LONDON Feb 2 The centre of Rupert
Murdoch's British newspaper clean-up operation is an unimposing
set of offices in a corner of the company's campus in Wapping,
It is here that the scarred reputation and the future of
Murdoch's UK newspaper titles may be rescued or broken for good.
The chairman and chief executive of News Corp says he has
entrusted the operation, known as the Management and Standards
Committee (MSC), to investigate the details of phone-hacking and
alleged police bribery by his London tabloids and prevent such
events from happening again.
On a typical day, say people who are familiar with the
operations of the MSC, up to 100 personnel from several of
London's top law firms as well as forensic advisers and computer
experts file into the MSC's office through special security to
search through more than 300 million emails, expense claims,
phone records and other documents that amount to several
terabytes of data. Their work is expected to take at least
another 18 months. Reams of paperwork that cannot fit in the
offices are stored in warehouses at another, secret location. In
an unusual arrangement, 15 or 20 police are embedded with the
The committee was in the spotlight last weekend, when
British police arrested three senior current staffers and one
former journalist from Murdoch's Sun tabloid in a bribery
investigation. The company's chief executive said he understood
the arrests came as a result of documents handed over by the
MSC. In December, the committee surfaced an email trail that
indicated James Murdoch, Rupert's son and heir apparent, was
alerted to the scale of the alleged hacking years ago
-potentially contradicting testimony James gave to the British
Parliament last summer.
Fact-finding committees are a common strategy employed by
multinationals engulfed in scandal. But so far, the committee
has brought more strife than relief for New York-based News Corp
and its British newspaper division, News International.
The MSC's work is earning respect from many who have clashed
with the company over phone hacking. But it also faces criticism
on multiple fronts, including News International journalists who
fear it is tossing loyal staff under the bus, parliamentarians
who suspect it is insufficiently independent of Murdoch, and
lawyers who allege the committee's main interest is in repairing
the company's reputation, not outing the truth.
Mark Lewis, a lawyer for victims of phone hacking by
Murdoch's now-defunct News of the World, said News Corp's push
to settle the dozens of civil cases against News International -
the committee is the primary point of contact for lawyers
representing hacking victims - conflicts with its remit of
transparency. His clients include the family of murdered
schoolgirl Milly Dowler. The revelation that her cell phone was
hacked on the orders of a News of the World reporter turned the
paper's illegal voicemail interception into an international
"If they really want the truth to come out, then they should
be willing to let things go to a trial," Lewis said. "They
should stop trying to settle cases and let it go to a trial."
News International says it "is committed to reaching fair
and where possible swift settlements with victims of illegal
voicemail interception." It has also launched an online scheme
to enable people to settle their cases without having to go to
court. Reuters is a competitor of Dow Jones Newswires, a unit of
The MSC was set up last July, in the heat of the
phone-hacking scandal. News International's long-held defence
that illegal voicemail interceptions were the work of a single,
"rogue" reporter had crumbled under the weight of evidence of an
industrialized hacking operation. Advertisers pulled out of the
News of the World. News International closed the 168-year-old
tabloid, apologised and agreed to compensate some victims.
The committee consisted of a group of three executives who
were relatively new to the company, including Will Lewis, an
award-winning former editor of Britain's Daily Telegraph who
joined News International as general manager in 2010 and was
seen as a rising star at the company before being seconded to
the MSC. The committee is chaired by Anthony Grabiner, a leading
London commercial barrister.
News Corp said the group would root out the causes of the
wrongdoing, cooperate with criminal and civil investigations,
and establish new standards of behavior that would ensure no
such scandal could recur at Murdoch's remaining British titles:
the Sun tabloid, the Times of London broadsheet and its sister,
the Sunday Times.
News Corp says the committee is independent of News
International. But it isn't independent of the parent company:
via Joel Klein it reports to News Corp board member Viet Dinh,
who was an associate counsel to the U.S. senate banking
committee for the Whitewater investigation of President Bill
Clinton. Dinh, who also served as a U.S. assistant attorney
general in the George W. Bush administration, has been on the
board for eight years, and is godfather to a child of Lachlan
Murdoch, Rupert's eldest son.
Klein was initially hired by Rupert Murdoch to head a new
education division at News Corp.
