article

11.02.11

Murdoch Needs a Miracle

New documents show Rupert’s former heir apparent had been told of the gravity of the phone-hacking scandal. Staying alive at News Corp. will require a Houdini trick, writes Brian Cathcart. Plus, Mike Giglio on James Murdoch’s smoking gun.

Imagine that James Murdoch is Houdini. He was already chained, bagged, and locked in a safe by all the evidence suggesting that he knew about and helped to conceal illegal phone hacking in News Corp.’s London paper, News of the World.  Now, with the release of further legal documents, it looks as though the safe has also been sunk in the River Thames. Murdoch has a week to wriggle free.

On Nov. 10, he returns to face the committee of members of Parliament who caused him and his father so much discomfort in July. So far, his defense has been that nobody told him the full story, but if he can’t improve on that he faces certain humiliation and, in time, a resounding condemnation by Parliament.

The new documents, secured and published by the committee, vividly reveal that the two men who briefed Murdoch in mid-2008 were themselves fully informed and crystal clear on the detail—and apparently discussed it step by step with their boss. Both these men, legal manager Tom Crone and News of the World editor Colin Myler, insist they left Murdoch in no doubt about the gravity of the hacking problem.

And the legal papers also make explicit for the first time that Crone and Myler were actively discussing how to keep knowledge of the scale of illegal hacking by reporters from the public.

At the end of a sequence of meetings, conversations and document exchanges in May-June 2008, the new documents show that Murdoch approved a payment to end the key privacy lawsuit that was at least 10 times more than the normal rate for such cases. The natural suspicion is that he knew that this £450,000 payment was necessary to buy silence—in other words a cover-up—but this is what he denies.

At one point, a lawyer noted a conversation with Myler in which the editor’s message was “Spoke to James—not any options—wait for silks view.” (A silk is a senior barrister.) That legal opinion is in the new file, and it is an unambiguous calculation of the payment likely to be required, accompanied by a full discussion of the reasons for secrecy. News Corp.’s British wing, News International, on Tuesday denied that Murdoch ever saw the opinion.

How do you prove you didn’t know something? That would be a real Houdini trick.

Murdoch’s position seems hopeless. Though the documents contain no smoking gun in the form of a contemporaneous document signed by him revealing full knowledge of the depth of the hacking problem, they amount to the next best thing. Myler and Crone have already testified that Murdoch knew about the hacking, but they were themselves tainted witnesses; these new documents, however, confirm so much of what they have said that Murdoch now has to prove the negative to stay alive. How do you prove you didn’t know something? That would be a real Houdini trick.

The parliamentary committee is not a court of law, and Murdoch is unlikely ever to face criminal charges. But it is within the power of the M.P.s to cause deep and lasting damage to his reputation. They can, if it is their considered view, denounce Murdoch formally as a senior executive who, on the balance of the evidence, authorized a cover-up of illegal activity by his employees and went on to maintain in public for years afterward that the illegal activity did not take place. They can also condemn him, if they choose, for misleading Parliament.

As the recent shareholder vote showed, James Murdoch has already lost the confidence of most of the investors in News Corp. outside the Murdoch family and its closest allies. With a British parliamentary condemnation on his résumé he might well become such a liability to the business that even the family would have difficulty supporting him.