WHEN Peter Jukes let it be known last year that he was writing a book called The Fall of the House of Murdoch, a senior Sun editor emailed him to say: "Is this a joke?"

But with Rebekah Brooks and Andy Coulson both now facing charges over phone-hacking, and Rupert Murdoch slowly stepping back from his British newspaper holdings, it looks like a prescient title.

The old adage – "Never pick a fight with someone who buys ink by the barrel" – no longer fits. Much ink has been expended on the Australia media baron, from Michael Wolff's acidic biography to Tom Watson's plodding account of the phone-hacking scandal. The Fall of the House of Murdoch is refreshing as it examines the ideas that have driven the modern western world to its current crisis.

It's hard to believe, but at 4pm BST today it will be exactly a year since Nick Davies and Amelia Hill published online a leak from Operation Weeting, the newly recreated (third) investigation into phone hacking, and revealed that the News of the World had hacked the phone of a missing 13 year old schoolgirl, who was found dead six months later, murdered by Levi Bellfield.

That headline changed the political scene here in the UK. Within days the News of the World had closed, and New Corp were forced to withdraw their takeover bid for Britain's most lucrative broadcaster, BSkyB. Within two weeks James and Rupert Murdoch were summoned to appear before a Parliamentary select committee, and David Cameron was forced to set up the Leveson Inquiry.

The Net Closes In

Just as it seems some kind of legal injunction managed to stop the broadcast of last night's much anticipated BBC Panorama documentary on Murdoch's spying activities on other rivals, the police leap into action with the biggest number of arrests since the Hackgate scandal begun. Six people were arrested this morning in early morning raids on the very serious charge of perverting the course of justice, a common law offence which can carry a life imprisonment sentence.

Today in the High Court, News Group Newpapers, the News Corp subsidiary responsible for the defunct News of the World and The Sun, is settling dozens of hacking and surveillance claimsin an attempt to avoid a high court case on Feb 13th which could result in punitive damages.

There are over 60 hacking victims with ongoing cases, and at least another 800 confirmed  and subject to litigation. Financially, this could be very costly for News International. But in terms of the hacking saga, it could be devastating for the Murdochs

Two Smoking Guns

1. In terms of the legal statements now being made in court, perhaps the most important is the admission of corporate cover-up. David Leigh at the stellar Guardian has the most incisive analysis

The most significant new element of Thursday's hacking settlement announcements is the accusation by the hacking victims' lawyers that Murdoch company directors tried to destroy evidence.

Although the lawyers' statement does not name names, it specifically accuses directors of News Group Newspapers Ltd, the Murdoch subsidiary which controlled the News of the World, of seeking to conceal the wrongdoing by "deliberately deceiving investigators and destroying evidence".

The directors of NGN were headed, from April 2008, by James Murdoch, Rupert Murdoch's son. James has already been at the centre of public allegations that he first authorised a cover-up in June 2008, by agreeing to buy the silence of Gordon Taylor, one of the hacking victims, with a lavish £700,000 secret pay-off.

The following year, former News of the World editor Rebekah Brooks joined the NGN board. This was on 23 July 2009, a few days after the Guardian revealed the existence of the cover-up at the News of the World. Brooks, who by now had been promoted by Rupert Murdoch to head his entire UK newspaper operation, responded by claiming: "The Guardian coverage, we believe, has substantially and likely deliberately misled the British public."

This takes the whole phone hacking scandal right to the top of the tree. Who knows what will unfold, but I wouldn't be surprised to see more resignations.

2. But for US readers - and for News Corp which is incorporated in the US - perhaps the most significant revelation in the welter of admissions today is with the Jude Law Case, where NGN's lawyers have admitted that - in line with news reports months ago - they hacked his phone while he was on US soil at JFK. From the Telegraph in June

The News of the World allegedly hacked into the mobile phones of Jude Law and his personal assistant while they were in New York, opening the way for News International to be prosecuted in the United States.

In the first specific example of a case of hacking on US soil, it has emerged that the actor and his assistant, Ben Jackson, were allegedly targeted shortly after arriving at New York's JFK airport.

