Hack Attack

by Nick Davies

  Undaunted, he wriggled on. He understood that it now appeared that he had discussed the Taylor case with Colin Myler in May 2008, but he did not recall this and, therefore, did not recall Myler passing on any of the ‘fatal’ evidence which Tom Crone had given Myler. And, he agreed, he had decided to wait for Michael Silverleaf’s opinion before deciding how to settle with Taylor, but, he claimed, he had then settled the case without reading the opinion for which he had asked.

  Furthermore, he said, it was not just in 2008 that he had remained unaware of the evidence in the Taylor case. When it was splashed across the front page of the Guardian in July 2009, he still had not known about it, even when the Guardian the following week gave the email for Neville to the select committee. This had all been handled by Rebekah Brooks, he claimed, because she had become chief executive in June 2009. This happened to be provably inaccurate: Brooks’s appointment had been announced in June 2009, but she had not taken over until September.

  Beyond that, he claimed that in spite of the public storm which had broken around the Taylor settlement after the Guardian story, he had not stopped to ask why his company in February 2010 then agreed to pay £1 million to stop Max Clifford suing them. That, too, had been dealt with by Brooks. ‘It was discussed with me in general terms but not from an authorisation perspective,’ he told the committee.

  James was alive but still struggling in the water when that hearing finished. The committee then obtained one final piece of evidence, which appeared to contradict him. News Corp disclosed that in the midst of his meetings with Crone and Myler, James had received an email chain which included Myler telling him that ‘unfortunately, it is as bad as we feared’ and Crone explaining that ‘we knew of and made use of the voicemail information from Glenn Mulcaire’. James had sent a brief reply a few minutes later. Confronted with this, James wrote to the committee to claim that although he had replied, he had not actually read the message which he had received. He suggested that this was because he had received it on a Saturday ‘when I was likely alone with my two children’. In spite of his pressing childcare arrangements, he had then invited Myler to call him at home that weekend.

  Mark Lewis, who had been at the centre of the Taylor case, was called back to the committee and put the case against James in its clearest form: ‘I think James Murdoch would like to give you the impression that he was mildly incompetent rather than thoroughly dishonest.’ In their final report, published on 1 May 2012, the committee also used strong language, concluding that it was ‘extraordinary’ that James had authorised such an expensive settlement without knowing the evidence and ‘simply astonishing’ that he had not understood that the ‘rogue reporter’ defence had collapsed.

  At the end of all this, James Murdoch could still insist that he had not been proved to be part of a cover-up, but the cumulative damage to his credibility and reputation was serious. In New York, he was marginalised. ‘Because his surname is Murdoch, he can command meetings with people who fly in to report on what’s going on,’ according to a senior News Corp executive, ‘but he’s just treading water and has no function.’ His close ally, Beryl Cook, stepped down as head of human resources. His right-hand man, Matthew Anderson, also resigned. In the run-up to the media select committee publishing its report, James himself resigned his two UK posts, as executive chairman of News International and chairman of BSkyB.

  * * *

  For Rupert Murdoch, the threat of exposure was never so tightly focused.

  Like his son, he stumbled into trouble with the media select committee, for example by telling them that News International had hired the law firm Harbottle & Lewis ‘to find out what the hell was going on’. That was emphatically denied by Daniel Cloke and Jon Chapman, the two News International executives who had hired the law firm. It was also denied by Harbottle & Lewis themselves, who told the committee: ‘There was absolutely no question of the firm being asked to provide News International with a clean bill of health which it could deploy years later in wholly different contexts for wholly different purposes.’

  He stumbled into more trouble when he was summoned to appear before the Leveson Inquiry, spending two days in the witness box, under attack over his relationships with senior UK politicians and his handling of the hacking scandal. He denied all wrongdoing. He had never asked a politician for a favour, he said. And he had simply not known the facts about the hacking. Indeed, he claimed, it was he who was the original victim of the cover-up at News International. His evidence was greeted with great scepticism. He emerged bruised and diminished. But at the end, his line of defence was not quite broken.

