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News Corp and the hackers: a scandal in two parts

15 September 2011

With the Leveson inquiry into the British press starting work in London, Rodney Tiffen looks at what the phone-hacking scandal has revealed so far about media, politics and the police – and what’s likely to happen next

Right:

Above: Rupert Murdoch and James Murdoch (at left) encounter the media in London in July.
Photo: Jedd Goble/ Flickr

Above: Rupert Murdoch and James Murdoch (at left) encounter the media in London in July.
Photo: Jedd Goble/ Flickr



ON 4 JULY this year the Guardian reported that a private investigator working for Rupert Murdoch’s News of the World had hacked into the phone of missing teenager Milly Dowler in 2002. After her message bank had filled up, he had deleted some messages to make more room, giving her parents and friends and the police false hope that she was still alive. The Guardian had published other exposés based on information about the Murdoch paper’s phone hacking over the previous two years, but the reporter who had been following the story, Nick Davies, told the editor that this was the strongest article so far. Yet no one anticipated that it would provoke such a dramatic reaction.

The next two weeks, according to veteran journalist and newspaper historian Roy Greenslade, were “the most astonishing fourteen days in British press history, with daily shock heaped upon daily shock.” Before the end of the first week – amid a chorus of politicians and commentators denouncing the paper – News International, the British subsidiary of News Corporation, shocked everyone, including its own employees, by announcing the closure of the 168-year-old newspaper. It was still profitable and still the highest-circulation Sunday paper in Britain, read by over eight million people per week, but – in the words of James Murdoch – it had become a toxic brand.

Within another week, the present and previous heads of News International – Rebekah Brooks and Les Hinton (who by this time was in New York overseeing Dow Jones for Murdoch) – had resigned. Several journalists associated with the News of the World had been arrested, including Brooks and former editor Andy Coulson, who became chief spin doctor for Conservative leader David Cameron in July 2007.

In that same week, London’s top police officer resigned and his deputy followed the next day. Prime Minister Cameron cut short his visit to Africa to confront the crisis, and especially the need to defend his hiring of Coulson. Cameron sought the political initiative by announcing two judicial inquiries and reform of the Press Complaints Commission.

Opposition Leader Ed Miliband moved a motion in the House of Commons declaring it was in the public interest for Rupert Murdoch and News International to withdraw their bid for BSkyB. All parties supported the motion, which was passed without a voice being raised against it. Murdoch was thus forced to abandon his attempt to increase his ownership of the British satellite broadcaster from 39 per cent to total control, despite the Conservative government having approved of his bid only weeks before.

The parliamentary committee investigating the phone hacking created headlines every day it sat. But the saturation coverage it generated on the day that Rupert and James Murdoch appeared dwarfed all the publicity that had gone before. Rupert called it “the most humble day” of his life. In other public acts of contrition, the Murdochs visited the Dowler family and placed paid full-page apologies in the national press.

The tipping point for this extraordinary two weeks was the Milly Dowler phone-hacking story. This was so grotesquely cynical, so telling about the tabloid’s sense of entitlement, so devoid of any legitimate public purpose or ethical justification, let alone normal human compassion, that it became the focus of sustained outrage.

Politicians of all parties and the other news media rushed to catch up with public anger. The police had begun moving in the same direction, having launched Operation Weeting early in the year. The first arrests were made in April, although before July the operation had attracted relatively little publicity.

Apart from the Milly Dowler outrage, the sheer scale of the phone hacking was astounding. The officer in charge of Operation Weeting, Sue Akers, told the parliamentary committee that the original files seized from private investigator Glenn Mulcaire in 2006 included nearly 4000 names, 5000 landline telephone numbers and 4000 mobile numbers. Since 2006, the 11,000 pages of hacked material in police possession had sat in plastic garbage bags, but all the documents were now being sifted.


THE intensity of the phone hacking scandal in July turned a searing spotlight on News International and its ethics. But equally fascinating is the question of why the scandal was so slow to gain momentum. The reluctance of police, politicians and the media to pursue the wrongdoing reveals as much about power and morality in modern British democracy as the abuses themselves.

