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CNN LIVE EVENT/SPECIAL

Live Coverage of the News International Phone-Hacking Hearing

Aired July 19, 2011 - 11:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


PHILIP DAVIES, BRITISH CULTURE, MEDIA AND SPORT COMMITTEE: And is there any -- any confidentiality in their payoff that they're not supposed to speak about what happened or what their time at your company or what they know? Any clauses like that?

JAMES MURDOCH, CHAIRMAN, CEO, NEWS CORPORATION INTERNATIONAL: Mr. Davies --

(CROSSTALK)

JAMES MURDOCH: Mr. Davies, the -- a settlement or compromise agreement when somebody resigns or leaves the business in circumstances like this -- you know, there are some -- there are commercial confidentiality agreements, but nothing that would stop or inhibit the executive from cooperating fully with investigations, from being transparent about any wrongdoing or anything like that.

And it's important to note that in these agreements, they're made on the basis of no evidence of impropriety. And if, you know, evidence of impropriety emerges, or was there prior to that departure, then you would have a different -- a different piece (ph). But there's quite a -- that's an important point, I think, just to be clear about.

DAVIES: My final question is, it seems to me on the face of it that "The News of the World" was sacrificed in order to try and protect Rebekah Brooks' position at News International, that, in effect, rather than her being -- having her departure being announced, "The News of the World" was offered up as an alternative to try and deal with the whole thing.

Do you regret now making that decision? Do you regret closing "The News of the World" to try and save Rebekah Brooks? In hindsight, do you wish you'd accepted her resignation to start with, in order that that paper, with a fine tradition, could probably continue and all of the people who are now out of work or struggling to find a job could still be in work?

RUPERT MURDOCH, CHAIRMAN, CEO, NEWS CORPORATION: I regret very much the pain of people who will not be able to find work. The two decisions were totally unrelated, absolutely and totally unrelated.

DAVIES: So when you came into the UK and said your priority was Rebekah Brooks -- RUPERT MURDOCH: I'm not sure I did say that. I was quoted as saying that. I walked outside my flat and I had about 20 microphones stuck in my mouth, so I'm not sure what I said.

DAVIES: So you were misquoted, so to speak.

RUPERT MURDOCH: I'm not saying that. I just don't remember.

JAMES MURDOCH: I think it's important -- I'm sorry, Mr. Chairman.

JOHN WHITTINGDALE, CHAIRMAN, BRITISH CULTURE, MEDIA AND SPORT COMMITTEE: Yes.

JAMES MURDOCH: Mr. Davies, it's important to -- I mean, you know, the closure of a newspaper with a history -- 160-some-odd years history is something that is a grave thing and something that is a serious matter of regret for us, for the company.

But much more serious than that is the seriousness of really the violation of privacy, the hurt that certain individuals at "The News of the World" caused to the victims of illegal voicemail interceptions and their families.

And really -- and I can tell you, you know, I advocated at the time that this was a step that we should take. This was a paper and a title that had fundamentally violated the trust of its readers. And it's something that was a matter of great regret, real gravity. But under the circumstances and with respect to the -- really, the bad things that -- certain of the things that happened at "The News of the World" some years ago did, it was really a right choice for the paper to cease publication.

Now, it is important to note -- and I want to be clear with the committee on this -- that the company is doing everything it can to make sure that journalists and staff at "The News of the World" who had nothing to do with any of these issues, who are completely blameless in any of these things -- and many are -- you know, really done tremendous work journalistically, professionally, commercially for the business -- that we find reemployment for them wherever we can.

And I think the company is being as generous as we can under the circumstances. The company is being as thoughtful and compassionate for them and their families to get through this. But it is a very regrettable situation and one that we did not take lightly in any way.

WHITTINGDALE: You have made that clear. I'm going to ask for members -- I don't want to cut anybody off, but please, we do still have some way to go. Paul Farrelly.

PAUL FARRELLY, BRITISH CULTURE, MEDIA AND SPORT COMMITTEE: Thank you, John. I just want to return to the how John opened the session and the evidence that was given us previously. But I just -- in connection with Mr. Davies's questioning, there was one -- one key question he omitted to ask. Mr. Murdoch, James, through all the civil actions, have been paying Glenn Mulcaire's legal fees -- not you personally, your organization?

JAMES MURDOCH: As I said -- as I said earlier to the question from Mr. Davies, I -- there -- there --

FARRELLY: No, no. This is -- this is -- let's keep it short. Yes or no. It's a yes or no question.

JAMES MURDOCH: I don't know the current status of those. You asked a question --

FARRELLY: No, have you --

JAMES MURDOCH: -- are we paying all of Mr. Mulcaire's legal fees?

FARRELLY: Have you been paying legal fees for Glenn Mulcaire during the course of the civil actions?

JAMES MURDOCH: I don't know the details of the civil actions, but I do know that certain legal fees were paid for Mr. Mulcaire by the company, and I was as surprised and shocked to learn that as you are.

