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HACKING SCANDAL

James Murdoch Maintains Innocence

James Murdoch Maintains Innocence Warren Allott, AFP / Getty Images

After 'News of the World' reporter arrested.

In a letter to the British parliament on Wednesday, James Murdoch claimed his innocence in the phone-hacking scandal that has embroiled his family name and News International conglomerate while saying he had "deep regret" for the situation. "It has been suggested that my decision to resign my role at News International reflected past knowledge of voicemail interception or other alleged criminal wrongdoing at News International," Murdoch wrote in a seven-page letter. "This is untrue." meanwhile, veteran British reporter Neville Thurlbeck was arrested on Wednesday for his alleged involvement in the scandal. He was arrested on charges of trying to intimidate a witness and encouraging or assisting an offense while working at News of the World. The 51-year-old was taken into custody by officers working on Operation Weeting, the investigation that stemmed from revelations that phone hacking was rampant at the paper, which is now defunct. Thurlbeck, who was arrested in April 2011, made bail. His former colleague Rebekah Brooks was also rearrested, along with four others.

Read it at Politico

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News Corp.

James Murdoch in the Crosshairs

After a stinging rebuke from the British broadcast regulator, Rupert Murdoch's son is attempting a comeback—but the road ahead is fraught with peril. By Peter Jukes

It looks like a perfect act of defiance. On Thursday, the British broadcasting regulator, Ofcom, came to its long-awaited judgment on the “fit and proper” test for Britain’s dominant satellite broadcaster, BSkyB. Rupert Murdoch’s News Corp. owns 39.1 percent of the pay-TV company, and the media mogul's son, James Murdoch, was chair of both BSkyB and the British publishing subsidiary News International when there was a “cover-up” (in his father’s words) of the phone-hacking scandal.

James Murdoch

Murdoch at a tech conference January, 2011. (Tobias Hase / DPA-Corbis (FILE))

James’s claim to be heir apparent to his father’s media empire rested to a large degree on Project Rubicon, a three-year strategy to take over 100 percent of BSkyB and combine it with News International to create a digital hub combining broadcast, print, and new media. The plan foundered in the wake of the revelations about the News of the World, which was shuttered last year after hundreds of new victims of phone hacking emerged from the files of a private investigator.

BSkyB may have kept its license, but its former chair and current non-executive director came in for some of the harshest language the regulator has ever delivered. While Ofcom gave BSkyB a clean bill of health, James Murdoch’s behavior was described as “both difficult to comprehend and ill-judged.” For five years, News International claimed the phone hacking had a handful of victims and was conducted by a rogue investigator and reporter. But since the revelation that a teenage murder victim’s phone was hacked, more than 50 people associated with News International have been arrested. Ofcom concluded that James’s oversight of the newspaper arm “repeatedly fell short of the exercise of responsibility to be expected of him as CEO and chairman.”

In effect, the report said that had James remained as chairman, the plug could been pulled on Britain’s most lucrative broadcaster. Moreover, there was a clear warning that, if further evidence should emerge that he had any involvement in the cover-up, even James’s current position as a non-executive member of the board would be in question. “Ofcom’s duty to be satisfied that a licensee is fit and proper is ongoing,” the report stressed. “Should further relevant evidence become available in the future, Ofcom would need to consider that evidence in order to fulfill its duty.”

Since he resigned from the chair of BSkyB earlier this year, James has also resigned several other prestigious U.K. directorships, including at the auction house Sotheby’s and the pharmaceutical giant AstraZeneca, and effectively relocated to the U.S. For the former heir apparent, and one of Britain’s most powerful movers and shakers, this is a massive comedown. But James remains a deputy chief operating officer at News Corp., and the response in New York was defiant.

Within hours of the damning Ofcom judgment, the Financial Times was running a well-sourced story that James was set to take over the running of the Fox Networks Group, one of News Corp.’s most lucrative divisions. Recently separated from 20th Century Fox Studios, the Fox Networks Group would be a key player in the new company that would emerge from his father’s plan to split the troubled publishing assets from the revenue-earning entertainment parts of News Corp.

The story was soon supported by The Wall Street Journal quoting “people familiar with the situation.” Since the WSJ has been owned by Rupert Murdoch for more than five years, one would assume it knows who is familiar and who is not.

STEPPING DOWN

James Murdoch Resigns

The news of the younger Murdoch’s departure from News International has prompted speculation over succession plans within the Murdoch empire.

Ever since the phone-hacking scandal forced Rupert Murdoch to shutter his News of the World tabloid last summer, there had been a general consensus among London’s media observers: James Murdoch, Rupert’s youngest son and heir apparent, wouldn’t last long at the helm of News International, the U.K. arm of the family’s News Corp. media empire. But few expected he would go so soon. It was announced today that James had stepped down as News International’s executive chairman, leaving behind a tempest of succession rumors and speculation over how deeply the phone-hacking crisis has affected the Murdoch family and their prized U.K. newspaper chain.

