Hack Attack (58 page)

One of Murdoch’s most senior newspaper executives, Andrew Langhoff, resigned as European director of Dow Jones when the
Guardian
revealed that the
Wall Street Journal
had been channelling money through other companies in order to secretly buy thousands of copies of its own paper, misleading readers and advertisers about its true circulation and compromising its authority by giving one of the companies helpful editorial coverage.

The
New York Times
exposed the detail of how one of his US subsidiaries, News America, which sold advertising on supermarket shelves, had been accused of undermining a rival, Floorgraphics, by hacking into its computers to get information about its plans and customers. Court hearings which would have exposed the facts were halted when News Corp settled with Floorgraphics – and then settled again with two other companies, Valassis and Insignia, who complained that News America had been variously using threats, bribes and smears to try to steal their customers. It cost News Corp a total of $650 million to silence the three legal actions. In an uncomfortable echo of James Murdoch’s problems with the Gordon Taylor case, News Corp refused to say whether Rupert Murdoch had been aware of the evidence of foul practice when he authorised these settlements.

BBC’s
Panorama
investigated allegations about another News Corp subsidiary, NDS, who were crucial to the success of Murdoch’s pay-TV business. NDS used an Israeli military scrambling system to encrypt the signal which was sent from the News Corp satellite to millions of homes. Without the encryption, potential customers could simply take the service without paying. Those who have worked with Murdoch say that he was particularly closely involved with NDS.
Panorama
reported that in the late 1990s NDS had not only encrypted Sky’s signal but had sabotaged the business of its biggest rival, ITV Digital, by hiring a computer hacker who obtained and distributed codes which then allowed people to watch ITV Digital without paying. ITV Digital eventually folded. News Corp denied
Panorama
’s allegations. Similar claims against NDS had been made in 2002 by the French pay-TV company, Canal Plus, who sued the company. Those allegations also were denied. A court hearing which would have exposed the facts was cancelled when News Corp bought the part of the Canal Plus business which was at the heart of the affair.

A Murdoch subsidiary in Russia, News Outdoor, which sold advertising space on billboards, was accused of bribing local officials. The Chinese office of the
Wall Street Journal
was accused of paying bribes to get information. Whenever a rock was lifted in the News Corp business, it seemed to reveal another allegation of rule-bending or lawbreaking from a company which lived by only one rule: to win. Even in the world of sport, it had cheated to win, breaking the rules of Australian rugby league to pay nearly $4 million in secret salary top-ups to players in the team which Murdoch owned, Melbourne Storm. (It worked: the team won four Premiership titles.)

The picture which emerged was of a rogue corporation which thrived precisely because of its ruthlessness – the more money it made, the more power it accrued, the more money it could make. And if it was running on the fuel of amorality, that really didn’t matter. All that counted was the bottom line.

While Murdoch escaped allegations that he had covered up crime at News International, he was damned for his oversight of his own business. Lord Justice Leveson concluded that there had been ‘a serious failure of governance within the
News of the World
, News International and News Corporation’.

The media select committee went further. Rupert Murdoch, they said, had ‘turned a blind eye and exhibited wilful blindness to what was going on in his companies and publications. This culture, we consider, permeated from the top throughout the organisations and speaks volumes about the lack of effective corporate governance at News Corporation and News International. We conclude, therefore, that Rupert Murdoch is not a fit person to exercise stewardship of a major international company.’

Murdoch’s reputation was deeply damaged. Symbolically, the Church of England in August 2012 made good on its threat to wash its hands of News Corp, disposing of all its stock in the company. Murdoch’s summer party in London, which had become an annual pilgrimage for the UK’s power elite, was cancelled. A group of institutional shareholders, led by Amalgamated Bank, sued the company over its handling of the hacking and its purchase of Elisabeth Murdoch’s TV company, Shine, and in April 2013 forced News Corp to accept more independent directors, a whistle-blower’s hotline, scrutiny of its political activity and possibly an end to Rupert Murdoch being both chairman and chief executive. They also won damages of $139 million.

