Murdoch 'not fit' to run News Corp

 

The committee itself does not have the power to impose sanctions

The bombshell is on page 70 of the report by the Culture Media and Sport Select Committee into News International and phone-hacking.

It is worth quoting in full:

"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 blindess 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".

That description of Mr Murdoch by the British parliament as "not a fit person" is likely to have significant consequences.

It will force the board of News Corporation to review whether the 81 year-old, who created one of the most powerful media groups the world has ever seen, should remain as its executive chairman.

It will give ammunition to those News Corporation shareholders who would like to loosen the hold over the company of the Murdoch dynasty.

It will push Ofcom, the media regulator, closer to the conclusion that British Sky Broadcasting is not fit and proper to hold a broadcasting licence, for as long as News Corporation owns 39% of BSkyB.

'Savage criticism'

Nor is that the only one of the MPs' conclusions which will shake News Corporation, and its British subsidiary, News International, owner of the Sun tabloid and of the News of the World prior to its closure.

Mr Murdoch's right hand man for decades, Les Hinton, is deemed to have misled the committee in 2009 by "not telling the truth" about substantial payments to Clive Goodman - the News of the World's former royal reporter who was jailed for phone hacking- and how he authorised those payments.

Mr Hinton is also ruled to have "misled" the committee about the extent of his knowledge that phone hacking extended beyond Clive Goodman and Glenn Mulcaire (the private detective who carried out the hacking on behalf of jounalists).

He is, say MPs, "complicit in the cover-up at News International".

As expected, the MPs are savage in their criticism of the former News of the World editor, Colin Myler, and of Tom Crone, the former legal manager of News International's newspapers, for misleading them about what they knew about phone hacking and for failing to pursue alleged hackers.Murdoch 'not a fit boss', say MPs

But more damaging for News Corporation is that MPs say that senior executives, such as Rupert Murdoch's son James, should have seen that the company's official view, that there was a single rogue hacker, was not sustainable.

The MPs say: "if there was 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 committee says that News International "wished to buy silence" by settling legal actions with victims of hacking that included confidentiality clauses.

And News International executives are accused of exaggerating the thoroughness of reviews of hacking carried out in 2006 and 2007.

As for those deemed to have misled the committee, Mr Hinton, Mr Crone and Mr Myler, the MPs say it is for the Commons to decide whether they are guilty of contempt.

UPDATE 11:42

I forgot to mention one very important conclusion, that the News of the World and News International also misled MPs as corporate entities.

The MPs say these institutions "exhibited wilful blindness", for which Rupert Murdoch and James Murdoch should "ultimately be prepared to take responsibility".

UPDATE 12:02

The report's verdict that Rupert Murdoch is not fit to run a big international public company was not supported by four Tory MPs on the committee. The disclosure that the vote on this divided along party lines may lessen its force.

In particular, News Corporation's board may well view the verdict as a political judgement, rather than a dispassionate one.

 
Robert Peston Article written by Robert Peston Robert Peston Economics editor

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