MURDOCH NEWSCORP

James Murdoch in New York on Tuesday (Peter Foley, Bloomberg / Getty Images)

According to News Corp. the resignation is part of a longstanding plan to move James to the company’s New York headquarters and have him focus on pay-television business and international operations. “We are all grateful for James’s leadership at News International,” Rupert Murdoch said in a statement announcing the move. James was named News Corp.’s deputy chief operating officer last year.

Analysts say today’s move suggests deep changes in the elder Murdoch’s succession plan, as well as increasing concern over News International’s mounting public-relations problems. The Leveson inquiry—which convened in the wake of the phone-hacking scandal to investigate press ethics—has been unearthing damning testimony about what Scotland Yard’s lead investigator called a “culture” of wrongdoing among Murdoch journalists, and police have recently arrested several top reporters and editors at News of the World’s sister paper, The Sun, as part of an investigation into illegal payments to public officials. These tremors, as well as nascent staff unrest at The Sun, seem have put Rupert Murdoch on the defensive: he flew to London to reassure his employees and to announce the rushed launch of a Sunday version of the paper, in what seemed like a bid to display his strength. Some experts suspect that James’s resignation reflects these recent woes—while others say the younger Murdoch’s move could also suggest that more damning information could be about to surface.

Says a Westminster source who has been following phone hacking closely for years: “Maybe they know there’s worse stuff to come.”

Of late, the crisis gripping Murdoch’s tabloids has shown no sign of abating.

Fueling the fire is the company’s own internal investigation, which is being led by board member and former New York City schools reformer Joel Klein. The company has painted its internal inquiry as an effort to come clean about past practices at the newspapers—and also to show it is fully cooperating with authorities such as Scotland Yard and the FBI, the latter of which is reportedly investigating whether News Corp. violated the U.S.’s Foreign Corrupt Practices Act (FCPA). The internal committee is in the process of digging through hundreds of millions of emails and passing them on to police who are stationed within News International’s Wapping headquarters.

A source close to the internal investigation famously described the process as “draining the swamp.” One person close to the family furthered that analogy today. “As the swamp recedes to reveal more dangerous and disgusting creatures in the mangroves, the man who said he had no idea of their existence has to go,” the person told The Daily Beast, referring to James’s testimony to Parliament last summer that he was not aware that phone hacking was allegedly rampant at the company’s tabloids. Former News Corp. executives contradicted James’s assertions at the time, insisting they had informed him in 2008 that phone hacking was widespread. Since then, emails have surfaced that indicate top News Corp. executives knew of the extent of phone hacking and that they had clued James in as well. And last month it was revealed that James was forwarded a chain of emails—later deleted from his account by an IT worker—that suggested hacking went beyond a single rogue reporter, as the company had previously claimed (James now claims he never read the entire email chain).

CLOUDY DAY

Bribery Alleged at Murdoch’s Sun

Bribery Alleged at Murdoch’s Sun Carl Court, AFP / Getty Images

Police continue tabloid investigation.

Police in the United Kingdom have said that The Sun, a British tabloid owned by Rupert Murdoch’s News Corp., had a “culture ... of illegal payments.” A deputy assistant commissioner for London Metropolitan police said Monday that journalists at the tabloid were in the habit of paying public officials for tips. Investigations into the paper and its practices are ongoing, even as Murdoch continues to tout a new weekend edition of the paper, The Sun on Sunday. The London investigators said that one official allegedly received the equivalent of $127,000 over several years.

Read it at The Daily Beast

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Did the Sun Pay Off Public Officials?

A day after Rupert Murdoch debuted his Sun on Sunday in an effort to move past the phone-hacking scandals, officials began looking into practices of former Sun journalists. Mike Giglio reports.

Rupert Murdoch billed yesterday’s much-ballyhooed launch of his Sun on Sunday tabloid as the start of a new era for his U.K. media empire. But today he received a stark reminder of how much the old reputation of phone hacking and other allegedly corrupt practices still haunts his newspapers.

The Leveson inquiry, launched last year after the phone-hacking scandal brought down Murdoch’s News of the World, kicked back into gear on Monday after a brief hiatus with a new and explosive topic at hand: the relationship between journalists and police. This has been the subject driving a recent spate of arrests of senior Sun journalists, as part of an investigation into tabloid payments to public officials. The arrests prompted a wave of staff discontent and led some to question whether the paper might be shuttered. Instead, Murdoch doubled down by launching a new Sunday edition of his beloved paper. The editorial in yesterday’s inaugural edition, titled “A New Sun Rises Today,” promised readers that they’d be able to “trust our journalists to abide by the values of decency as they gather news.”

