James Murdoch goes under Parliament's microscope again
News Corp. Deputy Chief Operating Officer James Murdoch will make a much-anticipated return appearance before Parliament's Culture, Media and Sport Select Committee on Thursday to answer more questions about the ethics scandal at the now-closed News of the World tabloid.
This is Murdoch's second appearance before the committee and is part of Parliament's investigation into phone hacking conducted by operatives of News of the World into the voice-mail accounts of celebrities, members of the royal family and victims of crime and terrorism and their families.
News Corp. has acknowledged that hacking by the paper occurred. Last month, the company paid almost $5 million in a settlement with the family of Milly Dowler, a slain teenage girl whose cellphone was hacked by the tabloid when she was still missing. Last week, the company launched a voluntary settlement program for other phone-hacking victims.
While News Corp.'s efforts are clearly aimed at building some good will, it hasn't lessened any of the heat on James Murdoch, who has oversight over News International, the unit that housed News of the World.
Unlike in July, when James Murdoch appeared before Parliament with his father, News Corp. Chairman and Chief Executive Rupert Murdoch, this time he will be a solo act. Committee members, particularly the Labor Party's Tom Watson, are expected to press Murdoch on his role in News Corp.'s handling of the scandal. There are discrepancies concerning statements James Murdoch gave Parliament regarding what he knew about the hacking and when he knew it. Two former News International executives have disputed his account.
How Murdoch performs Thursday could determine his future with the company. Until the phone-hacking scandal broke last summer, he was seen as the likely successor to his father. He had been given a new title and was set to move from England to News Corp.'s New York headquarters to work more closely with his father and Chase Carey, the media giant's deputy vice chairman and chief operating officer.
The phone-hacking fiasco has done more than just give News Corp. a black eye. It caused the company to close its 168-year-old tabloid and to pull the plug on its $12-billion deal to buy the 60% of British satellite broadcaster BSkyB it didn't already own. Senior News Corp. executives Les Hinton and Rebekah Brooks, both of whom had oversight of the paper when the hacking occurred, also resigned. Brooks was also arrested along with 15 other people in relation to the investigation.
News Corp. is also facing scrutiny in the United States. If its actions at News of the World are found to have violated the Foreign Corrupt Practices Act, the company's broadcast licenses could be in jeopardy.
The controversy surrounding James Murdoch is not limited to News Corp. CtW Investment Group, which works primarily with labor-related pension funds, is trying to get Murdoch tossed from the board of directors of the Sotheby's auction house.
In a letter to the Sotheby board, CtW Research Director Richard Clayton wrote, “while News Corp. may be willing to risk investor contempt, the board at Sotheby’s cannot ignore the concerns raised over Mr. Murdoch’s credibility and competency as an executive and corporate director.” Murdoch is also chairman of the board of BSkyB.
Although James Murdoch will face tough questions, odds are security will be tighter than it was at the last hearing, where a spectator was able to throw a pie at Rupert Murdoch. The pie was mostly deflected by News Corp. lawyer Janet Nova's iPad. The mogul's wife, Wendi Deng Murdoch, leapt up and threw a punch at the assailant.
The Parliament hearing will begin at 3 a.m. California time, and Company Town will be covering all the action. It is being televised in the U.S. on both C-Span2 and Bloomberg Television.
-- Joe Flint
Photo: James Murdoch. Kirsty Wigglesworth /Associated Press