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Global media tycoon Rupert Murdoch is "not a fit person to exercise the stewardship of a major international company", British lawmakers investigating phone hacking at his tabloid News of the World reported Tuesday.

The ruling could prompt British regulators to force him to sell his controlling stake in British Sky Broadcasting, a significant part of his media empire.

The damning report accused Murdoch and his son James of showing "willful blindness" to phone hacking at News of the World, and said the newspaper "deliberately tried to thwart the police investigation" into the illegal activity.

The paper's publisher, News Corp. subsidiary News International, "wished to buy silence in this affair and pay to make the problem go away," the Parliament's Culture, Media and Sport Committee found.

Ofcom, the British media regulator that could force Murdoch out of BSkyB, said it is "reading with interest" the report from Parliament.

The agency noted that it "has a duty under the Broadcasting Acts of 1990 and 1996 to be satisfied that any person holding a broadcasting license is, and remains, fit and proper to do so."

Allegations of widespread illegal eavesdropping by Murdoch journalists in search of stories have shaken the media baron's News Corp. empire and the British political establishment, up to and including Prime Minister David Cameron.

Police have arrested dozens of people as part of investigations into phone hacking, e-mail hacking and police bribery, while two different Parliamentary committees and an independent inquiry led by Lord Justice Brian Leveson are all probing aspects of the scandal.

Testifying before the Leveson Inquiry last week, Rupert Murdoch admitted that there had been a "cover-up" of phone hacking at News of the World.

But Murdoch, who owns the Sun and the Times in London, as well as controlling The Wall Street Journal, New York Post and Fox News, said his News Corp. had been a victim of the cover-up, not the perpetrator.

"Someone took charge of a cover-up, which we were victim to and I regret," he said Thursday at the Leveson Inquiry.

He apologized for not paying more attention to the scandal, which he said had been "a serious blot on my reputation."

Tuesday's report by the Culture, Media and Sport Committee is based partly on earlier testimony by Rupert and James Murdoch.

John Whittingdale, the chairman of the committee, said Tuesday that while there is "no definitive evidence to prove whether or not James Murdoch was aware of ... evidence which indicated that phone hacking was widespread, the committee was nevertheless astonished that he did not seek to see the evidence."

Tom Watson, the Labour lawmaker who has long been one of the fiercest critics of Murdoch, was blistering in a news conference announcing the Parliamentary findings.

"These people corrupted our country. They have brought shame on our police force and our Parliament. They lied and cheated -- blackmailed and bullied and we should all be ashamed when we think how we cowered before them for so long," he said.

But Louise Mensch, a Conservative member of Parliament who is on the committee with Whittingdale and Watson, said the report had gone too far.

She was one of the four Conservative MPs who dissented from the amendment to the report finding that Murdoch was not a fit person to run a company.

She called the amendment "faintly ridiculous" given Murdoch's decades in the business, and accused the Labour members of the committee of pushing through a "nakedly political" statement.

"The amendments were so far out of left field they made a mockery of the whole thing," she said.

The section declaring Murdoch "not fit" passed by a vote of 6 to 4, with support from Labour and Liberal Democrat lawmakers, over opposition from Conservatives. Committee chair Whittingdale, a Conservative, did not vote.

The report did not accuse either Murdoch of misleading Parliament, but said three of their underlings had done so when they testified before the committee.

Longtime Murdoch right-hand man Les Hinton was criticized, as were Colin Myler, the last editor of News of the World, and Tom Crone, who was the paper's lawyer for decades.

The full House of Commons will have to rule on whether the three committed contempt by misleading the committee, "and, if so, what punishment should be imposed," the report says.

"It is effectively lying to Parliament," Whittingdale said. "Parliament at the end of the day is the supreme court of the land. It is a very serious matter."

News Corp. said it was "carefully reviewing the Select Committee's report and will respond shortly.

"The company fully acknowledges significant wrongdoing at News of the World and apologizes to everyone whose privacy was invaded," its statement said.

BSkyB shares were up slightly in London on the news. News Corp. is traded in New York, where the markets were not open when the report was published.

Rupert Murdoch said last week that if he had known the depth of the problem in 2007, when a private investigator and a Murdoch journalist were sent to prison for phone hacking, he "would have torn the place apart and we wouldn't be here today. But that's hindsight."

But he also suggested last week that key parts of the scandal have been overblown.

"The hacking scandal was not a great national thing until the Milly Dowler disclosure, half of which has been somewhat disowned by the police," Murdoch said.

He was referring to the revelation that people working for him had hacked into the voice mail of a missing 13-year-old who later turned out to have been murdered.

The Guardian newspaper originally reported that the hackers had also deleted some of the girl's voice mails, leading to false hopes that she was still alive and deleting them herself. In fact, the messages may have expired automatically.

Murdoch was also grilled over his media empire's back-channel lobbying of the British government, and said he learned of the existence of one of the key lobbyists only "a few months ago."