There was more financial pain from the scandal in London. In the year following the Dowler story, News Corp paid $224 million in damages, compensation and fees for lawyers and other consultants. There was damage too to Murdoch’s family and to his dreams of handing the chairmanship to one of his children.
Vanity Fair
reported that three months after the scandal exploded, Murdoch and his children had met, on 8 September 2011, in their yachts off the coast of Ibiza. The family remained divided. Rupert Murdoch and James were barely on speaking terms, according to one of their senior executives. And the cold gap between Elisabeth and James became publicly visible a year later when she gave the MacTaggart lecture in Edinburgh, glancing back to her brother’s bold claim in the same lecture three years earlier, that the only guarantor of independence is profit, by complaining of the absence of moral language in the worlds of government and business. ‘Profit without purpose is a recipe for disaster,’ she said.

Elisabeth said she would not serve on the board of News Corp nor seek to succeed her father. James’s older brother, Lachlan, had already fled the snake pit in New York. James himself remained, discredited, unfavoured, powerless.

*   *   *

Exposure is one thing, victory another. Even as the truth emerged about the secret life of the power elite, there were signs that they were not yet ready to change their ways.

All those involved in uncovering the hacking scandal had lived with the fear that the Murdoch papers might turn on them. In the months after the Dowler story, hard evidence emerged that they had indeed tried to punish some of them, using their favourite weapon: prying into their sex lives.

Tom Watson had a history of animosity with the
Sun
, going back to 2006 when he had pushed for Gordon Brown to replace Tony Blair as prime minister. Watson told Leveson that during the Labour Party conference in Manchester later that year, he had been approached by the
Sun
’s political editor, George Pascoe-Watson, who had told him that ‘Rebekah will never forgive you for what you did to her Tony’ and that ‘Rupert Murdoch never forgets’. Three years later, under Brooks’s editorship, the
Sun
ran a series of stories calling him ‘Two Dinners Tom’ and a mad dog, falsely accusing him of being part of a plot to publish smear stories about Conservative MPs. Watson sued for libel and won substantial damages.

Now it was revealed that in the autumn of 2009, as Watson and colleagues on the media select committee dug into crime at the
News of the World
, both the
Sun
and the
News of the World
had targeted him again. Watson says he was warned by several people that Brooks was complaining about him. One source at the
Sun
says that she called in reporters to ask if they had ‘any dirt’ on him. They had none, but the
News of the World
picked up on a rumour that he was having an affair. This appears to have come from the paper’s notorious undercover specialist, Mazher Mahmood, who emailed the news desk with the heading ‘Labour sex scandal’, claiming that ‘Tom Watson as we speak is shagging’ an Asian woman who belonged to the Labour Party. The paper then tasked their surveillance expert, Derek Webb, to shadow Watson for five days at the Labour Party conference in September 2009 in search of confirmation. They found none. The story was untrue. Colin Myler had to content himself with walking through the conference and describing the troublesome MP as ‘a fat bastard’ within his hearing.

It was also disclosed that the
News of the World
had used Derek Webb to run at least two surveillance operations on solicitors working for the victims of hacking. The first, in March 2010, was aimed at Mark Lewis as he gathered new clients to sue News International in the wake of their successfully stopping Max Clifford’s case. The
News of the World
turned to Webb, who located Lewis’s former wife and daughter and secretly videoed them as they visited local shops. It is not clear why they did this. The second surveillance, in January 2011, targeted Charlotte Harris as her case with Sky Andrew threatened to destroy News International’s remaining defences. Again, Webb was commissioned to follow her, apparently searching for evidence that she was having an affair with a solicitor in Manchester. She had never met the solicitor in question. Questioned by the media select committee, Tom Crone admitted that he had seen information which had been gathered about Lewis and Harris. ‘It involves their private lives,’ he said.