Their mobile telephones were operating on American networks, meaning that regardless of where the alleged hacker was based, American law would apply.
It would leave News International open to claims that it broke US federal laws and also pave the way for costly lawsuits.

The allegation comes after it was announced that the FBI has opened a preliminary investigation into allegations that Rupert Murdoch's company tried to hack into the phones of victims of the September 11 attacks.

So where does this leave the FBI investigation? The DOJ is still looking at violations Foreign Corrupt Practices Act, and potential RICO violations. But this is a clear cut admission of intercepting wireless telephony on US soil.

I'm looking to fellow Kossacks for legal clarification on this and - if possible - to push the DOJ into action.

UPDATE: looks like this is getting some traction stateside. From Vanity Fair contributor and Murdoch Biographer, Michael Wolff:

Be part of the FOTHOM book: Bad Press: Fall of the House of Murdoch

Today in Parliament

As expected, the appearance of James Murdoch, the Chief Executive of News International (and related to some other famous people) before the DCMS Committee today failed to produce any huge bombshells. Let's remind ourselves that the Parliamentary Committee has no real powers of subpoena, witnesses are not obliged to testify on oath, is not run by trained lawyers, and is not allowed to investigate anything that could prejudice the three ongoing police investigations.  

C-Span has the whole proceedings here

James is smart, lawyered up, and left no hostages to fortune in terms of his evidence. Tom Watson had some stellar moments, challenging James over various contradictory testimonies, naming three or four other private investigators working for News International (adding some cryptic reference to Operation Millipede), and at least landing a rhetorical blow by calling James

'the first mafia boss in history who didn't know he was running a criminal enterprise.'.

(This latter remark has caused some consternation among Watson's enemies and Murdoch's apologists - but my American friends will know that the Department of Justice IS looking at potential RICO violations by Newscorp)

All in all, another day in the ongoing Murdoch saga. As Britover puts it in an excellent rec-listed diary: Some top line people really need to face jailtime. The most senior executive of the sixteen so far arrested has been Rebekah Brooks: but though James might not feel the hand of the law on his shoulder, the media scrutiny of his performance could be just as damaging in the long run.

Unanswered Questions

But however evasive and well trained James is at avoiding direct questions ("I have no knowledge of that... I don't recall") there are three glaring contradictions that this appearance has underlined.

1. Someone has Misled Parliament over the information provided to James when he authorised an extraordinary 700,000 GBP payment to Gordon Taylor in a civil suit over his phone being hacked by News of the World. James' claim in his previous appearance in July that he had no knowledge of phone hacking beyond the rogue reporter Clive Goodman had been directly contradicted by evidence given by the editor of NOTW at the time, Colin Myler, and News International's chief legal adviser, Tom Crone. They claim they informed James when he made that settlement. James now claims they didn't tell him, and that they misled Parliament rather than him.

TW: Did you mislead this committee?

JM: No I did not

TW: If you didn't who did?

JM I believe his committee was given [evidence] by people without full possession of the facts or...it was economical. My own testimony has been consistent. I testify to this committee with as much clarity and transparency as I can.

TW: Was it Mr Crone [who misled the committee?]
JM: I thought it was inconsistent and

TW: So you agree he misled the committee
JM: It follows that I do. I believe their testimony was misleading and I dispute it

This is a kind of either/or argument that the Committee will comment on: both accounts cannot be true.

2. How can an Effective Chief Executive be so ineffectual? James consistent response to the mounting evidence of extensive phone hacking, blagging and other borderline illegal activities by his staff was 'how am I supposed to know that level of detail'. Fair enough. But when you're making multimillion pound payouts to Gordon Taylor and Max Clifford, with dozens of other suits pending, surely it's your corporate duty to find out.

This is now being called the Asda Moment - 'Asda' is the UK equivalent of Walmart.

After explaining that he used to work for the supermarket chain (owned by the giant US company, Walmart) Davies registered his incredulity that Murdoch could have authorised the payment of more than £500,000 (to Taylor) without inquiring deeply into the reasons.

