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Murdoch 'unfit to run global company'

May 01 2012 13:28 Reuters

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London - Rupert Murdoch is unfit to run a major international company and should take responsibility for a culture of illegal phone hacking that has shaken News Corp, a powerful British parliamentary committee said on Tuesday.

Pulling few punches, lawmakers focused on the failings of the 81-year-old News Corp chief executive, his son James and a company which they said had showed “willful blindness” about the scale of phone-hacking that first emerged at Murdoch’s News of the World newspaper.

The cross-party committee, which approved the report by a majority of six to four, scolded News Corp for misleading the British parliament and trying to cover up illegal phone hacking. It said that there had been huge failures in corporate governance which raised questions about the competence of Rupert’s son, James.

“News International and its parent News Corporation exhibited wilful blindness, for which the companies’ directors -including Rupert Murdoch and James Murdoch - should ultimately take responsibility,” it said.

“Their instinct throughout, until it was too late, was to cover up rather than seek out wrongdoing and discipline the perpetrators,” the lawmakers said in an 85 page report.

“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 may force James Murdoch, once heir apparent to the media empire, to sever his last ties with Britain’s biggest satellite TV firm BSkyB, which News Corp had sought to take over before the scandal.

In the week of local elections, the report could also embarrass Prime Minister David Cameron, who has acknowledged that Britain’s political elite has been dazzled and charmed by the Murdoch’s media clout for years.

The committee has been investigating the allegations on and off since a single reporter went to jail for the crime in 2007, believing that the practice went far beyond the one “rogue” staffer and questioning a string of executives over what they knew and when.

Rupert Murdoch has apologised for the scandal but told a judicial inquiry into press ethics last week that senior staff at his British newspaper publisher had hidden the hacking scandal.

The 39-year-old James has also apologised for failing to get to the bottom of the scandal but said he was kept in the dark by staff at the paper.

Both Rupert and James Murdoch have put the blame on the journalists and in particular on the News of the World’s former lawyer Tom Crone and former editor Colin Myler.

Regulators

Media regulator Ofcom will take the report’s findings into consideration in its assessment of whether BSkyB’s owners and directors are “fit and proper” persons to hold a broadcast licence.

James Murdoch recently stepped down as chairperson but remains on the board of BSkyB, which is 39% owned by News Corp.

“We’ll all be looking at the wording in terms of the fit and proper test,” said Charlie Beckett, founding director of the Polis journalism and society think-tank at the London School of Economics.

“If it says there was a systematic lack of due diligence at News International or News Corp, that might impinge on future fit and proper tests for Ofcom.”

Cameron was summoned to parliament on Monday to explain why he would not investigate emails revealing that a ministerial aide had assured News Corp over its $12bn bid for BSkyB.

He insisted there was no need to refer the case to his independent adviser on ministerial conduct, noting the emails had been handed to a separate judicial inquiry into press ethics.

“I am perfectly prepared to admit that the relationship between politicians and media proprietors got too close,” Cameron said during a rowdy debate, blaming politicians of both main parties for the failing.

But Cameron could face further embarrassment as former Murdoch confidante and News Corp executive Rebekah Brooks prepares to reveal text messages and emails between herself and the prime minister, a former friend and part of the so-called “Chipping Norton” set.

The group includes Cameron, Brooks and other political and media elite who live in and around the well-heeled Oxfordshire town of Chipping Norton, giving rise to accusations of cronyism and suspicions that Britain is run by an exclusive clique.

The committee will present its report to parliament, which is likely to hold a debate on its findings, and the government then has 60 days to respond.

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