  However, he faced a more powerful threat from a much bigger accusation: that he had been running a rogue corporation. The hacking scandal turned out to be one particularly well-defined part of a pervasive pattern.

  One of Murdoch’s most senior newspaper executives, Andrew Langhoff, resigned as European director of Dow Jones when the Guardian revealed that the Wall Street Journal had been channelling money through other companies in order to secretly buy thousands of copies of its own paper, misleading readers and advertisers about its true circulation and compromising its authority by giving one of the companies helpful editorial coverage.

  The New York Times exposed the detail of how one of his US subsidiaries, News America, which sold advertising on supermarket shelves, had been accused of undermining a rival, Floorgraphics, by hacking into its computers to get information about its plans and customers. Court hearings which would have exposed the facts were halted when News Corp settled with Floorgraphics – and then settled again with two other companies, Valassis and Insignia, who complained that News America had been variously using threats, bribes and smears to try to steal their customers. It cost News Corp a total of $650 million to silence the three legal actions. In an uncomfortable echo of James Murdoch’s problems with the Gordon Taylor case, News Corp refused to say whether Rupert Murdoch had been aware of the evidence of foul practice when he authorised these settlements.

  BBC’s Panorama investigated allegations about another News Corp subsidiary, NDS, who were crucial to the success of Murdoch’s pay-TV business. NDS used an Israeli military scrambling system to encrypt the signal which was sent from the News Corp satellite to millions of homes. Without the encryption, potential customers could simply take the service without paying. Those who have worked with Murdoch say that he was particularly closely involved with NDS. Panorama reported that in the late 1990s NDS had not only encrypted Sky’s signal but had sabotaged the business of its biggest rival, ITV Digital, by hiring a computer hacker who obtained and distributed codes which then allowed people to watch ITV Digital without paying. ITV Digital eventually folded. News Corp denied Panorama’s allegations. Similar claims against NDS had been made in 2002 by the French pay-TV company, Canal Plus, who sued the company. Those allegations also were denied. A court hearing which would have exposed the facts was cancelled when News Corp bought the part of the Canal Plus business which was at the heart of the affair.

  A Murdoch subsidiary in Russia, News Outdoor, which sold advertising space on billboards, was accused of bribing local officials. The Chinese office of the Wall Street Journal was accused of paying bribes to get information. Whenever a rock was lifted in the News Corp business, it seemed to reveal another allegation of rule-bending or lawbreaking from a company which lived by only one rule: to win. Even in the world of sport, it had cheated to win, breaking the rules of Australian rugby league to pay nearly $4 million in secret salary top-ups to players in the team which Murdoch owned, Melbourne Storm. (It worked: the team won four Premiership titles.)

  The picture which emerged was of a rogue corporation which thrived precisely because of its ruthlessness – the more money it made, the more power it accrued, the more money it could make. And if it was running on the fuel of amorality, that really didn’t matter. All that counted was the bottom line.

  While Murdoch escaped allegations that he had covered up crime at News
International, he was damned for his oversight of his own business. Lord Justice Leveson concluded that there had been ‘a serious failure of governance within the News of the World, News International and News Corporation’.

  The media select committee went further. Rupert Murdoch, they said, had ‘turned a blind eye and exhibited wilful blindness to what was going on in his companies and publications. This culture, we consider, permeated from the top throughout the organisations and speaks volumes about the lack of effective corporate governance at News Corporation and News International. We conclude, therefore, that Rupert Murdoch is not a fit person to exercise stewardship of a major international company.’

  Murdoch’s reputation was deeply damaged. Symbolically, the Church of England in August 2012 made good on its threat to wash its hands of News Corp, disposing of all its stock in the company. Murdoch’s summer party in London, which had become an annual pilgrimage for the UK’s power elite, was cancelled. A group of institutional shareholders, led by Amalgamated Bank, sued the company over its handling of the hacking and its purchase of Elisabeth Murdoch’s TV company, Shine, and in April 2013 forced News Corp to accept more independent directors, a whistle-blower’s hotline, scrutiny of its political activity and possibly an end to Rupert Murdoch being both chairman and chief executive. They also won damages of $139 million.

