Some Fourth Of July Fireworks For Rupert Murdoch

The hacking scandal appears to be a problem for Rupert Murdoch once again.

Not only is his "news" News Corporation having to deal with one and possibly more cases of hacking on U.S. soil that could cost hundreds of millions of dollars in court costs and fees, but now there's a tape out that suggests Rupert Murdoch called for internal management to begin covering up the scandal after they had started cooperating with police:

Labour MP Tom Watson has called on Rupert Murdoch to be questioned by police after a covert recording emerged of him appearing to regret the level of help News Corporation gave to the investigation into alleged wrongdoing at its newspapers.

The News Corporation boss describes payments to police and public officials as "the culture of Fleet Street" in a secret recording made during a meeting with staff from the Sun newspaper this March.

In a transcript of the recording, which was obtained by the investigative website ExaroNews and aired by Channel 4 news on Wednesday evening, he appears to regret the extent of News Corporation's internal management and standards committee's (MSC) co-operation with the police.

After a Sun journalist at the meeting appears in the recording to query the MSC handing over documents to the police, Murdoch is heard saying: "… it was a mistake, I think. But, in that atmosphere, at that time, we said, 'Look, we are an open book, we will show you everything'. And the lawyers just got rich going through millions of emails.

"All I can say is, for the last several months, we have told, the MSC has told, and [**** ****], who's a terrific lawyer, has told the police, has said, 'No, no, no – get a court order. Deal with that.'"

Journalists told Murdoch that they felt like scapegoats and he says: "We're talking about payments for news tips from cops: that's been going on a hundred years, absolutely. You didn't instigate it."

Watson told the Guardian: "I think we need to hear from [Metropolitan police comissioner] Bernard Hogan-Howe when the MSC stopped co-operating with the police inquiry."

In one particularly revealing part of the recording, Murdoch makes reference to those who might succeed him as the head of the media empire. A journalist asks what would happen if the 82-year-old Murdoch was no longer around to give them his support. "The decision would be – well, it will either be with my son, Lachlan, or with Robert Thomson [Murdoch's chief executive at News Corp]. And you don't have any worries about either of them," he tells the meeting.

During the tape, Murdoch accuses the Metropolitan police of incompetence and brands the criminal investigations into journalists as a "disgrace", saying: "The idea that the cops then started coming after you, kick you out of bed, and your families, at six in the morning, is unbelievable."

Watson told Channel 4 News: "What he seems to be saying there is that they stopped co-operating with the police before the Sun staff started to rebel. And what I would like to know is what are they sitting on that they've not given the police. And I'm sure that this transcript and this audiotape should be in the hands of the police tomorrow because I hope that they're going to be interviewing Rupert Murdoch about what he did know about criminality in his organisation."

Roy Greenslade says the tape was leaked by someone on the Sun staff because they're pissed at Murdoch for throwing them under the bus in the scandal:

As for Murdoch, he could be under no illusion about the underlying hostility from staff who felt they were paying the price for doing what was expected of them.

One told me: "We did as we were bid. No-one thought they were doing wrong. There was no training of any kind. No office lawyer raised any question." That genuine feeling of being hung out to dry is shared by almost every one of the arrested journalists.

In the tape Murdoch admits that the culture of bribery the staff engaged in at The Sun and the News of the World had been around at the papers for a long time:

He talks of the News of the World in personal terms: "We got caught with dirty hands, I guess" before launching into a further attack on the police: "The cops are totally incompetent … It's just disgraceful what they're doing … It's the biggest inquiry ever, over next-to-nothing."

A crucial section follows when one of the journalists, who had been with The Sun for under 10 years, points out that the paper's "working practices… were ones that I've inherited, rather than instigated."

Murdoch replies in what will surely be seen as a crucial statement about The Sun's culture and his acceptance of it:

"We're talking about payments for news tips from cops: that's been going on a hundred years, absolutely. You didn't instigate it."

In my opinion, this offers the journalists a crucial plank of mitigation for their actions. It is also a reminder of the occasion in 2003 when the former Sun editor, Rebekah Brooks, told a Commons select committee that the paper had paid the police for information.
Murdoch continues: "I would have thought 100% … at least 90% of payments were made at the instigation of cops saying, 'I've got a good story here. It's worth 500 quid' or something. And you would say, 'No, it's not' … And they'd say, 'Well, we'll ring the Mirror…' It was the culture of Fleet Street."

In the end, this tape confirms that Rupert Murdoch, the man at the top, was responsible for the culture of bribery and corruption at his newspapers:

But the real significance of the tape is that it reveals the true, unexpurgated Rupert Murdoch. As I have said often since the hacking scandal first broke, as the man at the top I believe he has been responsible for the journalistic culture at Wapping. This tape appears to prove my point.

It is time to bring Rupert Murdoch down to the police station and interview him over the tape contents.

We'll see if they actually do that.

NY Post Dragged Into News Corp. Bribery Scandal, Murdoch Faces FCPA Case Against Him

The NY Times published a piece about News Corporation and Rupert Murdoch yesterday that said, essentially, Murdoch and his company had their mojo back, the hacking scandal was behind them and the company was out to buy new properties.

That was yesterday.

This was today:

The new round of criminal charges brought in the UK against former senior News International editors has once raised again the prospect that Rupert Murdoch's New York-based parent company may be prosecuted under US anti-bribery laws, and complicates the rehabilitation of his son James as a possible successor to lead the global media empire.

The charges brought against Rebekah Brooks, who ran Murdoch's newspaper holdings in Britain, Andy Coulson, former editor of the now defunct News of the World, and two other former News International employees exposes the parent News Corporation to possible action under the Foreign Corrupt Practices Act. The FCPA exists to prosecute US-domiciled companies for acts of bribery and corruption that they might commit abroad.

An official of the British ministry of defence, Bettina Jordan Barber, also faces trial for allegedly receiving £100,000 from Murdoch's tabloid newspapers for information that led to a series of published stories. The allegation that money passed hands clearly falls within the legal remit of the FCPA.

Mike Koehler, professor of law at Southern Illinois school of law and author of the blog fcaprofessor.com, said the charges "would be hard for the Department of Justice and the Securities and Exchange Commission to ignore. We have been hearing allegations for a year and a half now, now we clearly have charges against high ranking officials at a foreign subsidiary," he said.