The Sun’s promise for a fresh start came not a moment too soon. Today Sue Akers—the top cop leading the phone hacking and related investigations for Scotland Yard—took to the witness stand at the Leveson inquiry to describe in cutting detail what she called “a culture at the Sun of illegal payments.” (The full transcript of her testimony can be found here [PDF].)

The inquiry went on to spell out a description of what that statement entailed, expanding the categories of corruption beyond police to military, health, government, and prison officials, among others. “The evidence suggests that such payments were being made to public officials across all areas of public life,” Akers said. “The current assessment of the evidence is that it reveals a network of public officials.”

Part of this so-called culture, Akers said, involved covering up the payments. She said journalists knew they were doing something illegal and made references in emails “to the need for ‘care’ and to the need for ‘cash payments’.” The payments, she added, were also hidden by directing them to a friend or relative of the source. “The evidence further suggests that the authority level for such payments to be made is provided at a senior level within the newspaper,” Akers testified.

Sun on Sunday

Recent evidence presented in the Leveson inquiry gave Rupert Murdoch a stark reminder of how much the old reputation of phone hacking and other allegedly corrupt practices still haunts his newspapers. (Carl Court, AFP / Getty Images)

The cases currently under investigation by Scotland Yard, Akers said, involve “the delivery of regular, frequent, and sometimes significant sums of money to small numbers of public officials by journalists”—in one case, she claimed, for more than £80,000 over several years. One journalist allegedly received more than £150,000 in cash to pay sources, including public officials, Akers said. “There is also mention in some emails of public officials being placed on ‘retainers.’”

None of the journalists arrested so far have been charged.

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Murdoch Launches Sun on Sunday

New Sunday tabloid features models as columnists and a topless Kelly Rowland.

Rupert Murdoch’s much-anticipated The Sun on Sunday tabloid launched this morning in Britain, starting what its sister Sunday Times broadsheet called “one of Fleet Street’s biggest circulation wars for decades.”

sun-relaunch-giglio

A billboard advertises the new Sun on Sunday (Matthew Lloyd / Getty Images)

There has been much turmoil surrounding The Sun, Murdoch’s flagship British newspaper, following the recent headline-grabbing arrests of senior journalists as part of an investigation into whether public officials were paid for scoops. The drama prompted questions over how much control Murdoch retained over the crisis facing his U.K. media empire—along with speculation that he might even shutter The Sun, as he did the News of the World at the height of the phone-hacking scandal last summer. But Murdoch buckled down for a fight instead, announcing that The Sun would be putting out a Sunday edition—and doing so right away.

Now Murdoch’s rivals have to contend with a new Sunday paper whose launch was announced just a week ago today. The new title is printed on thick, bright paper stock and priced at a cut-rate 50 pence—half the price of both News of the World, which had sold 2.7 million weekly copies, and its traditional rival, the Sunday Mirror, which had picked up many of News of the World’s readers. Murdoch has said The Sun on Sunday will strive to be more ethical and female-oriented than the now-infamous News of the World.

The new launch was so dear to Murdoch that he rolled up his sleeves and got to work in the paper’s London newsroom last week as staff hustled to line up advertisers and columnists. “More good Sun news. We're completely sold out for advertising!” he tweeted Thursday. Last night Murdoch even traveled to the company’s printing plant in Hertfordshire, a county north of London, to set the presses in motion. A photo op showed Murdoch proudly hoisting a copy of the inaugural edition, as he had when he relaunched the daily Sun as a tabloid after purchasing the newspaper in 1969. The Sun has gone on to become the highest-circulation daily newspaper in Britain and has found a place close to Murdoch’s heart—one person close to the newspaper calls it his “family jewel.”

On Friday, Murdoch tweeted that he’d be happy with sales for the new title “substantially over two million!” “No pressure then,” Sun editor Dominic Mohan jibed in a Sunday Times column today recounting his hectic week preparing the launch. “There’s a free bar at the pub once we’re finished but I plan to be on the back of a motorbike to our printing plant to catch the boss pushing the button to let the presses roll.”

Some highlights from today’s launch:

• The newspaper’s journalists searched hard for a front-page exclusive. The 1969 Sun launch lead with the cover headline “Horse Dope Sensation,” for a story in which a racehorse trainer admitted to doping his horses. This time around, it’s “My Heart Stopped for 40 Seconds,” trumpeting a “world exclusive” account of Britain’s Got Talent judge Amanda Holden’s near-death experience after giving birth to a daughter last month. “I was moments from death,” Holden tells the newspaper.

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Murdoch’s Tabloid Letdown

The tycoon’s new paper, The Sunday Sun, promised a juicy exclusive on Lord Lucan, a notorious British fugitive. But the hype died as readers opened the first edition. By William Coles.