News International’s involvement in phone hacking had been in the public domain since August 2006, when News of the World royal reporter Clive Goodman and private investigator Glenn Mulcaire were arrested. The charges related to stories in late 2005 that made the less than startling revelations that Prince William had hurt his knee and borrowed some audiovisual material. Buckingham Palace was convinced the paper had obtained the information illegally, and a subsequent Scotland Yard investigation uncovered phone hacking. Goodman and Mulcaire pleaded guilty and issued apologies.

In January 2007, both men were sentenced to jail. The paper’s editor, Andy Coulson, resigned, taking formal responsibility for the illegal actions but asserting that they were all the work of a rogue reporter, Goodman, who had worked without his or anyone else’s knowledge. Later that year, Coulson, whose journalistic career had begun in show-business reporting, and whose main contribution to political journalism had been to ask Tony Blair whether he and wife Cherie were members of the “mile-high club,” went to work for Conservative leader David Cameron as chief spin doctor.

When the judge summed up in the Mulcaire case in January 2007, he noted that the private investigator had hacked the phones of five other people, none of them members of the royal household, and in these cases he had dealt not with Goodman, the royal reporter, but with others at the paper. The police did not follow up the judge’s findings.

There the matter rested for more than two years. In July 2009, the Guardian investigative reporter Nick Davies revealed that News had paid more than £1 million to settle three cases involving footballers. The largest amount was £700,000 – made up of £400,000 in damages plus legal fees – paid to Gordon Taylor, head of the Professional Footballers Association. Smaller amounts were paid to two others. The story also contended that phone hacking was rife at the News of the World.

News International denied it. Rebekah Brooks claimed that the Guardian coverage had, “we believe, substantially and likely deliberately, misled the British public.” Police officer John Yates (who resigned as assistant commissioner of the Metropolitan Police this July) took only hours to decide there was no reason for further inquiries. Some months later the Press Complaints Commission found no evidence against the Sunday paper and even concluded that the Guardian report “did not quite live up to the dramatic billing.”

The story did spur a parliamentary committee into action. In February 2010 its inquiry concluded that it was “inconceivable” that knowledge of the News of the World’s phone hacking was limited to Goodman and Mulcaire. None of the major media felt the need to publish the committee’s findings.

Again there was a long silence. The next major revelation came in March 2010 via another Nick Davies exclusive. The Guardian reported that high-profile publicist Max Clifford had been paid £1 million to drop an action against News, and again the settlement included a gag order. There were more denials from News, no new action by the police, and a resounding lack of interest among most politicians and the other news media.

Guardian editor Alan Rusbridger was perplexed by the media’s lack of interest in wrongdoings among them, especially as they involved Coulson. “The nearer Cameron edged to the door of No. 10 Downing Street, the less appetite there was to run anything negative about Coulson,” he wrote. In November 2009 an employment tribunal awarded a former News of the World journalist more than £790,000 in damages after finding he had suffered from a culture of bullying under Coulson. Not a single paper other than the Guardian noted the fact in its news pages the next day.

News International was feeling confident. Rebekah Brooks told colleagues that the story was going to end with Guardian editor Alan Rusbridger “on his knees, begging for mercy.” Indeed, Rusbridger did find that “life was getting lonely at the Guardian,” with the other media failing to follow up the paper’s investigative reporting. So he called New York Times editor Bill Keller. The Times sent over three reporters, who spent some months working on the story. Their coverage began with a major exposé on 1 September last year. Importantly, they had found more former News of the World journalists willing to confirm publicly that illegal newsgathering methods were common at the paper. These revelations were again met with blanket denials from News, but they did jolt some of the other British quality media into action.

In early 2011 there was a quickening of the pace. While the media and politicians were still overwhelmingly silent on the issue, there was movement in the police and judiciary. Dozens of civil suits against the News of the World were launched by people who thought they had been victims of phone hacking. The police began Operation Weeting, with forty-five officers involved. The starting point for the police investigations in 2011 were the 11,000 phone-hacking documents that they had possessed – but not examined – since 2006.

In May, the former deputy prime minister, John Prescott (now Lord Prescott), and others had secured a judicial inquiry into how the police had handled the hacking abuses. (Later, in July, the original investigating police officer, Andy Hayman, apologised for having earlier referred to Prescott’s “ranting” on the issue.)

By June 2011 there was a gathering storm, and News International’s defences were increasingly vulnerable. Then, in July, the scandal became unstoppable. The previous power balances, maintained by self-interest, collapsed, and all three of the main groups – police, politicians and news media – finally began to play active roles in dealing with a scandal whose end cannot yet be foreseen.

