The News Corp. Coverup

Memory-impaired execs, payments to key figures, and Keystone Kops

News Corp.’s behavior in the UK hacking scandal has all the hallmarks of a coverup.

We’ve got the scapegoat (Clive Goodman), the pro forma internal investigation saying the problem was contained to said scapegoat, the scramble to hide or destroy evidence, the stonewalling “I don’t recalls” from executives like Dow Jones CEO Les Hinton, the large payments to key witnesses, the police who bent over backwards to avoid pushing an obviously widespread criminal case, the lead police investigator now on Murdoch’s payroll—what am I leaving out? That’s just what we know from some of the (excellent) press coverage thus far, which has been dominated by The Guardian and now The New York Times.

Let’s take these one by one.

The scapegoat

The Guardian reports today that former News of the World senior editor Paul McMullan says ex-editor Andy Coulson, now the prime minister’s spin doctor, is lying when he says he didn’t know about the illegal phone tapping that was rampant under his regime:

Paul McMullan, a former features executive and then member of the newspaper’s investigations team, says that he personally commissioned private investigators to commit several hundred acts which could be regarded as unlawful, that the use of illegal techniques was no secret at the paper and that senior editors, including Coulson, were aware that this was going on.

“How can Coulson possibly say he didn’t know what was going on with the private investigators?” he said…

McMullan is one of six former News of the World journalists who have independently told the Guardian that Coulson, who was deputy editor from 2000 and editor from January 2003 to January 2007, knew that his reporters were engaging in unlawful acts.

The pro forma internal investigation

News Corp. says it investigated the matter fully and concluded that Goodman was the only journalist involved in illegal hacking. The fact that the Guardian can round up six people who say otherwise—and the NYT can find some, too—shows pretty clearly that this wasn’t a serious investigation.

The scramble to hide or destroy evidence

This from last week’s Times Magazine piece, which reports that the coverup started immediately (emphasis mine):

ON THE MORNING of Aug. 8, 2006, Scotland Yard detectives arrived with a search warrant at News of the World. For six months, officials had tracked Clive Goodman and Glenn Mulcaire as they hacked into the voice mail of the royal household, according to people with knowledge of the investigation. One royal aide’s voice mail was called 433 times, records show. In the newspaper’s lobby, detectives faced resistance from executives and lawyers for the paper over searching the newsroom, former police officials said. As word of the detectives’ arrival ricocheted around the office, two veteran reporters stuffed reams of documents into trash bags, one reporter recalled, and hauled them away.

The stonewalling “I don’t recalls” of executives called to testify

You really have to read the testimony of Les Hinton to the House of Commons to get the full flavor of this, but the Times Mag had a nice summary:

During a recent interview, the committee chairman reread portions of that testimony, pausing to laugh at Hinton’s repeated “I do not recall” or “I do not know” responses. “This was just a masterful performance by Les Hinton,” Whittingdale said. “We all sat in awe.”

And here’s a longer excerpt, where an MP has a devil of a time getting Hinton to answer a basic question on whether News Corp. paid for Clive Goodman and Glenn Mulcaire’s high-priced lawyers:

Q2117 Philip Davies: I want to focus on the payments that you have made to Clive Goodman and Mulcaire specifically since their conviction, or certainly after they were arrested and charged. First of all, did you in any way pay for any of the legal fees for Clive Goodman or Glenn Mulcaire?

Mr Hinton: I absolutely do not know. I do not know whether we did or not. There were certainly some payments made afterwards but on the matter of legal fees I honestly do not know.

Q2118 Philip Davies: The problem I have here is that whenever we have questioned anybody who was involved at the News of the World or News International, even including very senior people such as yourself, everybody has always said they do not know and they have also been able to further add that they have no idea who would know. This is all becoming rather incredible that some of the most senior people involved in News International either did not know or did not know who would know. Stuart Kuttner said that he did not know and he said that he did not know who would know. Now you are saying you do not know. Who on earth would know these things?

Mr Hinton: That is a fine flourish of a question, Mr Davies, but I have answered your question: I do not know.

Q2119 Philip Davies: Well, who would know in your organisation? You were a senior person in this organisation. Who in your organisation would know?

Mr Hinton: If we paid their legal fees the company would know; I do not.

Q2120 Philip Davies: Who at the company would know? The company is not a person. What person would know?

Mr Hinton: Sorry?

Q2121 Philip Davies: What person at the company would know if the legal fees had been paid or not?

Mr Hinton: Well, I would guess the Director of Human Resources but I do not know. When employees get into difficulty it is not unusual for them to be indemnified by the company that employs them and for their legal fees to be paid, but I am sorry, I just do not know. I am just surprised that of all the people you have had before you in the past two months you have not asked that question before. I just do not know, I am sorry.