In the United States, people in News Corp's headquarters are
aware of the growing tensions in London but feel they have no
alternative but to stick to their course, according to a company
The committee is divided into teams of lawyers and police
who work in soundproofed offices, according to the people who
are familiar with the work. The volume of data is so large that
there is no question of reading each document. Instead, searches
are carried out for key terms, meaning that no one knows what
secrets may be buried in the documents - many of them deleted or
corrupted emails that have been recently recovered - until the
right term is hit upon.
MSC workers try to keep a distance from News International's
journalists. At first they were in the same building, but kept
bumping into reporters and editors in the lobby or lifts. Now
they are in a separate building where they share a floor with
BrandAlley, an online clothing retailer in which News
International has a stake.
But different buildings do not guarantee peace. News
International journalists say they are furious at the committee.
When media reports began circulating that an insider had
described the MSC's work as "draining the swamp," tempers
"What do they mean, 'drain the swamp'?" asked a News
International journalist. "Are they saying we're a bunch of
filthy insects?" News Corp, the journalist continued, "is seen
as the enemy now. They have failed to exercise due diligence...
and their response now is to dump on their own employees. It's a
Tom Mockridge, who was brought in from another division to
take over News International after the scandal broke, said in an
email to staff after the Sun arrests: "News International is
confronting past mistakes and is making fundamental changes
about how we operate which are essential for our business ...
Despite this very difficult news, we are determined that News
International will emerge a stronger and more trusted
"SLOW AND PARTIAL"
Some outsiders see the MSC as an honest but potentially
futile attempt at righting wrongs.
"My experience in the civil cases is that they appear to be
trying to get to the bottom of things - they have disclosed
documents which are unhelpful to the company, for example," said
one lawyer acting for phone-hacking victims. "But there's still
been a huge problem in getting disclosure which has been very
slow and partial, and the claimants have had to fight every step
of the way."
Tom Watson, a member of the British parliamentary committee
investigating the hacking, said the new board "is a huge
improvement on what the company had in the past." But the
lawmaker, who once likened News Corp to the Mafia, added: "The
governance arrangements of the company and the culture that
exists within in it are part of the leadership of James and
Rupert Murdoch. So what you end up with is a company in conflict
with itself. Unless the Murdochs provide a convincing case that
they are as keen for the truth to come out, I don't think
they'll have credibility."
Watson said on his Twitter feed on Thursday that the police
had started to investigate the Times newspaper over email
hacking. News International declined to comment and the police
said they would not give a running commentary over their
investigation, although they did confirm that they had been in
contact with the parliamentarian.
Lawyer Mark Lewis, said the company should have had higher
standards in the first place.
"They're doing this bizarre thing of saying that they're
cooperating with the police. Well hang on a minute, you're meant
to cooperate with the police. That's what we do."
James Murdoch is one executive who could have bridged the
culture gap between News International and its parent. The
39-year-old son of Rupert, James arrived at News International
in 2007, when the phone-hacking activity at the company appeared
to have died down. But six months after his arrival, he approved
a 700,000 pound ($1.1 million) payoff to a hacking victim,
soccer union boss Gordon Taylor, after it emerged that Taylor
had evidence that phone hacking was rife in the organisation.
Company insiders describe James as being supportive of the MSC's
work but not the driving force behind it or the executive who
deals with the committee.
James has consistently said that he did not know all the
facts when he approved the payment, despite the revelation by
the MSC in December of an email trail that would have alerted
him to the scale of the problem, had he read it. His defence was
that he likely read the email on his BlackBerry, as he received
it on a Saturday, and did not scroll down to read all of the
The MSC did not receive any praise for turning up the email
trail, with critics, including the parliamentary committee,
questioning why it took so long to find. This week, the
committee published a response from the MSC's law firm,
Linklaters, saying the email had originally been found in hard
copy form by a junior employee, who had not appreciated its
The MSC recognizes it has an uphill struggle. With a
judge-led inquiry about to start questioning journalists about
payments to police, a civil trial involving multiple hacking
victims due to start next month if settlements are not reached,
and a potential flood of criminal trials of ex-News
International journalists later this year, its work is only just
beginning. A legal bid by victims to force the private
investigator behind the hacking to reveal who gave him his
orders is also pending. A ruling against the company in that
case could leave the MSC, even with its army of lawyers, with a
lot more to manage.