Media titan Rupert Murdoch today launched his latest Sunday paper, The Sunday Sun—and despite all the media hype that the first issue would land the mother of all world exclusives, it has turned out to be nothing but moonshine.

For the past week, Fleet Street has been agog with rumors that The Sunday Sun (which replaces the defunct News of the World) would be exclusively revealing the final whereabouts of Britain’s most wanted fugitive, Lord Lucan.

The Seventh Earl of Lucan has been missing since 1974 after a botched murder—and in journalistic terms, the story of what actually happened to Lucan would be the scoop of all scoops, an absolute Leviathan of an exclusive.

But after all the huffing and puffing about the so-called Lord Lucan exclusive, it has turned out to be not so much a Leviathan as the Loch Ness Monster: a lot of talk, a lot of intrigue, a lot of money spent, and even a certain amount of romance, but in the end, it has had not one iota of substance.

The Lord Lucan scandal has captivated Britons for 38 years, ever since the 39-year-old earl tried to claw his way out of his financial penury, the story goes, by attempting to kill his estranged wife. But instead he’s said to have mistakenly bludgeoned to death his children’s 29-year-old nanny, Sandra Rivett, before going on the run.

The earl has never been seen or heard of since, despite the media and the police spending millions of pounds trying to track him down over the years.

But in the past week, the British press has gone into a complete feeding frenzy over all things Lucan, doubtless whipped up by the whiff of the The Sunday Sun’s imminent world exclusive.

It started off a week ago, with a BBC documentary that revealed that an anonymous woman had fixed up flights for two of Lucan’s children to go to Africa, where the fugitive earl could discreetly watch them from a distance.

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Did NOTW Delete Phone-Hacking Emails?

Newly released court documents claim that a senior executive at News of the World implemented an ‘email-deletion policy’ and destroyed hundreds of thousands of company emails.

This week, News International finally settled the last of nearly 60 lawsuits recently brought by alleged victims of phone hacking against the company, the U.K. arm of Rupert Murdoch’s News Corp.

But court documents released yesterday by a high-court judge detailed potentially troublesome allegations that would have aired in trials if the lawsuits had proceeded. (British papers published the documents here and here.)

Names and certain sections of the court documents had been redacted. But even with the redactions, the documents—created by lawyers for the alleged phone-hacking victims and based on information provided by News International’s internal investigative arm, the Management and Standards Committee—contain damaging information. According to the claimants, an unnamed senior executive at News International reportedly engaged in what one newspaper described today as a “secret policy of deleting emails that could be ‘unhelpful’ in any future litigation.”

The court documents say that a senior executive had discussed, via email, a program put in place to delete certain company emails. The claimants also allege that News International destroyed the computer used by a journalist who had been named in one specific suit by the actress Sienna Miller. In one correspondence, the documents say the executive sent an email ordering that “everyone needs to know that anything before January 2010 will not be kept.”

The timing of the purported deletions would have taken place after the first accusations of phone hacking had appeared in rival papers and after legal actions against the company’s News of the World tabloid had been launched, starting in 2007. The court papers also refer to a September 2010 letter from Miller’s legal team that ordered all relevant documents and emails in her potential phone-hacking case be preserved by Murdoch’s News Group Newspapers, which published News of the World.

phone-hacking-giglio

A costumed Murdoch protester poses with a parody newspaper, 'the Son,' outside the houses of Parliament in November (Ben Stansall, AFP / Getty Images)

According to the court documents, three days after that letter was sent, an IT employee at News International sent an email stating that “There is a senior NI management requirement to delete this data as quickly as possible but it need [sic] to be done within commercial boundaries.”

The court documents cite language from the company’s own alleged Email Deletion Policy, whose purpose was purportedly to “eliminate in a consistent manner across News International (subject to compliance with legal and regulatory requirements) emails that could be unhelpful in the context of future litigation in which an NI company is a defendant.”

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Cherie Blair Sues Murdoch

The wife of Britain’s former prime minister launched a suit against News Corp.’s U.K. arm, alleging that Murdoch’s tabloids hacked her phone.

Just last week, it seemed the specter of phone hacking was dying down for News International, the British arm of Rupert Murdoch’s media behemoth News Corp. The company had settled a string of hacking-related lawsuits in recent months—58 so far this year—to prevent the cases from reaching the high court. It was even reportedly close to reaching a settlement with the singer Charlotte Church, whose suit is scheduled to go on trial next week. But Cherie Blair, the wife of former prime minister Tony Blair, dropped a bombshell on Murdoch’s company on Wednesday when she announced her plans to launch a lawsuit against News International “in relation to the unlawful interception of her voicemails,” according to Blair’s lawyer Graham Atkins. (News Corp. has so far declined to comment on the matter.)