FARRELLY: Can you understand that people might ask why a company might wish to pay the legal fees of a convicted felon who's been involved -- intimately involved in the destruction of your reputation --

JAMES MURDOCH: I can --

FARRELLY: -- if it were not to buy his cooperation and silence?

JAMES MURDOCH: No, it's not -- it's -- I can understand that -- that -- and that's exactly why I asked the question. It's exactly what -- when I -- when -- when the allegations came out, I said, How can we -- are we really -- are we doing this? Is this what -- is this what the company is doing?

And on legal advice -- you know, and again, I don't want to be legalistic and I'm not a lawyer, but these are serious litigations. It's important for all of the evidence from all of the defendants to get to court at the right time. And the strong advice was that from time to time, it's important and customary even to pay co-defendants' legal fees. And that --

(CROSSTALK)

JAMES MURDOCH: And I have to rest on counsel's advice on some of these serious litigation matters.

FARRELLY: Is the organization still contributing to Glenn Mulcaire's legal fees?

JAMES MURDOCH: As I said earlier, Mr. Farrelly, I don't -- I don't -- I don't know the precise status of that now. But I do know that I asked for -- I asked for those things -- for the company to find a way for those things to cease with respect to these (INAUDIBLE)

FARRELLY: Will you let us know?

JAMES MURDOCH: I'm happy to follow up with the committee on the status of those legal fees.

FARRELLY: This is a serious question. Mr. Murdoch, Senior, is it not time for the organization to say, Enough is enough? This man allegedly hacked the phone of the murdered schoolgirl, Milly Dowler. Is it not time for your organization to say, Do your worst. You behaved disgracefully. We're not going to pay any more of your costs.

RUPERT MURDOCH: I would like to do that. I don't know the status of what we're doing, or indeed, what his contract was, or whether it still has any force.

FARRELLY: If the organization is still paying his fees, will you give the instruction now that that should stop?

RUPERT MURDOCH: Provided it's not in breach of a contract, a legal contract, yes.

FARRELLY: I just want to return now to the question of making statements to Parliament without being in the full possession of the facts. During our 2009 inquiry, all the witnesses who came to us testified to being intimately involved, in particular, a huge trawl (ph) of e-mails after the arrival of Colin Myler. It seems over the past few days, they've been rather quick to try and distance themselves from that investigation, according to some of the quotes in the newspapers.

So could I -- and you've stated to us clearly that that trawl, that investigation uncovered no new evidence. It was still a lone rogue reporter. So Mr. Murdoch, James, can you tell us about the file of e-mails, the so-called internal reports that was discovered, allegedly, we read through the pages of "The Sunday Times," a great newspaper, in the offices of Harbottle and Lewis? Can you tell us a little bit more about when that was discovered, when you first came to know about it, what's in it?

JAMES MURDOCH: I first came to know about that earlier this year, in 2011.

FARRELLY: Can you be more precise about the time? You've got a great grasp of chronology.

JAMES MURDOCH: It would have been in the -- it would have been around -- it would have been in the springtime. I don't remember the exact date when I was to told about it.

FARRELLY: Before April?

JAMES MURDOCH: It would have been April or May. And I can try to find the meeting schedules and whatnot and come back. But it was a number of months ago, it was a few months ago.

FARRELLY: Please. Please.

JAMES MURDOCH: And the -- but -- and I can't speak, I should say -- I can speak a little bit to it, but as to the activity that was carried out in 2007 -- again, I piece this back together from the past. It was before any of my involvement. But the company at the time -- I think you're referring to -- there was a dismissal -- an unfair dismissal case that was brought by Mr. Goodman, and that was the basis for conducting -- it was right about the time of the conviction, so it was all in that period of time.

FARRELLY: That's what we inferred in our report last year, but we were -- despite the assurances as to the other motivations.

JAMES MURDOCH: Well, there was a -- but there was a -- but it was -- it was right at the time Mr. Myler had come in, codes of standards had been talked about. This was before my time. All of the 2007 business was there. And the -- an investigation was done, or a fact-finding piece (ph), around this. And there was a -- outside counsel was brought in -- it was Harbottle and Lewis -- by the company at the time.

And I understand that the legal executives -- I think it was Mr. Chapman at the time, along with Mr. Myler, who testified to this effect -- went -- you know, took (ph) a report from them, and the opinion was clear that as to their review, there was no additional illegality with respect to phone hacking in that file.

And as to their review, that was the opinion that was clear. And the company really rested on a number of things from then on. And I certainly know that in 2009, when additional allegations came in the summer, the company really rested on a handful of things.

(CROSSTALK)

FARRELLY: I just wanted to move right up to date, to what was discovered in the offices at Harbottle and Lewis and when it was discovered.