"It all seems so cavalier to me," said Davies. "You agree to settle cases with no real cap but a ballpark figure. You agree that a company should have a legal opinion, but you don't even ask to see the opinion when it is written."

3. A Fit and Proper Person? Next month is the shareholders meeting of BSkyB, Britain's largest pay-for-TV operator, 39.14% owned by Newscorp. Though the public outcry and online petitioning (by groups such as Avaaz) effectively stopped the full takeover of the company this summer, James still chairs the board. Our broadcast regulator, Ofcom, has a statutory duty to make sure that owners of licensed broadcasters are 'fit and proper' and can revoke a license if a director fails that test.

By the time BSkyB meets next, the DCMS committee will have ruled whether James has deceived Parliament or not.

Is being either/or a 'liar' or completely incompetent enough? Or even better - both.

In other News

Your intrepid reporter made a fool of himself an appearance outside Parliament for James' testimony. Bedecked like a human press pack, Brit decided to protest about the 30 years of Murdoch influence by sporting a sandwich board illustrated by fellow Kossack Eric Lewis, bearing the understated message:

Murdoch Ruined my Life.

Above you can see him above talking to a French journalist. Tonight he will appear on Al Jazeera. Below he joins members of the Avaaz campaign also picketing parliament.

When it's processed, I'll also post a video of him picketing Portcullis House where James was supposed to arrive, only to be stopped by a policeman and told (much to his shock and amazement) that no protests or placards are allowed within a kilometre of Parliament without prior approval, and I could be arrested. I told the very polite and helpful officer that I wasn't protesting, merely advertising the book I'm writing with Eric Bad Press: Fall of the House of Murdoch. The policeman said he didn't hear that, because advertising without a licence could also earn me a night in the cells.

I'm not as brave as many in the Occupy Movement, and rapidly removed my billboards.

There will be more about the book in later posts. It will be loosely based on my Kossack series of diaries, and focus on the stellar 'crowd sourced' journalism, reportage and activism of my fellow bloggers. It will also be crowd sourced in funding, so we'll be hitting back at the command and control modus operandi of the main stream media both in form and content.

Meanwhile join me below to discuss what you make of this latest chapter in the FOTHOM saga. And do contribute to the dedicated Bad Press: Fall of the House of Murdoch website if you can

{jb_dropcap}No, there is no major news about the three major investigations into multiple phone and computer hacking, bribing police officials, or perverting the course of justice by News International in the the UK. Nor is there any major development in the DOJ investigation into the parent company Newscorp, for violating the Foreign Corrupt Practices Act, or other examples of systemic criminality (RICO violations) like the Floorgraphics case. No, the simple stunning verdict on the Murdoch Dynasty has been delivered by Newscorps Shareholders

Shareholders Deliver a Damning Verdict on James and Lachlan Murdoch

As handsomely diaried by Ceebs, last Friday's Newscorp shareholders meeting, held in high security in LA rather than in New York, was still a tumultuous affair, with many of independent shareholders calling the management to task over issues of corporate governance, probity, possible further legal actions, and of course the underlying complaint that Rupert Murdoch treats the public corporation like a 'family candy store'. Usually as Murdoch's biographer Michael Wolff explains in a tellingly titled piece: Rupert Murdoch: News Corp's great dictator on the brink

Under normal circumstances, Rupert Murdoch doesn't have much patience for the annual shareholders' meetings that are required by law of American public companies. He regards them as a farce, because they cannot change the outcome in a company where a voting majority is secure, and as an exercise in liberal corporate law designed to put him personally on the spot.