The new charges, and the allegation of bribery of a military official, come as a setback for News Corporation at a very sensitive time for the company. The media giant is preparing to split itself in two, separating the TV and broadcasting arm from the scandal-hit newspaper and publishing division.

The developments also bring to a crashing halt the recent perception in America that News Corporation had begun to recover its confidence after months on the defensive as a result of the phone-hacking scandal.

...

 The new charges will increase pressure on the company. Koehler said US authorities would be looking to see how high up the chain of command the bribery scandal reached. "The question will be what did James know and when did he know it," he said. Ultimately he predicted News Corp would reach a settlement with the Justice Department rather than go to trial, but he said that News Corp faced some uncomfortable investigations in the coming months.

The FCPA has two main components, one that relates to the bribing of foreign officials and another that relates to books and record keeping. It is often the latter that causes companies the biggest headaches. Characterising a bribe as "miscellaneous expense" is a serious offence.

"This latest news is an escalation of the FCPA case," said Koehler. But he said he expected the case could still take some years to be resolved.

 In addition to that FCPA problem for Murdoch, the Daily Beast's Peter Jukes alleges News Corporation employees may have either bribed a U.S. military officials or known that News International employees in Britain had bribed said officials and used the information obtained through the illegal payments in the NY Post:

Did News Corp. Illegally Purchase Saddam Hussein Photos from U.S. Officials? 

Dozens of employees have already been arrested for allegedly paying off British officials—and sources now tell Peter Jukes that U.S. agents may also be implicated, as questions arise over how they scored controversial photos of Saddam Hussein.

 While the scandal that shuttered Britain’s best-selling tabloid, News of the World, has gone quiet ahead of next year’s phone-hacking trials, Britain’s parallel investigation into what has been described as a “culture of illegal payments” to public officials at sister daily The Sun has shifted into high gear. And this week Scotland Yard handed over several new files from its investigations into the alleged bribery to public prosecutors in the U.K., for a decision over whether to press formal charges against some of the 54 individuals arrested so far in the controversy.

The allegations that News Corp., which owns The Sun, made illegal payments to British defense personnel, police officers, and health workers in exchange for confidential information sparked widespread public outcry, which triggered investigations by the U.S. Department of Justice, Federal Bureau of Investigation, and Securities and Exchange Commission in the summer of 2011. Under the U.S. Foreign Corrupt Practices Act, American-owned companies who suborn foreign officials can incur large fines and possible prison sentences for senior executives. These investigations typically take two years to complete.

But The Daily Beast has learned that The Sun may have made another potentially corrupt payment, to a U.S. official on American soil.

On Friday, May 20, 2005, two Murdoch-owned tabloids, The Sun and the New York Post, ran front-page pictures of Saddam Hussein in his underwear, and inside the papers, more photos of the former Iraqi leader in U.S. captivity. According to Fox News, the Multinational Forces spokeswoman in Baghdad said the images could have been taken between January and April 2004, “based on the background of the photos and appearance of him.” Given the context of the Abu Ghraib revelations and ongoing, violent insurgency in Iraq at the time, multiple sources reported that President George W. Bush was upset about the leak. “There will be a thorough investigation into this instance,” deputy White House spokesman Trent Duffy told The New York Times, “[The president] wants to get to the bottom of it immediately.”

No investigation has ever found the source of the leaked pictures, but buried in the contemporary reports is a glaring admission. The Sun’s then-managing editor, Graham Dudman, told the Associated Press that his newspaper paid “a small sum” for the photos. Dudman would not elaborate “except to say it was more than 500 British pounds, which is about $900.”

Sources close to the story have told The Daily Beast that the payment was significantly greater, and was made to a U.S. official on American soil. Meanwhile, Scotland Yard detectives arrested Dudman in January of this year on suspicion of making corrupt payments involving British officials. He has yet to be charged with any criminal offense in the U.K.

(Incidentally, in 2005, Dudman said in a statement, “The Sun obtained [the Hussein] pictures by professional journalistic methods, and by any standards this is an extraordinary scoop as shown by the way it has been followed in the world’s media.”)

In 2004 former News of the World editor and current CNN host Piers Morgan was sacked from the U.K.’s Daily Mirror publishing fake photos of British soldiers abusing Iraqis. Given this history of hoaxes, The Sun would have been very cautious about accepting the Hussein photos in 2005. Expertise in both photographic manipulation and the physical details of Iraqi life would have been required to authenticate the pictures before they were procured. If the procurement and verification of the photos happened on American soil by a News International contact from the U.K., their movements may have been recorded by U.S. immigration. Any financial transaction would also most likely have left an audit trail.

The Sun’s editor in 2005, Rebekah Brooks, appeared to be oblivious to the illegality of paying public officials for stories when she appeared before a House of Commons Select committee a couple of years before. However, in his verbal evidence to the Leveson Inquiry into press ethics, Rupert Murdoch, chair, CEO and head of corporate governance for News Corp., told Lord Justice Leveson under oath in May (PDF), “I believe that paying police officers for information is wrong.”

The problem for Murdoch and the board of News Corp. may be that these pictures were published on both sides of the Atlantic on the same day, perhaps suggesting some kind of advance co-operation between the American parent company and the British News International subsidiary. If there is any evidence that there was prior knowledge by senior executives of payment for the pictures, this could bring the possibility of a U.S. investigation and charges with stiff penalties for illegal payments to public officials.

Last year, New Corp. set up a Management and Standards Committee, tasked with assisting British police with uncovering evidence of corrupt payments. The MSC holds a vast database of internal News International emails and communications, and answers to former U.S. assistant attorney general and News Corp. board member Viet Dinh. It is not known whether any requests for information have been made to the MSC regarding The Sun’s activities in May 2005, when the Hussein pictures were published.

Neither representatives from the FBI nor News Corp. responded to The Daily Beast’s requests for comment on the fresh revelations at the time of publication.

 Yesterday's NY Times story absolving Murdoch and News Corp from any more consequences related to the hacking/bribery scandal seems to have come too early.

I know the Obama administration wants nothing to do with a FCPA case against Murdoch and News Corporation, but as more and more information becomes public about the scandal and the criminal activities of N.I. bribing government officials in Britain, they may have no choice.

And now with the Peter Jukes story dragging the NY Post into the mess, we may yet see some Posties frogmarched into custody.