JAMES MURDOCH: So in 2010, after the civil litigations had -- had -- had put a spotlight on us (ph), if you will, to us, to the company, additional new evidence, new information that hadn't been there before. And the police investigation started off, one of the things that was went back and looked at -- I suppose it was in the spring by senior people at International -- was that file, and it was re-looked at. It was opened up and looked at. And it was very rapidly brought to our attention that this was something that --

FARRELLY: When did this happen? When was this looked at?

JAMES MURDOCH: It was -- again, this is between May and -- this is April, May, June, in that period.

FARRELLY: And who looked at it first?

JAMES MURDOCH: On the --

FARRELLY: (INAUDIBLE) Lewis.

JAMES MURDOCH: On the side of the people managing the work on behalf of News International from early this year, who have been led by Mr. Lewis, that's correct.

FARRELLY: And what's in that file? It's been reported as a collection of 300 e-mails or a loose-leaf binder. What is it?

JAMES MURDOCH: Mr. Farrelly, as you know, there is an ongoing criminal investigation, and I think it would be wrong of me to talk about specific information or evidence that is subject to and could make problems for the police in doing the important work that they're currently doing.

FARRELLY: I don't think it's going to cause problems for the police if you tell us whether it's a (INAUDIBLE) foolscap (ph) e- mails, e-mails in a ring binder, a loose-leaf. What is it? What is this -- what is this -- this --

JAMES MURDOCH: It's paper. I mean, I think there are some e- mails, there are some documents. It's -- it's -- it's --

FARRELLY: And when was it -- and have you read it all?

JAMES MURDOCH: I have not read it all, but some e-mails -- some -- some things in it have been -- have been shown to me.

FARRELLY: And what was your reaction? Was there expletive that you used when you first read some of these e-mails?

JAMES MURDOCH: I try not to --

FARRELLY: But when you do.

JAMES MURDOCH: -- utter expletives.

FARRELLY: Occasionally, when you do.

JAMES MURDOCH: My reaction immediately was to agree with the recommendation of the executives involved, which was that this is something that we should bring to the attention of the police with respect to their ongoing investigations, and perhaps new ones.

FARRELLY: And when do you -- when was it given to the police? It's been reported as June the 20th.

JAMES MURDOCH: I believe it was in June, after we informed the board of the company, as well.

FARRELLY: So that date -- that date's accurate.

JAMES MURDOCH: I believe it was June, yes.

FARRELLY: OK. "The Sunday Times," a great newspaper, portrayed -- painted a picture on the 10th of July from this file with a cabal of six so-called gatekeepers on the news desk dealt with Glenn Mulcaire, and they named them as Alex Marunchak, Greg Miskiw, Clive Goodman, Neville Thurlbeck, James Weatherup, Ian Edmondson.

Do you recognize that summary from the file that you've had a look at?

JAMES MURDOCH: Mr. Farrelly, respectfully, I would ask you to please understand that detailed questions about any of the evidence, information that we passed to the police in relation to their ongoing criminal inquiries are difficult for me to answer.

And I would appreciate it if we could allow the police to undergo the important work that they are undergoing. There's a process that's important. We are cooperating with it. We are providing information on a regular basis. The company is providing information on a regular basis, as needed by the police. And I really believe that we have to allow the police to conduct their investigation and hold the people who did wrong to account in this area.

FARRELLY: OK. I'll respect --

RUPERT MURDOCH: (INAUDIBLE) want to comment on anything now that could result in guilty people --

FARRELLY: I fully understand.

(CROSSTALK)

FARRELLY: I will respect that. And clearly, the descriptions in the press, so they're on the record, actually do -- and including in "The Sunday Times" do mention that the e-mails implicate Andy Coulson in knowledge of payments to the police, but I wouldn't expect you to comment on that.

So I will -- I will now just turn to the Harbottle and Lewis letter that was provided us -- provided to us by Rebekah Brooks as evidence during our inquiry that this trawl (ph) of e-mails produced nothing -- nothing more. That letter from Lawrence Abrahamson, the then senior partner or Harbottle and Lewis, mentioned that e-mails had been reviewed of Andy Coulson, Stuart Kuttner, Ian Edmondson, Clive Goodman, Neil Wallis and Jules Stenson, and that nothing had come to light from that review that contradicted the lone reporter, rogue reporter working with Glenn Mulcaire.

Having -- knowing what you know now from the other evidence you've discovered, have you looked back at -- in detail at the basis on which Harbottle and Lewis wrote that letter and why they -- why they -- why they gave such a clean bill of health?

JAMES MURDOCH: All I can say is that having directed -- having -- having -- having looked at some of the things in that, and the advice of the senior people inside the company more recently that went and looked at that, it was the view of the company, self-evidently, that it was right to bring this to the attention of the police and go forward. And that opinion from the counsel was something the company, you know, rested on. It was a clear opinion about a review that was done around those records. And in addition, in conjunction with the police continuing to say that there was no new evidence and that there was no reason to open a new investigation, and in conjunction with the PCC (ph) saying that they had done their review and done their inquiry and there was nothing new there, it was viewed that that was a settled matter. And you know, it was only really when new evidence emerged those three things began to be undermined.

