry over intercepted voice mail of celebrities and the murdered schoolgirl Milly Dowler.

Ofcom, which decides if broadcasters in the U.K. are “fit and proper” to hold a license, launched an inquiry last year into BkyB following revelations about phone hacking.

If the regulator were to determine that News Corp. does not meet that test, it could be forced to divest part of its 39 percent stake, depriving it of a controlling interest in the British broadcaster.

British law offers no legal definition of “fit and proper,” meaning that Ofcom must use its judgment in deciding whether executives should be trusted to hold a broadcasting license. Analysts say that likely leaves any Ofcom decision open to legal challenges in the courts.

The committee said the House of Commons would need to decide on the punishment meted out to the three executives accused of misleading it: Colin Myler, an ex-News of The World editor who now works as editor-in-chief at the New York Daily News; Tom Crone, the British tabloid’s longtime lawyer; and Les Hinton, the former executive chairman of News International and the former publisher of The Wall Street Journal.

All three issued statements denying they had misled the committee, or had taken part in any cover-up of phone hacking.

Parliament’s power to fine such offenders or send them to jail lapsed in the 18th century — and a cell underneath Big Ben has long been in disuse. However, offenders can be called to the House of Commons to be publicly admonished, a sanction last used against a non-lawmaker in 1957.

Murdoch has insisted he was unaware that hacking was widespread at the News of The World, blaming staff for keeping him in the dark and failing to inform him about payouts to victims.

The panel agreed that James Murdoch, 39, was badly at fault over the scandal — but they were again divided over the tone of their criticism. Lawmakers said they agreed that phone hacking at the News of The World dated back to at least 2001, and that James Murdoch could have halted the practice as early as 2008 if he had acted correctly.

James Murdoch had displayed a “lack of curiosity ... willful ignorance even,” in failing to demand evidence that would have shown the extent of phone hacking, the report said.

Legislators agreed that both Murdochs must be “prepared to take responsibility” for corporate failures.

“Everybody in the world knows who is responsible for the wrongdoing of News Corp. — Rupert Murdoch. More than any individual alive, he is to blame,” committee member Tom Watson, a Labour lawmaker and among the tycoon’s fiercest critics, told reporters. “It is his company, his culture, his people, his business, his failures, his lies, his crimes.”

Conservative panel members said divisions over Murdoch would undermine the serious findings made on Myler, Crone and Hinton — who worked as a top Murdoch aide on both sides of the Atlantic for decades and resigned from his post as the publisher of The Wall Street Journal amid the hacking scandal.

Legislators said Hinton had misled them over his repeated claim that hacking was not rife at the News of The World, while Myler and Crone had failed to present factual accounts of what they knew. All deny that charge.

Still, some analysts say the report’s savage criticism of the Murdoch empire could have implications in the United States.

Murdoch’s U.S. media empire includes the Fox television network and 20th Century Fox film studio, publisher Harper Collins, Dow Jones Newswires, The Wall Street Journal and the New York Post. He also owns British newspapers The Times, The Sunday Times and The Sun; the stake in BSkyB; and outlets around the world from broadcaster Sky Italia to Australian cable provider Foxtel.

“A question for Americans is whether his empire and methods will come under scrutiny in this country,” said Louis Ureneck, a journalism professor at Boston University.

News Corp. acknowledged the panel’s report had uncovered some “hard truths,” including that its “response to the wrongdoing was too slow and too defensive, and that some of our employees misled the select committee.”

However, it denounced “the unjustified and highly partisan” attack on Rupert Murdoch — noting objections raised by panel members.

The corporation has been rocked by the scandal, which has claimed the jobs of a string of senior executives and several top British police officers.

Lawmakers lambasted Britain’s top prosecutor and Scotland Yard’s initial failure to investigate tabloid wrongdoing properly.

The police dropped their phone hacking investigation in 2007, only beginning a new inquiry in 2010. London’s then police chief quit amid the scandal, while several serving police officers have been arrested.

Police appeared to have “no interest or willingness to uncover the full extent of the phone hacking,” and repeatedly failed to act on evidence they had, the report said.

A total of 43 people, including at least 25 past and present employees of News International, have been arrested in a new investigation into phone hacking, bribery and computer hacking.

Seeking not to prejudice those police inquiries, the panel declined comment on the culpability of ex-News of The World editors Brooks, an ex-News International chief executive, and Andy Coulson, the former communications director to Cameron.

Lawmakers did, however, criticize Brooks for a culture that permitted illegal acts at her newspaper in the Dowler case.

The claim that the tabloid not only listened to but interfered with messages left on the cellphone of 13-year-old Dowler in 2002 — before she was found dead — appalled many Britons as it exposed how grief-stricken ordinary people, in addition to celebrities and politicians, had been pursued.

Murdoch has so far paid out millions to settle lawsuits from 60 celebrities, athletes, politicians and other public figures whose voice mails were hacked. Dozens more lawsuits have been filed.

Printed on Wednesday, May 2, 2012 as: UK lawmakers call Murdoch 'unfit to run' media empire

A protester dressed up as Rupert Murdoch poses for photographs as he demonstrate outside the Leveson inquiry at the High Court in London on Tuesday.

