James Murdoch May Be Toast as Ex-Employees Say He Knew Payoff Implications

Testimony suggesting he knowingly paid money to cover up illegal activity puts him in deep trouble. By Brian Cathcart

Chris Rathcliff / Getty Images

James Murdoch painted himself into a corner in the British phone-hacking scandal, and now, thanks to a shabby pair of ex-employees, that corner has just gotten considerably tighter. You would need to be a very ardent Murdoch supporter to believe that the man once considered the heir apparent to the world’s biggest media empire is not finished.

His problems date back to a 15-minute meeting in London in April 2008, presumably in the chairman’s office of the headquarters of the British arm of News Corp., an office he decorated with a life-size Darth Vader suit. Rupert Murdoch’s fourth child, now 38, had been in charge in London for only four months.

There were grounds to believe—and James may well have hoped—that the shabby pair who were with him in that meeting might throw him a lifeline when they appeared before members of Parliament this week. Instead they administered a coup de grace.

Tom Crone, formerly legal-affairs chief at News of the World, and Colin Myler, the last editor of the sensationalist tabloid, went together to see James in 2008 after a legal case the paper was fighting went badly wrong. Gordon Taylor, the head of the English soccer players’ union, was suing the paper for breaching his privacy by illegally hacking his voicemails, and his lawyers had unearthed a smoking-gun document.

This was an email containing transcripts of 35 voicemail messages meant for or left by Taylor, which was sent by a junior staff reporter of News of the World to private investigator and hacker-in-chief Glenn Mulcaire, and opened with the words “Here is the transcript for Neville.” The chief reporter of News of the World was named Neville Thurlbeck.

Crone had spoken to lawyers who said that in the light of this document the legal case could no longer be defended, and he reported this to Myler, who in turn asked for a meeting with the new boss, James Murdoch. This was at a time when the company position was that it might once have had a hacking problem, but only one rogue employee, Clive Goodman, had been involved (working with Mulcaire), and he had gone to jail.

No one disputes that at the meeting James agreed that the case must be settled and Taylor paid off, and the deal was soon done at a price of £425,000 plus considerable legal costs. But since July of this year James has firmly denied the obvious implication, which is that he knowingly paid money to cover up evidence of illegal activity in the company he ran.

There can be no dispute that if James understood the full meaning of the “for Neville” email, he was aware that more than one employee was involved in voicemail hacking. It followed that he knew the company’s public stance was a lie and that there should be a full and prompt police investigation.

But James’s position today, adopted after the tidewater of scandal finally reached him this summer, is that he authorized the Taylor payoff after being given "an incomplete picture" of the problem. In other words, he was not told and did not know about the wrongdoing by company journalists.

At the time James said that, in July, both Crone and Myler were employees; when the paper closed later that month, they became ex-employees. And this week the pair, called before parliamentarians, expressed absolute certainty that the picture they painted to James in those 15 minutes was a complete one. Crone said: “I explained that this document meant there was wider News of the World involvement.” And “the effect of this document is that it goes beyond Clive Goodman.” Myler agreed: “I think everybody perfectly understood the seriousness and significance of what we were discussing.”

Myler and Crone are shabby because they had appeared together before the same committee two years ago telling a rather different story, consistent with the company’s then defiant position of denial. This week they looked like naughty, ashamed schoolboys, and dropping their boss in trouble was about the most they were able to do.

But drop him in it they did. James, they insisted, knew full well after this meeting that there was a problem of illegal activity in the News of the World newsroom, and he did nothing about it. So in July 2009, after the incriminating “for Neville” email became public, his company stubbornly continued to maintain that position of denial; indeed, that did not change for another year and a half, until this January. By then the police had finally caught up and were arresting people.

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James Murdoch issued a statement in response to the testimony. “Neither Mr. Myler nor Mr. Crone told me that wrongdoing extended beyond Mr. Goodman or Mr. Mulcaire,” it said. “They did not show me the email, nor did they refer to Neville Thurlbeck.” Instead, he said, he was merely told that the email was damaging because it linked News of the World to the Taylor hacking, and for that reason the case should be settled.

The mathematics is simple. There were three people in that room back in 2008, and two of them are now on the public record giving one consistent version, while the third says something different. James is outnumbered. And the very large payment made to Taylor—roughly 100 times the biggest payment awarded by a British court in a privacy case at that time—strongly suggests that after the meeting the company's priority was to prevent the “for Neville” email from reaching the public, rather than to crack down on lawbreaking by its staff.

The Murdoch empire, it is often said, is like a cult, and does not obey normal business rules. People the world over invest in it because they believe the old man can see around corners, and if they believe that, who knows what else they might believe? But in any normal company James Murdoch would be fighting for survival, or out on his ear. As it is, he will almost certainly have to face the parliamentarians in the next few weeks and answer the allegation of Crone and Myler. What can he say?