Commons Committee Report: Rupert Murdoch Is Unfit To Lead Major Company

The Commons culture, media and sport select committee is out this morning - and it's pretty devastating to News Corporation:

Rupert Murdoch is "not a fit person" to exercise stewardship of a major international company, a committee of MPs has concluded, in a report highly critical of the mogul and his son James's role in the News of the World phone-hacking affair.

The Commons culture, media and sport select committee also concluded that James Murdoch showed "wilful ignorance" of the extent of phone hacking during 2009 and 2010 – in a highly charged document that saw MPs split on party lines as regards the two Murdochs.

Labour MPs and the sole Liberal Democrat on the committee, Adrian Sanders, voted together in a bloc of six against the five Conservatives to insert the criticisms of Rupert Murdoch and toughen up the remarks about his son James. But the MPs were united in their criticism of other former News International employees.

The cross-party group of MPs said that Les Hinton, the former executive chairman of News International, was "complicit" in a cover-up at the newspaper group, and that Colin Myler, former editor of the News of the World, and the paper's ex-head of legal, Tom Crone, deliberately withheld crucial information and answered questions falsely. All three were accused of misleading parliament by the culture select committee.

Rupert Murdoch, the document said, "did not take steps to become fully informed about phone hacking" and "turned a blind eye and exhibited wilful blindness to what was going on in his companies and publications".

The committee concluded that the culture of the company's newspapers "permeated from the top" and "speaks volumes about the lack of effective corporate governance at News Corporation and News International".

That prompted the MPs' report to say: "We conclude, therefore, that Rupert Murdoch is not a fit person to exercise the stewardship of major international company."

Hinton, Myler and Crone got hammered by the report:

The culture select committee charged Hinton with being "complicit" in a cover-up of wrongdoing at Rupert Murdoch's media empire.

MPs said that Myler and Crone deliberately withheld crucial information and answered falsely questions put by the committee.

The executives demonstrated contempt for parliament "in the most blatant fashion", the MPs said, in what they described as a corporate attempt to mislead the committee about the true extent of phone hacking at the News of the World.

The MPs said that Hinton, executive chairman of News International until December 2007, had "inexcusably" mislead the committee over his role in authorising the £243,000 payout to Clive Goodman, the former royal editor convicted of phone hacking in January that year.

"We consider, therefore, that Les Hinton was complicit in the cover-up at News International, which included making misleading statements and giving a misleading picture to the committee," the MPs said.

Crone and Myler were accused of deliberately misleading the MPs on the culture select committee in 2009 and again in 2011 about their alleged knowledge that phone hacking went beyond a single "rogue reporter" at the now-closed Sunday tabloid.

"Both Tom Crone and Colin Myler deliberately avoided disclosing crucial information to the committee and, when asked to do, answered questions falsely," the MPs said in the report.

All three executives now face the prospect of being called to apologise before parliament, in a constitutional move that has not been used for almost half a century.

The report could prove especially problematic for Myler, who is only five months into his editorship at the New York Daily News.

More on this later.

Former Wall Street Journal Publisher, Les Hinton, Accused Of Misleading Parliament

Interesting article from The Guardian on what tomorrow's committee report will look like:

James Murdoch will be criticised by MPs investigating phone hacking on Tuesday, but their assessment of his conduct is expected to fall just short of accusing the former chairman of News International of misleading parliament about the extent of his knowledge of the affair.

The all party culture media and sport select committee concluded they could not reach a final decision about whether Murdoch misled them because of what the MPs described as conflicting evidence, according to a source close to the process. However, there was enough to lead members to agree that Murdoch had not asked the questions that would help determine the true extent of phone hacking at the News of the World for several years.

...

The select committee will reserve some of its strongest condemnation for Murdoch's predecessor in the role, Les Hinton, who had appeared before the committee three times over the past five years. Hinton told the committee last October that he was right to have told MPs in 2009 that phone hacking was not rife at the newspaper.

Hinton is expected to be accused of misleading parliament as a result, with MPs particularly focused on his evidence as regards Clive Goodman, the former News of the World royal editor, who went to jail for hacking in 2007.

Goodman subsequently made an unfair dismissal complaint, saying hacking was "widely discussed" until reference to it was banned by the then editor. But Hinton said the complaint was unfounded, and amounted to "accusations and allegations".

The parliamentary report will also criticise the former News of the World editor Colin Myler and the newspaper's long serving chief lawyer Tom Crone in a long awaited document due to be released on Tuesday.

Myler, who is now editor of the New York Daily News, and Crone had been repeatedly pressed on their failure to uncover what had happened.

However, Rebekah Brooks and Andy Coulson, the two previous editors of the Sunday tabloid when phone hacking took place, will not be singled out, because both have been arrested on suspicion of involvement in the intercepting of voicemail messages.

Committee members felt they could not condemn indiduals who had been arrested – providing some relief for David Cameron, who appointed Coulson as his chief spin doctor after Coulson resigned from the News of the World after Goodman was jailed.

Here are some questions:

So now the ball is in Les Hinton's court - does he take the fall for the hacking and corruption scandal or does he tell what he REALLY knows Rupert Murdoch knew about the whole thing? (as Rupert's right hand man for a long, long time, Hinton knows where some bodies are buried...)

Also, will Colin Myler be criticized for not taking enough steps to clear up the hacking matter at NOTW or will he too be accused of misleading Parliament?

And can he remain as Daily News editor if he is criticized in the committee report for not taking the corrective actions needed to clean up the newsroom? (I think if he is accused of lying to Parliament, he has to go - but what do I know? I wouldn't have thought he'd have gotten another job after the NOTW mess!)

So far the Murdochs and their "fixer" Joel Klein are managing to hang the scandal onto others.

Some of those people have pushed back.

Myler and Tom Crone have already accused James Murdoch of lying.

When does Les Hinton take on the Murdochs?

The Independent On Whether The Hacking Scandal Ignites In The U.S.

The Independent has a great summary of the Week That Was at the Leveson inquiry and where things may go from there.

The Independent also reports that Jeremy Hunt, a cabinet secretary in Cameron's government, is hanging by a thread over allegations he misled Parliament - and if he goes, the firewall protecting George Osborne and David Cameron goes too.

David Puttnam writes in The Guardian about how Rupert Murdoch undermined democracy.

Vanity Fair covers the "civil war" going on within News Corporation (and not a surprise, Joel Klein is behind some of the whackings.) Vanity Fair also reports that two former Sun journalists, now accused of hacking crimes, have attempted suicide over the treatment they have received from their former employer, News Corporation.