For the police, investigating the hacking became a top priority. “I think it is everybody’s analysis that confidence has been damaged in the Metropolitan Police,” Commissioner Akers testified. “If we do not get this right, it will continue to be damaged.” Another former senior police officer said that News had tried to thwart the original inquiry through prevarication and “what we now know to be lies.”

The police were embarrassed by revelations of the extent of hospitality and social dealings between News and some of the police officers involved. Andy Hayman had become a columnist on Murdoch’s Times. During the investigation Hayman (“more Clouseau than Colombo,” one MP commented) had also enjoyed dinners with journalists from the News of the World.

Ten of the forty-five press officers in Scotland Yard are former News International journalists. The evidence suggests a whole series of carrot-or-stick relationships: the hope for favourable publicity; the fear of negative publicity; and mutual patronage, including a preoccupation with promoting the law-and-order agenda that police and tabloid journalists often share.

For politicians, “never take on the tabloids” has been an unwritten rule. The British tabloids – and especially the Murdoch press – have developed a journalism of scorn and outrage that is equalled in few other democracies, and MPs and ministers have generally reacted with timidity.

The Murdoch tabloids’ sense of their own destructive power and their relish in exercising it was evident in an exchange between Prime Minister John Major and Sun editor Kelvin MacKenzie in 1992. Britain had been forced to withdraw from the European Exchange Rate Mechanism in controversial circumstances. Major asked MacKenzie how the Sun planned to cover it. “Well John,” said MacKenzie, “let me put it this way. I’ve got a large bucket of shit lying on my desk, and tomorrow morning I’m going to pour it all over your head.”

Cameron had hired Andy Coulson in 2007 partly because as opposition leader he had a problem with the tabloids in general and Murdoch in particular. At first Cameron seemed too much of a toff and too moderate to appeal to the Murdoch tabloids. It has been reported that Cameron’s first meetings with Murdoch went poorly: “According to one leading News International figure: ‘We told David exactly what to say and how to say it in order to please Rupert. But Cameron wouldn’t play ball. I can’t understand it.’”

Only after Cameron hired Coulson did Murdoch’s papers begin to warm to the Conservative leader, who was increasingly eager to please. After the Murdoch papers expressed disapproval of shadow home secretary Dominic Grieve’s perceived softness on crime, Grieve was moved to another portfolio. Eventually all this paid off, with the Murdoch press strongly supporting the Conservatives in the lead-up to the 2010 election.

Even though Murdoch had turned so strongly against Labour, the party was still keen to woo him in opposition. One of the early decisions of the new opposition leader, Ed Miliband, was to appoint a former News journalist, Tom Baldwin, as his spin doctor. Baldwin sent an email to Labour MPs instructing them to go easy on the hacking scandal, and in particular not to link it to the impending takeover decision on BSkyB. Before the events of July, Miliband had told confidants that he had no choice but to ignore the scandal, because the alternative would be “three years of hell” at the hands of the Murdoch press. After July the political calculus changed decisively.

The third passive group was the rest of the media, whose normal sense of newsworthiness was overcome by a shared dog-doesn’t-eat-dog attitude. Perhaps other media did not want to credit how the Guardian had so out-shone them. Perhaps their reticence was partly due to the fact that their own newsgathering methods, especially among the tabloids, had sometimes been less than pure.

In 2006, Britain’s Information Commissioner’s Office reported on the activities of one private detective, finding that 305 journalists had been identified as customers driving the illegal trade in confidential personal information. The most prolific media user was the Daily Mail, but the Daily Mirror and News International also availed themselves of this company’s services. Despite the staggering scale of a single detective’s illicit activities, and the disclosure of this information black market, the coverage in the major news media was strangely limited.

As late as April 2011, most of the other news media was still covering the scandal tepidly. In a wonderful article in the New Statesman, actor Hugh Grant, himself a victim of phone hacking, used a hidden tape recorder to capture the incriminating thoughts of Paul McMullan, News of the World journalist turned pub owner, and still – as Grant had earlier found out to his chagrin – a part-time paparazzo. According to the editor of the New Statesman, the BBC was reluctant to cover this amusing entrapment because of fear of Murdoch. Around this time News, for the first time, issued an unreserved apology to some civil litigants, admitted some failings and promised compensation. In their coverage of this statement – a dramatic reversal – the Guardian and Independent ran around 3300 words each on the story, while the other six national dailies averaged around 700 words each.