Blair is the latest in a string of public figures who have accused Murdoch’s now-defunct News of the World tabloid of hacking into their personal phones or email accounts in a bid to dig up scoops. Actor Jude Law, football official Gordon Taylor, the son of serial killer Christopher Shipman, and the actress Sienna Miller have all brought actions against News International—as did the family of murdered schoolgirl Milly Dowler, a revelation that broke the phone-hacking scandal wide open last summer and prompted the closing of News of the World. On Monday, the British press was finally able to reveal that a private investigator has been accused of hacking into the computer of former British intelligence officer Ian Hurst, allegedly at the behest of News of the World, to reportedly access confidential information about the identities and locations of IRA informants. News International is also reportedly facing at least 50 new civil actions from soccer players, singers, and politicians.

But Cherie Blair’s lawsuit is likely to be especially uncomfortable for Murdoch’s embattled company. The British public showed little interest in allegations of tabloid phone hacking when the targets mainly involved celebrities or sports stars. That sentiment changed quickly—and, for Murdoch, drastically—when lawyers accused News of the World of targeting innocent civilians who happened to be the victims of heinous crimes. Now, with Blair’s suit, if it's proved true, the phone-hacking trail could lead all the way to the halls of 10 Downing.

This is not the first time that Cherie Blair’s name has been tied to the phone-hacking scandal. Alastair Campbell, the prime minister’s former communications director, told a parliamentary inquiry in November that he thought it “at least possible” that stories about the Blairs, published during the couple’s years in power from 1997 to 2007, could have been obtained via phone hacking. While Campbell admitted he had “no evidence” that Cherie Blair’s phone, or the phone of a close family friend, was hacked, he told the Leveson inquiry, “I think it is at least possible this is how the stories got out. They often involved details of where Cherie was going, the kind of thing routinely discussed on phones when planning visits, private as well as public.”

“I have also never understood how the Daily Mirror learned of Cherie’s pregnancy,” Campbell testified, referring to News of the World’s rival tabloid. “As I recall it, at the time only a tiny number of people in Downing Street knew that she was pregnant. I have heard all sorts of stories as to how the information got out, but none of them strike me as credible.”

Cherie Blair Sues Murdoch

Cherie Blair, the wife of Britain’s former prime minister, alleges that Rupert Murdoch’s tabloids hacked her phone. (Getty Images)

The Blairs were known to have personal connections with the Murdochs, and News International’s most successful British tabloid, the Sun—the paper with the highest daily circulation in the country—backed Blair’s Labour Party in national elections, helping to ensure his decade-long reign. Murdoch’s third wife, Wendi Deng Murdoch, has also said that Blair is one of the Murdochs’ “closest friends” and the godfather of one of her young daughters with Murdoch. She also told Vogue magazine that the former prime minister attended the baptism of her girls in the River Jordan in 2010.

The supposedly cozy relationship between the Blairs and the Murdochs has led some critics to insinuate that Tony Blair failed to adequately pursue accusations of hacking that cropped up during his tenure as prime minister. And at the height of the phone-hacking crisis last July, he reportedly called his handpicked successor, Gordon Brown, to ask his friend to tell Labour M.P. Tom Watson to muzzle his attacks on News Corp. over the phone-hacking issue. (Neither Blair nor Brown confirmed the conversation.)

HACKING

Cherie Blair Sues News Corp.

Cherie Blair Sues News Corp. Alberto Pellaschiar / AP Photos

First civil trial starts next week.

The wife of former British prime minister Tony Blair filed a lawsuit against Rupert Murdoch’s News Corp. as the company braces for the first civil trial to result from allegations of phone hacking. “If it is true that a former prime minister’s family have been targeted by Rupert Murdoch’s hackers, then it is clearly a significant moment in the scandal,” said a member of the parliamentary committee investigating the hacking cases. The phone-hacking scandal has already touched Blair’s inner circle, though not his family: News International, the British arm of News Corp., settled claims with Blair’s former press chief as well as the former deputy prime minister.

Read it at Bloomberg News

A deluge of new cases suggest that the practice was rife at Murdoch’s tabloids, and the revelations could soon dwarf the phone-hacking scandal.

For months, reporters in Britain have been keeping a watchful eye on a criminal case playing out in the crown court in Kingston, southwest London. The case centers on an investigation into blagging—the practice of illegally obtaining confidential information such as bank statements and health records, often by private investigators who pose as their targets over the phone. Blagging has long been acknowledged to be widespread in British journalism. Four men pleaded guilty in the Kingston case.

