Published CommPro.biz 2014.05.20

Hacking the Royals 

 

Shakespeare has left us with a picture of the Danes -especially members of the Royal family like Hamlet- as rather pouty young guys. In fact they are really nice people and Denmark is a very nice (if a bit chilly) small nation, most famous for design and Legos. Scandal is not a word you expect to connect to the Danes at all. However, last Tuesday (2014.05.14) they were hit with what they consider a “Major media scandal.”

It seems that back in 2008 the younger son of the queen was taking a second try at marriage. Joachim Holger Waldemar Christian, the Count of Monpezat, was married to Marie Cavallier a Parisian advertising executive. While their wedding was quite public their honeymoon plans were not. You can imagine their surprise when a reporter from a Danish celebrity magazine turned up on their flight home. The reporter got his interview (he says they answered his questions politely) and until last week the Prince and his bride had no idea how he found them. Therein lies the scandal, the magazine paid off a source who hacked the credit card used to book the flight. This revelation has triggered a firestorm of legal and regulatory activity in Demark.

Alas Denmark’s “Tuesday” in the media scandal spotlight was not to last, the very next day Clive Goodman, one of Rupert Murdoch’s editors told a court in London that he hacked the phones of Prince William, Kate Middleton and Price Harry over 200 times. That was in 2007 the year before Goodman was caught and jailed for this and similar “research” efforts. Perhaps the Danes picked up the Royal Hack idea from the Murdoch pond scum school of journalism.

While this is all great fun, we need to look at the serious side. There is more to our right to know than gossip and much more to journalism than the Murdoch minions’ petty view imagines. A British Parliamentary Committee found that “Rupert Murdoch is not a fit person to exercise the stewardship of a major international company”. Clive Goodman and others steeped in Murdoch’s duplicitous culture have felt the weight of the law. The question remains, why have they not felt it in America?

Rupert Murdoch is a United States citizen; he had to become an American before he could own radio and television stations in our country. It’s one thing for him to be deemed “not a fit person” in Great Britain, in America it’s the law. Bribing foreign officials is illegal. Murdoch’s operations in Great Britain routinely bribed law enforcement officers and other officials. Murdoch should be stripped of his American broadcast stations. He should be charged and tried for his illegal activities along with his henchmen who flaunt America’s laws. The Danes are taking care of their business, it’s time for America to take of ours.

Murdoch Again?

The Murdoch slime machine slithered into the news cycle again. Their people in China reportedly laid some hefty “gifts” (entertainment and travel) on sources over there. If true, that would seem to be a big no-no under US law. Wall Street Journal staffers in China were tagged with the bribery charges. They deny everything and say outsiders hired to investigate gave them a clean bill. They could have saved their money; hopefully our authorities will do the investigation and if it turns out that the Journal is clean, it will not cost Murdoch a penny. But if our investigation goes the other way, it will cost him big time. The FBI and the Justice Department are not commenting on these bribery charges.

However, this is not the only instance of the Murdoch empire being looked at for possible violations of our Foreign Corrupt Practices Act (FCPA). That’s the law that makes it illegal for American entities to bribe folks outside our borders as Murdoch has in Great Britain. His minions were nailed for unconscionable telephone hacking schemes and laying thousands of British pounds on police and other public servants for scoops. Murdoch is a US citizen and his organization is based in the United States; that would seem to put his London crew under FCPA.

That could be the least of Murdoch’s worries. The FCPA violations would go away after some healthy fines; just a cost of doing business for the ethically challenged like Rupert Murdoch. More serious is the finding of a committee of the British Parliament that Murdoch is "not a fit person" to run a major international entity like News Corp. Where that spills over into News Corp’s home in America is when Murdoch’s broadcast licenses come into play. He owns a couple dozen broadcast stations in America.  