Photo Credit: The Associated Press

LONDON — News Corp. executive James Murdoch’s behind-the-scenes lobbying campaign spilled out into the public domain Tuesday, casting a harsh light on the British government’s Olympics czar.

Murdoch was speaking before the media ethics inquiry set up in the wake of the country’s phone hacking scandal, which has shaken the U.K.’s establishment with revelations of journalistic misdeeds, police corruption, and corporate malpractice.

Some of Murdoch’s testimony revisited his own role in the scandal, but far more explosive were revelations about how senior British ministers went out of their way to smooth the path for one of his biggest-ever business deals.

Particularly damning was correspondence showing how Olympics czar Jeremy Hunt secretly backed Murdoch’s multibillion dollar bid for full control of satellite broadcaster British Sky Broadcasting Group PLC. As the minister charged with deciding whether to refer the takeover deal to Britain’s competition authority, Hunt was meant to have been neutral.

“I am approaching the decision with total impartiality and following strict due process,” Hunt told lawmakers in January 2011. But a cache of text messages and emails published by Leveson’s inquiry Tuesday suggested that Hunt was fighting on Murdoch’s side the whole time.

“He said we would get there at the end, and he shared our objectives,” was how an email from News Corp. lobbyist Frederic Michel described Hunt’s attitude.

Other emails appeared to capture Hunt’s office providing Murdoch with sensitive intelligence on his political opponents and offering advice on how best to present his bid. At one point Adam Smith, Hunt’s special adviser, sends a text message to Michel boasting that “I [have] been causing a lot of chaos and moaning from people here on your behalf.”

One message even quoted Hunt’s statement a day before it was due to be delivered to the House of Commons — a breach of parliamentary protocol which Michel described as “absolutely illegal.”

Later Tuesday, Hunt issued a statement saying that some of the evidence “reported meetings and conversations that simply didn’t happen.” He said he has asked to move forward his appearance at the Leveson inquiry so he can present his side of the story.

“I am very confident that when I present my evidence the public will see that I conducted this process with scrupulous fairness,” Hunt said.

During Tuesday’s hearing, inquiry lawyer Robert Jay repeatedly needled Murdoch on the propriety of these back-channel communications.

“Do you think it’s appropriate, Mr. Murdoch, that here you are getting confidential information as to what’s going on at a high level of government?” Jay asked.

Murdoch hesitated before giving an awkward laugh.

“What I was concerned with here was the substance of what was being communicated, not the channel by which it was communicated,” he said.

Murdoch was eventually forced to drop the proposed deal following the eruption of Britain’s phone hacking scandal in July, but the emails could be still be damaging.

As secretary for culture, Olympics, media and sport, Hunt is the most senior government official dedicated to the 2012 Games. If it were proven that he had given Murdoch special favors, his lead role on the games — where a level playing field is guaranteed for all — might be in jeopardy.

Prime Minister David Cameron expressed confidence in the 45-year-old minister, but within minutes of Murdoch’s testimony, opposition politicians were calling on Hunt to step down.

“All politicians, including Labour, became too close to the Murdochs, but this is in a completely different league,” Labour leader Ed Miliband told journalists. “We have Jeremy Hunt engaging in detailed discussions with a party, News Corporation, that is bidding to take over BSkyB and he is supposed to be the impartial judge.”

The nature of the Murdoch family’s links with senior politicians is one of the key questions raised by the phone hacking scandal. Critics of News Corp. argue that Conservative Party politicians — including Hunt — waved through the BSkyB deal in return for favorable press coverage. Murdoch, showing little emotion, repeatedly denied the charge Tuesday.

“I would never have made that kind of a crass calculation. It just wouldn’t occur to me,” he said.

Murdoch’s testimony gave a feel for his company’s considerable clout, detailing 20-odd dinners, lunches, breakfasts and other meetings with Cameron and other leaders — including former prime ministers Gordon Brown and Tony Blair.

Earlier in the hearing Murdoch was forced to defend his record at the head of his father’s scandal-plagued British newspaper arm, saying that subordinates prevented him from making a clean sweep at the now-defunct News of the World tabloid.

Murdoch repeated allegations that the tabloid’s then-editor Colin Myler and the company’s former in-house lawyer, Tom Crone, misled him about the scale of illegal behavior at the newspaper.

Leveson asked Murdoch: “Can you think of a reason why Mr. Myler or Mr. Crone should keep this information from you? Was your relationship with them such that they may think: ‘Well we needn’t bother him with that’ or ‘We better keep it from it because he’ll ask to cut out the cancer’?”

“That must be it,” Murdoch said. “I would say: ‘Cut out the cancer,’ and there was some desire to not do that.”

Murdoch’s father Rupert, News Corp.’s executive chairman, is scheduled to testify before Leveson on Wednesday morning.

Media analyst Paul Connew predicted more pain for British politicians. “James Murdoch’s appearance is only the warm up act,” he said.

Printed on Wednesday, April 25, 2012 as: Murdoch inquiry affects top UK officials