FARRELLY: In a follow-up (ph) to the session (ph), could you just provide us with the instructions that were given to the Harbottle and Lewis, the information that -- the extent of the information that was given to them as of the totality of information that was available? That sort of detail would help us conclude what really happened.

JAMES MURDOCH: If there's additional detail required around some of those legal instructions, we will consult and come back to the chairman with a way to -- a way to satisfy you with the information that you'd like to have.

FARRELLY: I mean, clearly, we spotted (ph) last in our report that this review coincided not so much with Mr. Marlowe's (ph) arrival but with the timing of the industrial tribunal actions that Clive Goodman and Glenn Mulcaire were planning, and that begged the question of why these six individuals were named in there. Do you know the reason why it was limited to these six individuals?

JAMES MURDOCH: Why it was limited to those six individuals, I don't know. I think it was in -- I wasn't there at the time, and I can't tell you the circumstances, the conversations that people had with Harbottle and Lewis and the terms of reference of that. But it was viewed that that was something that would be -- it had been viewed after the fact that that was -- you know, had been a thorough look at information. And based on that review, that opinion was issued.

FARRELLY: Neville Thurlbeck is one admission (ph) that immediately jumps out.

JAMES MURDOCH: Again, in hindsight, you can say -- we can all say if somebody looked at this or somebody had known something that wasn't known yet at time. But I can't comment on why the terms and why the scope was what it was.

FARRELLY: The proceedings (ph) by Goodman and Mulcaire for unfair dismissal, notwithstanding the criminal convictions, clearly never saw the light of day because they were settled before then. So therefore, we don't know what they were planning to serve on you. Do you know what sorts of allegations that they were making? We can only imagine that they were saying that such and such a person used such a such person.

(CROSSTALK)

FARRELLY: Have you satisfied yourself about what allegations they were making?

JAMES MURDOCH: Mr. Farrelly, I think many of these individuals you mention are currently subject to criminal investigation. Some have been arrested recently. And you know, these are important matters for the police now. I do think it's important that I don't stray into, or I'm not led into --

FARRELLY: The question was --

JAMES MURDOCH: -- commenting specifically about individuals or allegations made in the past.

FARRELLY: The question was whether you satisfied yourself as to what Clive Goodman and Glenn Mulcaire were alleging in discussions and negotiations that led up to the settlements, if they brought industrial tribunal proceedings against you.

JAMES MURDOCH: As to --

FARRELLY: That was the question.

JAMES MURDOCH: As to Glenn Mulcaire --

FARRELLY: Not what they were alleging, but have you satisfied yourself about what they were alleging?

JAMES MURDOCH: As to Glenn Mulcaire, I -- I'm not aware of allegations at the time and other things. And as to Goodman, again, this was in 2007, before I was there. It's my understanding that that is what Harbottle and Lewis were helping to deal with and that that opinion did satisfy the company at the time when we -- and the company rested on that opinion for a period of time.

FARRELLY: I take it you'd like to take the opportunity to withdraw this letter as an accurate portrayal of what really went on at "The News of the World."

JAMES MURDOCH: Is that the -- is that the letter --

FARRELLY: This is the Harbottle and Lewis letter.

JAMES MURDOCH: It's something -- I think it's something that actually -- you know, I'm glad you've asked about it, actually, because it is a key bit of outside legal advice from senior counsel that was provided to the company and that the company rested on it. I think it goes some distance in explaining, actually, why it has taken a long time for new information to (INAUDIBLE) and actually -- and I would say, Mr. Farrelly, I think it's important. It was one of the bases for which, if you will, the sort of pushback that the company made against new allegations -- it was one of those sort of pillars of the environment around the place that led the company to believe that all of these things were a matter of the past and that new allegations --

FARRELLY: The question was different.

JAMES MURDOCH: -- could be denied.

FARRELLY: The question, again, was different, Mr. Murdoch. I asked you whether this letter, which is still lying on the record as evidence given to this committee, was not, for whatever reason, that your (INAUDIBLE) to a criminal investigation being withdrawn -- would you like to withdraw it?

JAMES MURDOCH: I -- I -- Mr. Farrelly, respectfully, I'm not aware of the legal technicalities of withdrawing that or submitting it on the record. I think it is a relevant document in trying to understand how News International was thinking at the time.

FARRELLY: We'll ask you the question when we (INAUDIBLE)

JAMES MURDOCH: I would say no, but I can come back after taking counsel and seeing if that's a -- if it's a better idea to do it.

FARRELLY: I'll also wind up, given the time, but I've got a few more questions. The -- when -- as you've described it, the -- and as Colin Myler described it, as the e-mail investigation was carried out by the IT department and it was overseen by the director of legal affairs, John Chapman, and the human resources director, Daniel Cloak. Is that your understanding?

