Audit Notes: Paywall Protection, News Corp. Scandal Widens, Goldman and Libya

Ken Doctor has a good post over at Nieman Journalism Lab on the Walter Hussman Theorem, which is that you can stanch or even reverse the decline of your print paper by not giving it away free online. Another name for this is “common sense.”

Here’s a terrific chart that Hussman put together on how his two papers (they’re the ones with print circulation growth over the last decade) compare regionally:

Doctor points out that this is all about playing defense. Indeed, if you spend all your time crouched behind your fortress under seige from the digital barbarians, eventually they’ll overrun you or your food will run out. But that doesn’t mean you can spend all your time hunkering down:

This week, the Chicago Tribune is going public with its reinvestment (in newsroom and in print product) plans, paralleling what The Dallas Morning News has done over the past two years. The Arkansas Democrat-Gazette itself is reinvesting digitally, now under the leadership of Conan Gallaty, an alum, of both The New York Times Regional News Group and Morris. Yet, as the tablet revolution dawns, throwing publishers a potential lifeline, news publishers badly need reinvestment in technology (web apps, per the FT innovative approach announced this week), in product development (mainly tablets), and in simply upgrading their reporting power and quality, so much of which has been lost in the last five years. There’s far too much waiting, and far too little impactful innovation. Too much, for metro and smaller papers, innovation is measured in onesies and twosies.

No doubt.

The Guardian reports that Rupert Murdoch and News Corporation’s criminal hacking scandal continues to widen, despite the company’s best efforts to silence it.

The paper reports that one of News’s hired hackers, Jonathan Rees, who also worked for the competitor Mirror Group, hacked or targetered prime minister Tony Blair, as well as senior members of his administration and more members of the royal family.

But the coverup continues. The Guardian reports that none of several high-profile likely victims it has named “has been officially confirmed or even investigated.” And then there’s this:

But the Labour MP Tom Watson told the prime minister on Wednesday the head of the Operation Weeting inquiry into the News of the World’s investigator, Glenn Mulcaire, had told him that it may be beyond its terms of reference to investigate this evidence.

“Prime minister, powerful forces are attempting a cover-up,” Watson said. “Please tell me what you intend to do, to make sure this doesn’t happen.”

Although this might also help explain why the authorities were so hesitant to investigate:

Some police contacts are said to have been blackmailed into providing confidential information. One of Rees’s former associates claims that Rees had compromising photographs of serving officers, including one who was caught in a drunken coma with a couple of prostitutes and with a toilet seat around his neck. Rees claimed to be in touch with corrupt Customs officers, a corrupt VAT inspector and two corrupt bank employees.

This is a guy who was on Rupert Murdoch’s payroll:

In 1999, (Rees) was arrested and sentenced to seven years for conspiring to plant cocaine on a woman so that her husband would get custody of their children.

News of the World sister paper The Wall Street Journal follows up today on last week’s great Goldman Sachs/Qaddafi story with news that the SEC is now investigating whether the bank considered paying huge bribes to Libyan officials.

Among other things, SEC officials are interested in a $50 million fee Goldman initially agreed to pay the Libyan sovereign-wealth fund as part of a proposal by the New York company to help the fund recoup losses, according to these people. The Libyan Investment Authority would have passed on the $50 million payment to an outside adviser, The Wall Street Journal reported last month.

That outside adviser, Palladyne International Asset Management BV, was run at the time by the son-in-law of the head of Libya’s state-owned oil company.



As part of the arrangement, the Libyan fund planned to hand over the $50 million to Palladyne, according to documents reviewed by the Journal. Goldman said it would make the payment if the deal satisfied “Foreign Corrupt Practices Act representations as set out in the Terms Letter,” among other conditions.

Lawyers said firms generally can’t rely on such language to ensure compliance with antibribery laws.

In other words, “we will pay this $50 million bribe to your oil minister’s son-in-law as long as we don’t call it a bribe.”

And Goldman’s supposed to be the smart ones.

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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: , , , ,