AFTER the dramatic events of July, the scandal disappeared from the news for a period, but the Murdochs’ respite was brief, and there is much more to come.

In the second half of August it was revealed that Andy Coulson was still receiving severance package benefits (amounting to hundreds of thousands of pounds) from News International while he was drawing a salary of £275,000 a year from the Conservative Party. Failing to declare this income may have breached House of Commons pass rules. Around the same time, private investigator Mulcaire launched a legal action against News because it had stopped paying his legal bills.

As soon as the House of Commons Culture, Media and Sport Committee resumed its sittings in late August, there were two bombshells. In the first, Harbottle & Lewis, the law firm News had hired, sent the committee a letter publicly dissociating itself from the use that News International, and Rupert Murdoch in particular, had made of its advice. It described News’s testimony as “hard to credit,” “self-serving” and “inaccurate and misleading.” Such public criticism of clients by a leading law firm is rare indeed.

On the same day, the committee released a letter written four years earlier by reporter Clive Goodman after his release from prison. Goodman was seeking his reinstatement and claimed that the editor (Coulson) and a company lawyer had repeatedly promised that this would happen if he did not implicate the paper or any of the staff in his mitigation plea. Goodman’s letter also says that phone hacking was widespread at the paper and had frequently been discussed at editorial meetings. To add to News’s embarrassment, when both it and the law firm released the letter it became evident that News had deleted all references to phone hacking being discussed at editorial meetings. The company also had to disclose that in addition to the £60,000 it had previously admitted paying Goodman when he went to prison, it had paid him almost another quarter of a million after the letter was received, although it refused to re-employ him.

Then, on 6 September, two former News International employees – its longstanding legal manager, Tom Crone (the lawyer who had dealt with Goodman), and the last editor of the News of the World, Colin Myler – directly contradicted James Murdoch’s July testimony. According to both men, during a fifteen-minute meeting in 2008 they not only sought James’s authorisation for a payout to settle the Gordon Taylor case, but also told him that the settlement was necessary because Taylor had obtained email correspondence that showed phone hacking was not just carried out by Goodman. Myler said it was “inconceivable” that James was unaware that the email indicated hacking went beyond a single reporter. Crone said he was “certain” he told James this because the email was the central reason they had to act as they did.

Beyond this, both were vague about the precise details of the conversation, although both thought that they hadn’t actually shown the email to James. James immediately issued a statement affirming his original testimony – that his recollection of the meeting is “absolutely clear and consistent” while their accounts were “unclear and contradictory.”

On 13 September, the Commons committee announced it was recalling James. By denying in his July testimony that he knew phone hacking was more widespread, the younger Murdoch has set himself a difficult task. Essentially, he had claimed, and was still claiming, that these senior executives had kept him in the dark. His own account might free him from the charge that he lied to the committee, but it paints him as strangely lacking in curiosity about major matters affecting the company.

Moreover, James Murdoch has sought to protect his father by saying that a £1 million payout fell below the threshold of an action about which he would have to notify his father. But after the Guardian story back in July 2009, Rupert made a public statement denying the story. “If that had happened,” he said, “I would know about it.” James apparently saw no need to apprise his father of the facts even when ignorance had led Rupert to make a false public statement.


WHILE they are likely to continue to provide embarrassing revelations, the parliamentary hearings are far from the Murdochs’ main problem. David Cameron has set up two judicial inquiries under Lord Justice Leveson, both of which will have more forensic power than the committee. These will begin later in September, will be televised, and will have the power to compel witnesses to appear. Witnesses will testify under oath in the High Court.

Moving more slowly, but with the power to inflict even greater damage on Murdoch interests, are the court cases. As of now, there are criminal charges against fifteen people associated with News of the World, including former editors of the paper. It isn’t clear when these will come to trial. In 2007 journalist Goodman and private investigator Mulcaire both spent several months in jail; these precedents suggest that the stakes for the fifteen so far accused are very high.