JAMES MURDOCH: Pardon me? What was the question? I don't understand. Is it my understanding that --

FARRELLY: The investigation itself. You have described it, Colin Myler described it to us. It was carried out by the IT department and overseen by the director of legal affairs, John Chapman, and the human resources director, personnel director, Daniel Cloak. Is that an accurate description?

JAMES MURDOCH: That is my understanding.

FARRELLY: OK. Can you tell us why John Chapman has left the organization?

JAMES MURDOCH: John Chapman -- John Chapman and the organization decided it was, you know, in mutual interest to part ways. And I think the -- you know, I think one of the pieces here, as well, is for the company to move forward, is for -- and I think this is -- and I think this is important -- you know, many of the individuals, even if there's -- you know, if there's no -- if there's no evidence of wrongdoing or anything like that, and I think that, you know -- and no evidence of impropriety, many individuals have chosen that it's time to part ways. I was not involved with the discussions with Mr. Chapman --

FARRELLY: You have no evidence --

JAMES MURDOCH: -- and I wasn't --

FARRELLY: -- of any complicity by Mr. Chapman to cover up the existence of the file that's belatedly been (INAUDIBLE)

JAMES MURDOCH: I do not have that.

FARRELLY: OK. And can you tell us the employment status of Daniel Cloak?

JAMES MURDOCH: Mr. Cloak left the company some time ago.

FARRELLY: He's (INAUDIBLE)

JAMES MURDOCH: And I don't know what his employment -- he's not in the business. He was the director of human resources for a number of years, not that many, actually -- I'm not sure, but left over a year ago, I think. I can follow up with you the status and --

FARRELLY: OK. And I'm just going through very quickly to the witnesses who came to us. And again, in respect to the file that you've discovered this year, regarding Les Hinton, when did he first become aware of this collection of e-mails and paper, as you call it, that clearly rendered the advice given (INAUDIBLE) the editors (INAUDIBLE) misleading by him? When did he learn about it?

JAMES MURDOCH: I can't speak to Mr. Hinton's knowledge about it. Are you referring to in 2011 or in 2007?

FARRELLY: This document that was left in --

JAMES MURDOCH: In 2007. You would -- you would -- I can't -- I can't speak to his knowledge, but I would -- I would -- I know that Mr. Hinton was aware of the work that had been carried out, and I think he's testified to this committee to that effect.

FARRELLY: Have you asked him whether -- Mr. Murdoch, Senior, have you asked Les Hinton whether he knew about this document?

RUPERT MURDOCH: No.

FARRELLY: Why not?

RUPERT MURDOCH: About --

(CROSSTALK)

JAMES MURDOCH: Which document are you --

(CROSSTALK)

FARRELLY: -- the document that was -- that you discovered in April/May in the offices of Harbottle and Lewis that --

JAMES MURDOCH: I don't think it's -- you know -- you know, I have not asked him, but I also think that, you know, he -- you know, I think he's testified to this, that he as the chief executive of News International at the time would not have been expected necessarily to read X hundreds or thousands of e-mails there, but would rely on the opinion of counsel about what they had done.

FARRELLY: And was Colin Myler aware of this evidence lying with the -- with Harbottle and Lewis?

JAMES MURDOCH: I cannot speak to other individuals' knowledge in the past. I simply don't -- I can't --

FARRELLY: Was Tom Crone?

JAMES MURDOCH: I simply, Mr. Farrelly, can't -- I just don't -- I can't speak for them.

FARRELLY: And Stuart -- Stuart -- that's the general pronunciation. Sorry. Stuart Kuttner?

JAMES MURDOCH: The same goes, Mr. Farrelly. I simply can't speak for them.

FARRELLY: And Rebekah Brooks.

JAMES MURDOCH: I simply cannot speak for (INAUDIBLE) I know that Mrs. Brooks, when she was chief executive of this (ph), was one of the people who brought it to my attention as a new -- as a new thing.

FARRELLY: Just to finish off this questioning -- I'm just going to wrap up. But we're left now with a -- with a situation where you, having looked into this affair, having cooperated with the police, cannot tell us who lodged the file with Harbottle and Lewis, who was aware of its contents, and who kept you from being in the full possession of the facts, evidence that is clearly now being submitted to the police, but clearly contradicts all the assurances that we were given not in one but in two select committee inquiries. And that's, frankly, I hope you'd agree, unsatisfactory.

JAMES MURDOCH: Mr. Farrelly, I can say that the company at the time engaged an outside law firm to review a number of these e-mails. They were provided to the law firm, as I understand it. They were reviewed. An opinion based on that review was issued to the company of a respected outside law firm, and the opinion was clear. And the company rested on that.

I cannot speak to individuals' knowledge at different times and -- because I -- I simply don't know. What I do know is that the company rested on that, rested on the fact that the police told us that there was no new evidence, there was no reason for a new investigation, and rested on the opinion of the PCC that there was no new information and no reason to carry it further.

