Blog by John Miller

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Nowhere to hide

Anyone who doubts that newspaper proprietors are different from you and me only has to look at Rupert Murdoch. I rest my case.

The evidence is indisputable that his News of the World operated for years with scant regard for either the law, recognized standards of journalism, or society's innocent victims. The paper's motto could have been "We Afflict the Uncomfortable." Yet the 80-year-old Australian tycoon denies knowing about it and he refuses to take personal responsibility.

He had the effrontery last week to tell British MPs, who hauled him and his son James before a Parliamentary committee, that "The News of the World is less than 1 percent of our company." He said he may have "lost sight" of the paper because it was "so small in the general frame of the company." That's true enough, but his loose hand on the tiller is unlikely to reassure newspaper readers, shareholders, police detectives, politicians or anyone else. It's time for the old man to go.

The losses at Murdoch's News Corporation go far beyond the shuttering of the paper, which used to boast to its 7 million readers that it was "the world's greatest newspaper." They go beyond the billions that the company has lost on the world's stock markets during the last two weeks. And they extend beyond the damage his shoddy journalism has done to bereaved victims of terrorism and kidnappers, the stability of Prime Minister David Cameron's British government and the reputation of Scotland Yard.

The longer Murdoch tries to tough this one out, the more his obstinacy could destroy one of the world's biggest corporations and arguably the one with the most impact on the information we consume every day. News Corp. owns 20th Century Fox, the Fox television network, Harper Collins book publishers, the Dow Jones newswire, and great newspapers like the Wall Street Journal, the Times of London and the Sunday Times, Barron's business weekly and the Sydney Morning Herald (in fact, he owns most of the major daily newspapers in Australia). His empire is estimated to be worth $7.6 billion, or at least it was before the recent meltdown.

Murdoch has been CEO since 1979 and also serves as chairman. But everyone knows that he cut his teeth on trashy tabloid newspapers, earning the nickname Dirty Digger. His company has been described as "a nasty, vulgar, cynical, dirty-laundry operation that has reduced standards of public taste and decency on at least four continents for decades." That's the opinion of Conrad Black, perhaps no pillar of moral rectitude himself although, as a newspaper proprietor who has had his own run-ins with the law, he sympathizes with the legal challenges Murdoch is facing. Any prosecution of him, Black feels, would be "an attempt on his life."

While Murdoch’s almost 40 percent voting control of News Corp. makes an involuntary ouster unlikely, the weight of the crisis may ultimately persuade him to give up the CEO post, says Sydney Finkelstein, a professor of management at Dartmouth College’s Tuck School of Business and author of Why Smart Executives Fail.

Chief executive officers who don’t hold themselves responsible for crises at their companies often have stepped aside under pressure. "Based on the pattern we’ve seen in other major scandals, it’s likely we’ll see Murdoch resign," Finkelstein told Bloomberg News. "They all end up resigning."

This has certainly happened to others implicated in the hacking scandal, including two top police officers who took the fall when news broke that their officers took bribes from News of the World reporters. Sir Paul Stephenson, chief of the Metropolitan police, had also accepted thousands of pounds-worth of free accommodation at a luxury health spa. Insisting his integrity was intact, he resigned saying: "I have taken this decision as a consequence of the ongoing speculation and accusations relating to the Met’s links with News International at a senior level." By that token, should Murdoch not now follow suit, lest he compromise his company?

His son James may be even more vulnerable. He's his father's heir apparent as chairman and chief executive of News International's Europe and Asia division, overseeing assets such as its British newspapers. He told British MPs that he had not been aware in 2008 of evidence that phone hacking at The News of the World went beyond a single "rogue reporter," as the company then maintained. A year earlier, a reporter covering the royal family for the paper, Clive Goodman, and a private investigator on contract to the paper were convicted and jailed for hacking into the voice mail accounts of members of the royal household.

But last week two executives — Colin Myler, a former editor of The News of the World, and Tom Crone, the company’s former legal manager — said that James Murdoch’s testimony was "mistaken" and that they had in fact shown him evidence of wider phone hacking.

James, like his father, denied everything and stood by his testimony. If it is proved he has lied, according to the New York Times, he will have failed to report a crime to the police and he could be guilty of perverting the course of justice. Any arrest on such charges would mean an end to his business career.

If that happened, it would end because of his own stupidity. Top executives have always had ways of shielding themselves from the actions of enthusiastic underlings and lawbreakers in their employ, something that has been noted by Roger Martin, dean of the Rotman School of Management at the University of Toronto. Writing in The Globe and Mail, Martin said: "The truth is that, when superiors put substantial pressure on their subordinates to achieve aggressive goals, and don’t check up on just how those subordinates accomplish those goals, something sinister can happen. The intense pressure to perform can lead to unethical or illegal behaviour on the part of the subordinates, while giving the bosses wonderful 'plausible deniability' protection: 'I never told them to do THAT!' "

With the good parts of the British press all over this story, it looks like that won't work anymore for the Murdochs. There's nowhere to hide. I say it's about time.