On Monday, legal restrictions on the case were lifted, allowing reporters to publish the identity of one of the convicted: private investigator Philip Campbell Smith, who is separately alleged to have engaged in a far more controversial tactic—computer hacking—at the behest of Rupert Murdoch’s News of the World, which the mogul shuttered this summer after evidence of the tabloid’s purported phone-hacking practices caused a public-relations storm. Some Murdoch opponents see computer hacking as a potential crisis that could one day deal Murdoch a serious blow. Tom Watson, the M.P. who has been driving the phone-hacking scandal in Parliament, has said it “could potentially dwarf” the scandal that has surrounded phone hacking so far.

Reports of email hacking by Murdoch’s U.K. newspapers have been surfacing of late. News of the World is said to have hacked the emails of Sienna Miller, the actress, and Christopher Shipman, the son of a British serial killer. It was even revealed that a young reporter from the stately Times of London allegedly hacked into an anonymous blogger’s email account to break a story in 2009.

But the highest-profile case has been that of former British intelligence officer Ian Hurst, who has accused Campbell Smith of hacking his computer at the behest of editors at Murdoch’s tabloids.

Murdoch Hacking

Dan Kitwood / Getty Images

Hurst worked as a handler of Irish Republic Army informants for the British Army. In 2006, according to an investigation last year by the BBC TV series Panorama, Hurst’s computer was hacked using a Trojan virus, and emails obtained from his computer were reportedly faxed to the Dublin offices of News of the World. (According to the Guardian, Smith is reputed to be under investigation by Scotland Yard’s Operation Kalmyk over the email-hacking allegations.)

After learning of the faxes, Hurst approached Smith—who was kept anonymous in the broadcast, but can now be identified—about the breach and recorded the ensuing conversation. In it, Smith admitted that the hack was relatively easy—“I sent you an email that you opened, and that’s it. It’s in,” he said—and claimed that he was commissioned by Alex Marunchak, a former senior editor at News of the World who left the paper later in 2006. (Marunkchak has previously denied the allegations.)

Hurst has since said the newspaper may have been looking for information about a famous secret agent known as Stakeknife. The BBC broadcast alleged that Marunchak hired out Smith through the private detective Jonathan Rees, a controversial figure from the News of the World’s past. Rees ran an agency called Southern Investigations that was a major client of the newspaper in the 1990s, along with its rival tabloids the Daily Mirror and Sunday Mirror.

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Murdoch’s Sun on Sunday Gambit

The embattled News Corp. mogul hits back at his rivals with a new Sunday tabloid—but will it be enough to save his troubled empire?

Rupert Murdoch made some bold and surprising moves when he visited the offices of his embattled Sun tabloid on Friday—pledging his support for the paper, lifting suspensions of journalists arrested in a police investigation into payments to public officials, and announcing that he would plant himself in London for the next several weeks to help weather an increasingly volatile public-relations storm. But it was Murdoch’s announcement that The Sun would soon be launching a Sunday edition—filling the void left by its sister paper, News of the World, which Murdoch shuttered at the height of the phone-hacking scandal this summer—that inspired the most buzz. The move seemed to suggest that the notoriously combative mogul was hunkering down for a serious fight.

Murdoch seems anxious to get into the ring. Last night, he surprised observers once again with the announcement that the new Sun on Sunday will publish its inaugural edition this week. As the cover story of today’s Sunbilled as an “exclusive,” perhaps in a nod to the amount of media-on-media ink spilled of late—proclaims: “Now that momentous new dawn is here. From today your favourite paper will be available seven days a week, making every day a Sun day.”

Even Murdoch antagonists couldn’t hide their excitement at the news. “This gambit smacks of the Rupert of old. It will surely have his rivals gasping, leaving them little time to prepare,” wrote media critic Roy Greenslade in The Guardian, which has been leading the anti-Murdoch charge. “Love him or hate him, you have to admire the chutzpah. What a guy!”

Murdoch seems intent on getting the upper hand in the crisis gripping News International, his U.K. media empire. But as he looks ahead to the launch of his newest high-profile asset, serious questions remain. For one, it is unclear who will wind up steering News International through the ongoing crisis once Murdoch finally makes his way back to the United States. Observers noted the conspicuous absence of Murdoch’s son James, the current head of News International, who has come under fire for his handling of the situation so far. On Murdoch’s Friday visit to The Sun, he was accompanied by James’s older brother, Lachlan—prompting a round of speculation about internal family drama, though the company claimed Lachlan was simply filling in while James attended to business in the States. “I’m prepared to accept the company’s explanation,” says Claire Enders, a London-based media analyst who follows Murdoch closely. However, she added, “what’s interesting is the absence of James Murdoch, rather than the presence of someone else. It’s a very clear sign that there’s more and more distance being placed between James Murdoch and News International.”