Other criminal charges may be laid against police. It has been reported that News paid £100,000 in bribes for information to five police officers. The shape of what may well prove dramatic developments in these bribery cases is not yet clear. In August, the police watchdog, the Independent Police Complaints Commission, cleared the officers directly involved in the hacking inquiries of any breaches of police disciplinary codes, but it also said there would be further investigation of links between senior police and the media, including “hospitality” arrangements.

And there are civil as well as criminal cases. By early August, around thirty-five invasion-of-privacy suits had been mounted. But the head of the police taskforce, Operation Weeting, has said that up to 4000 people had their phones tapped, and the majority have not yet been advised that they were victims. So the number of civil cases could run into the hundreds. Five cases have already reached out-of-court settlements. The largest reported sum is the £1 million paid to Max Clifford, while the most recent was in June when £100,000 was paid to the actress Sienna Miller. The £20 million that James Murdoch said News had budgeted for civil litigation may not be enough.

The plan is for five test cases – reportedly involving footballer Paul Gascoigne, actor Jude Law, sports agent Sky Andrew, designer Kelly Hoppen and Labour MP Chris Bryant – to be tried in January. Presumably these will provide guidelines that will save the necessity of all cases going to a full trial.

But there may be some high-profile cases that are not settled in this way. Former prime minister Gordon Brown and former deputy PM John Prescott have both publicly charged that they were victims of criminal conduct by News International. Brown has said that people working for News “blagged” (or assumed a false identity) to obtain details of his bank accounts and his health and legal records. It is not yet clear whether these politically charged allegations will result in criminal or civil cases. In addition, some celebrities who were heavily targeted may feel they deserve more. In September 2010, for instance, Nick Davies quoted former News of the World journalist Paul McMullan as saying that David Beckham had thirteen different SIM cards for his mobile phones and Glenn Mulcaire had hacked all of them.

These are the institutional processes already under way. All have their own immutable logic; in each, the stakes for individuals are very high. Previously strong alliances inside News may well fracture.

Depending on what emerges, more responses could follow, and not only in Britain. If News International is found guilty of paying bribes to British police, for instance, then that would be an offence in the United States under the Foreign Corrupt Practices Act, and official actions may flow there. (Australia has similar foreign bribery legislation.) In turn, findings of illegal and unethical behaviour may even disqualify the company from holding US broadcasting licences under Federal Communications Commission rules.

In the United States, there has already been curiosity about whether News illegally spied on victims of 9/11, but thus far no evidence has been produced. Another effect of the British scandal has been to focus attention on the activities of News America Marketing in the United States. This News-owned company dominates in-store advertising under the direction of Paul Carlucci, who is also publisher of Murdoch’s New York Post. It has been involved in three cases in which competitors have alleged unethical behaviour, including the hacking of computers by someone at the Murdoch company. The cases have been settled out of court with very large payouts to the litigants; in one case, News purchased the company at far above its former market value. It is not clear that there will be any follow-up official action, but since the British scandal these transactions have received far more attention.

Thus far, all the developments sketched above are responses to specific abuses. It is also possible that there will be broader policy changes. In Britain, there is talk that the scandal shows the need to strengthen privacy laws, and it is likely to lead to reforms to the Press Complaints Commission, which, each step of the way, found News had no further case to answer. There may even be inquiries by Ofcom (Britain’s communications regulator) or others into whether Murdoch is a fit and proper person to own a share of BSkyB.

Here in Australia, the scandal has prompted an independent inquiry into the news media. In the United States there are several shareholder suits against News Corp, which may produce far-reaching changes in the corporation’s governance, not to mention Rupert’s dynastic ambitions.

The phone-hacking scandal may not again reach the dizzying pace of July, when dramatic developments followed each other with breathtaking rapidity, but for at least the next year its consequences will continue to haunt the Murdochs. The News of the World’s exclusive report about Prince William’s sore knee may turn out to be News Corp’s most expensive story ever. •

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Right:

President Obama’s budget plan will destroy jobs because “it spends too much, it borrows too much, and it increases the deficit,” according to House speaker, John Boehner (above).
Photo: Photo by Alex Campbell/ Medill News Service

President Obama’s budget plan will destroy jobs because “it spends too much, it borrows too much, and it increases the deficit,” according to House speaker, John Boehner (above).
Photo: Photo by Alex Campbell/ Medill News Service