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James Murdoch Again Blames Subordinates for Hacking Scandal

James Murdoch, the News Corp. executive whose leadership has been called into question over phone hacking at the company’s U.K. unit, continued to blame his subordinates in testimony to a media-ethics inquiry.

Murdoch said, under repeated questioning about his knowledge of the scandal, that News of the World Editor Colin Myler failed to tell him in 2008 that voice-mail interception was common at the paper. Myler and the newspaper’s lawyer Tom Crone have said they discussed the evidence with Murdoch.

“Their assurances to me were consistent, as I’ve said -- the newspaper had been investigated thoroughly, outside people had come in to investigate, no evidence was found, and the police found nothing,” Murdoch, News Corp. (NWSA)’s deputy chief operating officer, said today in London. “That was entirely consistent with Crone and Myler all the way through.”

Murdoch, 39, and his father, Chief Executive Officer Rupert Murdoch, 81, are testifying over three days this week at the panel set up by Prime Minister David Cameron to help quell public outrage over phone hacking. The scandal, which widened to include police probes of computer hacking and bribery, has led to 45 arrests and the closing of the best-selling News of the World tabloid, where the hacking started.

James Murdoch, who oversaw News Corp.’s U.K. operations, also described his relationships with the country’s leaders, including Cameron, as the inquiry probes the ties between the press and politicians. He described a Dec. 23, 2010, Christmas dinner with the prime minister and others in which he discussed News Corp.’s then-proposed 7.8 billion-pound ($12.6 billion) bid for the 61 percent of British Sky Broadcasting Group (BSY) Plc it didn’t already own.

‘Tiny Side Conversation’

“I imagine I expressed a hope that things would be dealt with in a way that was appropriate and judicial,” Murdoch said of the government’s review of the proposed takeover. “It was a tiny side conversation at a dinner where other people were there.”

Murdoch also said there was nothing improper about e-mails showing Culture Secretary Jeremy Hunt, who had to approve the BSkyB deal, told the company in advance that he supported the bid. Inquiry lawyer Robert Jay described the evidence as indicating that it was “almost game over for the opposition.”

The sharing of Hunt’s opinion and other information about the approval process was private and may have been inappropriate to share given Hunt’s quasi-judicial role at the time, Jay said.

‘Entirely Reasonable’

“It was entirely reasonable to try to communicate with the relevant policymakers about the merits of what we were proposing,” Murdoch said.

Testimony earlier focused on James Murdoch’s role in approving a settlement for Gordon Taylor, the chief executive officer of the Professional Footballers’ Association. Jay asked Murdoch if the 700,000 pound ($1.1 million)-settlement, the first in a phone-hacking case, was reached because of the risk it would hurt News of the World.

“This wasn’t a rehash of old news, but this was something new,” Jay asked Murdoch.

Murdoch has said he didn’t read a 2008 e-mail from Myler about phone hacking potentially being much more widespread than the reporter who was jailed a year earlier. He said he didn’t read it because it was sent on a Saturday, he had jet lag and was preoccupied with his two children swimming in a pool at home. “I’m telling you that was not what was communicated to me in that meeting.”

Goodman, Mulcaire

Jay repeatedly asked how James Murdoch seemed to ignore key evidence on whether phone hacking extended beyond reporter Clive Goodman and private investigator Glenn Mulcaire, both of whom had gone to jail over the crime.

“Either you were told about the evidence which linked others at the News of the World about Mulcaire and this was in fact a cover-up, or you weren’t told,” Jay asked. “You didn’t read your e-mails properly and there was a failure of governance within the company. Do you accept those are the only two possibilities?”

Murdoch responded that he didn’t agree.

‘Same Assurances’

“I was given the same assurances that they gave outside,” he told Jay.

Myler didn’t return a message left at the New York Daily News, where he is now the editor.

Murdoch told the inquiry that he only read the tabloid from “time to time” and that the publisher didn’t have enough transparency when he took over in 2007, the same year the tabloid’s royal reporter and private investigator were jailed for phone hacking. He said new controls were put in place and the scandal was believed to be contained.

“You didn’t feel it was necessary to get into any more detail when your senior management team, at least according to a judge, had got it spectacularly wrong?” Judge Brian Leveson, who is overseeing the inquiry, asked Murdoch today.

The U.K. Parliament questioned the Murdochs last year about how much they knew about reporters’ illegal activities. Since the July appearance before lawmakers, additional evidence has emerged in litigation by phone-hacking victims, police investigations and the company’s own internal probe.

‘Friendly’ With Osborne

The controversy has been a blow for the younger Murdoch, as the scandal prompted News Corp. to drop the bid for the rest of the BSkyB shares it didn’t own. It also led to his resignation this month as chairman of BSkyB, the pay-TV operator he built into one of News Corp.’s most profitable businesses.

He said that before the BSkyB bid was dropped, he also complained to Chancellor of the Exchequer George Osborne, with whom he is “friendly,” about the government’s review of the deal taking too long and its referral to media regulator Ofcom.

“I don’t think there’s any evidence of an advantage,” Murdoch said of the company’s relationships with politicians. Approval of the BSkyB deal was sought “on the merits of the business.” News Corp. ultimately dropped the bid as a result of the phone-hacking scandal.

James Murdoch’s resignation as BSkyB chairman came after he had moved a step closer to succeeding his father with his promotion to News Corp.’s deputy chief operating officer in New York in March 2011. The role at BSkyB had been crucial for Murdoch after he departed from other boards in the wake of the hacking scandal to focus on overseeing News Corp.’s international TV business.

Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.

To contact the reporters on this story: Amy Thomson in London at athomson6@bloomberg.net; Erik Larson in London at elarson4@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net; Anthony Aarons at aaarons@bloomberg.net

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