And it wasn't until new evidence emerged from the civil trial, the civil litigations that were going on, that we -- the company immediately went to the police, restarted this. Those were the -- and the company has done the right thing in that respect.

FARRELLY: This is evidence that was lying in your company's -- in your lawyers' possession all the time. It's not simply evidence that emerged through litigation. Can I -- can I -- Mr. Murdoch, Senior --

(CROSSTALK)

JAMES MURDOCH: The Harbottle (INAUDIBLE) was re-looked at -- sorry, Mr. Farrelly. The -- may I?

FARRELLY: Yes.

JAMES MURDOCH: The -- was looked at in conjunction with the new and restarted criminal investigation. And these are serious matters and we take them seriously. When we looked at those, when it was looked at, and it was deemed that these things would be of interest to the police, we immediately actually brought in additional counsel, Lord McDonald (ph), who I believe you, Mr. Farrelly, mentioned earlier, and -- to help advise the company on what the appropriate way forward in terms of full transparency and cooperation with police investigations were. And they're very serious matters, and the company took them very seriously.

FARRELLY: Mr. Murdoch (INAUDIBLE) just two questions.

UNIDENTIFIED MALE: Very quickly.

FARRELLY: The situation that I've just painted, where we're now here, not knowing who at News International, "News of the World" was complicit in keeping that file containing however many bits of paper -- we're not -- we're nowhere near knowing who knew what and when about that file, evidence that clearly contradicts not only -- not only the (INAUDIBLE) select committee, but evidence as it would appear that -- that led your closest and trusted aide over many years, Les Hinton, to give misleading evidence. Do you find that a satisfactory state of affairs?

RUPERT MURDOCH: No, I do not.

FARRELLY: And what do you think the company should do about it in a follow-up to this select committee inquiry?

RUPERT MURDOCH: Well, Mr. Chapman, who was in charge of this, has left us. And he had that report for a number of years. And until (ph) Mr. Lewis looked at it carefully, that (ph) we immediately said (INAUDIBLE) legal advice, see how we go to the police with this, how we should present it, et cetera.

(CROSSTALK)

JAMES MURDOCH: My understanding is that the file was with the lawyers, it was with the law firm and there had been no reason to go and relook at it. Again, the opinion was very, very clear based on the review that was done. And as soon as it was in the new criminal investigation, it was deemed appropriate to look at. It was immediately done so.

FARRELLY: Mr. Murdoch you either regressed on the point or you're not reading your own newspapers in the form of the "Sunday Times."

My final question, Mr. Murdoch. Given the picture that's been painted of individuals on the news desk acting as gatekeepers for a private investigator, do you think it's possible at all that editors of your newspaper would not have known about these activities?

Do you think it's remotely possible?

RUPERT MURDOCH: I can't say that because of the police inquiries and coming -- I presume coming judicial proceedings. That's all I can tell you, except it was my understanding -- I better not say it. But it was understanding that Mr. Miler (ph) was appointed there by Mr. Hinton to find out what the hell was going on and that he commissioned that Harbottle and Lewis inquiry. Now, that is my understanding of it. I cannot swear to the accuracy of it.

FARRELLY: Thank you.

WHITTINGDALE: I am going to appeal for brevity because we've been going for two hours now.

Alan Keen.

ALAN KEEN, BRITISH CULTURE, MEDIA AND SPORTS COMMITTEE: What I would like to know it, it's a mystery to us how some of the newspapers broke it. I'm very familiar with the (INAUDIBLE) industry. Could you try to paint a picture of a week's operation at ""News of the World"?" What affairs were you closely involved controlling the ""News of the World"?"

JAMES MURDOCH: My involvement in the business Was overseeing the region of Europe and Asia, just to be clear in 2008, starting in middle of December until 2007 (ph), I was chief executive for Europe and Asia, our European television business, our Asian television business, as well as our UK publishing business, one title of which is the ""News of the World"." So I can't say I was ever intimately involved with the workings of the ""News of the World"."

KEEN: What results would come to you within the seven days after publication? Presumably the sales, the advertising income and the newspaper on the profitability week by week presumably. I know that -- you know, Rupert Murdoch would find it (INAUDIBLE) -- and yet when you were --

RUPERT MURDOCH: I certainly get that.

KEEN: (INAUDIBLE).

JAMES MURDOCH: Yes, yes. These are enterprises and sales and advertising figures and personnel numbers and all of those things are relevant. Managers look at those things.

KEEN: We understand from questions that have been answered already that when it comes to legal issues, settlement of claims, that that's taken outside from the day-to-day management of the news, isn't it?

JAMES MURDOCH: Each group of companies or entitlement will have their own legal executives who will deal with things like libel and other things that will try to check if something doesn't go into the paper that's going to be wrong, et cetera. Sometimes that's right, sometimes it's wrong. But each has its own legal resource and the managing editor's office is very involved in those things, as well as the counsel office in the newspapers.