This time it was different. This time the voices couldn't be ignored, and they were joined by the stalwart British Parliamentarian, Tom Watson, initially a victim and now a persistent campaigner against both the industrial scale phone hacking in the UK (among other illegal practices) and the coverup. The vote was supposed to be delivered here last week. Now you can see the reason for the delay. Pegasus Corporate Governance has just tweeted the independent votes:

2011 AGM James Murdoch: For 59,297,033 (19.23%), Against 232,013,203 (75.24%) Abstain 494,831 Non-Votes 16,564,060

2011 AGM Lachlan Murdoch: For 67,175,479 (21.78%), Against 224,151,616 (72.69%) Abstain 477,972 Non-Votes 16,564,060

It doesn't constitute a majority since, though only owning 10 percent of the shares, the Murdoch family have 40 percent of the voting rights. But this is like Thatcher winning the first round of the votes in 1990 - not by a big enough margin. She was holed in the water. The vote of non confidence is resounding. As the Guardian puts it:

James Murdoch's future at News Corporation looks increasingly precarious as shareholders delivered a damning verdict on his tenure amid widespread criticism of his handling of the hacking scandal. Following a contentious meeting in Los Angeles last week News Corporation shareholders lodged a massive protest vote against James and his brother Lachlan Murdoch. A majority of independent shareholders voted against the re-election of chairman Rupert Murdoch's sons James and Lachlan Murdoch. James Murdoch received the largest vote against his re-election at 35%. James, 38, faces a second grilling in the Parliament next month over phone-hacking at The News of The World, one of News Corp's UK newspapers. Some 34% of shareholders voted against Lachlan Murdoch 40. After subtracting the shares controlled by Rupert Murdoch, 67% of the votes went against James Murdoch and 64% against Lachlan, said Julie Tanner, assistant director of News Corp investor Christian Brothers Investment Services (CBIS), who last week called for Rupert Murdoch to step down as chairman after the "extraordinary scandals" at the company. "Shareholders are saying loud and clear that this board has failed as a group," she said.

Over the course of these diaries, both myself and other FOTHOM aficianados have tried to stress that the UK hacking scandal is just one indication of the corrupt and anti-competitive practices that characterise the modal monopoly of Newscorp. Now another scandal is breaking which, like the looming shareholder rebellion, allegations of satellite card hacking in Italy and the Floorgraphics case prove once again that - like Watergate - the current scandal being investigated by no less than three large scale police operations in the UK, is only the tip of the iceberg, and that RICO violations are the best way for the current DOJ investigation to go.

Now the Wall Street Journal has news of the resignation of one of its chief executives:

yes, the Murdoch story may be flying under the mainstream media radar, but with three British police investigations ongoing, two Parliamentary committees, a televised public enquiry with full powers of subpoena starting tomorrow, a DOJ enquiry stateside, and other investigations and legal cases in the US, Australia and Italy into Newscorp anti-competitive and/or criminal behaviour, this is not about to go away any time soon.

Hackgate: A Pattern of Criminal Behaviour

 

---

 

As an early indication of this, it has just been announced that over sixty separate claims (some filed in multiple names) have been filed in the UK civil claims court against News International: these include dozens of celebrities and prominent politicians, but also the families or partners of murder victims, or casualties of other high profile incidents such as the 7/7 London bombings. These weren't people who thrust themselves into the limelight - but people who had already been violated by some awful event, only to have their own privacy violated by illegal means by a company whose only interest was profit and using press exposure to exert political power. According to The Guardian

The overwhelming majority of the writs have been issued jointly against News Group Newspapers, the News International subsidiary that published the now defunct News of the World, and Glenn Mulcaire, the private investigator who worked under contract for the Sunday tabloid. However, one – by singer Cornelia Crisan – also names the former News of the World chief reporter, Neville Thurlbeck, and another of the paper's former reporters as defendants in her claim. It is the first phone-hacking lawsuit to target Thurlbeck. He was arrested and bailed in April for alleged phone hacking but has not been charged. He is suing News International for unfair dismissal. Thurlbeck said: "As I said last week, the truth will out. But this will be in the law courts and at a public tribunal." The number and range of the claims has taken some legal observers by surprise. One source said it suggests that News International's £20m contingency fund to deal with legal claims will not be anywhere near enough to cover the final total.