And we await the Parliamentary committee report on hacking that will be released on Tuesday. Reuters says that report looks to be very critical of Rupert and James Murdoch:

LONDON (Reuters) - Rupert Murdoch's tetchy and uncompromising appearance at a British inquiry into phone hacking could come back to haunt him this week when politicians give their verdict on the scandal at his defunct News of the World newspaper.

Three days of grilling at the Leveson judicial press inquiry last week extracted few new facts from Rupert and his son James as the 81-year-old casually threw out insults at politicians and described himself as a victim of a corporate cover-up.

That appearance will only increase pressure on a powerful parliamentary committee to be harsh in its verdict on the scandal, putting Murdoch's News Corp further on the defensive.

"The timing of the select committee report, following the week we've just had at Leveson, is crucial," a person familiar with the thinking and mechanics of the committee, told Reuters.

"Anyone putting their name to an amendment that supports Rupert and James, or dilutes the criticism of Rupert and James, would look very different now than they would have done a week ago."

Another person familiar with the situation said the report had become much more critical in recent months.

The committee will meet on Monday to vote and agree the final wording for the report, which had originally been expected late last year. It will be published on Tuesday.

I'm still waiting to see how many cases Mark Lewis files against News Corporation here in the United States.

I agree with Michael Wolff that the Obama administration has no will to take on Murdoch during this election season (or perhaps even after that.)

But if revelations come in civil cases brought by Lewis against Murdoch and his media outlets like the NY Post and FOX News, they will not be able to ignore that.

We'll see.

Every time the consensus is reached that the Murdochs have put out the flames on this scandal, the scandal continues to smolder and eventually reignites.

Right now we have three strands of flame on this scandal:

There's the government corruption angle that looks like it is about to take down Jeremy Hunt and threatens to take down George Osborne and David Cameron as well.

There's the TV piracy angle, which has the Murdochs accused of hiring hackers to steal code and use the theft to destroy rivals (a similar accusation was made against a Murdoch-owned advertising paper a few years ago, as reported in the NY Times. The Times reported that News Corporation paid $655 million dollars to make the "embarrassing charges of corporate espionage and anticompetitive behavior go away." )

And finally there is the American angle - with Mark Lewis about to file civil cases against Murdoch for the hacking of British and American citizens here on American soil and for other "dark arts" practiced by Murdoch's media outlets.

So far, Murdoch and his "fixer" Joel Klein have managed to keep those three flames from igniting into one huge conflagration (Reuters reports that Klein was one of Murdoch's "coaches" preparing the 81 year old oligarch for his Leveson inquiry.)

We'll see how much longer they can continue to do that.

James Murdoch Accuses Daily News Editor Colin Myler Of Hacking Cover-Up

Jeremy Hunt wasn't the only score James Murdoch looked to settle at the Leveson inquiry today.

James Murdoch has accused Colin Myler, the editor of the New York Daily News, of withholding the full extent of the phone-hacking scandal at News corporation's UK newspaper arm when he was in charge of the now-defunct News of the World.

Under oath, Murdoch told the Leveson inquiry into British press ethics that he would have "cut out the cancer" if he had known about it earlier.

Murdoch repeated allegations that Myler, the News of the World's final editor, together with the company's former in-house lawyer Tom Crone, had misled him about the scale of illegal behaviour at the newspaper.

Myler and Crone have previously challenged Murdoch's account and called his recollection of events "disingenuous".

The row has shone a spotlight on Myler, now one of the US's top newspaper editors. He was appointed by Mort Zuckerman, owner of the New York Daily News, to edit the paper earlier this year, giving him a place at the top table of American journalism.

Myler declined to comment to the latest set of allegations from Murdoch.

Myler is clearly going to have address these allegations.

Whether he is called to testify under oath to the Leveson inquiry hasn't been made clear.

So far, Myler's keeping his head down here in New York and going after PERVERT TEACHERS!!!! RUN FOR YOUR LIVES!!!

But he's got his own perversion troubles, as Labor MP Tom Watson is claiming Myler sent News Corporation reporters to dig up dirt on Parliament members in order to intimidate them off the hacking case and now James Murdoch is claiming that Myler, along with another News of the World associate, ran the hacking cover-up at the paper.

Tell me exactly how it is Colin Myler, stinking from the hacking case and already embroiled in a He Said/He Said with James Murdoch last summer over the mess, got hired by Mort Zuckerman to run the Daily News?

Tuesday Round-Up (UPDATED BELOW)

Lots going on in the Murdoch hacking scandal - thought I'd put a few links together for those of you watching the scandal.

Frontline has a nice round-up of News Corporation/Murdoch links - including James Murdoch going before the Leveson inquiry today and Rupert Murdoch going before the inquiry tomorrow and Thursday.

The Guardian reports that British investigators have opened another official hacking inquiry into a Murdoch-owned media outlet. Sky News, partly owned by News International, has admitted to hacking into email accounts on at least two separate occasions.

The Guardian also takes a closer look at the allegation that former News of the World editor and current New York Daily News editor-in-chief Colin Myler tried to intimidate those investigating hacking in 2009 by sending reporters to dig up dirt on them.

New York Magazine takes a close look at Myler's journalism career and previous missteps - including lying to the official inquiry looking into hacking charges against the Murdoch-owned News of the World back in 2009.

Michael Moore says he thinks FOX News will eventually be drawn into the hacking scandal.(Moore also criticized Davis Guggenheim for scapegoating public school teachers and unions in his pseudo-documentary Waiting for Superman.)

The Daily Beast reviews Labor MP Tom Watson's book (co-written with Martin Hickman) Dial M For Murdoch and finds it a part Hitchcockian thriller, part All the President’s Men.

Finally, if you're so inclined, you can watch the Murdoch go before the Leveson inquiry here.

UPDATE: James Murdoch goes before the Leveson inquiry and says

when he took over the family’s British newspaper outpost in 2007, responsibility for the journalist ethics of The News of the World, the now defunct Sunday tabloid at the heart of the scandal, lay with its editor and legal manager.

The “ethical risk was something that was very much in the hands of the editor,” he said. “I wasn’t in the business of deciding what to put into the newspaper.”

“The newsroom governance was really an issue for the editor and the legal manager,” he said.

...

