The Murdoch Archipelago

by Bruce Page

  Newton’s flair for insult, apt in a pundit, served poorly in an editor. Many freemarket partisans might deplore tax revenue going into schooling for religious groups. Few but Newton would mock it as ‘saving Catholic children from the consequences of their parents’ religious convictions’. Government service being a classic Irish-Australian aspiration, Peter Viereck’s notion of anti-Catholicism as ‘the anti-semitism of the intellectuals’ resonates in Canberra with no need for translation from US usage: the harm a newspaper would suffer from similar remarks about Jewish families in New York could not be more acute.

  And chronic harm was meanwhile caused by inept foreign cover, unforgivable in a capital city. These were the Vietnam years, and for Australia a participant in the war – the issue had an urgency not unlike America’s. The intricate Tonkin Gulf crisis set a tough test when the Australian was only a few weeks old. No newspaper in 1964 penetrated the truth of that crisis. But, as George Munster noted from contemporary reading, the Australian failed even to convey the scope of what was known: ‘The lasting upshot … the Congressional resolution giving President Johnson the power to conduct hostilities without further reference to the legislature was buried on an inside page … Newton and Murdoch decided what was important … neither was conversant with Asian politics.’

  In March 1965 Newton sought much enhanced terms. Getting no eager response, he quit, telling Canberra Times readers that Murdoch’s supervision had ‘made it impossible to achieve … essential principles, aims and standards of quality’. Few thought the Australian’s faults were Rupert’s alone. But he appointed no clear successor to remedy them. In 1965 Nationwide News Pty Ltd filed accounts suggesting that the Australian was losing about A£800,000 a year (its first and last separate accounting). In 1967 it moved base to Sydney, ‘leaving the battlefield to us’ as John Pringle remarked happily. Thus far, it was a disaster by ordinary publishing standards. By extraordinary ones, though, it was about to do vital service for Black jack and his apprentice.

  In 1966 Harold Holt succeeded Menzies as Prime Minister and Liberal leader. McEwen remained Minister for Trade, and Deputy Prime Minister. Holt was insecure, and the Australian suggested that McEwen might replace him. Few analysts agreed, and Murdoch’s judgment attracted mockery – some of it from Max Newton. The ex-editor had become an economic consultant, and a publisher of newsletters in which he called McEwen’s party an economic dinosaur, and Rupert a ‘whippersnapper from Adelaide’.

  The Country Party indeed was a fading power. But Black Jack still inspired awe in Canberra, because rumour said he had a special relationship with the Australian Security Intelligence Organisation (ASIO), roughly equivalent to the FBI or MI5. We now know rumour was accurate, and that Rupert Murdoch shared McEwen’s advantage. ASIO of course was designed for counter-espionage (and won some battles with the KGB). But by the end of the 1960s it was suspected of burgling and bugging where no such enemies existed.

  Above every rival Black Jack hated the federal Treasurer, ‘Billy’ McMahon. It was bad enough that McMahon was a dandified little lawyer with a party-going wife and affected, allegedly bisexual tastes. Worse, he was liberal economically: an enemy of protection. And worst, he appealed to those Liberals who saw the ALP reuniting and wanted to build a seaworthy Ark before the deluge.

  Newton was a keen McMahon supporter – and the Trade Minister planned to strike at the Treasurer through this ally. Learning that Newton had a small consultancy with the Japan Export Trade Organisation (JETRO), McEwen’s office called in the Director-General of ASIO, Brigadier Sir Charles Spry, codename ‘Scorpion’. Spry’s archives, opened under the thirty-year rule, provide a striking record of politico-editorial conspiracy, starting with a memo of 21 August 1967 marked ‘Top Secret’.

  JETRO:

  On August 18, 1967, the Director-General discussed a plan of action against the abovementioned organisation. The Secretary, Department of Trade … had drawn the attention of the DG to the activities in Australia of the Japanese Government-sponsored JETRO and expressed the view that [it was] involving itself in domestic issues which indicated the possibility of subversion … inquiries should be made into the financial, and taxation, affairs of JETRO, Maxwell Newton and such other individuals as might emerge as being of interest …

  Nothing ‘indicated’ subversion: Newton was simply briefing JETRO on trade policy. The true target, as events soon proved, was McMahon, and the project was the direct insertion of a secret state agency into the political process. The Scorpion’s title for his file was quite frank: ‘Spoiling Operations. NEWTON, Maxwell’. The extant documents are less frank about some of his excavations:

  These [unidentified] papers have been seen by the DG. [Unidentified] suggests we hold them and I agree. Suggest they be made into a file. Also B1 and B2 should be told we have a file as they certainly will have one. B1 could well be dealing with something associated with JETRO not knowing we hold other papers … B2 knows of this.

