BusinessWeek Goes Inside a Critical Hacking Scandal Meeting

Murdoch, at a fork in the road, chose the coverup

Bloomberg BusinessWeek has a fantastic story reporting on a critical meeting Rupert Murdoch held last May to plot how to contain the hacking scandal.

The detail and reporting here are remarkable. Nobody at the dinner in Murdoch’s London townhouse goes on the record, but Bloomberg’s Greg Farrell pieces together the meeting by talking to four attendees on background. With color like this, it feel like we’re in the room as the momentous meeting unfolds:

The far side of the living room opened onto a balcony with a stunning view of Green Park. Off in another direction was the dining room with a large rectangular table. The assembled executives fragmented into smaller groups, cradling their drinks and wandering around the room and onto the balcony to take in the fresh air.

BW even reports on the seating chart at the table, something that might seem a bit much at first, but is actually a significant part of the story, as I’ll explain below:

Brooks was typically at the center of any small gathering involving Murdoch, but as the other executives mingled, she and Sullivan migrated to a corner of the balcony. According to one observer, Sullivan spoke to her sternly, reminding her not to hold anything back from him. Brooks returned from the tête-à-tête looking slightly shaken.

When it was time to sit down for the meal, everyone took assigned positions. Murdoch sat in the middle of the long table, flanked by Klein and Sullivan. Directly across from him was Brooks, and next to her was James. At one end of the table sat Jacobs, Palker, and Carey. At the other end sat Lewis, Greenberg, and John Villa, Sullivan’s right-hand man from Williams & Connolly. Before the group could settle into their chairs, Brooks expressed mild embarrassment at being in the prime position, even though she had arranged the seating personally. She turned to Carey and coyly insisted that he switch seats with her. Carey demurred. She made the same offer to Jacobs, who also declined.

This reporting serves a few purposes. Most importantly for the story, which by its nature almost had to be anonymously sourced, the detail is so precise that it adds credibility to the rest of the information BW reports. Second, it gives us an unflattering insight into Brooks’s character. This little anecdote says quite a bit about her. Third, it shows how people at the top of the power pyramid can be even more status-conscious and insecure than people at the bottom. Murdoch is at the center, surrounded by his inside and outside counsel—a signal that these are the most important people here. Top execs, notably including the company’s top lawyer, who would quit two weeks later, are at one side of the table and “three lower-ranking advisers—Jeff Palker, William Lewis, and Simon Greenberg— (who) had been told to stay away until right before the dinner began” are at the other. Brooks has finagled her way into the prime seat. This thing is more choreographed than a Cabinet meeting and clearly, just by remembering it, Farrell’s sources were painfully aware of what it said about their standing with the boss.

It’s worth noting that the one executive here who called for Murdoch to launch an independent investigation into News of the World was frozen out and resigned two weeks after the meeting. Joel Klein and Brendan Sullivan recommended that Murdoch put Brooks in charge of the company’s response, which apparently didn’t even include an internal investigation.

In the month after the meeting, Brooks led an internal committee “which would respond to specific police requests for information while not actively searching for any evidence of wrongdoing.” The three men on that committee, William Lewis, Jeff Palker, and Simon Greenberg, are the same three who BW reports “had been told to stay away until right before the dinner began,” while Murdoch had drinks with his executive team. You have to wonder why.

BW says this:

Nine months later, the consequences of that decision still reverberate. Though none gathered at Murdoch’s home that evening could have foreseen the slew of allegations, arrests, and public outrage that loomed, by sticking with London’s effort to quarantine the scandal, Brooks and James Murdoch were, in particular, suspected of a coverup.

“Quarantine” is a nice and neutral word for cover up, which is what was happening here.

Great work by Farrell and BusinessWeek.

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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: , , , ,