As he has in the past, Mr. Murdoch said he did not recall in detail many aspects of the scandal and believed that he was not fully briefed on it because, if he had been, “I would say: cut out the cancer, and there was some desire not to do that” on the part of senior newsroom executives.

“There wasn’t a pro-active desire to bring me up to speed on these things,” he said.

In other words, James Murdoch is saying former News of the World editor and current New York Daily News editor Colin Myler and former News of the World legal affairs manager Tom Crone did not tell him the extent of the hacking and criminal activity at News of the World, nor were they too eager to get to the bottom of it all.

Murdochs Called To Testify On Political Connections, Threats To Politicians

Lots of news on the News Corporation criminal front today.

First up, the Murdochs have to testify before Parliament in the hacking scandal again:

News Corp. (NWSA) (NWSA)’s influence over British politics since Rupert Murdoch entered the U.K. media market in the 1960s will be dissected at an ethics inquiry reviewing the ties between journalists and politicians.

The News Corp. chairman and his son, Deputy Chief Operating Officer James Murdoch, will testify at the inquiry prompted by the phone-hacking and bribery scandals at their U.K. tabloids. James Murdoch is scheduled to testify April 24, while is father will appear the following two days, according to the inquiry’s website. The Murdochs will appear in person instead of using a video link and are the only witnesses scheduled for those days.

The review began last year after evidence emerged that voice-mail interception at News Corp.’s News of the World title was rampant and not limited to a “rogue” reporter as the company claimed. Some victims and lawmakers have said Murdoch’s connections to politicians helped protect New York-based News Corp. during police probes in 2006 and 2009 that failed to uncover the extent of the scandal.

“The public are going to be gobsmacked by the closeness” between News Corp. executives and Britain’s politicians, said Duncan Lamont, a lawyer at Charles Russell LLP who represents some News Corp. competitors in the inquiry. The Murdochs, in what could be their last public appearance in the matter, “are determined to go out with a bang -- not a whimper.”

Indeed, MP Tom Watson published a book today with details of just how much punishment Murdoch and his papers looked to dish out to those who crossed them, saying that News Corporation essentially operated as a "shadow state" in Britain:

News Corporation is a "toxic institution" that operated like a "shadow state" in British society, according to a Labour MP who is the co-author of a new book about the phone-hacking scandal.

Tom Watson, joint writer of Dial M for Murdoch, said that the book also featured allegations that Murdoch's News of the World set out to search for "secret lovers" or "extramarital affairs" of MPs on the culture, media and sport select committee in 2009.

At a packed press conference, Watson, a member of the Commons culture select committee, said that the surveillance revelation – passed onto him by former News of the World chief reporter Neville Thurlbeck – demonstrated how the Murdoch organisation tried to intimidate parliament.

Thurlbeck gave Watson an on-the-record interview, with a witness present, in which he said the then News of the World editor, Colin Myler, told journalists on the Sunday tabloid to "find out everything you can about every single member".

At the time the select committee was conducting its second inquiry into phone hacking, in the wake of revelations in the Guardian that the practice went beyond a single "rogue reporter" at the tabloid.

The aim was to discover "who was gay, who had affairs, anything we can use," according to Thurlbeck, as quoted in the book. "Each reporter was given two members [MPs] and there were six reporters that went on for around 10 days."

Thurlbeck told Watson that the investigations eventually "fell by the wayside" and that "even Ian Edmondson", the then news editor, "realised that there was something quite horrible about doing this".

Watson, and his co-author Martin Hickman, an Independent journalist, said that they believed that pressure on MPs at the time influenced the decision not to compel Rebekah Brooks, who was then News International's chief executive, to give evidence before the committee.

So give Rupert and his News Corporation criminals what they want or they'll dig up dirt on you and go public.

How's that for acting in the "public interest"?

One of the News Corporation employees involved in this dirt-digging and intimidation was Colin Myler, a former News Corp. editor who now is editor-in-chief at the Murdoch rival New York Daily News.

Myler should be under arrest, along with many of his News Corp. colleagues, but so far has eluded handcuff. Not so some more journalists who work for Murdoch, however:

(Reuters) - British police arrested three people, including the royal editor of Rupert Murdoch's Sun tabloid, a source familiar with the situation said, in an escalation of a long-running phone hacking scandal which reaches into Britain's political establishment.

Thursday's arrests and the fact they stemmed from information given to the police by Murdoch's company itself is likely to reignite tensions within the media group, just days before parliament gives its verdict on how the culture of illegality came about.

Next week Rupert Murdoch and son James will also appear before a judicial inquiry to answer questions over the conduct of the press, which will focus on the close ties between Murdoch, his executives and the political establishment.

James Murdoch will appear in court room 73 at the Royal Courts of Justice on Tuesday while lawyers at the inquiry have cleared a day and a half to grill the 81-year-old Rupert on Wednesday and Thursday.

"This was always going to be an important six weeks in this affair, with the Murdochs and politicians going before the Leveson judicial inquiry, but it will be exacerbated by the arrests and the imminent committee report," said Steven Barnett, communications professor at the University of Westminster.

Police made the arrests one day after prosecutors confirmed they had started to examine the police case against four journalists and seven others to establish whether they should be charged with a range of offences including perverting the course of justice.

Press reports have speculated that one of those named in the files is Rebekah Brooks, a former editor of the News of the World and Sun tabloids and a close friend of both Murdochs and Prime Minister David Cameron.

Brooks has been arrested twice, once for corruption and intercepting communications, and more recently for perverting the course of justice, along with her husband, Charlie Brooks.

The three arrested on Thursday were detained at dawn and questioned over inappropriate payments made to police and public officials.

That's Joel Klein's hand behind News Corp turning over evidence on employees to the police that are resulting in arrests of Murdoch employees.

The last time Klein engineered this, Rupert Murdoch himself had to fly into London to quell a News International near-riot against the company.

But this time, there will be no trying to quell employees - Murdoch and Klein are deliberately trying to hang the scandal around the neck of those arrested, including former News International chief (and Murdoch favorite) Rebekah Brooks.

So much breaking in this scandal that it's hard to keep track.

One thing is for sure, it's not been such a good week for the Murdochs or News Corporation and next week could be even worse.

The Telegraph reports that with today's arrests, James Murdoch faces a dire future:

Mr Murdoch, News Corp's deputy chief operating officer and former chairman of News International, is facing renewed pressure in the US following the arrest of The Sun's royal editor, Duncan Larcombe, over alleged payments to public officials.

