So has anyone fallen on their sword at News Corp to atone for these crimes? Well, certainly not at board level. And certainly not anyone whose name begins with M. And neither are there likely to be any major changes in corporate governance as a result.
The spin from on high is that this will never happen again: the stables have been cleaned, the door has been bolted; the culprits have been charged. But no responsibility at all has been taken by those who ran the group in which these things flourished or by those who (at the very least) failed to investigate it. That’s why this AGM in Los Angeles ought to see some interesting exchanges.
Now it must be said the current News Corp board is both more independent and more competent than some we’ve seen in the past. But that would surely not be hard. Back in 1994, an ancient News Corp director called Keith MacDonald, proudly confessed to BRW’s Ali Cromie that he was past his “use-by date” and made “virtually no contribution” to Rupert’s board meetings.
“I am yesterday’s man,” he happily admitted, “a kind of passenger, an interested passenger.” The 68-year-old Macdonald, who had by then been sitting on News Corp’s board for seven years, said it was up to Rupert how long he would stay. He continued to ride the gravy train for another four years, until 1998.
Back then, as Cromie revealed, virtually the entire News Corp board was made up of Rupert’s current or former executives, members of his family, or suppliers to News Corp. And his most forceful and outspoken critic in the boardroom, as Murdoch admitted, was his then wife Anna.
After the AGM next Tuesday, the 16-strong News Corp board will have eight “independent” directors. But the reality is that Rupert will still get what he wants. Seven of the 16 will owe their seat to the emperor’s continued patronage: James, Lachlan and Rupert are family members, while Chase Carey, David DeVoe and Arthur Siskind are in the Murdoch inner circle which runs News Corp. A seventh, Joel Klein, was paid US$4.5 million last year to be a vice president of News Corp. One would hardly expect any of them to kick up a fuss. An eighth, Stanley Shulman, runs the investment bank that has advised Rupert for 40 years or more, and still rakes in fat fees from News Corp. (As directors emeritus he and Siskind will get to go to meetings and speak but not vote.)
Among the eight independent directors is Sir Rod Eddington, who worked for News Corporation in the 1990s, running the ill-fated Ansett Airlines until it collapsed in 2001. As “lead director”, Eddington is principally responsible for keeping Rupert in check, so one can only hope he does a better job than he did with the charismatic David Coe at Allco, which collapsed into a $10 billion black hole in 2008 and has since been of great interest to the Australian Securities and Investments Commission.
Another independent director until June 30 this year was Andrew Knight, who has been with Rupert since the early 1990s and was once regarded as a potential successor. Murdoch’s long-time lieutenant in Australia, Ken Cowley, was also on the board until 12 months ago.
With such a line up, and with Rupert in the chairman’s seat at meetings, it would be brave bunch of independents who dared take him on, and an even braver bunch who managed to defeat him. And if it did come to a fight, the Murdochs would have massive firepower to deploy.
The Murdoch family trusts own 317 million Class B voting shares, which give them almost 40% of the votes in News Corp, even though they actually own only 12% of the company. They also have a formidable ally in the shape of the Saudi sheikh, HRH Prince Al Waleed Bin Talal Bin Abdulaziz Alsaud, who has a further 7% of the vote. It was he who came to Rupert’s rescue in 2005, when Murdoch’s control of News Corp was threatened by attacks from fellow media billionaire John Malone.
Back then, Prince Alwaleed — who is known as Arabia’s Warren Buffet — told the media he had “the utmost confidence in Mr Murdoch, his management team and his succession planning”. The prince reaffirmed that confidence in July 2011 when the phone-hacking scandal broke, even though he did demand that Brooks be sacked. And despite all that has been revealed since then, there is no suggestion that he has changed his mind.
This article first appeared on The Power Index.