Citizens for Responsibility and Ethics in Washington (CREW), a nonpartisan watchdog group, has been bugging the Federal Communications Commission (FCC) to revoke his licenses as the Communications Act would seem to dictate. Should that happen Murdoch’s American broadcast properties would be reduced to some used office furniture, used electronics gear and real estate. The tens of millions these facilities are worth would be gone, poof, just like that. We’ll see what the FCC does. They have had this issue before them for a couple years; it is past time for them to act.

Meanwhile the DOJ is juggling the FCPA implications raised by Murdoch’s bribery activities in Great Britain. The Brits have arrested Murdoch minions by the dozen including Rupert’s darling, Rebecca Brooks, who formerly headed all his smarmy Fleet Street newspaper operations. The DOJ ought to be arresting Murdoch executives here in the United States, perhaps even Murdoch himself, certainly his son James, who headed News Corp at least in theory. Don’t hold your breath, however. In the end the FCC and the DOJ will probably chicken out and do nothing; a pity.

My 2012 Top Ten 

Business Ethics Milestones

This year as every year almost everyone and almost every business strives and succeeds to maintain the highest ethical standards. It’s our nature and we know that our most precious asset is our reputation. After all, who wants to do business with a crook? It is, however, a struggle; and it’s too easy to take that first little step over the line onto the slippery slope. Of course there are those who seem ethically challenged. They spend a lot of time and treasure scheming and even more trying to cover their tracks. Ultimately they end up at the bottom of the slope, way past ethics into criminal territory. Most of this year’s milestones fall into the latter category, but there are some outstanding rays of sunshine.

#10 Let’s start out with some good news. A nationwide research study by Satmetrix, a West Coast provider of customer experience software, measured the attitudes of 30,000 consumers. Their findings reinforce the ethical business model’s value. It’s no surprise that companies boasting a long history of ethical standards top the list. Wegmans, Costco, Apple, Jet Blue, American Express, Virgin America, Amazon, Lowes, Google, all the usual suspects lead when it comes to doing the right thing. And guess what? They are leaders when you check their bottom line.

#9 There’s no such glow when you look at a few of our wealthiest Americans and biggest financial institutions; you get more of a Greasy Sleazy Feeling. They think nothing of turning our commodity markets into gambling halls, manipulating the price of food and fuel. Markets designed to support commodity producers have become a playpen for those with more money than morals. There’s a cure: limit commodity purchases to end users. Good for producers, good for end users, good for consumers, good for America.

#8 The ethical cesspool at the center of the media colossus Rupert Murdoch spawned on London’s Fleet Street, is beginning to suck him into its vortex. Unfortunately, it’s spread beyond his native Australia and Great Britain; it has spilled onto our shores. Murdoch became an American citizen so he could legally own broadcast properties here. He bought a couple smarmy newspapers like his British rags. He has also taken over and is twisting the once the once well-regarded Wall Street Journal. His big bucks come from broadcast holdings; satellite operations in Asia and Great Britain, cable outlets here. And then there’s his production arm producing television programs and motion pictures. Murdoch lunged over a line that most media tend to avoid, plunging into politics, even attempting to pick out his own presidential candidate. That kind of activity is common in Great Britain, not so much on this side of the pond. It’s especially disturbing when practiced by Scum-Lord Rupert Murdoch.

#7 Big Pharma's Big Con. The real cost of bringing a new drug to market averages $90 million a pop; a lot of money but a fraction of the$1.3 billion dollars they claim. Unless of course you include marketing, that’s where the big bucks go: flooding doctors’ offices with materials and samples, even hiring them to pitch other docs on the newest, latest, slightly updated drug. Add in the avalanche of print and television advertising urging patients to pressure their doc. It all adds up to sky high drug prices. Prices protected by a law prohibiting the government from negotiating lower prices– all courtesy of Big Pharma’s friends in the Congress. It’s enough to make you sick.

