Murdoch Calls Mafia Comparison "Inappropriate"

Nov. 10, 2011 — -- intro:

News Corp. chief operating officer James Murdoch, testified Thursday morning in front of a parliamentary select committee in London, saying he did not mislead the panel in his previous testimony on the phone hacking scandal that has rocked the company and the family of its leader, Rupert Murdoch.

At issue is whether he had seen an e-mail that included transcripts of 35 hacked conversations, intended for use by reporters in preparing stories at the defunct tabloid, News of the World.

"I want to be very clear. No documents were shown to me or given to me at that meeting or prior to it." Asked if the had misled the committee, James Murdoch replied: "No, I did not."

Parliament member Tom Watson said it appears James Murdoch and his staff were "all bound together by secrecy." He called Murdoch "the first Mafia boss in history not to know he is running a criminal enterprise" to which Murdoch replied, "that's inappropriate."

Shareholders and politicians have called for a shake-up on the News Corp. board, which includes Rupert Murdoch and two of his sons, James Murdoch and Lachlan Murdoch. The family owns 40 percent of the company.

Last month, shareholders re-elected the 13 News Corp. board members at the annual shareholder meeting to the dismay of outspoken shareholders, including Christian Brothers Investment Service (CBIS), which manages about $4 billion for Catholic institutions.

At the meeting, James Murdoch was re-elected with 65 percent of votes received, while Lachlan Murdoch received 66 percent support for re-election. More than 84 percent of votes were in favor of re-electing Rupert Murdoch.

"I think it was a clear and unmistakable message from shareholders not a part of the Murdoch family in favor of good corporate governance and strong independent leadership," Julie Tanner, assistant director of socially responsible investing at CBIS, told ABC News.

Not counting the 317 million shares of Rupert Murdoch, who presumably voted in favor of his sons, the votes against James and Lachlan Murdoch were 67 percent and 64 percent, respectively, Tanner said.

A spokeswoman for News Corp. declined to comment on whether James Murdoch's position with the company is in danger.

Tensions have been high within the Murdoch family since the phone-hacking scandal has attracted more attention, as reported in the December issue of Vanity Fair.

Sarah Ellison, author of "War at the Wall Street Journal: Inside the Struggle to Control an American Business Empire," detailed a dramatic family history and spats over the succession of News Corp. The following are eight secrets she revealed.

quicklist: category: title: James Murdoch may have been informed in 2008 about hacking by more than one journalist.

text:

James Murdoch testified in July to members of parliament that he did not know more than one journalist was involved in phone hacking. He also signed off on a legal settlement in June 2008, "in one of James' first and most fateful decisions," Ellison wrote in Vanity Fair.

James Murdoch led News Corp.'s operations in Europe and Asia since 2007 and became chief operating officer in March.

But Tom Crone, attorney at the now defunct News of the World, and Colin Myler, a former editor, testified in front of members of parliament in September that they told James Murdoch about an e-mail transcript that implicated another journalist. Parliament has recalled James Murdoch to give further testimony.

quicklist: category: title: Murdochs saw a family therapist. text: Ellison wrote that around the time James Murdoch became chief operating officer in March, siblings Lachlan, Prudence and Elisabeth Murdoch had "discussed the move extensively" with him.

"The siblings had been in family counseling with a psychologist over the issue of succession," Ellison wrote. "They told James that if they worked together as siblings they could help him and their father have a better relationship, and that together the kids could hold Rupert to account to be a mentor to James and not undermine him, as he had done with Lachlan so many years before."

quicklist: category: title: Elisabeth Murdoch wanted James to step back.text:

The relationship between Elisabeth and James Murdoch became especially tense as the scandal exploded to the point that the relationship now "appears broken, at least for now," Ellison writes.

"Elisabeth blamed her brother for allowing the phone-hacking crisis to spiral out of control," and urged her father to take control of the situation, Ellison wrote, saying James Murdoch should take a leave.

"The suggestion infuriated James -- he had been shouldering the responsibility for something that happened before he was even in charge, he said," according to Ellison.

quicklist: category:title: Rupert Murdoch wanted to let James Murdoch go, then changed his mindtext:

Rupert Murdoch had seen loyal lieutenants like Rebekah Brooks, former News of the World editor and chief executive of News Corp.'s European company News International, resign. Les Hinton, the former Wall Street Journal publisher, also resigned. But Murdoch struggled over his son, James Murdoch.

"Rupert then spoke to James and suggested that he take a leave -- 'Maybe you should go, too,' he said. But after a sleepless night he changed his mind," Ellison wrote.

quicklist: category:title: Rupert Murdoch checked background of daughter's high school boyfriend.text:

Murdoch "struggled most" with Elisabeth, the oldest child from his second marriage. Elisabeth rebelled against Murdoch, but "it seemed difficult to escape her father," according to Ellison.

"An old high-school boyfriend of Elisabeth's told me that she once let slip that she knew some personal details about his family that he had yet to tell her," Ellison wrote. "When asked how she could possibly have known that information, she confessed with embarrassment, 'My father checked you out.'"

quicklist: category:title: Elisabeth Murdoch declined News Corp. board seat to stay away from scandal.text:

After News Corp. agreed to acquire Elisabeth's production company, Shine, in February, Elisabeth agreed to take a seat on the company's board. But as the phone-hacking scandal escalated, she declined the seat.

"She felt it would be better for the company to have fewer Murdochs," Ellison wrote. "There was another reason: Her lawyers and her husband advised her that it was best to not take the seat, in order to stay as far away from the scandal as possible."

quicklist: category: title: Oldest son, Lachlan Murdoch, was quiet supporter through paparazzi attacktext:

Though Lachlan Murdoch has tried to live his own life in Australia after leaving News Corp. in 2005, as events escalated this year, "He stuck by his father and was a calm presence compared with Elisabeth and James," Ellison wrote.

"I think Lachlan wants to be above it all. He's looking at this as purely a family issue," a News Corp. executive told Ellison.

"This has nothing to do with him professionally," she wrote.

quicklist: category: title: "Wendi Deng is an undeniable X factor in any discussion about the future."text:

As it seems neither Lachlan or Elisabeth Murdoch are likely to take the reigns from Rupert Murdoch, and James Murdoch's future may be tenuous, the question of succession is still an issue. Ellison wrote that Wendi Deng, Murdoch's third wife, may even be a consideration.

At the parliamentary committee hearing in July, Deng famously thwarted a shaving cream pie attack on her husband.

"Even now Wendi is a formidable presence. She holds no official role in the company and wields no votes in the family trust," Ellison wrote. "But she is smart and ambitious, and has Rupert's ear -- and his back."