According to US lawyers, Mr Murdoch stands to have his personal assets seized and could be jailed if Mr Larcombe or any other member of News International's staff is found guilty of bribing police of government officials outside the US.

Such payments are prohibited by America's Foreign & Corrupt Practices Act (FCPA), the piece of legislation which is at the heart of parallel investigations into News Corp by the US Department of Justice (DoJ) and the Federal Bureau of Investigation (FBI).

Investigations typically last around five years, but have severe personal consequence for the directors of any companies charged, regardless of whether they were directly involved in the wrongdoing. The directors can be jailed for up to five years for each FCPA charge.

Thomas Fox, an FCPA expert who has spoken on the subject at events organised by News Corp's Dow Jones newswire, said that companies charged under FCPA "have to clear their house out at the highest levels in order to move forward and for that reason I wouldn't be surprised if James Murdoch had to step down from his leadership role".

Joel Klein is working really, really hard to tie the scandal around the necks of other people, so we'll just have to see how this plays out.

Maybe Klein, "The Fixer" in the case, can save Rupert Murdoch from the wolves.

But Klein certainly has his work cut out for him now, and each day that work gets harder and harder.

Did New York Post Reporters Engage In Illegal Hacking?

With the news today that Mark Lewis, the British lawyer who successfully battled Rupert Murdoch and News International over illegal phone hacking in Britain, is going to file at least three cases in the United States against News Corporation for phone hacking on U.S. soil, one question comes to mind:

How far does the criminality at News Corporation go?

Looking back, every time there was an allegation of hacking or wrongdoing made against News Corporation/International employees, the company sought to minimize the damage by either denying the allegations or saying they were limited to one individual.

When hacking reports first surfaced in Britain and News International (News Corporation's British subsidiary) was forced to admit that someone at the News of the World had hacked into phones, they blamed the incidents on "one rogue reporter."

Later on, that excuse was made inoperative when it became apparent that hacking was endemic at News of the World, many reporters there had engaged in the practice and News of the World executives knew this.

At that point, News International claimed hacking was limited to the News of the World tabloid (which Murdoch promptly closed) and was not engaged in by employees at any other N.I. papers.

But that excuse was made inoperative when the police arrested a News International employee at News of the World's sibling paper, The Sun, for hacking.

At this point, News Corporation, looking to minimize the damage to just its British tabloids, began turning over reams of evidence to British police that led to the arrests of more Sun employees.

The atmosphere got so toxic at The Sun, as employees felt Rupert Murdoch and his scandal fixer Joel Klein were using them as scandal scapegoats, that Murdoch himself had to fly into London to quell potential rebellion.

Then allegations came that reporters for the Times of London, another Murdoch owned newspaper, had engaged in the hacking of email accounts, further ratcheting up the scandal from reporters at the Murdoch tabloids hacking into phones to reporters at the respected Times of London hacking into email accounts.

The line from News Corporation at this point was hacking and the attendant police bribery, corruption, conspiracy to cover up crimes and destruction of evidence were limited to its British newspapers and were being cleaned up by scandal fixer Joel Klein and News Corporation's new ethical guidelines committee.

But that excuse was made inoperative when it was reported that Sky News, a partially-owned Murdoch TV news channel, had also engaged in illegal hacking of computer accounts.

The excuse executives at Sky News used for the illegal hacking was that the crimes were in the "public interest," though legal experts in Britain say the legal statutes contain no such clause for law breaking.

In any case, the hacking scandal had now gone from Murdoch's British papers to a TV news channel partially owned by Murdoch. In an additional widening of the scandal, News Corporation has also been accused of hiring hackers to steal the security codes of rival satellite operators and disseminate those codes for free on the Internet to ruin its rivals.

When those allegations surfaced, Rupert Murdoch took to Twitter to deny them as ridiculous and to claim that News Corp. was getting ready to hit back hard against its opponents.

That was last week.

This week, one of its opponents, the lawyer who successfully fought the Murdochs and News International over hacking in Britain (winning settlements for Milly Dowler's family as well as scores of other hacking victims) instead has taken the fight to Murdoch and News Corporation by announcing suits to be filed in the U.S. over hacking on U.S. soil, with at least one of the alleged hackees a U.S. citizen.

At every point in time when News Corporation was faced with allegations of criminal wrongdoing, the Murdochs or their henchmen (including former NYC schools chancellor Joel Klein) claimed the crimes were limited in scope and there was no further wrongdoing to be revealed.

Every one of those excuses by News Corporation was eventually proven inoperative.

Which brings me to the question of whether New York Post (or Wall Street Journal or FOX News) employees have engaged in any hacking or criminal wrongdoing.

News Corporation defenders have maintained that no hacking has occurred in the United States by News Corporation employees at U.S. news outlets.

Even the cases soon to be filed by Lewis are for hacking done by British reporters at the News of the World (though the hacking is alleged to have occurred on U.S. soil.)

But as I have noted above, at every juncture where News Corporation has tried to build a firewall to the scandal and limit the scope and the damage, the fire has breached the wall and spread elsewhere.

We have gone from phone hacking limited to "one rogue reporter" at News of the World to the exposure of widespread phone hacking by many News of the World employees to the spreading of the both phone and computer hacking to The Sun and the The Times of London to the additional spreading of the hacking to a TV operation partially owned by Rupert Murdoch to TV piracy allegations made against News Corporation in Australia, Britain and Italy.

With every excuse or denial made by News Corporation eventually made inoperative by subsequent revelations of criminal wrongdoing, why should we believe that News Corporation employees at the Murdoch-owned New York Post or Wall Street Journal or FOX News haven't engaged in criminal wrongdoing like hacking, bribery, extortion, etc.?

In addition, many News Corporation employees at the Post, Journal, et al. came over from Murdoch's British newspapers where criminal wrongdoing was habitual.

Why should we believe that those News Corporation journalists and employees left their criminal ways back in Britain when they began work at Murdoch's U.S. papers?

So far, betting that every allegation made against News Corporation over hacking, bribery, criminal activity, et al. is actually worse than first revealed would make you a lot of money while believing ANY of the excuses or denials News Corp. has offered in the scandal would lose you a lot of money.

Now that lawsuits are to be filed in the U.S. against News Corporation, there will be a lot of scrutiny to Murdoch's U.S. operations that he has so far avoided.