KEEN: Yes. So the editor of the "News of the World" --

RUPERT MURDOCH: My week's -- my son's typical week would well have been a day in Munich or a day in Sky Italia, where he had a very particularly difficult situation with a particularly tricky competitor, if I may say so. And he had a lot on his plate.

KEEN: I'll leave some of these -- (INAUDIBLE). It became clear from the first couple of questions to you, Rupert Murdoch, that you've been kept in the dark quite a bit on some of these. We have seen these (INAUDIBLE).

Is there no --

RUPERT MURDOCH: Nobody kept me in the dark. I may have been lax in not asking more, but it was such a tiny part of our business.

KEEN: I understand that. But obviously, we've come to this point. We wouldn't here if it wasn't extremely serious.

RUPERT MURDOCH: It's become extremely serious.

KEEN: Is there no written rules that certain things have to be reported straight to the very to top? If there are no such rules (ph)?

RUPERT MURDOCH: Yes. Anything that's seen as a crisis --

KEEN: It's left to the trustees (ph)?

RUPERT MURDOCH: Anything that's seen as a crisis comes to me.

JAMES MURDOCH: Mr. Keen, may I?

I think it's important to know that there's a difference between being kept in a dark and a company that's a large company, the management of which is delegated to managers of different companies within the group and so on and so forth.

And I think to suggest that my father or myself were kept in the dark is a different thing from saying that actually the management and the running of these businesses is often delegated, either to the chief executive of a different company or an editor or managing editor or an editorial floor (ph) and decision-making has to be there.

There are thresholds of materiality, if you will, whereby things have to move upstream, so something has to be brought to the attention. From a financial threshold point of view, I think we addressed that earlier, with respect to the settlement -- out of court settlement with Mr. Taylor. But also from the standpoint of things like alleged criminality, violations of our own code of conduct, things like that, those are things that the company's internal audit function, as well the audit committee, as well as the senior executives of the committee are expected to be made aware of as they were in the case of the criminal prosecutions in 2007.

KEEN: But, you know, whatever efforts were made, whatever rules there were, you know, we reached -- News International has reached a crisis point otherwise you wouldn't be here today and the "News of the World" wouldn't have been closed.

Who really is responsible? Who do you hold responsible for that failure? If -- you're saying that people should have told me, but -- no, you're really saying just now, not that they should have told you, but that -- you know, you let them get on in managers (ph). But they should have told you, shouldn't they?

JAMES MURDOCH: Mr. Keen --

KEEN: What's gone wrong?

JAMES MURDOCH: Mr. Keen, it's a good question, but I think it's not to say that we're saying -- and I'm not saying that somebody should have told me. To my knowledge certain things were not known and when new information came to light, with respect to my knowledge of these events and to the understanding -- when new information came to light, the company acted on it. And the company acted on it in a right and proper way as best the company could. But it's difficult to say that the company should have been told something, if it's not known that a thing was a known fact to be told.

Now, I've been asked today that, you know, about what other people knew when and I can only rest on what they have told me or what they have told you in previous hearings and I know -- I understand completely your frustration about this. You can imagine my own frustration in 2010, when this civil litigation came to a point where things were -- came out and to suddenly realized that actually the pushback or the denial of the veracity of allegations that had been made earlier, particularly in 2009, had been too strong.

KEEN: And I suppose really this is a rhetorical question. I'm sure your answer will be what I expect. But, it's admirable the fact that you've had such long-term employees who have become friends, very close friends, I'm sure of (INAUDIBLE). And, Mr. Rupert, explained that with determination to look after Rebekah Brooks. So it's admirable.

But there was a lot of criticism at the time. This isn't a criticism, James, of your ability. But there was criticism in the financial press that it was nepotism to appoint -- in retrospect, as to (INAUDIBLE) rhetorical question, I know what the answer will be.

But, do you regret, do you regret, Mr. Rupert, it has become really a family organization -- RUPERT MURDOCH: Let me just turn back to this. When the judge became available of head of BSkyB, several people were fired, including my son. (INAUDIBLE) Not just board committees, but outside experts, et cetera, who made the conclusion that he was the right person. The press all had a field day.

When he left to go to what I promoted him to take charge of much wider responsibilities, we had calls from all the big shareholders -- I say all -- many big shareholders saying it was a terrible thing to take him away because he had done such a great job.

JAMES MURDOCH: Yes. I said I wasn't disputing the ability of James. But, you know, the fact that you have been -- you didn't know about so many of these criminal activities that went on. Do you not think that was made more likely because of this sort of family history? I don't just mean James here. I'm talking about people that weren't direct members of your family, but became friends? It's admirable but it's --

RUPERT MURDOCH: No.

KEEN: You don't think that's --

RUPERT MURDOCH: No, I don't. I don't think --

KEEN: -- mismanagement, because it has been mismanaged.

