Although speculation as to its contents was in many ways on the mark, the UK government’s select committee report into phone hacking had a few surprises up its sleeve today. Neither Rupert Murdoch nor James Murdoch has been accused of misleading Parliament, but the findings are critical of both. Especially incendiary is a refrain that reads: “Rupert Murdoch is not a fit person to exercise the stewardship of a major international company.” The inclusion of the line was debated by the cross-party panel but ultimately stayed in after a 6-4 vote. In remarks following the report’s publication, lawmakers cautioned that this particular conclusion should not deflect from the report’s initial aim — namely to determine whether executives at News Corp-controlled News International misled the committee during 2009 sessions on phone hacking.
Despite those warnings, there could be a fair amount of fallout. The express choice of the words “fit person” is interesting. UK regulator Ofcom is currently weighing whether News Corp and James Murdoch are “fit and proper” to hold a broadcast license on behalf of BSkyB. If Ofcom were to be moved, News Corp could be forced to reduce its stake in the satcaster to a non-controlling level and James could give up his role as a non-executive board member.
Meanwhile, UK Prime Minister David Cameron is already on the hot seat over Culture Secretary Jeremy Hunt. Hunt’s office exchanged over 150 emails with the office of James Murdoch during the BSkyB bid process and Cameron is being pressed to open an inquiry. That it was members of Cameron’s own Conservative Party who voted against calling Rupert Murdoch unfit is likely to make the politician uneasy as Britain heads to the polls for local elections this week. Cameron has recently said he felt there was “too much closeness” in his relationship to Murdoch.
The entirety of the “not a fit person” section of the committee’s report reads: “On the basis of the facts and evidence before the Committee, we conclude that, if at all relevant times Rupert Murdoch did not take steps to become fully informed about phone-hacking, he turned a blind eye and exhibited wilful blindness to what was going on in his companies and publications. This culture, we consider, permeated from the top throughout the organisation and speaks volumes about the lack of effective corporate governance at News Corporation and News International. We conclude, therefore, that Rupert Murdoch is not a fit person to exercise the stewardship of a major international company.”
Ahead of the report it had been speculated that James, who formerly ran News International, would be severely criticized for failing to properly investigate the goings on at his own newspapers. And indeed he was. In a majority vote, the committee said it was “astonished” that Murdoch did not seek more information with regard to potential misdeeds at News Of The World. “Had James Murdoch been more attentive to the correspondence that he received at the time, he could have taken action on phone hacking in 2008 and this committee could have been told the truth in 2009,” the report said. It was referencing the now infamous “For Neville” email in which widespread phone hacking at the paper is discussed but which Murdoch has maintained he did not read fully.
James Murdoch did not appear at the 2009 hearings. Both he and Rupert appeared together before the select committee last July when the scandal at the now-shuttered tabloid blew wide open after it was revealed the paper had intercepted voicemails on the phone of murdered schoolgirl Milly Dowler. James also later appeared before the committee in November. He stepped down from his role at News International in February and the following month penned a letter to the committee saying, “I have not misled Parliament. I did not know about, nor did I try to hide, wrongdoing. I do not believe the evidence before you supports any other conclusion.”
Although the committee stopped short of accusing the Murdochs of deceit, it did take a swipe at their managerial skills: “Even if there were a ‘don’t ask, don’t tell’ culture at News International, the whole affair demonstrates huge failings of corporate governance at the company and its parent, News Corporation,” the report said.
The committee reserved its most concrete findings for Les Hinton, James Murdoch’s predecessor at News International and a once close ally of Murdoch Senior. The panel said Hinton had misled Parliament by not having informed it of widespread phone hacking at News Of The World back in 2009. Also taken to task are former News Of The World editor Colin Myler and legal counsel Tom Crone. In his testimony before the Leveson Inquiry into UK press ethics last week, James Murdoch also pointed a pretty stiff finger at Myler and Crone. The pair has contended they informed Murdoch of the extent of hacking; Murdoch maintains they did not.
The News International stance has been that it did not understand the full extent of phone hacking inside the company until new evidence emerged in a civil case brought by actress Sienna Miller in 2010.
News International employees arrested to date, including Rebekah Brooks, were criticized in the report. This was to avoid prejudicing any pending criminal proceedings.
The government has 60 days to respond to the report.