Murdoch said he was "surprised" by the extent of the contact by the employee, Fred Michel, with the British government as it considered a bid by News Corp. to take full ownership of British Sky Broadcasting.

That bid collapsed because of the phone-hacking scandal.

The scandal has forced News Corp. to pay hundreds of thousands of pounds in compensation to the victims of phone hacking.

Murdoch and his son James have been hammered over the past year about what they knew about phone hacking by people working for them.

They have always denied knowing about the scale of the practice, which police say could have affected thousands of people, ranging from celebrities and politicians to crime victims and war veterans. http://www.cnn.com/2012/05/01/world/europe/uk-phone-hacking/index.html
?hpt=hp_t2 keep hoping someone will finally take this bastard down; nobody should have that much power, especially someone as ruthless and slimy as Murdoch. Nobody should have that much power, especially someone unelected with the money to do it surrpetitiously, without the public knowing what's going on behind the scenes.

At least it's a beginning...of the end, hopefully?

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Rupert Murdoch is facing a two-front war. On the eastern front, he has denied knowledge before a House of Commons committee of phone hacking or payments by News Corp. to Scotland Yard while bemoaning the employees who failed him. He will probably escape criminal prosecution in the United Kingdom, unless some senior employee yet turns on him.

But even if he survives, huddled in his bunker, the wreckage around him resembles postwar Berlin: A prime minister is in jeopardy, Scotland Yard has been discredited, and the British press faces an inquiry commission that may impose new restrictions on press conduct that would be clearly unconstitutional in the United States. No tears are here shed for any of them; they had it coming. This may (or may not) prove to be Britain's Watergate, but the long-cozy relationship between the press, police and government seems likely to unravel.

But what about the western front? The FBI is investigating accusations that News Corp. employees hacked the phones of September 11 terror attack survivors. No one can predict what this investigation will produce, other than more denials from Murdoch. If, however, it happened once in the U.S., it probably happened repeatedly, because once the technology is used, it is too tempting not to use it again. At this point, the volcano erupts.

Unlike the United Kingdom, where phone-hacking charges have been circulating for many years, the U.S. has little tolerance for such behavior. Also, in the U.S., corporations can be criminally prosecuted (while this is rare in the UK and requires that the senior-most managers be implicated).

Even without a U.S. phone-hacking scandal, the Securities and Exchange Commission and the Department of Justice are duty-bound to take action.

Under the Foreign Corrupt Practices Act, it is criminal offense for a U.S. corporation, such as News Corp., to make any payment to a foreign governmental official to "obtain or retain business." Scotland Yard employees qualify as foreign governmental officials, and although an arguable defense can be imagined that the payments were not to "obtain or retain business," they were made to increase revenues by illegally gaining intimate details, which is fuel on which tabloids run. The stronger defense is that these payments were made by News International, not News Corp., and the former is a British corporation.

Still, even if no U.S. corporation made any illicit payment, a second prong of the act remains applicable. News Corp. is under a legal obligation to "maintain a system of internal controls" that meets specified standards, and no person may "knowingly circumvent ... a system of internal accounting controls or knowingly falsify any book, record, or account" that is part of this system. Because few, if any, corporations publicly disclose paying bribes, it follows that someone within the News Corp. hierarchy falsified its books and records. The maximum penalty here is 20 years and a $25 million fine.

Even if no individual within News Corp. can be identified who knowingly falsified records, this does not save News Corp., which can be convicted based on the activities of its subsidiary.

Most likely, the SEC will bring a civil case, and the Justice Department could indict. But what should they seek to achieve through criminal prosecution? Both the SEC and Justice Department use deferred-prosecution agreements as part of their standard toolbox. For years, News Corp. has had a lapdog board of directors, regularly graded an F-minus by the Corporate Library, because it is dominated by the Murdoch family.

In any deferred-prosecution agreement, the SEC or Department of Justice should insist on an outside study of both the phone-hacking scandal and the unlawful payments. It should be conducted by a first-rate U.S. law firm that they find satisfactory, using a former U.S. attorney or SEC enforcement head as its lead counsel. The SEC should further urge whistle-blowers to come forward with a promise of bounties.

Next, News Corp. should be required to waive the attorney-client privilege as a condition of this agreement. Based upon that study, News Corp.'s board should be strengthened with new outside directors and a tough audit committee.

Finally, it is time for Murdoch to retire. A deferred-prosecution agreement should require new directors and a truly independent nominating committee to select a new CEO, whose last name is not Murdoch. This is a tall order, because Murdoch may prefer to hold out and risk a criminal conviction of News Corp. rather than step down. But if a deferred-prosecution agreement with teeth cannot be negotiated, then, after conviction, the sentencing court could impose most of these same terms as probation conditions.

What we do not need is another soft, bloodless SEC settlement that couples a fine with an injunction directing the defendant to obey the law in the future. This time, the regulators should hold out for real reforms, and that means Murdoch should go. http://www.cnn.com/2011/OPINION/07/19/coffee.murdoch/index.html?iref=s
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