The most bizarre aspect of James Murdoch’s appearance before the Commons Culture, Media and Sport Committee was that this was the chairman of a company that had, by his own admission, misled the committee and hired private detectives to follow one of the committee’s MPs, and yet no repercussions of any kind will arise from that behaviour.
Murdoch put the blame for the private detective, who followed Tom Watson, phonehacking victims’ lawyers and, it seems, half of Who’s Who, on the apparently very heavy shoulders of Tom Crone, erstwhile chief lawyer for News International and, shall we say, a disputant with Murdoch over who knew what, when and how about the scale of phone-hacking inside News of the World.
Murdoch had barely left the the committee room in Portcullis House before Crone issued a statement repeating that he’d told Murdoch about the “damning email,” as per Thurlbeck’s alleged statement to Watson. Murdoch had earlier accused Crone, and former NOTW editor Colin Myler, of misleading the committee, and suggested Crone had gone beyond his financially-delegated authority in negotiating a settlement with Gordon Taylor. In Murdoch’s eyes, it seems, Crone could do no right — but never let Murdoch into what was going on.
This, at least, is a departure from the usual corporate strategy when dealing with major scandals. The template, to which James and Rupert Murdoch rigorously adhered at their earlier appearance, is to deny all direct knowledge, apportion all blame to subordinates, but accept a kind of moral responsibility for the company’s failings, and contritely promise that “processes are being reviewed” and “systems are being set up” to ensure it “never happens again.” Ideally, relevant documents are destroyed and relevant subordinates are sent packing with a nice lump sum to keep them quiet. Rebekah Brooks and Les Hinton fall into the latter category.
But the prospect of a criminal conviction or even gaol time can play merry hell with such a strategy. It screws with people’s incentives. Suddenly the most faithful and longstanding employees can turn on their companies. Documents start reappearing and memories radically improve. Judging by the poor recollections regularly on display in court cases involving corporate malfeasance, it’s frankly amazing any business is ever transacted in the private sector, so apparently beset by rampant amnesia is it. But the prospect of a criminal conviction seems to have remarkable curative powers for foggy memories. Murdoch thus finds himself contradicted by two former executives now at open war with their former employer, and they are now backed by a third former ex-employee who corroborates their essential claim.
Meantime back at the hearing, Tom Watson had gone over the top with a comparison of News International to the mafia, a silly comparison not because of the lack of parallels between some of the methods of News International and those of organised crime (parallels that have been drawn by others, like Michael Wolff, before), but because of the essentially pointless nature of accusation, which looked like a very plain bid for a news bulletin grab.
The problem isn’t so much News International or News Corporation’s similarity to organised crime, as its similarity to any large corporation. This is the way they function to evade responsibility, and why the issue of wilful blindness — which came up again last night — is so central to not just the phone-hacking scandal but to the accountability of large corporations in general. It generates a clear form of moral hazard in encouraging lower level executives to take risks that, if they don’t come off, have no repercussions for the company itself.
This is why the reach for “corporate personhood” is so potentially disturbing. It would extend to corporations many of the rights of humans — such as a right to privacy and the right to participate in a democratic political process — without the basic requirement for personal responsibility. The company that sicced a private detective onto the lawyers of its victims, MPs investigating it and anyone else it thought it could make a buck from continues to operate without any repercussions. It’s a profound evasion of responsibility, and one central to modern corporate “governance”.