Q2122 Philip Davies: We keep asking everybody who comes before us who knew about the payments and everybody says they do not know, but Clive Goodman…

Hinton, CEO of Dow Jones, is the guy whose portfolio includes The Wall Street Journal. Take a bow, Bancrofts!

The large payments to key witnesses:

So, you’ve got an employee and a contractor who commit some serious crimes, which include hacking the phone of the Crown Prince, and are convicted. Do you pay them large settlements because you’re afraid you’ll lose a wrongful-termination lawsuit? Or because you want them to keep their mouths shut?

News Corp. paid Goodman, the reporter it said—implausibly—was the sole person at News of the World aware of or involved in the hacking, and Mulcaire, the hired gun who did the hacking, to go away. This from a House of Commons committee’s report on the scandal:

The News of the World and its parent companies did not initially volunteer the existence of pay-offs to Clive Goodman and Glenn Mulcaire, and their evidence has been contradictory. We do not know the amounts, or terms, but we are left with a strong impression that silence has been bought.

450. The newspaper’s approach in this instance also differed markedly, we note, from that adopted towards sports reporter Matt Driscoll, to whom a tribunal awarded nearly £800,000 - possibly the biggest amount in the industry to date - in November 2009 for unfair dismissal after persistent bullying by then editor Andy Coulson. The newspaper strongly resisted that particular claim.

The NYT reported that News Corp. dropped $124,000 (at current exchange rates) in Mulcaire’s lap. I don’t think it’s come out yet (and I’m not sure why Parliament doesn’t have the power to demand to know) how much Goodman got.

Also, an MP suggested in questioning Hinton that he had “good information” that News Corp. agreed as part of the terms of the hush mon… I mean… settlement to pay any civil claims awarded against Mulcaire and Goodman.

Here’s the committee questioning Hinton on why it paid them off:

Q2130 Philip Davies: You are a senior executive, clearly a high flyer. Did you not even say, “Why on earth are we giving payments to people who have been sent to prison?” Would that not be the first question that anybody in your position would ask?

Mr Hinton: I agree that it is unusual for people who go to prison to be given financial settlements or people to even commit gross acts of misconduct or abuse of trust. In this case that was the advice that I was given.

Hinton, naturally, couldn’t recall who gave him this advice.

But News Corp. has also made huge payments to those targeted by its hacking. It paid about $1.5 million to Gordon Taylor, a soccer bigwig who’d been hacked by News of the World, and two of his associates. You can understand why News Corp., which the Times reports had laughed Taylor’s attorney off at first would be so eager to settle:

The settlement remained under wraps until July 9, 2009, when The Guardian broke the story.

That took the well contained scandal to a new level—one that’s only increased with the Times excellent spadework last week.

Murdoch’s people also paid off Max Clifford, a bigtime flack, who had sued the paper:

That same month, a judge hearing the lawsuit by the public-relations executive Max Clifford ordered Mulcaire to name any journalist for whom he hacked into Clifford’s phone…

News International agreed to pay Clifford one million pounds in exchange for feeding the paper exclusive stories over the next several years.

The company had been able to prevent Mulcaire’s testimony.

The police who bent over backwards to avoid pushing a big criminal case, one that “went to the heart of the British establishment, in which police, military, royals and government ministers were hacked on a near industrial scale”:

The Times reports:

Within days of the raids, several senior detectives said they began feeling internal pressure. One senior investigator said he was approached by Chris Webb, from the department’s press office, who was “waving his arms up in the air, saying, ‘Wait a minute — let’s talk about this.’ ” The investigator, who has since left Scotland Yard, added that Webb stressed the department’s “long-term relationship with News International.”

…the officials didn’t discuss certain evidence with senior prosecutors, including the notes suggesting the involvement of other reporters, according to a senior prosecutor on the case. The prosecutor was stunned to discover later that the police had not shared everything. “I would have said we need to see how far this goes” and “whether we have a serious problem of criminality on this news desk,” said the former prosecutor, who declined to speak on the record…

Scotland Yard initially promised prosecutors it would alert everyone named in the files, but it didn’t.

The lead Scotland Yard investigator is now on the Murdoch payroll:

Andy Hayman, who ran the case for Scotland Yard, has since retired. He declined to comment for this article. He is currently a columnist for The Times of London, where he has written in defense of the police investigation and maintained there were “perhaps a handful” of hacking victims. The paper is owned by News International.

Quite the story, no? And there’s more to come—bet on that.

What does Murdoch think about all this? Well, he’s none too happy. Watch his employee Stuart Varney cravenly fall back into line after asking the emperor an impertinent question and getting snapped at:

He’s going to have plenty more to get snippy about in the weeks and months ahead. The cat’s coming all the way out of the bag this time.

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.