  Maybe the quarry knew something of it too. People who dealt with McMahon in 1967-8 thought he had become oddly paranoid about confidential telephone discussions.

  On 17 December 1967 Prime Minister Holt vanished into heavy surf off a beach near Melbourne. The theories applied to this accident – from suicidal political despair to accounts of him as a Chinese agent fleeing by submarine – are only relevant as symptoms of the fever it generated in an already racked political community.

  In Canberra on 19 December McEwen took the oath as Acting Prime Minister, and left for Melbourne, where Spry was ordered to meet him the same evening. Black Jack, now legally the Scorpion’s chief, wanted to know what he had on Newton and McMahon. Holt’s Liberal replacement, about to be elected, would replace McEwen. The contenders were John Gorton, a guileless landowner McEwen expected to control – and McMahon. McEwen had made plain already that he would not accept McMahon. But his reasons, he said, must remain secret during a national crisis. McEwen had created appetite for disclosure which now it was imperative to feed.

  Spry had to tell McEwen that surveillance of Newton had yet to produce anything of ‘security significance’. On the world conference circuit, Newton had denounced Australian protectionism: McEwen thought the Treasury was subsidising him illegally. But no proof existed. An attempt to purloin official papers overseas was under inquiry – perhaps criminal, still unproven. Urgent messages were being sent out. Christmas, however, would reduce staff and delay confidential bags.

  In New Year 1968, with the Liberal vote set for 9 January, McEwen decided to go with what he had, but not go public himself. On the night of 5 January Murdoch went to McEwen’s suite at the Kurrajong Hotel in Canberra, and Black Jack gave him a package of material. Later, according to the Scorpion’s notes, Murdoch called Newton and said: ‘This is the whippersnapper from Adelaide. I suggest you read my paper tomorrow.’

  The Australian’s main headline on 6 January was ‘WHY McEWEN VETOES McMAHON: FOREIGN AGENT IS THE MAN BETWEEN THE LEADERS’. The text said McEwen knew McMahon to be in regular contact with an ‘agent of foreign interests’. The agent was named as ‘the former managing editor of this paper, Maxwell Newton’, the ‘interests’ as Japan, represented by JETRO.

  The Australian thus asserted what McEwen had purported to conceal: that the Treasurer was a treacherous ‘cabinet colleague and coalition partner’. No sources or byline appeared – the story ran on Murdoch’s word alone. The Australian still had no clear editorial command. Its staff, however, suspected that Black Jack was the actual author. Murdoch’s headline-and-text package, though grotesquely false, may well have been believable at the moment to him. Credulity and conspiracy may go together – and ‘truth’ perhaps means ‘whatever authority asserts’.

  Corroboration was specious, but well timed. On 9 January, the day of the Liberal vote, the Australian published JETRO’s contract with Newton in copious detail. This material could not have been legally obtained, and may fairly be assumed to be the product of ASIO’s ‘tax and finan
cial’ inquiries. By no sensible professional judgment did it justify the ‘foreign agent’ claim. But it had an official appearance, and political panic, not judgment, was in the saddle. McMahon, wrote George Munster, was found guilty ‘by association’, thus ensuring Gorton’s victory.

  In Political Gladiator, his biography of McEwen, Peter Golding records him as a young minister visiting a remarkable library in the outback ghost town of Borroloola. He opened a copy of Curiosities of Literature, by Disraeli’s father Isaac, and a man standing alongside noticed the passage at which McEwen’s finger pointed: ‘A false report, if believed three days later, may be of great service to a government.’

  Though journalists knew the story was spurious, they could not then uncover its origins. But the JETRO operation followed an undercover pattern in which action, however absurd, continues in pursuit of retrospective justification. Secrecy sustains hope. Thus the Scorpion’s paperwork expanded, providing today a revealing overview.