These efforts were fruitless, but News International successfully wreaked havoc in the life of the only front-bench politician who spoke out about the hacking scandal before the Dowler story: Chris Huhne, who was the Lib Dem home affairs spokesman when the
Guardian
published the Gordon Taylor story. Huhne consistently badgered the company to come clean. In June 2010, when he had become Secretary of State for energy in the new coalition government, the
News of the World
exposed the fact that he was having an affair. He left his wife, Vicky Pryce, who then took revenge on him by disclosing to the
Sunday Times
that in 2003, he had persuaded her to accept penalty points on her licence for a speeding ticket which he had incurred. The
Sunday Times
controversially handed police their email exchanges with Pryce, exposing her as their source and compounding the damage to Huhne. It is not clear whether the company’s hostility to Huhne contributed to this decision. In March 2013, both Huhne and Pryce were jailed for eight months for perverting the course of justice. Huhne’s political career was destroyed.

Separately Gordon Brown, who had denounced News International after the Dowler story, then found himself the object of a sequence of hostile stories in
The Times
,
Sunday Times
and
Sun
. The stories were false, and the three Murdoch titles were forced to print a total of eight apologies to him in one six-month period. James Harding, who had reportedly infuriated Rupert Murdoch by publishing a leader comment which denounced the hacking of Milly Dowler, was suddenly ousted as editor of
The Times
. David Cameron, who had been News International’s darling, was vilified by the
Sun
after he called for Rebekah Brooks’s resignation and set up the Leveson Inquiry.

In the months after the Dowler story, Amelia Hill was warned that the
Sun
were trying to trace her former partners to do a story about her sex life; and I was warned that the
Sun
had put a ‘hit squad’ on me who were contacting former students from my masterclass in reporting technique, in search of evidence that I had advised them to use illegal techniques or attempted to seduce them. As it happened, I had done neither.

The
Sun
declared war on the
Guardian
. In November 2011 the
Guardian
columnist Marina Hyde claimed that the
Sun
had sent a reporter to doorstep one of Leveson’s counsel, Carine Patry Hoskins, and suggested that this was like ‘defecating on his lordship’s desk while doing a thumbs-up’. Hyde’s claim was incorrect. The
Guardian
published a correction, but the
Sun
’s managing editor, Richard Caseby, followed up by sending Alan Rusbridger a toilet roll with the message: ‘I hear Marina Hyde’s turd landed on your desk. Well, you can use this to wipe her arse.’

Early the following month, December 2011, I had a private conversation with a senior police officer who had some important news: Operation Weeting had found new evidence about the hacking of Milly Dowler, and it now looked as though the
News of the World
might not have deleted the messages which had given her parents false hope she was still alive. That was not good news. The Dowler story had set off the chain reaction which finally brought the scandal to a head. It had gone all around the world. And if an important piece of the story was now falling apart, it was clear that Caseby, the Murdoch titles and other enemies we had made in Fleet Street would move in for a monstering.

I spent the following week trying to work out what had happened. There was some good news. Police had confirmed everything else in our story: that the
News of the World
had hacked the missing girl’s phone; that Surrey police had known about it at the time and taken no action (because, as one officer later put it, the press were ‘untouchable and all-powerful’); and that it was very likely that the paper had also hacked the phones of detectives who were trying to find her. It was also confirmed that the paper had hired Steve Whittamore to blag confidential information about her family. Finally, they confirmed that Mrs Dowler had been given false hope when messages were suddenly deleted from Milly’s phone. But how had those messages come to be deleted?

Digging deep into Surrey police’s dust-covered archive, I learned, Weeting detectives had found new evidence which suggested that the deletions had happened before Glenn Mulcaire was instructed to hack Milly’s phone and that it was far more likely that the voicemail had been wiped by a crude automatic system on Milly’s voicemail which removed any messages which were more than seventy-two hours old, even if she had not listened to them.