  There was more financial pain from the scandal in London. In the year following the Dowler story, News Corp paid $224 million in damages, compensation and fees for lawyers and other consultants. There was damage too to Murdoch’s family and to his dreams of handing the chairmanship to one of his children. Vanity Fair reported that three months after the scandal exploded, Murdoch and his children had met, on 8 September 2011, in their yachts off the coast of Ibiza. The family remained divided. Rupert Murdoch and James were barely on speaking terms, according to one of their senior executives. And the cold gap between Elisabeth and James became publicly visible a year later when she gave the MacTaggart lecture in Edinburgh, glancing back to her brother’s bold claim in the same lecture three years earlier, that the only guarantor of independence is profit, by complaining of the absence of moral language in the worlds of government and business. ‘Profit without purpose is a recipe for disaster,’ she said.

  Elisabeth said she would not serve on the board of News Corp nor seek to succeed her father. James’s older brother, Lachlan, had already fled the snake pit in New York. James himself remained, discredited, unfavoured, powerless.

  * * *

  Exposure is one thing, victory another. Even as the truth emerged about the secret life of the power elite, there were signs that they were not yet ready to change their ways.

  All those involved in uncovering the hacking scandal had lived with the fear that the Murdoch papers might turn on them. In the months after the Dowler story, hard evidence emerged that they had indeed tried to punish some of them, using their favourite weapon: prying into their sex lives.

  Tom Watson had a history of animosity with the Sun, going back to 2006 when he had pushed for Gordon Brown to replace Tony Blair as prime minister. Watson told Leveson that during the Labour Party conference in Manchester later that year, he had been approached by the Sun’s political editor, George Pascoe-Watson, who had told him that ‘Rebekah will never forgive you for what you did to her Tony’ and that ‘Rupert Murdoch never forgets’. Three years later, under Brooks’s editorship, the Sun ran a series of stories calling him ‘Two Dinners Tom’ and a mad dog, falsely accusing him of being part of a plot to publish smear stories about Conservative MPs. Watson sued for libel and won substantial damages.

  Now it was revealed that in the autumn of 2009, as Watson and colleagues on the media select committee dug into crime at the News of the World, both the Sun and the News of the World had targeted him again. Watson says he was warned by several people that Brooks was complaining about him. One source at the Sun says that she called in reporters to ask if they had ‘any dirt’ on him. They had none, but the News of the World picked up on a rumour that he was having an affair. This appears to have come from the paper’s notorious undercover specialist, Mazher Mahmood, who emailed the news desk with the heading ‘Labour sex scandal’, claiming that ‘Tom Watson as we speak is shagging’ an Asian woman who belonged to the Labour Party. The paper then tasked their surveillance expert, Derek Webb, to shadow Watson for five days at the Labour Party conference in September 2009 in search of confirmation. They found none. The story was untrue. Colin Myler had to content himself with walking through the conference and describing the troublesome MP as ‘a fat bastard’ within his hearing.

  It was also disclosed that the News of the World had used Derek Webb to run at least two surveillance operations on solicitors working for the victims of hacking. The first, in March 2010, was aimed at Mark Lewis as he gathered new clients to sue News International in the wake of their successfully stopping Max Clifford’s case. The News of the World turned to Webb, who located Lewis’s former wife and daughter and secretly videoed them as they visited local shops. It is not clear why they did this. The second surveillance, in January 2011, targeted Charlotte Harris as her case with Sky Andrew threatened to destroy News International’s remaining defences. Again, Webb was commissioned to follow her, apparently searching for evidence that she was having an affair with a solicitor in Manchester. She had never met the solicitor in question. Questioned by the media select committee, Tom Crone admitted that he had seen information which had been gathered about Lewis and Harris. ‘It involves their private lives,’ he said.

