Rupert Murdoch Not ‘Fit’ to Run News Corp.: Report
Staff Writer, CNBC.com
Rupert Murdoch andNews Corp.came under fresh attack by U.K. politicians Tuesday, when a key Parliamentary report into the phone-hacking scandal said he is “not a fit person” to run a major international company.
The report by the Culture, Media, and Sport Committee accused News Corp. and its directors, including Rupert and James Murdoch, of “willful blindness over the extent of phone hacking at the company's British newspapers." They added that the company’s corporate culture “permeated from the top.”
It comes after a shareholder group at News Corp. called on the 81-year-old media tycoon to step down at the company’s annual general meeting later this year.
The lawmakers also condemned a "huge failure of corporate governance at News Corp." for the scandal. Not all of them backed the condemnation of Rupert Murdoch. MPs from the governing Conservative Party voted against using the phrasing “not a fit person,” but were overruled.
Conservative Party leader David Cameron and Culture Secretary Jeremy Hunt came under fire last week after allegations about their closeness to the Murdochs and News International, the British newspaper arm of News Corp., emerged during the Leveson Inquiry into phone hacking.
The report was a chance by U.K. MPs to refocus the debate on the Murdochs’ role in the scandal.
Former News International executives Les Hinton, Colin Myler, and Tom Crone misled the committee, according to its report. They could now face punishment by Parliament. The MPs called for misleading Parliament to be punished in a similar way to contempt of court — punishable by a jail sentence in the U.K.
Former News International editor Rebekah Brooks and Andy Coulson, Cameron’s former head of communications, were not discussed in detail as there is still a possibility they could face criminal charges over the scandal.
News Corp. said in a statement later Tuesday that while the committee's findings contained some "hard truths," it also included "some commentary that we, and indeed several members of the committee, consider unjustified and highly partisan."
The company said it "already confronted and have acted on the failings documented in the report" including internal reviews of its newspapers' operations around the world, volunteered any evidence of apparent wrongdoing to the authorities and made changes in internal controls and compliance programs.
In the report the committee called James Murdoch's failure to investigate the scandal more deeply "simply astonishing." However, the committee could not decide if he had deliberately misled them.
The Murdochs were also urged to make public a key report by law firm Burton Copeland, which the committee believes could have been used to help people at News International “perpetrate a falsehood” by covering up the scandal. That report was not mentioned in the News Corp. statement.
One News Corp shareholder group repeated its call for a new Chairman to replace Rupert Murdoch. Julie Tanner, assistant director, socially responsible investing of Christian Brothers Investment Services, said in a statement: "News Corp now exemplifies the risks associated with poor corporate governance. In light of the report issued today by the House of Commons select committee, its findings support our resolution to appoint an independent Chair at News Corp, and demonstrates the far-reaching impact of News Corp’s corporate governance failures.
"By appointing an independent Chair and seating independent board members, the company could begin the process of re-establishing public trust. Short of these measures, these scandals will continue to cloud the company and its stock for the foreseeable future."