Murdochs survive, but the fallout is serious

Karen Kissane, London 

Prime Minister David Cameron can now afford to exhale. Rupert and James Murdoch — perhaps not quite so easily.

Mr Cameron now faces a difficult task to build consensus on how best to implement the Leveson principles, given that his deputy, the Opposition and a fair proportion of his own back-bench support the idea of a new press watchdog that is underpinned by law.

Mr Cameron, on the other hand, warns that laws to regulate the press are a danger to freedom of speech. He told the Commons, “In this House, which has been a bulwark of democracy for centuries, we should be very, very careful before crossing that line.”

Whatever political process follows next will be messy and divisive, but Mr Cameron is likely to be relieved that is the worst he has to handle. The Leveson report does not seem to represent a major nightmare for his government (although its 10 kilos and 2000 pages could be consumed in a day only by a wunderkind, so it may contain small landmines that have yet to be discovered).

Here is the good news for Mr Cameron.

Justice Leveson did not savagely criticise former Culture Secretary Jeremy Hunt and his handling of the Murdoch bid for satellite broadcaster BSkyB. He merely rapped Mr Hunt over the knuckles for the unwisdom of appointing garrulous adviser Adam Smith, whose over-friendly communications with News International during the Sky bid process sparked headlines earlier this year.

Justice Leveson did not condemn relationships with red-headed media executives, or loans of horses, or in fact any particular encounter between Mr Cameron and a News International chief. Nor did the judge find that any specific policy by Mr Cameron’s government had been unduly influenced by connections with, or fear of, the Murdoch empire.

His condemnation of the undue closeness of politicians with the press was carefully couched in general terms, along the lines of “a pox on all your houses”.

The British police got a relatively clean bill of health, with a finding that there was no evidence of widespread corruption in their dealings with the media.

And several key players in the phone-hacking scandal got only the most glancing of mentions. This will be due to the law of inverse proportion that follows any arrest: the deeper the legal doo-doo in which a person stands, the less likely a judge such as Leveson would be to examine his or her conduct in any detail, for fear of imperilling future trials.

The fallout for Rupert and James Murdoch and their empire might be more serious.

The phone-hacking scandal and the inquiry it sparked have left them personas-non-grata in British politics. From figures all sought to win over — some saw them as makers and breakers of British governments —  they are now men with whom English politicians cannot afford to be publicly associated. In April, Mr Cameron told Commons, “I think we all, on both sides of this house, did a bit too much cosying up to Mr Murdoch.”

The loss of political influence in Britain has been mirrored across the Atlantic by challenges to the family hold on News Corporation in the United States, where institutional investors have been trying to oust Rupert as chairman and his sons James and Lachlan from the board. The rebels have used the phone-hacking scandal, its costs to the company (around $US 244 million) and related inquiries by US authorities to bolster their case.

The criticisms of the Murdochs by Leveson are carefully-phrased attacks on their corporate competence and, in James’s case, on the accuracy of his evidence to the inquiry. They will add fuel to the fire of already-angry institutional investors.

In the wake of the phone-hacking scandal and the Leveson inquiry, Rupert Murdoch has resigned a few roles; his son has moved on from News International; and Rupert’s beloved newspapers are being split into a separate entity, so as not to sully cleaner and more profitable areas of his empire.

But in the end, does any of that that really matter to a man worth an estimated $US9.4 billion?

 First published on

‘What the hell was going on?’: Leveson questions Murdoch’s credibility

The Murdoch-owned company News International seriously failed in corporate governance over phone-hacking and James Murdoch’s account of a key event was less credible than that of an executive who told a different story, the Leveson inquiry has found.

In a 2000-page report on press ethics released overnight, Lord Justice Leveson also said that:

• Rupert Murdoch exercised power over politicians without having to ask for favours directly;

• An independent watchdog should be established by law to regulate newspapers because they had often behaved outrageously and wreaked havoc in innocent lives; and

• Police made poor decisions in not pursuing phone-hacking but were not driven by fear of, or relationships with, News International executives.

