Murdoch's World (31 page)

THAT SWAGGER DIDN'T LAST FOR long.

Police arrested Rebekah Brooks on July 17, a Sunday, and questioned her on suspicion of involvement in illegally intercepting electronic communications (the hacking into mobile phone voice mails) and corruption (illegally paying police and public officials). She had planned to submit to an arrest two days later, on Tuesday. By this point, however, police had dispensed with all manner of courtesies.

On July 19, the day the Murdochs were to testify, the morning papers were stuffed with reports of
a confrontation between Charlie Brooks and security guards at a parking lot near their luxury apartment overlooking the Thames. A passerby had given security guards two briefcases containing a laptop, an iPhone, and a stack of documents, all of which had been retrieved from a plastic sack dumped in a trash bin at the parking lot. What happened next is a matter of some dispute. What is known is that Charlie Brooks did not emerge from the lot with the computer; a spokesman told papers a friend had left it there by accident. Murdoch's tabloids did not display the
ferocity of interest that the episode might have engendered had the person involved been someone else.

But that was low farce. The arrest played into a plot with high drama, underscoring the personal ties involved. As Rupert and James Murdoch entered the hearing room in Portcullis House, a modern wing of Parliament, protesters outside chanted, while a pair mocked father and son by donning oversize masks, Rupert denoted by his exaggerated, furrowed brow, James by his high-tech glasses frames.

The hearing room could have been a newish criminal courtroom in any midsize American city, except instead of jurors seated in a box, lawmakers were arrayed in horseshoe fashion, facing the witnesses.

Rupert Murdoch's wife, Wendi Deng, sat behind him, as did Joel Klein. Murdoch had wooed Klein to serve as a chief adviser and to lead the company's push into educational software. Now Murdoch had tapped him to lead internal affairs. He had appeared that day in a show of support for his corporate chairman and to witness the process playing out.

Klein, a slender man with a crown of graying hair and nasal accent reflecting his childhood home of Queens, New York, was nobody's idea of a pushover. Two years earlier,
Rupert Murdoch had personally called Klein while he was still chancellor of schools in New York City to suggest he consider coming into the fold. Once Klein left public office, the decision and announcement were swift: he would lead News Corp's revitalized educational division. But as an executive vice president, Klein reported directly to Murdoch in the office of the chairman. Concurrently, Murdoch appointed him to the corporate board. Klein could have become rich at any number of Manhattan law firms, but this arrangement nonetheless rewarded him handsomely.
His compensation was worth at least $4.5 million in 2011, his first full year, plus a $1 million signing bonus and $18,000 toward car expenses. The pay bought his legal counsel and loyalty, but Klein did not want to lose his reputation as a lawyer known for tough-minded independence.

Now, Klein's overriding aim was to convince authorities in the US and the UK that the company would tear itself apart to satisfy them of its determination to root out corruption—short of the chairman's office.

The Murdochs had been carefully coached and knew they were addressing different audiences, in testimony broadcast live in the UK and the US. Both men wanted to convey to investors that the fever had broken, that sound management would once more be the order of the day.

Rupert needed to preserve his company's reputation and show contrition and to argue he had no involvement in an operation of such small importance to the company's bottom line. James Murdoch needed to show he was not a callow youth in his father's shadow, but a capable executive who could handle this and other scandals and surprises, a worthy heir to the corporate throne. In short,
he needed to salvage his career.

James Murdoch first attempted to read from a prepared statement, as witnesses typically do in congressional hearings in Washington. John Whittingdale told James he could read the statement at the end if adequate time remained. Police removed a group of vocal protesters who leaped up from their seats and started to shout at the Murdochs; Whittingdale then reminded the Murdochs, the committee members, and the public that the committee in 2010 had concluded it was “inconceivable that only one reporter had been involved” in phone hacking and reiterated that “it is also clear that Parliament has been misled.”

Whittingdale began by asking what James Murdoch meant when he acknowledged that the company had made statements to Parliament “without being in full possession of the facts.” James offered a note of contrition and regret, on behalf of himself, his father, and the employees of News Corp.

Just as he began to explain the context and thrust of his comments, he was interrupted. “Before you get to that, I'd just like to say one sentence,” Rupert Murdoch said, reaching out his hand and resting it on his son's arm. “This is the most humble day of my life.”

The phrasing of that interjection had been scripted for Murdoch by his advisers, especially his
new team of crisis management experts, including senior figures from the giant public relations firm Edelman and Steve Rubenstein of Rubenstein Associates. Several days earlier at One Aldwych Hotel in the heart of London, Murdoch sat perched on the white-fabric chair, his head in hands, repeating his sorrow for the Dowlers. His PR consultants recommended that Murdoch similarly needed to convey his humility once more before Parliament. Yet by interrupting his son at the outset, Murdoch's commanding nature trumped that message of regret and undermined James's standing. He demonstrated that even in crisis, News Corp, a publicly traded company, was propelled by the vision of a single man. And despite Rupert's aspirations for his son, that man wasn't James. If what he said damaged his son's standing or independence, he really didn't care.
His
message would be heard.

THE TWO Murdochs jointly attempted to sketch out a defense, in which the company had relied on the police, the Press Complaints Commission, and outside lawyers hired by News International to perform a thorough review, to tell them what had happened inside their own newsrooms. The police had publicly cleared them. So had the PCC. James said he should have pushed harder to challenge those assumptions. But he said he had been told a thorough inquiry had been conducted and found only limited wrongdoing. The oversight was regrettable, he said. But he left the implication hanging that anyone could have fallen through the same trapdoors.