  Finding Black jack’s successor just as obsessive about Newton, Spry feverishly tracked any sliver of feloniousness. Accounts did at last turn up of Newton scavenging stray papers after a conference, unsuccessfully: now, Gorton was advised, the Crimes Act might apply. (Predictably, the lawyers disagreed.) And Newton’s plans to start a newspaper in Western Australia were monitored for political character. An undated, unsigned note records the prospective editor asking prospective colleagues (1) their opinion of Gorton as Prime Minister and (2) whether McMahon might ‘make a good Prime Minister’: ‘Source – Rupert Murdoch, phone from Perth.’

  Most revealingly, Spry added a careful retrospective memo about the Australian’s JETRO story, after discussion with an unnamed journalist. The Scorpion seems to have suspected some personal animus on the part of Murdoch (shown in the ‘read my paper’ call). And the memo notes his belief that McEwen passed information to Murdoch (feeling it wise perhaps to record that it was not his doing: McEwen’s papers show reckless determination to label JETRO a threat to ‘national security’). In 1969 Gorton grew so frustrated as to order police raids on Newton’s home and office. Their highly public failure to find pay-dirt ended the affair – bar one vengeful footnote. In the 1970 trade talks with Japan McEwen made it a condition that JETRO dismiss Newton.

  In Canberra folklore the Australian’s January 1968 antics remained a shadowy episode – until September 2000, when Alan Ramsey of the Sydney Morning Herald, investigating recent security controversies, thought to compare the police operations against Newton. His inquiries unearthed the Scorpion’s papers, and exposed the 1969 raids as the conclusion to a clandestine programme of secretservice abuse plotted months before the Holt crisis, conducted by McEwen and aided by the Australian. There is no other known case of a Cabinet minister using ASIO to develop character-assassination material against a colleague – nor any British or US equivalent. And Murdoch’s role is hard to match.

  McEwen’s concoction could only be circulated via an uncritical conduit. For this it was essential to have a newspaperman he could entirely trust – or entirely dominate. Any competent reporter close enough to grasp what Black jack was peddling would certainly have suspected – and probably penetrated – the real, explosive story about abuse of secret power. The untruth did McMahon some intended damage. But as Alan Ramsey observes, the truth at the time would have ruined McEwen. And Murdoch’s gullibility, or professional naivety, was of a kind which cannot be separated from the ensuing benefit McEwen conferred on him.

  Gorton in office eventually wore out even McEwen’s patient powers. Before that, however, Black jack was able to summon him in aid at a critical moment in the News of the World acquisition – which in 1969 projected Murdoch on to the world stage.

  In 1968 six million British citizens bought the News of the World on Sundays. Though its slogan ‘ALL HUMAN LIFE IS THERE’ suggested a broad demotic sociology, the scholarship involved was rigidly selective. Therein lay the commercial attraction. Buying and distributing details of sexual eccentricity and violence was a business with steady, manageable costs. As the News of the World largely ignored the world, it required no versatile news-gathering systems. Christiansen might fret about creating interest in opera or economics – but not the News of the Screws. It knew what it liked, and so did every news agency and local reporter in the British Isles.

  Sir William Carr and his family, with 52 per cent of the voting shares, controlled the business. They and it were pillars of Tory Britain. Mark ChapmanWalker, a former Conservative Party official, was a director, and the editorial page radiated patriotic domesticity. As Norton’s Truth once did, it claimed to be society’s watchdog (‘the Hansard of the sleazy’ said a Fleet Street veteran more candidly). But by the later 1960s Sir William’s clan was split. His cousin Derek Jackson – a distinguished scientist and jump-jockey, beset by ex-wives – complained, not unjustly, about aimless diversification and declining core business. Nearly half the family shares were his; he wanted to sell. And Carr’s health was failing, corroded by booze.

  On to this scene in October 1968 burst Robert Maxwell, the most bumptious of modern swindlers, with a takeover bid. Sir William and his allies did not object to Maxwell as a swindler: remarkably, the City mavens had not divined the fact. But they supposed him efficient, socialist and foreign-born (that is, Jewish). Therefore the paper’s editor, Stafford Somerfield, declared him unfit for a concern ‘as British as roast beef and Yorkshire pudding’. Sir William, though, was still less fit to defend it, and no white knights volunteered. Anti-monopoly rules, if mild, encumbered the newspaper groups; Maxwell, on the other hand, owned no papers, and was a Labour MP, which the Labour government found congenial.