News Corp Chief Executive and Chairman Rupert Murdoch

Rupert Murdoch with staffers in The Sun's newsroom on Feb. 17 (Handout photo by Arthur Edwards via Reuters-Landov)

Of more immediate concern to many News International journalists is their ability to go about their work under the pressure of a police investigation that is apparently being fueled by the company itself. The current crisis stems from a parallel investigation into phone hacking, in which senior Sun journalists have been arrested on suspicion of paying police and other public officials for information. The arrests came after a team of independent internal investigators, appointed by News International this summer, passed along potentially damning information from company emails and other documents to police, who are planted in the building as well.

The internal investigation has been seen as Murdoch’s bid to get his own house in order, and also help restore the reputation of his damaged British news brand. It may also help alleviate some of the legal trouble in store—such as reported FBI investigations into whether the alleged payments put News Corp., Murdoch’s mother conglomerate headquartered in New York, and its executives in violation of the U.S. Foreign Corrupt Practices Act. Mike Koehler, an FCPA expert at Butler, notes that strident cooperation is looked on favorably by U.S. authorities and can help to alleviate fines.

But News International journalists say the specter of police going through their files has made sources afraid to deal with them. “People I’ve been speaking to for years will just not call me back,” one senior News International journalist told The Daily Beast before Murdoch’s visit last week. “I think we’re all a bit paranoid, and we’re all furious. I have a real sense of journalism in Britain being under attack … We have a committee that’s just handing stuff over, hundreds of millions of emails, and allowing police who are based in our offices to take whatever they like.”

HACKING INVESTIGATION

Police: ‘Sustained’ Crimes at Sun

Police: ‘Sustained’ Crimes at Sun Leon Neal, AFP / Getty Images

Investigation into phone hacking and bribes at Murdoch daily.

Rupert Murdoch’s news empire sustained another blow Wednesday as investigators announced that they are looking into “suspected criminality over a sustained period of time” involving alleged payouts by journalists at The Sun to law enforcement. The News Corp. tabloid has come under scrutiny after its own staff, fed up with police and management looking into their sources, lashed out. An anonymous source told Reuters that the investigation is looking into “regular cash payments totaling tens of thousands of pounds a year for several years to public officials, some of whom were effectively on retainers to provide information.” Wednesday’s announcement comes just days after some of the top reporters and editors at The Sun, which has the highest circulation of any newspaper in Britain, were arrested, along with several police officers.

Read it at Reuters

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Murdoch Foe Eyes U.S. Lawsuit

As new arrests roil News Corp., a prime antagonist in the hacking cases may be readying a stateside challenge. Mike Giglio on the latest threat to Murdoch’s American empire.

Rupert Murdoch may be heading to London this week, but his primary antagonist seems ready to take the fight to the heart of the media mogul’s empire in America.

Over the weekend, police in Britain launched a spate of headline-grabbing arrests of senior reporters and editors from The Sun, Murdoch’s flagship daily tabloid, as part of an ongoing investigation into the bribing of police and other public officials. The increasing number of arrests—on top of the broadening of the net of potential bribery targets, with a defense ministry official and member of the armed forces detained in addition to a police officer—has already increased speculation that Murdoch’s News Corp. could face legal action in the United States.

Under the U.S. Foreign Corrupt Practices Act (FCPA), which prohibits American companies from paying bribes to foreign officials, company executives could be liable if they either authorized bribes or knew about them but didn’t stop them. Meanwhile, it was reported this morning that the U.S. Securities and Exchange Commission is also making inquiries, and could be interested in cases in which the company’s books contained false names or accounts to disguise bribes paid to public officials or police.

But perhaps most threatening to Murdoch are reports that Mark Lewis—the lawyer who this summer negotiated a massive settlement for the family of Milly Dowler, the murdered schoolgirl whose phone was hacked by News of the World and who has played a crucial role in bringing the phone-hacking scandal to light—may be bringing the legal battle to the States. Lewis was reported last night to be moving ahead with at least one case against News Corp. in America.

Britain Phone Hacking

Rupert Murdoch, center, may face a legal battle in the U.S.. . (Kirsty Wigglesworth / AP Photo)

When asked by The Daily Beast if he was pursuing a U.S.-based case against News Corp., Lewis said only that he was “not prepared to deny” it. It’s unclear what kind of case Lewis is pursuing, but the thought of the high-profile lawyer on their home turf promises to be a disconcerting one for News Corp. brass.

Lewis was the lawyer for Gordon Taylor, the soccer official whose lawsuit 2008 lawsuit made the first inroads into the phone-hacking case, helping to establish that phone hacking was endemic at News of the World and not just confined to a single “rogue reporter,” as the company had claimed. And the lawsuit continues to plague News Corp. to this day. James Murdoch, in his efforts to avoid being implicated in the scandal, maintained before Parliament last summer that he was unaware that phone hacking was widespread when he authorized an unprecedented $1.1 million settlement to Taylor. Yet an email chain unearthed recently shows company officials alerting the younger Murdoch to the scale of the problem before the settlement. (Murdoch has since claimed that he didn’t fully read the emails at the time.) Lewis has gone on to lead the charge on a number of high-profile phone-hacking cases.