# 6 When the lobbyists pushed through “The Commodity Futures Modernization Act” opening up Wall Street to gambling, they unleashed a chain of events that resulted in the collapse of the world economy eight years later. Wall Street began leaping one ethical barrier after another and today everyone but the bankers is suffering. Dodd-Frank is designed to rein in some of the worst of this. The bankers are fighting these sensible controls. Our economic future depends on how it works out.

#5 Foxconn, a Taiwanese company with operations in China and around the world, makes many of the electronic toys that fill our lives. A British newspaper report described the life of a 21-year-old woman working ninety hours a week for less than fifty dollars a month. They calculated that allowing for inflation that fifty bucks comes to, “about half the wage weavers earned in Liverpool and Manchester in 1805.” Ponder that ethical issue the next time you finger the electronic toys in your pocket.

#4 Little did we know that the HSBC slogan, “Bank as easily around the world as you do at home” was to be taken literally. That this British “too-big-to-fail” bank was laundering cash for Mexican Drug Lords, hiding funds from the IRS in far off India for wealthy Americans, providing US currency to a Middle Eastern bank said to be a source of terrorist funding, and generally thumbing their nose at American laws and regulators. The bank has been hit with a record $1.9 billion fine in the US. The $27.5 million Mexico hit them with last summer along with the legal fees they have run up brings the total over $2 billion. That sounds like a lot of cash until you compare it to their 2011 profit, nearly $17 billion, or to a bonus pool of more than $4 billion that the HSBC executives split up. And surprise, it looks like none of those big-wigs are facing jail. The $2 billion amounts to pocket change for HSBC, just another minor cost of doing business.

#3 “Income Inequality” is a really big deal in the minds of Americans. A Pew study found it to be our greatest source of tension. Two thirds of the respondents see the divide between the super rich and those on down the food chain as our major concern. Reinforcing that view, in a Bloomberg Global Poll more than 1,200 investors, analysts and traders say it harms the economy and harms growth. Why is nobody willing to do anything about it?

#2 How can we turn our backs on sexual abuse? The Church, College Athletics, The Boy Scouts, who knows where it will be found next? The abuse of our children by institutions we trust is horrific, to cover it up is unforgivable.

#1 The Gift of Life - 4,800 people died last year waiting for a kidney. There were nearly 100,000 waiting for one a few months ago. The numbers are similar across organ donation programs. How could that happen? Consider that the latest available annual highway death toll (2010) totaled 32,885 individuals, a tragic number. But most with healthy organs, it’s disgraceful that so few remember that should something fatal befall us, our organs could help others live. Every business, everywhere we gather, organ donation should be a primary focus. We can think of no higher moral and ethical goal than assuring that if we give up our lives, we give life to others.

Collapse of an Empire

The ethical cesspool at the center of the media colossus Rupert Murdoch created over the years since he arrived on London’s Fleet Street, is beginning to suck him into its vortex. Last week (05.01.12) a Parliamentary Committee released a 121 page report detailing some of the smarmy activities and behaviors the Murdoch culture has spawned. As widely trumpeted in the media, it branded Murdoch “not a fit person” to run an enterprise like his.

Apologists for the Murdoch clan are quick to point out that the “not-a-fit-person” phrase was opposed by four of the nine members of the Committee, all members of Prime Minister David Cameron’s Conservative Party. While the Conservative members of the Committee dissented on the fit-person wordage, they agreed with most of the report. Cameron is connected to Murdoch’s organization in a number of aspects. Foremost is his former Communications Director, Andy Coulson, who moved directly to 21 Downing Street from one of Murdoch’s London newspapers. Coulson has been arrested but not charged. Prime Minister Cameron described his own ties to the Murdoch organization as “too cozy.”

Phone hacking, police bribery, and who knows what else were unearthed by the inquiry. “Who knows,” because many areas in the report are left untouched. The Committee did not venture into the domain of Scotland Yard and the prosecutors who are still building the criminal cases. As a result they did not explore the role of more than forty Murdoch editors, private investigators, and reporters, along with police officers who have been arrested so far. That group includes Murdoch darling Rebecca Brooks and ten others whose connections to the hacking scandal were reportedly referred to prosecutors last month by Scotland Yard.