Justice Leveson found that News International and its parent company News Corp had failed to investigate evidence that phone-hacking was widespread among journalists at the News of the World.

“There was serious failure of governance within the News of the World. Given criminal investigation and what are now the impending prosecutions, it is simply not possible to go further at this stage,” he said.

“What can be said is that there was a failure on the part of the management at the News of the World to drill down into the facts to answer the myriad of questions that could have been asked and which could be encompassed by the all-embracing question … ‘What the hell was going on?’”

The way the company clung to the line that hacking had been confined to “one rogue reporter”, in the face of outside investigations and doubts by its own senior executives, was “extraordinary” and said a great deal about the paper’s approach to ethics, the report said.

Justice Leveson found that evidence was unclear as to what NI’s then-executive chairman, James Murdoch, knew of hacking allegations.

Mr Murdoch had been sent an email chain in which a hacking victim alleged that illegal practices were “rife within the organisation”. Mr Murdoch told the inquiry he had not read all the email chain and was unaware of this claim.

Justice Leveson concluded: “James Murdoch replied to the email within two minutes of receiving it. The speed and content of his reply appear to support his claim not to have focused on the key allegation.”

Mr Murdoch had also said he was never shown or told the significance of a different email, headed “for Neville”, that was also evidence that hacking was more widespread. In contrast, News International’s then-legal chief, Tom Crone, told the inquiry the significance of this email had been made clear to James Murdoch at a meeting on June 10, 2008.

Justice Leveson said he concluded “that Mr Crone’s version of events … should be preferred to that of Mr Murdoch. There are aspects of the account of Mr Murdoch that cause me some concern: in particular, it is surprising if the gist [of a lawyer’s opinion that there was evidence hacking was widespread] was not communicated to him. Furthermore, [editor Colin] Myler and Mr Crone had no reason or motive to conceal relevant facts, as borne out by [Mr Myler] sending James Murdoch the [earlier] chain of emails containing the ‘bad news’.”

Rupert Murdoch had told the inquiry that senior management at News International covered up the truth: “[We were] all misinformed and shielded from anything that was going on there … there’s no question in my mind that maybe even the editor, but certainly beyond that, someone took charge of a cover-up that we were victim to.”

Justice Leveson said if there had been such a cover-up, “then the accountability and governance systems at News International would have to be considered to have broken down in an extremely serious respect. If James Murdoch was not the victim of an internal cover-up, then the same criticism can be made of him as of Mr Myler and Mr Crone in respect of the failure to take action”.

Justice Leveson also criticised Rupert Murdoch and News International’s parent company, News Corporation: “Although there is no evidence from which I could safely infer that Rupert Murdoch was aware of a wider problem, it does not appear that he followed up (or arranged for his son to follow up) on the brief [he said he had given] Mr Myler ‘to find out what the hell was going on’…

“If News Corporation management, and in particular Rupert Murdoch, were aware of these allegations, it is obvious that action should have been taken to investigate them. If News Corporation were not aware of the allegations, which … have cost the corporation many hundreds of millions of pounds, then there would appear to have been a significant failure in corporate governance.”

The report also criticised politicians’ close relationships with publishers including Rupert Murdoch. It said his denials that he had ever made express deals with any prime minister “were not the end of the story”.

It concluded that politicians, just like Mr Murdoch’s editors, tacitly understood “the basic ground-rules” of dealing with him: “Politicians knew that the prize was personal and political support in his mass-circulation newspapers …. [They] were well aware that ‘taking on’ Mr Murdoch would be likely to lead to a rupture in support, a metaphorical declaration of war on his titles, with the inevitable backlash that would follow.”

But the report said Mr Murdoch’s influence was more about what did not happen than about what did. Examination of policies did not reveal any that showed politicians compromised to favour Mr Murdoch’s interests directly, “but no government addressed the issue of press regulation, nor of concentration of ownership”.

