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UK MP Buys News Corp Shares to Speak at Meeting

British member of parliament, Tom Watson, will attempt to address News Corp shareholders when it holds its the annual general meeting (AGM) on Friday.

Rupert and James Murdoch in front of Parliament
CNBC
Rupert and James Murdoch in front of Parliament

Watson rose to prominence in the United Kingdom during the phone-hacking scandal at the now closed News of the World newspaper earlier this year.

He has recently become a shareholder in the newspaper's parent company, News Corp just to be able to attend the meeting in the US and address its shareholders directly. Under US law, anyone who buys a single share in a corporation has the right to attend its annual meeting.

Watson intends to shareholders of the activities of News International, the subsidiary of News Corp which owned the News of the World, in the UK. The entire board of News Corp is up for re-election at the meeting.

James and Lachlan Murdoch are in for a tough meeting, after increasing pressure from shareholder groups unhappy at the failure of corporate governance at News International, which James is the chief executive of and Lachlan's position on the board due to his position on a rival television channel to those owned by News Corp, in Australia.

The threat to the parent company from a lawsuit being considered by the lawyers acting for the family of murdered schoolgirl Mille Dowler and other victims of the phone hacking scandal under the US Foreign Corrupt Practices Act has added greater pressure on the board.

It was the revelation that journalists working for the News of the World had hacked the phone of Millie Dowler, deleting phone messages from her parents during the man hunt for her and giving them false hope she was still alive, that turned the phone-hacking controversy into a full-blown global scandal.

Further Revelations

Further revelations emerged that the newspaper had hacked the phones of dead military service personnel, as well as victims of the London tube bombings on July 7 2005, leading to fears journalists had done the same to victims of the 9/11 attacks in the US.

Several shareholders have already expressed their unhappiness with the amount of control the Murdoch family has over News Corp. CalSTRS – the California State Teachers Retirement System, one of the largest public sector pension funds in the US — has already voted against 13 directors on the board, including James Murdoch.

The Australian Council of Superannuation Investors (ACSI) also wants Rupert Murdoch to be replaced as chairman by someone "genuinely independent". And it has called for the removal of both James and Lachlan Murdoch from the board, along with three other directors.

The Local Authority Pension Fund Forum (LAPFF) has called for the replacement of Rupert and James Mudroch on the board by former British Airways boss Sir Rod Eddington – who already sits on the News Corp board.

And on Thursday, the Australian Shareholders Association (ASA) added its voice to the calls for change, proposing the removal of five directors including James and Lachlan Murdoch. It has also proposed the removal of Andrew Knight who has served as a non-executive director of the company for the last twenty years saying he “can no longer be considered independent”.

The ASA also wants the removal of Arthur Siskind, who, it says, "has been a loyal foot soldier to the Murdoch family ever since advising News Corp on the purchase of a newspaper in San Antonio, Texas, in 1973."

Finally the ASA proposes the removal from the board of Viet Dinh who it says was portrayed as the lead independent board spokesman on governance issues.

“Given the atrocious governance at News Corp and the failure to replenish the board with genuinely independent directors, Mr Dinh should be held especially accountable in the eyes of non-Murdoch shareholders seeking protection from the indulgences of the controlling family,” the ASA said.

Institutional Shareholder Services, a major advisory agency for shareholders, has recommended voting against 13 out of the 15 directors on the News Corp board including Rupert, James and Lachlan Murdoch.

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