Murdoch tells News Corp AGM 'no excuse ' for hacking
- 22 October 2011
- From the section Business
News Corp chief executive Rupert Murdoch has told shareholders that there was "simply no excuse" for the phone-hacking scandal.
Speaking at the company's AGM in Los Angeles, he said that News Corp "cannot just be a profitable company, we must be a principled company".
During the meeting Labour MP Tom Watson alleged that some reporters hacked computers as well as telephones.
Mr Murdoch said he would "stop at nothing" to discover if this was true.
During his opening remarks, the News Corp boss said: "We must admit to and confront our mistakes and establish a rigorous and vigorous procedure to put things right.
"There is simply no excuse for such unethical behaviour," he said of the hacking of mobile phones by journalists from the now-defunct News of the World.
"These are real issues that we must confront and are confronting," Mr Murdoch said. "If we hold others to account we must hold ourselves to account."
"I am personally determined to right whatever wrong has been committed and to make sure that it doesn't happen again anywhere in our company," he said.
Shortly before the AGM, held at News Corp's Fox Studios, the company confirmed it would pay £2m to the family of a murdered girl at the heart of the phone-hacking scandal.
In a joint statement with the family of Milly Dowler, Mr Murdoch said he would also personally donate £1m to charities chosen by the family.
It emerged in June someone working for the News of the World accessed Milly's messages after she disappeared in 2002.
"The behaviour that the News of the World exhibited towards the Dowlers was abhorrent and I hope this donation underscores my regret for the company's role in this awful event," Mr Murdoch said.
"I also hope that through the personal donation something positive can be done in memory of their daughter," he said.
Mr Watson, a key figure in exposing the scale of phone hacking, was allowed into the meeting as a proxy shareholder.
He said News Corp still had serious questions to answer about alleged computer hacking and warned that the controversy was far from over for the Murdoch empire.
Mr Murdoch said that board director Viet Dinh would look into the allegation. "I promise you absolutely that we will stop at nothing to get to the bottom of this and put it right," Mr Murdoch told the MP.
Mr Watson noted with irony that a large graphic behind the board of directors showed the Duke and Duchess of Cambridge, both of whom are alleged victims of phone hacking.
Several shareholders took issue with a chart News Corp had put up showing the share price's upbeat performance compared with most other media peers since the beginning of the year.
They said its performance over 10 years or more lagged its peers.
Murdoch said the chart was to address criticism that the company had been hurt by the phone-hacking scandal, which had forced the company to close the News of the World newspaper and abandon its bid to buy the 61% of broadcaster BSkyB it does not already own.
Shares in News Corp fell sharply after it emerged in July that the News of the World had hacked the voicemails of Milly Dowler.
But the shares have since recovered and are now trading up about 6% over the past year.
Before the meeting, some shareholders had called for several directors - including Rupert Murdoch and his two sons - to step aside.
One small shareholder, Christian Brothers Investment Services (CBIS), tabled a resolution to separate the roles of chairman and chief executive, positions currently held by Rupert Murdoch, and instead replace them with an independent chairman.
Julie Tanner, director of socially responsible investing at CBIS, told the BBC that many shareholders were worried.
"Right now the company is in the crosshairs of regulators, lawmakers [and] law enforcement, and it's really eroded public trust in the brand."
The motion to separate the two roles was rejected by the board and all directors who were standing for election, including James and Lachlan Murdoch, were elected.
'Unfair' voting system
Calpers, one of the world's biggest investors, had previously said it would vote against the re-election of the Murdoch family to the News Corp board. However, there was a slim chance of the Murdochs failing to be elected due to the two-tier voting system the company has.
Only 30% of the shares have voting rights - and 40% of these are owned by the Murdoch family.
The remaining 70% of shares, known as A shares, are owned by investors unrelated to the Murdochs and have no voting rights.
Many shareholders, including the Local Authority Pension Fund Forum, have expressed their unhappiness with the system.
"We have concerns about governance models that are flawed, and News Corp has one at the moment," said councillor Ian Greenwood, chairman of the Fund Forum.
"It has a joint chairman and chief executive in Rupert Murdoch and it has a voting pattern that is not fair, where a group that owns 12% of the shares gets 40% of the votes.
"Both of those are unacceptable."