Justice Leveson found that politicians had spent too much time cultivating relationships with the press and had failed to be transparent and accountable to the public over it. While he did not suggest any “deals” contrary to the public interest had been made, he said,  “potential threats and promises hang in the air”.

He also found that two generations of failure to deal with press misconduct was due to “the press and the politicians [having] formed too close a relationship”.

Prime Minister David Cameron rejected the report’s central recommendation for legislation to set up an independent body to regulate the press. He warned this would result in undue limits on freedom of speech.

But he also said the status quo was unacceptable and that the British press would have a limited amount of time to set up an appropriate watchdog.

Opposition Leader Ed Miliband backed the Leveson proposals for new laws and so did deputy Prime Minister Nick Clegg.

Justice Leveson also recommended legal protection for freedom of the press; increased damages for people who win media cases over wrongs such as libel or invasion of privacy; a system to protect media plurality; and rules to encourage politicians to reveal meetings with editors and publishers.

First published on

UK coalition divided over tougher press regulation

LONDON: The British Prime Minister, David Cameron, faces a potential breach in the ruling coalition over the findings of the Leveson inquiry, with all three main parties split over any recommendations for press regulation.

Mr Cameron’s office received six advance copies of the “hefty” report on Wednesday and was due to convene a coalition meeting on Thursday morning to try to thrash out a joint response with his Liberal Democrat Deputy Prime Minister, Nick Clegg.

But Mr Clegg also approached the Speaker of the House of Commons to ask that he be permitted to make a statement separate to Mr Cameron’s.

Politicians of all parties are divided over whether freedom of the press should prevail over the need to constrain the worst excesses of Britain’s rabid tabloids, such as the phone-hacking scandal that led to the Leveson inquiry 16 months ago. The public overwhelmingly wants laws to keep papers in line, with a poll on Tuesday reporting that 79 per cent wanted an independent press regulator established by law.

Only 9 per cent supported the idea of newspapers setting up their own body to deal with complaints and decide sanctions if journalists broke agreed codes of conduct.

The associate director of the lobby group Hacked Off, Evan Harris, said of the poll: “The results hardly vary whether voters read The Guardian or The Daily Mail, and are held as strongly by Conservative swing voters as by Labour voters.”

But that same day, 86 MPs, including 76 Tories, wrote to The Guardian opposing statutory regulation, warning that “state licensing is inimical to any idea of press freedom”. That contrasted with a letter earlier this month from 44 different Conservative MPs, who demanded statutory regulation.

Mr Cameron was believed to be considering a free vote in Parliament, given the widely differing views.

The actor and phone-hacking target Hugh Grant said victims did not want statutory regulation but independent regulation “underpinned by statute, which is a very different beast”.

“What people are campaigning for is an end to newspapers being able to regulate themselves, marking their own homework,” Grant said.

The London mayor, Boris Johnson, said any kind of state regulation was “preposterous”.

“The British media is one of the glories of our country. They keep politicians’ feet very firmly held to the fire, which is absolutely right,” he said.

Tom Mockridge, the chief executive of News International, the Murdoch-owned company whose paper News of the World was killed off as a result of its phone-hacking, said he backed tougher press regulation but warned the government not to “cross the Rubicon”.

“The people who argue for state regulation are saying they are going to trust the politicians in this country for another 300 years not to exploit that. That’s a trust too far,” Mr Mockridge said.

Lord Justice Brian Leveson was asked to look at the ethics, culture and practices of the press, and its relationships with the public, police and politicians. This followed newspaper revelations of widespread phone-hacking, including the hacking of the voicemail of a murdered schoolgirl, Milly Dowler, and questions as to why police repeatedly failed to investigate the practice.

The 184 witnesses included the former culture secretary Jeremy Hunt, Rupert Murdoch and his son James, and the former News International executive Rebekah Brooks.

First published in The Age.