April 26 (Bloomberg) -- Rupert Murdoch told a U.K. media-ethics inquiry that he “failed” to prevent the phone-hacking scandal at News Corp.’s News of the World tabloid and blamed employees and lawyers for covering up the crime.
Senior executives at News Corp. were never told by lower-ranking officials at the company’s U.K. unit about the extent to which reporters intercepted voice mails for stories, the 81-year-old chief executive officer told the inquiry today.
“The senior executives were misinformed and shielded from anything that was going on,” Murdoch said on his second and final day of testimony in London. “Maybe even the editor, but certainly below that, someone took charge of a cover-up which we were victim to.”
U.K. Prime Minister David Cameron ordered the inquiry last year after evidence emerged that voice-mail interceptions at Murdoch’s News of the World tabloid were rampant and police opened probes into bribery and computer hacking by journalists at his other U.K. titles. During testimony this week, Murdoch’s son, News Corp. Deputy Chief Operating Officer James Murdoch, also blamed underlings for failing to contain the scandal.
“I also have to say that I failed,” Rupert Murdoch said. News Corp. didn’t believe 2009 media reports that hacking went beyond a News of the World reporter and a private detective who were jailed in 2007, he said.
The company wrongly accepted conclusions from the Metropolitan Police in London and two outside law firms that the case was resolved, Murdoch said. The Met denied Murdoch’s characterization and one law firm, Harbottle & Lewis LLP, has said its work was limited to an unfair dismissal claim filed by the reporter jailed over hacking in 2007.
Murdoch said that in hindsight he should have interviewed the reporter, Clive Goodman, himself and decided what to do with the News of the World.
“I should have gone down there and thrown all the damn lawyers out of the place,” Murdoch said.
Judge Brian Leveson, who is overseeing the inquiry, told Murdoch that his responses don’t “quite answer the question of whether you really did try to understand what was going on.”
Tom Crone, the former legal manager for the U.K. unit, News International, denied he helped cover up the scandal, calling Murdoch’s claim a “shameful lie.”
“The same applies to his assertions that I misinformed senior executives about what was going on and that I forbade people from reporting” the scandal to James Murdoch and Rebekah Brooks, the unit’s ex-chief executive officer who was arrested last year in police probes of phone hacking and bribery, Crone said in a statement.
After James Murdoch testified about the scandal before a parliamentary committee in July, Crone and the tabloid’s former editor Colin Myler contradicted his claims that neither man informed him of evidence phone hacking might be widespread.
The phone-hacking scandal is a “huge blow” to Murdoch’s reputation, Mort Zuckerman, the billionaire owner of the New York Daily News, said in an interview on Bloomberg Television’s “In the Loop” with Betty Liu.
The scandal has caused less harm in the U.S., though that could change “if there are criminal charges in England,” Zuckerman said.
James Murdoch said he never read an e-mail sent by Myler on a Saturday that contained details about the scandal.
Myler didn’t return a call to his office at Zuckerman’s Daily News, where he now works. Ken Frydman of Source Communications, a spokesman for Myler, declined to comment.
News Corp. rose 9 cents to $19.36 in New York trading at 12:09 p.m. New York time. They’ve risen 2 percent since James Murdoch testified on April 24.
Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.
The phone-hacking revelations, including the fact that the News of the World hacked the phone of a murdered school girl, ended the company’s 7.8 billion-pound ($12.6 billion) bid for British Sky Broadcasting Group Plc, he said.
About 45 people have been arrested, including former News Corp. journalists, and the company closed the News of the World in July in response to public outrage. Murdoch said the decision to shutter the newspaper was made in a panic.
Glad He ‘Panicked’
“I panicked, but I’m glad I did,” Murdoch said. “I should have closed it years ago and replaced it with a Sunday Sun. The thing that stopped us was the News of the World readers.”
Earlier today, Murdoch said he never discussed the proposed BSkyB takeover with the U.K. Cabinet members tasked with approving the deal. He said he never talked about the bid with Business Secretary Vince Cable or Culture Secretary Jeremy Hunt, who took over responsibility for the government’s decision after Cable’s opposition was exposed by undercover reporters.
“I don’t remember my exact feelings then,” Murdoch said when asked about the perceived delay in approving the deal. “This was a very big move for our company, but I was a lot more concerned in 2011 about the unfolding hacking scandal.”
Murdoch also told the inquiry the company had been disrespectful to Parliament when lawmakers concluded after a 2009 probe of the scandal that executives at the News International unit had “collective amnesia” about phone hacking.
“Our response to that was far too defensive and what’s worse, disrespectful to Parliament,” Murdoch said.
Murdoch told the inquiry yesterday that he had never sought favors from any prime ministers and that News Corp. doesn’t consider business needs when deciding which politicians to support in its newspapers.
Three Days of the Murdochs
The testimony capped three days of evidence from Rupert Murdoch and his son James on how they managed the phone-hacking scandal. The Leveson inquiry is only one of several pending reviews of the scandal.
Media regulator Ofcom, which today said it asked for civil litigation documents involving News Corp., is investigating whether BSkyB is “fit and proper” to hold a broadcasting license. Lawmakers will issue their own report May 1.
Rupert and James “have to share in their responsibility for the culture of the company,” Tom Watson, an opposition Labour Party lawmaker who has been critical of News Corp., said in an interview on Bloomberg Television. “In any other major trans-global corporation it would be the chief executive that takes responsibility.”
James Murdoch’s testimony on April 24 led to the resignation of Adam Smith, an adviser to Hunt. E-mails released by the inquiry showed Smith leaked information about the government’s deliberations on the BSkyB bid to News International.
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