For whatever reason, the Obama DOJ has seemingly slow-walked its investigation of claims that News Corporation employees hacked into the family members of 9/11 victims, so much so that some family members have become frustrated by the lack of progress in the case.

I have speculated that just as the Obama DOJ didn't want to prosecute any Bushies over torture because of the political fallout such cases would engender, the Obama DOJ is reluctant to pursue a case against News Corp. here in the U.S. over hacking for fear of seeming "political" in an election year by going after the owner of FOX News.

But with Mark Lewis getting ready to file suits in both NY and LA, you can bet that Murdoch will no longer have his scandal firewall in the U.S. and the Obama DOJ will not be able to slow walk their investigation any more.

And as light gets shone onto News Corp's U.S. properties, particularly onto the Wall Street Journal (where publisher Les Hinton resigned as a consequence of the hacking scandal in Britain) and the Post, more criminal wrongdoing by News Corporation employees will be exposed.

So far that has been the case at every juncture of the scandal.

There is no reason to believe that has changed now.

Rupert Murdoch's News Corporation Faces Police Investigation In Australia For Hacking

From The Telegraph:

Rupert Murdoch's News Corporation is facing a police investigation in his native Australia, throwing his attempt to tighten his grip on its powerful regional media into jeopardy.

The Australian government has called for a police inquiry into corporate hacking by the media group, after a newspaper released more than 14,000 emails allegedly showing that the company used a secret unit to sabotage competitors.

The office of Stephen Conroy, Australia's communications minister, said the allegations were "serious" and "should be referred to the Australian Federal Police for investigation".

Experts said a police inquiry would be likely to derail the $2bn bid by Foxtel - the Australian pay-TV operation 25pc owned by News Corp - for rival network Austar.

Claims have been made that NDS, a technology company that was part-owned by News Corp, had a secret unit which encouraged the widespread hacking of competitors. The practice reportedly cost rivals $AUS50m (£33m) a year and helped put at least one out of business.

The Australian Financial Review made the claims this week, as it published thousands of emails from an archive held by Ray Adams, European chief of the unit called "Operational Security" between 1996 and 2002. Pay-TV operators worldwide, including ITV Digital in the UK and Austar in Australia, were subject to a major wave of piracy during the period.

On Monday, a Panorama documentary on BBC1 alleged that NDS hired a man who ran a piracy website and tasked him with publishing "cheat" codes on the internet, allowing viewers to "crack" their ITV Digital boxes and use the services for free.

Crime all over the world - that's what Rupert Murdoch hath wrought.

And unlike the phone hacking scandal, which ultimately seems to end right at Rupert's son, James Murdoch, this TV piracy hacking scandal lands right at Rupert Murdoch's door:

The Australian Financial Review aligned the NDS scandal to Murdoch senior, saying it was ''particularly sensitive because Operational Security … operates in an area which historically has had close supervision by the office of the chairman, Rupert Murdoch''.

More on this later.

Joel Klein's News Corporation Putsch

The crisis at News Corporation continues to spread this morning:

Dark rumours were swirling as long ago as last spring, when Rupert and James Murdoch paid three unprecedented visits to Wapping in the space of a month.

Not only were father and son considering closing the scandal-racked News of the World, went the chatter on the Wapping grapevine, but its sister paper, the Sun, was also in the line of fire. Back then the fears seemed outlandish, born of the febrile atmosphere around the Sunday title that was to bring about its demise last July. There was little evidence the toxic allegations of malpractice would spread to the daily tabloid.

But what seemed incredible last year is now being discussed openly in Fleet Street following the arrests of five Sun employees on suspicion of bribing public officials. They follow the arrest of four other current and former Sun executives and journalists in January – and the separate arrest of a reporter on the paper the previous November – on similar suspicions.

The drip, drip nature of the arrests is in danger of becoming a flood. What started as a separate, but minor, line of investigation for the Metropolitan police team predominantly charged with examining allegations of phone hacking now threatens to become an epic bribery scandal of equal gravity.

Indeed, the moral rot at the core of News Corporation is more and more exposed as the arrests in the various police investigations mount:

A total of 21 people have now been arrested in the bribery probe, Operation Elveden, including three police officers, though no one has yet been charged. Those arrested include Rebekah Brooks, the former chief executive of Murdoch's News International, the company that owns the Sun, and ex-News of the World editor Andy Coulson, who went on to become prime minister David Cameron's communications chief.

That the arrests are linked to alleged bribes paid not just to police officers but prison staff and Ministry of Defence officials, confirms Scotland Yard is throwing its net wider as it seeks to root out corruption. The arrest of an MoD official may invite speculation that the Official Secrets Act could have been breached.

Here in the United States, News Corporation may face investigation under the Foreign Corrupt Practices Act (FCPA) for the bribery charges:

The latest Operation Elveden arrests sharply increase the danger to News Corporation of potential multimillion dollar fines by US authorities as part of the continuing investigation into alleged bribery of public officials under the Foreign Corrupt Practices Act (FCPA).

The eight arrests escalate the FCPA crisis for the company by extending the allegations of bribery from the News of the World to the Sun newspaper, and by broadening its scope from police officers to other public officials. An official from the Ministry of Defence and a member of the armed forces were also arrested for alleged corruption and "misconduct in a public office".

The threat of prosecution under the FCPA constitutes the greatest danger of the phone-hacking scandal for Rupert Murdoch's media empire. It could expose the company to tens of millions of dollars in fines and the risk of imprisonment of its executive officers.

So what is Rupert Murdoch's strategy going forward on this widening scandal?

Why, put Joel Klein in charge of whacking every News Corp. employee who is even suspected of bad behavior:

Toxic allegations that the Yard failed to take allegations of endemic phone hacking on the News of the World seriously did for the careers of both the Met's commissioner, Paul Stephenson, and his deputy, John Yates.

Now it is the mirror image of this relationship that is damaging the Sun. The paper's journalists are said to be furious that the arrests have been triggered by information supplied to the Yard by the Management and Standards Committee (MSC), an independent committee set up by the New York-based News Corporation, the parent company of News International. Following the first set of arrests, a News International source suggested it was intent on "draining the swamp", a comment that provoked fury among the company's journalists.