All of this and the disclosures unfolding before a separate British judicial inquiry, raises the question, why are there no similar queries into the Murdoch Oligarchy in the United States? Rupert Murdoch and his clan are all US citizens; News Corp is a US corporation. While his trashy newspapers in the UK are often seen as the face of his holdings, they’re but a tiny segment. In America he has a couple dozen television licenses, so where is the FCC? Combined, these stations, Fox News, The New York Post, The Wall Street Journal and his entertainment entities dwarf any similar organization.

Where are the Congressional investigations? Given the detailed bribery charges in the UK, where are the FCPA (Foreign Corrupt Practices Act) concerns? If the SEC is hot on Walmart’s tail (properly) for spreading the wealth among Mexican officials, how about Murdoch’s minions greatly enriching Scotland Yard types? If a parliamentary investigation in the UK finds Murdoch “not a fit person” to run a handful of newspapers, what does that say about the television properties our FCC has awarded him? Are the bureaucrats and the political types in Washington afraid of his attack dogs at The New York Post and Fox News?

A Jolly Good Time

A British High Court Room saw the Murdoch media empire humbled as never before last week. It was the first of what’s likely to be many “Pay-Up Days” for Rupert and his minions. After years of denials and reported cover-ups, the Murdochs were passing out cash like Halloween candy. In carefully worded and vetted statements one potential lawsuit after another was settled, tens of thousands, even hundreds of thousands of pounds in many instances, plus legal and court costs of course. Lots of big entertainment names, political types and the occasional ordinary person who got caught up in their mess.

Two very significant factors stood out for us. One was new: News Group News, the umbrella entity for the Murdoch London based newspapers caught up in the hacking scandal, as much as admitted that their senior executives were involved. In a statement the lawyers for the victims said, “News Group News has agreed to compensation being assessed on the basis that senior employees and directors of NGN knew about the wrongdoing and sought to conceal it by deliberately deceiving investigators and destroying evidence.” 

While that falls under the usual legal cover, “doesn’t admit nor deny,” it’s pretty clear that “documents relating to the nature and scale of the conspiracy, a cover-up and the destruction of evidence by News Group” in the hands of the victim’s legal counsel, has Murdoch painted into a corner. It’s pretty clear that a culture of deceit is at the core of the Murdoch organization and that it seeps down from the very top staining every corner of his vast domain. 

The second thing that popped out for us is not new, but it may be the first time it has emerged in a formal legal setting. Apparently two of Murdoch’s gossip sheets, The News of the World and The Sun, had a field day with details of the back and forth that went on between Jude Law and his ex-wife Sadie Frost. Of special interest to those of us on this side of the pond is that Law had his phone hacked while he was at JFK Airport on Long Island. We had heard that before, but never in a legal setting. It’s important because the laws regarding hacking are very different in America. 

The Murdoch Empire is headquartered in the United States. The parent company, News Corp, is a Delaware corporation and fully subject to the laws of the United States. Rupert Murdoch is a United States citizen. The Murdoch Empire is largely in America. Murdoch moved into the US in the early 70s with one newspaper and soon followed up by founding the Star a trashy supermarket tabloid; adding the New York Post, not much above that. Then came television, motion pictures and The Wall Street Journal, most devoted to spewing his sensationalist trademark views of the world.

By hacking Jude Law in the United States, Murdoch has put it all at risk. There will be no carefully vetted settlement in this case. Like the ethically challenged at Enron, Adelphia and others in our recent past, the Murdochs may very well be facing jail time.

Rupert The Humble

New Year’s Resolutions showed up on Twitter in Rupert Murdoch’s name. At the same time a Twitter stream attributed to his wife Wendi turned out to be a fake. A News Corp spokesperson has confirmed that Rupert –we’d guess with the help of one or more of his minions- is actually tweeting. Not surprisingly it took less than a week for him to pick up more than a hundred thousand followers. That is pretty impressive, until you compare it –as at least one pundit did- to the vast media array at his disposal that regularly spews his views.