Now this is all based on the files of Glynn Mulcaire, but as the Mark Lewis, the lawyer who broke the current storm with news of the hacking of the phone of Milly Dowler (a teenage murder victims) explains:

"So far, fewer than 5% of the victims of Glenn Mulcaire have been notified," said Mark Lewis, a lawyer for some phone-hacking victims in an email. "He was just one agent used by one paper. When the final tally takes place, we will see thousands of claims and more than one paper." SNIP Mr. Lewis said that, as the number of plaintiffs grows, his own estimate that the New York-based company would need at least £100-million to settle such claims looks like "a serious underestimate." News Group agreed to pay one of Mr. Lewis's clients, the family of murdered schoolgirl Milly Dowler, £3-million, a person familiar with the matter said last month. Mr. Lewis said that the rash of suits may have been triggered by a deadline set by Judge Geoffrey Vos to consider claims ahead of a January trial to determine how much News Corp. should pay in damages to five of the victims.

So this is just phone hacking, and just the UK. But let's be clear. This is still just the tip of the iceberg. .

RICO: A Pattern of Criminal and Anti Competitive Behaviour

Now we know that financially, Newscorp has paid much more than $200 million in the past to settle lawsuits, and indeed has paid out three times as much as that to settle various lawsuits against its profitable marketing division, News America. Apart from the hacking allegations and the FCPA violations (suborning foreign officials) there is now ample evidence, in the US and elsewhere (cf Italy and Australia) that Newscorp has a standard modus operandi when dealing with the 'free market'.

1. Establish leverage over politicians to change anti monopoly legislation

2. Dumping - artificially lowered prices to destroy competitors (cf News America, London Times)

3. Industrial espionage against competitors using a variety of means (Floorgraphics, Daily Mirror etc.)

For those following this story in Newscorp's home country, the US, there is now ample evidence of a sustained pattern of behavior liable to a RICO violation. My firm belief is that the heart of this problem is an abuse of power which comes from a monopoly position in cross platform ownership. It is at it's worst in Australia, only marginally better in the UK, but the US is where both the power lies, economically and politically, and where Murdoch's combination of tabloid blackmail, highly leveraged acquisitions (Miliken is a good friend of his) and ultimate commercial and political power ultimately resides. And it's only there he will be defeated.

So keep digging. Keeping on adding your own comments and sources. Just like the Wall Street occupations, this is an example whete the power elites can be held to account: by occupying their channels of communication and spin.

Originally posted at DailyKos. 

Bernstein on the Watergate Analogy and the Culture of Lawlessness

If you think the Watergate analogy is hyperbolical or fanciful, don't forget it was first made by Carl Bernstein himself in The Daily Beast nearly three months ago

The circumstances of the alleged lawbreaking within News Corp. suggest more than a passing resemblance to Richard Nixon presiding over a criminal conspiracy in which he insulated himself from specific knowledge of numerous individual criminal acts while being himself responsible for and authorizing general policies that routinely resulted in lawbreaking and unconstitutional conduct. Not to mention his role in the cover-up. It will remain for British authorities and, presumably, disgusted and/or legally squeezed News Corp. executives and editors to reveal exactly where the rot came from at News of the World, and whether Rupert Murdoch enabled, approved, or opposed the obvious corruption that infected his underlings.

And here he is, in a Guardian interview today where he makes the same point

The parallels with Watergate... Had to do with the culture itself that made this possible. In the Nixon Whitehouse Nixon was responsible for the sensibility that permeated the place, that had to do with unconstitutional acts with a cynicism about the political process and how it was practised, and a disregard for the law. And it became apparent to me, as I read more and more what was happening here, that really at bottom what this hacking furore is about, 

it's about a culture in the newsroom that has nothing to do with real journalism, real reporting (which is very simply put the best obtainable version of the truth)

 but rather has to do with serving up both the lowest common denominator of information and calling it news, and obtaining it through a methodology which is outrageous, whether you're talking about hacking or other kinds of invasions of privacy, and that the atmosphere in that newsroom is a product of the culture that Murdoch in the News of the World .

