Phone-Hacking Shows Jail Needed for Data Theft, U.K. Privacy Chief Says

The phone-hacking scandal at News Corp. (NWS)’s News of the World tabloid should persuade Britain’s government to overcome challenges from the newspaper industry and implement prison sentences for using stolen personal data, the head of Britain’s privacy regulator said.

A two-year prison term was suggested in 2006 by the Information Commissioner’s Office after it probed the sale of stolen personal data to hundreds of journalists, said Christopher Graham, who leads the agency. Lawmakers never implemented the proposal after newspapers said it would stifle free speech and lead to wrongful jail terms, he said.

“There was such a hue and cry from newspapers,” Graham, who has pushed for a custodial sentence since taking office in 2009, said in an interview in London. “They said it would have a chilling effect on investigative journalism.”

The idea of sending journalists to jail for using stolen data may find more support following the phone-hacking scandal at Rupert Murdoch’s now-shuttered tabloid, Graham said. The hacking triggered a new police probe in January, as well as the arrests of former editors and the resignation of senior Metropolitan Police officials.

“It didn’t need to get to this,” Graham said of the current scandal, which he attributes to a general lack of respect for personal data. “The power of the media over politics has been absolutely huge.”

Dowler, Payne

The ICO, Britain’s industry-financed data-privacy regulator, investigates corporate data breaches, audits companies’ data privacy practices and investigates violations of the Data Protection Act. It’s currently probing Sony Corp. over the hacking of its PlayStation network and auditing Google Inc.’s privacy policy related to its Street View product.

Revelations that the News Corp. newspaper deleted messages on the mobile phone of murdered schoolgirl Milly Dowler led to the New York-based company shuttering the Sunday tabloid and abandoning its 7.8 billion-pound ($12.7 billion) bid for all of British Sky Broadcasting Group Plc. (BSY) Sara Payne, the mother of another murdered girl, said she may also have been targeted by an investigator at News of the World.

Police and at least two parliamentary committees are investigating whether News of the World reporters bribed police and the extent to which politicians, celebrities, and murder and terror victims had their voice mail hacked. The environment is ripe for implementing the jail threat that was derailed by newspapers, Graham said.

Support for Sentences

“There probably will be support” for jail sentences, said Niri Shan, head of media law at Taylor Wessing LLP in London. “The problem now is that everyone’s emotions are running high and everyone needs to think carefully about the implications on free speech.”

While two people have gone to prison for phone-hacking -- former News of the World reporter Clive Goodman and private investigator Glenn Mulcaire -- most violations of the Data Protection Act are by employees who sell addresses, phone numbers and other personal information held by government agencies, telecommunications companies, financial institutions and health trusts, Graham said. Jail sentences should be introduced for those crimes as well, the ICO chief said.

Victimless Crime

“Unless people realize they can go to prison, it seems like a victimless crime,” Graham said. Journalists would have several defenses to avoid jail, including a “public interest” argument that the private details were needed for legitimate journalistic purposes, he said.

While most violations aren’t done by journalists, the newspapers were the ones who objected the loudest, Graham said. The stolen data is usually sought by debt-collection companies, lawyers and people who want to settle scores, he said.

Parliament avoided the decision “under newspaper pressure,” Graham said. “Now would be a good time” to try again.

The proposed jail sentences should be reconsidered by government in light of privacy abuses in the last year in the telecommunications and health industries, said Liz Fitzsimons, a lawyer at Eversheds LLP in London.

A review shouldn’t be done “simply because of the current News of the World issues, which may turn out to have been a historic practice rather than an ongoing issue, but because privacy abuses still appear to be widespread,” Fitzsimons said.

The ICO’s bid for jail terms started with its 2003 probe of a private investigator who used deception to obtain the private details of targeted individuals, a practice dubbed “blagging” by the authorities. The man had sold details to more than 300 journalists, including those at News of the World, according to the report.

Operation Motorman

The probe, called Operation Motorman, also found the private investigator had used blagging to seek contact details for Dowler, the murdered schoolgirl. The ICO never saw evidence of phone hacking and recently turned over to police all documents from the old probe, Graham said.

The three-year investigation culminated in a 2006 report that it said exposed a “hidden, pernicious and extensive trade in personal information” such as financial, medical and police records and suggested the tougher penalties.

“The current penalties don’t amount to very much,” Graham said. “All I want is an effective deterrent to the routine trashing of individuals’ rights under the Data Protection Act.”

Graham’s predecessor, Richard Thomas, was critical of the newspapers’ attempt to block the jail term, saying they “object to tougher sanctions against activities which they say do not exist or are not widespread,” according to an April 2008 report to the House of Lords.

Calls to News Corp. (NWSA)’s U.K. Unit, News International, and the Newspaper Society trade group, weren’t returned. Trinity Mirror Plc spokesman Nick Fullagar declined to comment.

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To contact the reporter on this story: Erik Larson in London at elarson4@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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