Isolated Figure

06.25.14

Rupert Murdoch’s Trouble Has Only Just Begun

His protégée Rebekah Brooks may have been spared, but the mogul faces a police grilling, more possible charges against News Corp from Scotland Yard, and a looming Senate probe.

When Rupert Murdoch flew into London as the phone-hacking allegations exploded in 2011, he was asked for his top priority. “This one,” he said, gesturing at Rebekah Brooks. He got his wish this week when she was spared by a jury, but Murdoch is expected back in the city to face dozens of new burning priorities, many of which threaten to diminish or even destroy his newspaper empire.

It can now be reported that the FBI has copies of at least 80,000 emails taken from the servers at News Corp in New York. These messages, including those sent up the chain of command by Brooks, were not part of the mass deletion that was ordered in London when it became clear that police officers were soon going to be searching for evidence of a vast criminal conspiracy.

A court in London found this week that Murdoch’s top-selling newspaper, the now shuttered News of the World, was systematically and illegally accessing the private phone messages of thousands of people, from royalty to murder victims. This is only the beginning.

On top of the FBI’s interest in the case in New York, Murdoch is set for questioning by the British police; Scotland Yard is investigating corporate charges against the company; and 12 further criminal trials against former staff at the Sun and the News of the World are scheduled to take place later this year. And after that, Jay Rockefeller, chairman of the Senate Committee on Commerce, says he is waiting to formally launch a congressional investigation into the company.

As the investigations and court cases mount up, Murdoch’s ability to rub shoulders with the world’s political elite is ever diminished. Two British prime ministers, David Cameron and Tony Blair, have been embarrassed by disclosures in the phone-hacking scandal that suggested their official and personal lives have been intertwined with Murdoch and his senior staff.

“No one owes him any loyalty after what happened. Now people know he’ll just close down a grubby newspaper if it’s proving inconvenient in New York.”

For decades, the staff of Murdoch’s own newspapers seemed to take a perverse pride in saying, “No one likes us, we don’t care.” But even that loyalty has crumbled as Murdoch is seen by some to have abandoned ship. “He betrayed us,” explained one reporter who lost his job as part of the closure of the News of the World.

Murdoch was always controversial in Britain, but for the first time he is cutting an isolated figure.

In East London, a five-minute walk from Tower Bridge along the banks of the Thames, stands a monument to arguably his greatest achievement. The Wapping complex, which once housed five of Murdoch’s British newspapers, was built in the era of Margaret Thatcher and Ronald Reagan as Murdoch wrested control of the media away from the powerful unions that had dominated Fleet Street.

In recent years, the three remaining newspapers moved to temporary offices and bulldozers have now been set to work on what used to be called Fortress Wapping.

Seven years after the first News International phone hacking convictions in Britain, the company, since rebranded as News U.K., is now facing its most dangerous period.

Tom Watson, the British MP who led the political charge to investigate Murdoch and his newspapers, told The Daily Beast that the culmination of the seven-month trial in London is just the beginning of the legal challenges. “It shouldn’t be forgotten that there are more criminal trials and more civil cases afflicting Mr. Murdoch,” Watson said. “And he faces being interviewed by London police for corporate charges. This will obviously be very significant to the authorities in the U.S. who are themselves considering possible corporate charges against the parent company.”

In a letter seen by The Daily Beast, Scotland Yard informs senior Murdoch lieutenants that the Metropolitan Police is actively pursuing corporate charges against the company. Soon after the warning in May 2012, Gerson Zweifach, News Corp’s general counsel, flew to London and told investigators, according to the Independent, that a successful corporate prosecution “would be apocalyptic” and threaten to “kill” the corporation in both Britain and the U.S., costing tens of thousands of jobs.

Until that point, when executives believed that it was only their employees at risk of prosecution, News Corp’s British subsidiary had cooperated fully with the police by handing over vast tranches of emails they had uncovered during an internal investigation carried out by the newly installed Management and Standards Committee (MSC).

Once the letter from Deputy Assistant Commissioner Sue Akers of the Metropolitan Police had been hand-delivered to Lord Grabiner, chairman of the MSC, that cooperation slowed down, the police told the House of Commons last year. According to the legal team of one of those facing prosecution, that slowdown sometimes also had a detrimental effect on their individual defense cases.

A month later, Murdoch’s global empire was split in two. The money-spinning movie and television companies were grouped together, while the newspapers, including The Wall Street Journal and New York Post, were separated into a smaller publishing arm, isolating Fox News and 21st Century Fox from the potential fallout of any corporate charges.

The entertainment arm and successful news channels continue to reap huge profits and satisfy shareholders, but it’s the newspapers, Murdoch’s first love, that are in trouble.

Police pursuing corporate charges have already interviewed Les Hinton—who spent 50 years working with Murdoch, latterly as CEO of Dow Jones—Brooks, and Andy Coulson, who was convicted of phone hacking on Tuesday. Next, Scotland Yard’s questions are expected to be put directly to Murdoch.

The FBI emails, on a single disk, were shared with investigators in London, but their existence was not disclosed to the judge until late in the phone-hacking trial and they were ultimately not entered into evidence and therefore could not be reported until the jury had reached its verdicts.

The negative fallout from the phone-hacking trial has been substantial for Cameron, whose friendship with Brooks and Coulson has been widely debated in the British media. Ed Miliband, leader of the Labour Party, said Cameron had “brought a criminal into the heart of Downing Street.”

“He put his relationship with Rupert Murdoch over doing the right thing over Andy Coulson,” he said.

Murdoch’s cozy relationship with the British government reached its peak under Blair, who is the godfather of Murdoch’s second-youngest child, and its end fell on Cameron’s watch. After the Leveson inquiry into the state of the British media, the public heard that Cameron had ridden Brooks’ horse and signed his text messages to her “lol”—thinking it meant lots of love. Never again will a senior British politician dare to foster such a close relationship with Murdoch or one of his companies without fear of rebuke from the public.

If the unraveling of Murdoch’s trustworthiness in political circles was a gradual process, his loss of respect among some of the journalists who worked for him was more abrupt.

After news had broken that the News of the World was to be closed down at the cost of hundreds of jobs, one reporter recalled: “They used to have these signs up on the wall saying, ‘Shock and amaze on every page.’ I remember one of the sports guys ripping it off the wall and kicking it at a photocopier.”

For many, the trust never returned. “The Sun guys feel a deep sense of outrage because they were sold down the river,” one former News International executive said. Another member of staff said: “No one owes him any loyalty after what happened. Now people know he’ll just close down a grubby newspaper if it’s proving inconvenient in New York.”

Since Murdoch’s explosive appearance before MPs in the House of Commons, his public appearances have been relatively few and far between, but one thing’s for sure: He is still determined for his newspapers to succeed.

Despite the legal threats swirling all around him, his three British newspapers will move into expensive new offices in Central London next month. As one current News U.K. executive said: “Typical Murdoch. He’s doubling down.”

Peter Jukes is a journalist and other the forthcoming book on the inside story of the phone hacking trial, Beyond Contempt