Audit Notes: Murdoch’s Influence, Reuters’s Chesapeake drumbeat

A sweeping indictment of the corruption of British politics by News Corp.

The News Corp. scandal is so massive and so sprawling that it’s just about impossible to bring all the pieces together to see a relatively complete picture.

So find some time to read this remarkable 8,000-word essay by openDemocracy founder Anthony Barnett on News Corp. and its corruption of the British government.

Barnett does a tremendous job of showing how all the pieces of corruption fit together, and shows how they implicate David Cameron and his government. I’ll excerpt the top at length:

First: Was there an across-the-board deal or understanding, or what in a grave and thoughtful column Peter Oborne calls a “Grand Bargain”, between the two teams of the Conservative leadership of Cameron and Osborne and the Murdochs, Rupert and James?

Second: We know in detail that there was widespread criminal intrusion and the corruption of police and public officials (and maybe worse) by Murdoch staff and their agents, in News International’s News of the World, across the early years of this century. This was followed by a systematic cover-up by both News International and Scotland Yard after the Royal Editor of the News of the World, Clive Goodman, was sentenced to jail in January 2007. Did Rupert and James Murdoch know about or connive in these illegal activities? Were they holding the reins when they were happening and/or during the cover up?

Third: The cover up originally scapegoated Goodman. His editor, Andy Coulson, claimed Goodman was a “rogue reporter” acting alone and falsely claimed ignorance of hacking. But he resigned as it had taken place “on my watch”. He was then hired by David Cameron and George Osborne to handle the Conservative party’s messaging in the run up to the 2010 election. Did Cameron and Osborne also participate in the cover up through ‘willful ignorance’ and by turning a blind eye to the evidence of the Murdochs’ acting illegally, as they developed their media strategy with Coulson and in many meetings with the Murdochs and their people?…

The questions are linked. If ‘no’ is the answer to all of them there is only a minor problem, one that Leveson can deal with easily…

But if the answer to all three questions is “yes” then there was an extensive agreement between the heads of our government and a criminal network, made significantly worse by Cameron and Osborne being complicit in the illegality because they were aware of it (or wilfully unaware). Which means the government needs to fall.

And the answer to all three questions is “yes”.

Here is how we know.

Read it all.

The New York Times looks at Joel Klein, the former Clinton antitrust lawyer and New York schools chancellor who is now Rupert Murdoch’s $4.5 million a year consigliere/education guy at News Corp.

This is a good catch on how Klein advised Murdoch on the PR effort after last week’s devastating report from Parliament deemed him “unfit” to run a major company:

More recently, there has been criticism of Mr. Klein’s seemingly contradictory roles within News Corporation, both investigating wrongdoing inside the company and advising Mr. Murdoch on handling public relations and his appearances before the British Parliament.

How does that work? You’re investigating the guy who’s paying you $4.5 million a year after earning government wages for years and advising him on how to respond to other investigations of his corrupt company?

Klein’s is the same internal investigation that Murdoch says “found no evidence of illegal conduct other than a single incident reported months ago, which led to the discipline of the relevant employee.” Sure.

I don’t think we’ve paid enough attention to what Murdoch and News Corp. are trying to do in education, so it’s good that the Times does here:

While Mr. Klein still worked for Mayor Michael R. Bloomberg, Mr. Murdoch and Mr. Klein became close friends. They talked frequently about the state of public schools and Mr. Klein was lured to News Corporation with the promise that he could use the company’s deep coffers to put in place his vision of revolutionizing K-12 education. Mr. Murdoch has said he would be “thrilled” if education were to account for 10 percent of News Corporation’s $34 billion in annual revenue in the next five years.

That’s worth keeping a close eye on.

— Reuters has another good scoop on Chesapeake CEO Aubrey McClendon’s billion-dollar loans.

Just a few weeks ago, McClendon borrowed another $450 million from a private equity firm called EIG Global Energy Partners that was doing business with Chesapeake. That brought his borrowings since 2009 to $1.6 billion—most of it from EIG.

The deal was initially intended to be significantly larger, up to $750 million, said the person familiar with the transaction. It was scaled back last week after the Chesapeake board announced the early end to the well-stake perk, which is now slated to conclude in June 2014.

The newest financing for McClendon closed shortly before EIG joined with other investment firms and hedge funds, such as TPG Capital and Magnetar Capital, in purchasing preferred shares in a newly formed Chesapeake subsidiary that has an interest in some of the company’s wells. EIG invested $100 million in that deal, called CHK Cleveland Tonkawa, which raised $1.25 billion for Chesapeake…

In his April 23 letter to clients, (CEO R. Blair) Thomas of EIG defended the two prior loans to McClendon, writing: “The crux of the story as it relates to EIG seems to be that we got too good a deal for our investors.”

Has America ever needed a media watchdog more than now? Help us by joining CJR today.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,