  These efforts were fruitless, but News International successfully wreaked havoc in the life of the only front-bench politician who spoke out about the hacking scandal before the Dowler story: Chris Huhne, who was the Lib Dem home affairs spokesman when the Guardian published the Gordon Taylor story. Huhne consistently badgered the company to come clean. In June 2010, when he had become Secretary of State for energy in the new coalition government, the News of the World exposed the fact that he was having an affair. He left his wife, Vicky Pryce, who then took revenge on him by disclosing to the Sunday Times that in 2003, he had persuaded her to accept penalty points on her licence for a speeding ticket which he had incurred. The Sunday Times controversially handed police their email exchanges with Pryce, exposing her as their source and compounding the damage to Huhne. It is not clear whether the company’s hostility to Huhne contributed to this decision. In March 2013, both Huhne and Pryce were jailed for eight months for perverting the course of justice. Huhne’s political career was destroyed.

  Separately Gordon Brown, who had denounced News International after the Dowler story, then found himself the object of a sequence of hostile stories in The Times, Sunday Times and Sun. The stories were false, and the three Murdoch titles were forced to print a total of eight apologies to him in one six-month period. James Harding, who had reportedly infuriated Rupert Murdoch by publishing a leader comment which denounced the hacking of Milly Dowler, was suddenly ousted as editor of The Times. David Cameron, who had been News International’s darling, was vilified by the Sun after he called for Rebekah Brooks’s resignation and set up the Leveson Inquiry.

  In the months after the Dowler story, Amelia Hill was warned that the Sun were trying to trace her former partners to do a story about her sex life; and I was warned that the Sun had put a ‘hit squad’ on me who were contacting former students from my masterclass in reporting technique, in search of evidence that I had advised them to use illegal techniques or attempted to seduce them. As it happened, I had done neither.

  The Sun declared war on the Guardian. In November 2011 the Guardian columnist Marina Hyde claimed that the Sun had sent a reporter to doorstep one of Leveson’s counsel, Carine Patry Hoskins, and suggested that this was like ‘defecating on his lordship’s desk while doing a thumbs-up’. Hyde’s claim was incorrect. The Guardian published a correction, but the Sun’s managing editor, Richard Caseby, followed up by sending Alan Rusbridger a toilet roll wi
th the message: ‘I hear Marina Hyde’s turd landed on your desk. Well, you can use this to wipe her arse.’

  Early the following month, December 2011, I had a private conversation with a senior police officer who had some important news: Operation Weeting had found new evidence about the hacking of Milly Dowler, and it now looked as though the News of the World might not have deleted the messages which had given her parents false hope she was still alive. That was not good news. The Dowler story had set off the chain reaction which finally brought the scandal to a head. It had gone all around the world. And if an important piece of the story was now falling apart, it was clear that Caseby, the Murdoch titles and other enemies we had made in Fleet Street would move in for a monstering.

  I spent the following week trying to work out what had happened. There was some good news. Police had confirmed everything else in our story: that the News of the World had hacked the missing girl’s phone; that Surrey police had known about it at the time and taken no action (because, as one officer later put it, the press were ‘untouchable and all-powerful’); and that it was very likely that the paper had also hacked the phones of detectives who were trying to find her. It was also confirmed that the paper had hired Steve Whittamore to blag confidential information about her family. Finally, they confirmed that Mrs Dowler had been given false hope when messages were suddenly deleted from Milly’s phone. But how had those messages come to be deleted?

  Digging deep into Surrey police’s dust-covered archive, I learned, Weeting detectives had found new evidence which suggested that the deletions had happened before Glenn Mulcaire was instructed to hack Milly’s phone and that it was far more likely that the voicemail had been wiped by a crude automatic system on Milly’s voicemail which removed any messages which were more than seventy-two hours old, even if she had not listened to them.