Associated Press reports he tweeted resolutions to “try to maintain humility, diet and to stay curious.” Humble is not a term most would apply to the media mogul. Rupert falls more into the overbearing arrogant camp. After the first few days his tweets began to fall into promotional efforts for his stable, especially The Wall Street Journal.

Then he jumped into the Republican primary race, posting, “I can’t resist” and “Good to see Santorum surging in Iowa.” While it’s no surprise that Murdoch is supporting someone on the extreme right, most media executives tend to keep their political views to themselves. While Murdoch had to become an American citizen to own US broadcast properties he still thinks like a Brit, where the media tend to be more involved.

It will be interesting to see if the Murdoch Twitter stream is just a passing fancy, or if they plan to use it as part of a strategy to deal with the very challenging year ahead. The major looming threat to the Murdoch clan comes in the form of the ongoing Leveson Inquiry in London. A number of major players from Murdoch’s Fleet Street organization have been arrested. So far they have been tight lipped and deny any wrongdoing. Worse, Rupert’s son, James, the titular head of much of the empire, seems to be caught up in the phone hacking scandal; an ethical disaster and perhaps a criminal disaster as well.

It will be interesting to see if the tweets from Rupert the Humble take a turn as all this plays out.

British Tabloid Culture

British Tabloid Culture

There’s a celebrity “A” list from Hugh Grant to JK Rowling parading before Lord Justice Leveson in London. The ongoing Leveson Inquiry is investigating media ethics in Britain centered on the Murdoch phone hacking mess. The celebs, along with lesser known folk, are laying out the damages the phone hacking, celebrity stalking, tabloid press has inflicted on them. Yes, it’s not just the Murdoch papers that employ these pond scum techniques. Nor is the damage limited to the crimp that it puts in the lifestyles of the rich and famous. Much sadder are the tales of everyday folk, most notably the family of murdered schoolgirl Milly Dowler. 

In an effort to keep the headlines coming Murdoch’s minions repeatedly emptied the voicemails from Milly’s mobile phone, leading her parents (and the police) to believe that she was alive and picking up the messages. Actually the 13-year-old had been lured into the hands of "predatory" nightclub bouncer Levi Bellfield on her way home from school and lay dead in a field at the end of that day. Bellfield was subsequently charged with the murder of two more young women. Witnesses are laying out stories of inconvenience, embarrassment, and tragedy before Lord Justice Leveson, all brought on by the telephone hacking, police bribing, peeping Tom, high speed chase stalking style of journalism favored by the British tabloids.

The lurid stories gained by these methods dim in shock value to the testimony of one former Murdoch editor, Paul McMullan, once a deputy features editor at The News Of The World. According to published reports, McMullan admitted that all these "worthy tools'” as he called them, were not only routinely used at the paper, they were aggressively urged upon him and his colleagues by their bosses.

McMullan even called out two former Murdoch executives, Andy Coulson and Rebekah Brooks. Coulson was the chief spokesperson for Prime Minister David Cameron by the time the firestorm hit, while Ms. Brooks headed all the Murdock newspaper holdings in Britain. McMullan said they could have been the “heroes” of journalism; instead they became the “scum,” apparently for their failure to take responsibility for the use of the worthy tools at The News Of The World.  He also calls Ms. Brooks an “arch-criminal.”

McMullan’s testimony was particularly hard to swallow when he described a culture that not only used these “tools” but believes they are “worthy tools.” He hotly defended a wide range of behaviors that we find ethically repulsive. When asked to define public interest, McMullan replied, “If the public is interested,” adding that if they don’t approve they could stop reading these stories. This culture seems pervasive among British tabloids and within the Murdoch Empire. Unlike McMullan we do not see these “tools” as “worthy,” we see them as disgustingly shameful.