Claire Enders, a London-based media analyst and expert on the Murdoch empire, points out that there is little precedent for pursuing the FCPA against newspapers. FCPA settlements are usually based on profits gained from the bribes, she says, and individual news stories are just one part of a newspaper's profit margin, which in the case of the Sun is not that large to begin with.

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Murdoch’s Latest Debacle

Phone hacking was just the start—a new wave of arrests sheds light on Murdoch papers’ ties to police. Mike Giglio on how the second phase of investigation could hit the mogul hard.

On Thursday, Britain’s high-profile public inquiry into the conduct of its newspapers brought the first of its four stages to an end. As if on cue, police Saturday made a spate of headline-grabbing arrests that offered a jarring preview for what comes next—rounding up five high-level journalists from Rupert Murdoch’s flagship daily tabloid, The Sun, and prompting the media mogul to make his way across the Atlantic for damage control. Murdoch’s newspaper empire suddenly looks to be bracing for another tough fight.

The first stage of the Leveson inquiry focused on phone hacking and other questionable information-gathering tactics that provoked such an outrage last summer that Murdoch hastily shuttered his storied Sunday powerhouse News of the World. By the time the inquiry got underway in November, though, some of the dirtiest laundry surrounding phone hacking had already been aired. When Leveson resumes next month for its second stage, a new and possibly explosive topic will be at hand—the potentially corrupt relationship between journalists and police. That subject could have far-reaching implications for Murdoch’s News Corp. Saturday’s arrests seemed to signal that they’re beginning to play out.

The five journalists who made headlines yesterday were arrested as part of Operation Elveden, which is looking into payments by journalists to police. Three others—a police officer, a Defense Ministry official, and a member of the armed forces—were arrested as well, following a similar turn of events last month in which four senior journalists and a police officer were detained.

The arrests, as Murdoch’s trip to London suggests, imply serious problems for his media empire, and not just in Britain. They further spread the damage from the defunct News of the World to the profitable Sun, which has the highest daily readership of any newspaper in Britain and is believed to subsidize Murdoch’s revered, but money-losing, The Times of London franchise. What’s more, the issue of police payments makes News Corp., which is headquartered in New York, potentially vulnerable to American prosecution in a way that phone hacking, to this point, has not. As Reuters reported last week, in the wake of the initial Sun arrests, while U.S. authorities have so far uncovered little evidence of phone hacking in the States, the FBI is investigating whether News Corp. employees have violated the U.S. Foreign Corrupt Practices Act, which prohibits American companies from paying bribes to foreign officials. Company executives could be liable if they either authorized bribes or knew about them but didn’t stop them. No charges have yet been filed, but as the list of arrested senior Sun journalists expands, and the net for potentially corrupt sources is cast beyond the police department, the risk can only grow.

NEWSCORP-ARRESTS

Chris Helgren / Reuters-Landov

The way Operation Elveden has played out, meanwhile, shows how News Corp., in an effort to cauterize the wounds sustained from the phone-hacking scandal so far, has waged a battle against itself. It is the company’s own investigators who have provided the police with the information that led to the recent arrests. After the phone-hacking scandal broke, News Corp. set up a special unit in London, the Management and Standards Committee (MSC), tasked with an independent investigation into the company’s wrongdoing. The committee is poring through millions of documents and emails from inside the News International offices in Wapping, which it then passes along to police investigators. Even senior Sun employees receive no advance notice of the proceedings—yesterday, Sun editor Dominic Mohan said he was “shocked” by that morning’s wave of arrests.

Sue Akers—the Jane Tennison–like top cop at the helm of the Scotland Yard investigation into British newspapers, who helped Helen Mirren prepare for her leading role in the hit TV drama Prime Suspect—told the Leveson inquiry last week that the News Corp. team “are the people who have passed us information on which we’ve made arrests.” She had just increased her Operation Elveden team by 50 percent. And the investigation, she suggested, still had a long way to go.

At the heart of News Corp.’s ongoing trouble is a massive trove of emails and documents, reportedly more than 300 million strong, on hand at the company’s London headquarters in Wapping. There, a team of lawyers, computer experts, and even police officers working with the MSC reportedly hunker down in soundproof rooms to pore through the documents—a process that will take at least another year and a half to play out. Though critics have argued that the internal investigation was conceived to ward off more serious inquests from the authorities, with so many documents on hand and the public spotlight on News International showing no signs of fading, News Corp. may have planted a ticking time bomb in its midst. Britain’s national journalism union has complained that Sun journalists are being “thrown to the wolves” in “a witch hunt.”

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