In a statement, the MSC said it was ploughing through a mass of information as it seeks to ensure "that unacceptable news gathering practices by individuals in the past will not be repeated". The committee has given a team of advisers, lawyers and forensic IT staff a broad remit to search for any evidence of wrongdoing. Significantly, the investigation is not confined to the now defunct News of the World. Overseen by Will Lewis, the former Telegraph executive, the committee is working closely with the law firm Linklaters, which is conducting a review of all three remaining News International titles – the Sun, the Times and the Sunday Times.

"The MSC is authorised to conduct internal investigations to fulfil its responsibilities in relation to News International's papers," the committee said in a statement. "It has powers to direct News International staff to co-operate fully with all external and internal investigations, and to preserve, obtain and disclose appropriate documents."

Chaired by Lord Grabiner QC and reporting directly to Joel Klein, executive vice-president and board director of News Corp, the committee's team is examining some 300m emails and what one insider described as "masses of hard copy". "They are looking at more information than one person could read in an entire lifetime," the insider said.

Well, Klein always did love data, didn't he?

Now he's got a treasure trove of it to look through, but one main piece of evidence found recently points to EXACTLY what Klein and Rupert intend to do next - pin this mess on Rupert's son, James.

The NY Times has that part of the story:

LONDON — As dozens of investigators and high-powered lawyers converge on Rupert Murdoch’s News International in the phone hacking scandal, attention has focused on the printout of an e-mail excavated three months ago from a sealed carton left behind in an empty company office.

Addressed to Mr. Murdoch’s son James, it contained explosive information about the scale of phone hacking at The News of the World tabloid — information James Murdoch says he failed to take in because he did not read the whole e-mail chain.

The e-mail returned to cause trouble for News International, the British newspaper subsidiary of News Corporation, several weeks ago when the company said that it had been deleted from Mr. Murdoch’s computer. Even as people familiar with the investigations said the e-mail and its convoluted history will form a crucial part of the inquiry into allegations of a cover-up, the scandal appeared to be widening on Saturday, as senior journalists at News Corporation’s Sun tabloid were arrested.

Tracing the story of the e-mail, which was found in November and first became publicly known in December, also sheds light on the intrigue surrounding Mr. Murdoch, the company’s heir apparent, and on efforts to protect him from the scandal.

Embroiled in three separate police operations, a parliamentary investigation, a judicial inquiry and a flurry of civil suits with potentially hundreds more waiting in the wings, News Corporation has begun to provide information that suggests a broader sweep of hacking activity at News International than was suspected even recently and more widespread knowledge within the company of past efforts to cover it up.

This new level of cooperation includes the release of damaging material from an internal investigation that is being overseen by executives who, observers say, are using it to consolidate their power within the company, a move that could come at James Murdoch’s expense.

The executive running the internal investigation who is releasing all the damaging material that has been resulting in arrests for Sun employees is of course Joel Klein.

He's the guy who is supposed to be "draining the swamp," as The Guardian story put it.

But more and more, it seems like he is running the cover-up around Rupert and throwing everybody else to the dogs - including Rupert's son, James.

Here is Murdoch biographer, Michael Wolff, on twitter:

NYT story re James Murdoch doesn't say he'll be arrested shortly, and that company is riven by perceived Joel Klein putsch--but almost says...Front page NYT story about James Murdoch will move case in UK more than same news in British papers...Joel Klein strategy at News Corp is to let Brits sink or swim. Unclear how much this is de facto or if Murdoch has bought in.

That last point is interesting - is Klein running this strategy at Rupert's behest or is he freelancing it?

Hard to know, but it quite clear Klein is running News Corporation strategy on the scandal and therefore essentially running News Corporation.

He's the one throwing everybody under the bus over at The Sun

We'll have to see if some of the pre-Klein News International and News Corporation employees begin to push back against Klein.

This article from Reuters on February 6 gives an indication of just how contentious things are between the people Klein brought in and the pre-Klein people:

News Corp says the committee is independent of News International. But it isn’t independent of the parent company: via Joel Klein it reports to News Corp board member Viet Dinh, who was an associate counsel to the US senate banking committee for the Whitewater investigation of President Bill Clinton. Dinh, who also served as a US assistant attorney general in the George W Bush administration, has been on the board for eight years, and is godfather to a child of Lachlan Murdoch, Rupert’s eldest son.

Klein was initially hired by Rupert Murdoch to head a new education division at News Corp.

In the United States, people in News Corp’s headquarters are aware of the growing tensions in London but feel they have no alternative but to stick to their course, according to a company insider.

The committee is divided into teams of lawyers and police who work in soundproofed offices, according to the people who are familiar with the work. The volume of data is so large that there is no question of reading each document. Instead, searches are carried out for key terms, meaning that no one knows what secrets may be buried in the documents - many of them deleted or corrupted emails that have been recently recovered - until the right term is hit upon.

MSC workers try to keep a distance from News International’s journalists. At first they were in the same building, but kept bumping into reporters and editors in the lobby or lifts. Now they are in a separate building where they share a floor with BrandAlley, an online clothing retailer in which News International has a stake.

“Filthy insects”
But different buildings do not guarantee peace. News International journalists say they are furious at the committee. When media reports began circulating that an insider had described the MSC’s work as “draining the swamp,” tempers flared.

“What do they mean, ‘drain the swamp’?” asked a News International journalist. “Are they saying we’re a bunch of filthy insects?” News Corp, the journalist continued, “is seen as the enemy now. They have failed to exercise due diligence... and their response now is to dump on their own employees. It’s a disgrace.”

The NY Times has more on the battle between management and employees:

Among former employees of The News of the World, said one, there is cynicism about the motivations of their former employer. Some feel, the person said, that the management “is protecting itself and serving up journalists.”

Britain’s National Union of Journalists criticized what it characterized as the handing of the staff members to the police without internal investigation of the evidence. “It’s a very brutal way of treating senior journalists who may or may not have done anything wrong,” said the group’s deputy general secretary, Barry Fitzpatrick.

News Corporation is at war with itself and Joel Klein, the master of creative destruction, is leading the charge.

I have to admit, I'm dubious Klein really wants to drain the swamp at News Corp.

Quite frankly, it seems to me that he has circled the wagons around Rupert and is slowly throwing everybody else to the wolves.

That includes Rupert's son, James.

There is little doubt to me that the Times article today about James and the incriminating email was planted by Klein.

Whatever happens next, one thing we can be sure about.

Things are going to get much worse for News Corporation before they get better.

You can't have a company at war with itself and expect it to thrive.