  St Rupert and the Dragon (with the Screws as the maiden) was a script by Lord Catto of Cairncatto – scion of a Governor of the Bank of England, director of Morgan Grenfell, merchant bankers to the Queen, and London adviser to News. Financial elites in Britain and Australia interpenetrate: Catto had banking interests in Australia, used the Melbourne Club and knew Rupert well. Murdoch flew discreetly to London and on 21 October dined with Sir William’s son William and his cousin Clive, who were charmed. Over breakfast, Sir William bridled at Rupert’s refusal to unpack his armour for anything less than chief-executive status. But promises of executive slots for several Carrs calmed him.

  Maxwell’s takeover currency was equity in Pergamon Press, which he had expanded – inflated, rather – from a base in scientific periodicals. Four Pergamon shares would buy three shares of NOTWO (News of the World Organisation), making an offer worth £27 million, which News Ltd could not match. In Catto’s ingenious counter NOTWO, which had 9.6 million voting shares, would issue another 5.1 million to News Ltd in exchange for Australian assets owned by News and guaranteed to add £2 million annual profit. News would have 40 per cent of the rebuilt NOTWO, which would be decisive when added to the votes of Sir William’s loyalists.

  This quasi-merger was unveiled at a press conference on 28 October. It would need ratification at an extraordinary general meeting, set for the New Year. Murdoch returned to Australia to collect the assets, and skirmishing became ferocious – the Sydney Daily Mirror’s investigation of Pergamon’s encyclopaedia-selling drawing one of Maxwell’s multitudinous writs.

  The meeting on 3 January was indeed extraordinary, as a spectacle. Maxwell belched copious fire before releasing his prey. In truth, the outcome had been decided in advance by swift outlay of ready cash. The Financial Times reported that between Hambros (bankers to NOTWO), various Carr loyalists and Rupert’s News Ltd, nearly all the uncommitted shares were beyond Pergamon’s control well beforehand.

  Operations by News in the London stock market required exchange-control approval in Canberra. Though such regulation was intrinsic to his protectionism, Black jack could understand a special need when he saw one. Unfortunately, the ‘Japanese agent’ Billy McMahon was the Treasurer. McMahon’s philosophy did not resist capital movements. But involved here were the resources of a business buil
t largely on public licences granted for the development of Australian television. There were many valid reasons for McMahon to review News Ltd’s uses of foreign currency – personal enjoyment apart – and publication even of an intention to do so would have been lethal.

  McEwen decided to deploy Prime Minister Gorton’s supreme power but delicately, for overruling McMahon in the course of regular business would be counterproductive. Research by Bill Carew, McEwen’s surefooted press secretary, located a weekend in which McMahon would be absent from Canberra.

  Then with careful timing – as Carew told Peter Golding – Black jack called Gorton’s official residence from his Kurrajong Hotel command post. ‘John,’ he said, ‘we have a bit of a problem. Young Rupert Murdoch needs some foreign exchange out of the country and we can’t track Billy down. Can you do it?’ Gorton hesitated. Though unsubtle, he must have sensed oddity. But McEwen insisted it was urgent, and the paperwork complete: ‘All we need is your signature.’ Gorton replied: ‘Righto, Jack … I’ll come over to the Kurra. I am out of scotch. Have you got a bottle?’ Black jack, that master of detail, never forgot such things. ‘So Gorton arrived. The papers were signed. Rupert and I were out in the garden. Gorton went off with his scotch. Rupert went off to buy his newspaper.’

  Murdoch’s London allies were not less devoted. Perhaps the City once showed gentlemanly restraint, but in the late 1960s, patrician financiers such as Morgan Grenfell certainly didn’t. Like Hambros, the Carr advisers, they treated the City Takeover Panel – a toothless, voluntary body with contempt. The Panel wanted to see bids decided by investors using equal quantities of rational information. There should be no tactics designed simply to forestall offers attaching more value to shares: NOTWO’s plastic surgery and the pre-emptive share-buying were clearly of that type. The Panel, Maxwell expostulated, was presiding over a ‘jungle’. That might have been so, a Morgan director later agreed, and Murdoch believed he could ‘smell’ the City’s resolve to defeat Pergamon.