I've always said that Murdoch's Wizard of Oz like appearance before the House of Commons Select Committee this summer - the first time the most powerful man in my country had faced the people's elected representatives - was the crucial moment. Murdoch ruled by fear, by politicians self censoring and second guessing his movements. The revelation that he was a rather frail crank oldy man suddenly undermined the fear, and frankly did much to diminish his effective power. As Bernstein says:

I think his power as it were is diminished, because I don't think he's held - as a result of what we've heard and seen - in the same kind of awe by both his peers and those who feared. At the same time I think it's a mistake to oversimplify any of this. Is his power over? Is he all good or all bad. I think that's much too simple.

Let me state for the record. I have no personal opinions of Rupert himself. I've never met him. I've heard he can be a deeply loyal father and boss. However, the empire he has accumulated , the modal monopoly it deployed to create a 'market in news' which was corrupt, was used to game legislation, blackmail politicians, intimidate opponents and destroy the lives of innocent people through tabloid exposure using illegal mean...

That was unequivocally bad, and we should keep campaigning for that empire to be dismantled.

Quiet Intensity: The Raft of Ongoing Investigations

So, while things may seem to be quiet on the Murdoch scandal front, but with three police investigations ongoing in the UK (into phone hacking, computer hacking and payments to police), a public inquiry and two parliamentary committees, it won't stay like that for long in the UK. Like all criminal scandals, the onus on investigators is to compile evidence - and much more is coming to light.

Just this week it's been revealed the James Murdoch's senior PR advisor has resigned: one of the arrested journalists is joining Andy Coulson in suing News International; continued threats to Tom Watson who tirelessly campaigned on this issue in Parliament, the revelation of 11 million emails, and details of illegal practices in other Murdoch tabloid titles, apart from the now defunct News of the World.

So the culture Bernstein talked about extended to Murdoch's other titles. What is the chance it didn't extend to the US too?

Ad has been diaried before, there are now three prongs to the ongoing DOJ investigation into Newscorp: the most salient being the Foreign Corrupt Practices Act (it's illegal to bribe foreign officials as Newscorp seems to have done with British police officers), rumours still of hacking victims on US soil, and by far the least known, but potentially the most deadly, an investigation into an old anti-trust suit from a few years ago, the Floorgraphics case, which could leave Newscorp vulnerable to RICO statutes.

U.S. investigators are looking into potential antitrust activities of Murdoch's News America Marketing Group, which specializes in producing in-store ads, coupons, advertising inserts and other promotional materials for supermarkets and retail outlets worldwide.

Investigators reportedly are seeking documents relating to a 2009 trial of a suit against News America by a New Jersey advertising company, Floorgraphics, which had accused News America of, among other things, hacking into its computer systems and lying to its customers. The case was settled for an undisclosed sum, and News America subsequently acquired Floorgraphics.

All told, News America has shelled out $655 million to settle suits against competitors alleging unsavory business practices.

As Crains put it two days ago (hat tip to the ever watchful Ceebs)

Investigations of News Corp.'s illegal conduct initially involved just News of the World, which represented only 1% of annual revenue for the New York-based media company, publisher of The Wall Street Journal and operator of the Fox television networks.

The marketing unit, which promotes products through supermarket coupons, accounted for four times that revenue and about 12% of profit for fiscal 2011.

Rivals of News America Marketing have claimed in court papers that it prospered by violating antitrust laws. It also hacked into a Floorgraphics password-protected website, one of its own lawyers told the jury at the 2009 trial.

“There is a pattern of anticompetitive behavior by News Corp.,” said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, a government watchdog group. “We've seen it in Britain, and we've seen it in America.”

Remember, News America Marketing provides 12% of Newscorp profits. That's a really compared with the 1% provided by the biggest English language paper, the News of the World, before it was closed.

So though it seems quiet, that doesn't mean a lot isn't going on under the surface. Indeed the 'unnamed source' regularly talking about Newscorp affairs is either a whistleblower, or some desperate damage limitation..

Remember all the Presidents Men? The movie ends with Bernstein and Woodward filing more stories: it took two years before Nixon resigned, and another year or two after that for the final criminal indictments to be handed down.

Don't despair: watch this space

Originally posted on DailyKos