Labour MP Tom Watson refused to allow James Murdoch to answer for his father. Why, Watson asked Rupert Murdoch, didn't News Corp instantly investigate reports that the paper's reporters bribed police for information?

“I didn't know of it. I'm sorry,” the senior Murdoch said. “If I can just say something, and this is not as an excuse, maybe it's an explanation of my laxity: The
News of the World
is less than 1 percent of our company. I employ 53,000 people around the world who are proud, and great and ethical and distinguished people.” Yet Murdoch was not known for laxity—he was a notoriously involved CEO, especially when it came to his tabloids.

The younger Murdoch said he had only learned of the seriousness of the problem less than a year before. “As soon as we had that new information at the end of 2010, that indicated to us there was a wider involvement,” James Murdoch told MPs, “We acted upon it immediately.” He was referring to the lawsuit filed by actress Sienna Miller. The twists and turns of her stormy relationship to fellow film star Jude Law were the stuff that tabloid dreams are made of.

But the year before that “new information” surfaced—in 2009—the
Guardian
exposés indicated that dozens of celebrities and politicians had been targeted illegally by the tabloid and revealed James Murdoch's approval of the secret payment to Gordon Taylor. There were only two interpretations of what had occurred. If they conceded knowing what was going on, they had condoned or intentionally ignored activities that were clearly criminal. James Murdoch in particular confronted the Hobson's choice of managerial incompetence or acquiescence to widespread criminality.

The Conservative MP
Louise Mensch was someone who tried over the course of hearings to make the case that hacking was endemic to the British tabloid industry, not simply the Murdoch stable. An author of young adult books who had made a fortune before entering Parliament, she had married the manager of the heavy metal band Metallica and found her own behavior as a twenty-something under scrutiny from critical blogs. As Mensch noted, Piers Morgan,
who came up in the Murdoch tabloids and was briefly editor of
News of the World
before he led the rival
Daily Mirror
, had spoken several times cavalierly
about phone hacking as a routine practice, though Mensch misstated some of the details.

Yet when Rupert Murdoch appeared, she did not relent. “Is it not the case, sir, that you are the captain of ship?” Mensch asked the older Murdoch. “You are the chief executive officer of News Corp, the global organization.”

“A very much larger ship,” Rupert Murdoch replied.

“It is a much bigger ship, but you are in charge of it,” Mensch said. “And as you said in earlier questions, you do not consider yourself a hands-off chief executive. You work 10 to 12 hours a day. This terrible thing happened on your watch. Have you considered resigning?”

Murdoch said he hadn't. “People I've trusted—I'm saying not who, I don't know what level—have let me down, and I think they behaved disgracefully, betrayed the company and me, and it's for them to pay,” he said. “And frankly, I'm the best person to clean this up.”

Rupert appeared tired, deflated, even old.
Tom Watson emerged as the Murdochs' chief antagonist. “It's revealing in itself what he doesn't know, and what executives chose not to tell him,” Watson told James Murdoch, in explaining his focus on the father.

Watson asked Rupert Murdoch, “Did you close the paper down because of the criminality?”

“Yes, we felt ashamed at what had happened and thought we ought to bring it to a close,” Murdoch replied. “We had broken our trust with our readers.”

That sacrifice did not endure for long. Reporters at rival papers confirmed rumors that a
“
Sun on Sunday
” had been under consideration for some time; the printing of a seventh daily edition of the tabloid, the most profitable major paper in the country, would have achieved savings by consolidating staffs anyway. Forty-eight hours before James Murdoch announced the end of the
News of the World
, two domain names were registered with a familiar sound:
sunonsunday.co.uk
and
thesunonsunday.co.uk
. Within a few days, News International was identified as the entity holding title to those domains.

The Murdochs were vague about the questions at the heart of the hearings. James Murdoch had not registered that the payment to settle Taylor's hacking complaint indicated any wider problem. James said he had not been told of an email that contained transcripts of voice mail messages of various targets of the tabloid's hacking that carried the legend “for Neville”—Neville Thurlbeck, the paper's chief correspondent. That email indicated that hacking was not an aberration. It was standard operating procedure.

Watson could not believe that James Murdoch could think the enormous payment (for a British case) was reasonable without knowing of the “for Neville” email.

W
ATSON
: “But you paid an astronomical sum and there was no reason to.”

J
AMES
M
URDOCH
: “There was every reason to settle the case, given the likelihood of losing the case and the damages that we had received counsel would be levied.”

In a
separate secret settlement in 2010, News International paid one of London's leading public relations executives, Max Clifford, a total exceeding $1 million after he started litigation against News International for mobile phone hacking. Rupert Murdoch said he knew nothing about it. James Murdoch said Rebekah Brooks made the decision to pay Clifford, which he only learned about later.

No party gave the Murdochs any quarter. Tory MP Philip Davies pressed both father and son on the payments. In 2008 News International had lost in a court case filed by the motor racing official Max Mosley after
News of the World
reported he had participated in a Nazi-themed orgy. Mosley
had
taken part in a sex party with several women. But the Nazi theme was said to be an embroidery on the part of Thurlbeck, who could be heard on a tape goading one of the participating women to make a
Sieg heil
salute. As Mosley's father was a noted Nazi sympathizer who
had founded the British Union of Fascists, the association was particularly damaging. That was the story on which Thurlbeck was found to have blackmailed a woman into putting her name as author of a fanciful account of the party that he had written.