From Los Angeles to London, Murdoch's Hacking Woes Set To Play Out

Rupert Murdoch's News Corp. phone-hacking scandal, now in its third month as a primetime news attraction, has become so sprawling that in coming days key events are scheduled to unfold across eight time zones, from Los Angeles to New York to London. The global showdowns are sure to highlight just how far the conservative media mogul has to go before putting the tarnishing scandal behind him, if that's even possible. They'll also shine a spotlight on how poorly his company is run, as well as on a corporate culture where cutting ethical corners seems to be commonplace.

First up on Murdoch's calendar is Friday's News Corp. shareholder meeting. Slated for the Fox studio lot Los Angeles, the forum will provide investors with their first public opportunity to express concern to News Corp. leaders about the far-reaching scandal, and how it has damaged the company's reputation. Murdoch and his board are bracing for a possible parade of public denunciations.

Indeed, in the run-up to the event, a parade of investors have made plain their plans to oppose Murdoch and his tightly-controlled board of directors:

-The California Public Employees' Retirement System, the nation's biggest public pension fund, will vote against the reelection of the Murdoch and his sons from the board.

-A leading shareholder at British Sky Broadcasting has called for James Murdoch to resign as BSkyB's chairman.

-The Australian Council of Superannuation Investors urged shareholders to vote against reelecting six board members.

-Hermes Equity Ownership Services, the shareholder advisory service affiliated to Britain's largest pension fund, has urged investors to remove Murdoch and his sons from the board.

Some observers however, doubt the votes of no confidence will alter Murdoch's board or his grasp on the company. They note the Murdoch family maintains a vise-like grip on 40 percent of News Corp. shares, making outside change almost impossible. Still, the spectacle of being called out by shareholders this week in front of assembled journalists cannot be a prospect the chairman relishes.

While Friday's corporate showdown in Los Angeles is likely to produce most of the headlines, particularly in the United States, Monday's testimony before the British Parliament from Murdoch's former lieutenant, Les Hinton, will probably be more damaging. The appearance will mark the third time in four years that Hinton has had to answer questions from Parliament about phone-hacking allegations. Murdoch's long-time confidant, who once oversaw the London tabloid News of The World, will be pressed on his previous false statements and asked if he was part of a News Crop. cover-up, or if he and his colleagues were simply incompetent in trying to flesh out the brazen hacking of mobile phones that was taking place right under their noses.

In previous session with lawmakers Hinton insisted phone hacking at Murdoch's tabloid represented an isolated incident.

Many members of Parliament didn't believe Hinton's spin. (They accused company executives of having “collective amnesia” when pressed on hacking specifics.) And since this summer, revelations of just how widespread the hacking was at Murdoch's newspaper seem to have further dented Hinton's credibility. Hinton, who was forced to resign as head of the News Corp. division that publishes The Wall Street Journal because of the hacking scandal and his central role in it, will testify from New York via video link to members of the Parliament Select Committee in London.

Hinton does not have a sterling track record answering Parliament's queries. In 2007, Hinton assured a committee that News Corp. had carried out a “full, rigorous internal inquiry” into the hacking allegations and was “absolutely convinced” the practice was limited to a single rogue reporter, Clive Goodman, and the private investigator he hired, Glenn Mulcaire.

In July 2009, the Guardian alleged widespread hacking at the Murdoch newspaper and reported the company had paid $1.59 million to settle hacking cases brought by victims. The news raised doubts about previous denials of wrongdoing and Hinton was summoned to testify once again. Once again, Hinton stressed the company had gone to “extraordinary lengths” to uncover any crimes. “There was never any evidence delivered to me suggesting the conduct of Clive Goodman spread beyond him,” said Hinton. “It just did not happen.”

On Monday however, Hinton will be asked about the testimony given this week by an attorney who worked with News Corp. on the hacking scandal and who claims he knew the company had misled Parliament with its “rogue” defense in 2009. The attorney, Julian Pike, testified that in 2008 there was "powerful" evidence that several reporters working for Hinton were hacking phones, and that senior Murdoch executives were made aware that a “a culture of illegal accessing of information” existed inside the company.

Note that two years ago, members of Parliament pressed Hinton about the revelation that News Corp. had authorized payments to Goodman and Mulcaire after they'd been sentenced to prison for hacking crimes. Skeptics pressed Hinton whether the payments constituted hush money to buy the men's silence.

He adamantly denied the claim:

I do not know how much silence there was for them to keep. They had been the result of massive publicity, the spotlight was on them and the newspaper for months and months and there was a court hearing, so I do not know what silence there was for them to keep.

Since Hinton's 2009 testimony, it has become clear there was all kinds of silence still to be kept. For instance, in 2007 an angry Goodman wrote to his employers spelling out how commonplace the hacking had been.

According to the Guardian, which broke the story of the letter this summer:

Goodman claims that phone hacking was “widely discussed” at editorial meetings at the paper until [former editor Andy] Coulson himself banned further references to it; that Coulson offered to let him keep his job if he agreed not to implicate the paper in hacking when he came to court; and that his own hacking was carried out with “the full knowledge and support” of other senior journalists, whom he named.

Tomorrow, Murdoch must face News Corp.'s shareholder critics and will likely insist company executives have been forthright in dealing with the crisis and are in the process of putting the ugliness behind them.

On Monday, Hinton's testimony is bound to undercut those claims.