RUPERT MURDOCH: I don't think Mr. (INAUDIBLE) mislead me for a minute but you must find out for yourself and make your own conclusion. Other people who gave the same evidence may well have been misleading you, but he certainly did not know of anything.

KEEN: Thank you very much.

WHITTINGDALE: I've got two more members -- Damian Collins.

DAMIAN COLLINS, BRITISH CULTURE, MEDIA AND SPORT COMMITTEE: Thank you.

Before I address my questions to the hearing, I'd like to make a short declaration of my own which is something I previously declared to the committee which is just to say that my wife is an employee of a company called Edelman, which has been engaged by News Corporation. She's never worked on this council, there's no access to the information relating to it. But I just want to share that with you before I ask you any questions.

Mr. Rupert Murdoch, you said earlier on we live in a transparent society. Do you think it's right that people in public life can expect total privacy in a society like that?

RUPERT MURDOCH: No.

COLLINS: And where do you think that lies? I noticed in the Watergate investigation, for example, personal banking and phone records were used that belonged to one of the witnesses that were relevant (ph) to that investigation. So to what extent do you think the use of confidential, private information, even phone records, even phone- hacking is permissible in the pursuit of a news story?

RUPERT MURDOCH: Oh, I think phone hacking is something quite different. But I believe that investigative journalism, particularly competitive, does lead to a more transparent and open society as inconvenient as that may be too many people. And I think we are a better society because of it. And I think we are probably more an open society than even the United States.

COLLINS: Where do you draw the line on that, if I may ask? Where are the boundaries of a legitimate investigation? What's out of bounds?

RUPERT MURDOCH: Well, there was a great -- we thought it would have been a terrible outcry when the -- I'm sorry to say this -- I know (INAUDIBLE) or anyone else around here. But when the "Daily Telegraph" bought a series of stolen documents of all the expenses of MPs, it caused a huge outcry, one of which I feel has not been properly addressed. I think there is an answer to it and we ought to look at them as open and clear society in the world, which is Singapore, where every minute gets at least a million dollars a year and the prime minister a lot more and there's no temptation and it is the cleanest society you'd find anywhere.

COLLINS: Good luck in selling that idea.

(LAUGHTER)

JAMES MURDOCH: May I help Mr. Collins?

COLLINS: No, I mean that seriously.

RUPERT MURDOCH: It is ridiculous. People were reduced to doing what they did.

JAMES MURDOCH: May I help, Mr. Collins? Which is that the -- cause I think it's a very good question, and I think it's a really important question, and I understand it's going to be one of the subjects of the judicial inquiry, which the prime minister announced last week, which as a company we immediately welcomed and we look forward to.

This question of public interest, the question of what's acceptable and what isn't in terms of investigative techniques is an important one. But let me be very clear, the codes of conduct of news corporation globally for employees, journalists or otherwise are very clear, that breaking the law is a very, very serious matter. It should be -- you know, people who are lawbreakers should be held to account. And in the matter of something like phone hacking or topically, payments to police and things like that, we don't think they should have any place in our business.

DAMIAN COLLINS, BRITISH CULTURE, MEDIA & SPORT COMMITTEE: So James Murdoch, you would be very clear that within your company, within your organization our questions, (INAUDIBLE) people should have been very aware that phone hacking was not only illegal but totally unacceptable?

JAMES MURDOCH: Well, I think -- and I think -- I think after the -- I think after the -- particularly in light of the successful prosecutions and convictions of the individuals involved in 2007, you know, it could not be taken more seriously. And if new evidence emerges, as it has in cases, you know, the company acts on it very, very quickly.

COLLINS: To what extent do you think you have a cultural problem? I mean, Rupert Murdoch, if I may, do you think you have a cultural problem within your organization that people only tell you things that you want to hear, and even people that have been your trusted advisers and work with you for years simply withhold information simply because they want to curry favor?

RUPERT MURDOCH: No, not my trusted advisers, certainly. You should hear the conversations in my office. They're coming in all the time.

COLLINS: Forgive me, I'm only asking because a lot of your trusted advisers --

RUPERT MURDOCH: -- and arguing.

COLLINS: (INAUDIBLE).

RUPERT MURDOCH: Most people would say I've got crazy ideas and (INAUDIBLE) against me,

COLLINS: So, I mean, a lot of your trusted advisers have left your company in days?

RUPERT MURDOCH: No, look we're a very big company. I'm sure there may be people that try to please me. That could be human nature, and it's up to me to see through that.

COLLINS: Let me ask you, to what extent do you think there is pressure on editors and senior managers to get scoops, to out to each other, to win favor within the organization that leads them to take risks, and clearly in the case of "News of the World," push boundaries that broke the law?

RUPERT MURDOCH: (INAUDIBLE) that again, I'm sorry.

COLLINS: Why do you think -- do you think there's a pressure on editors of your newspapers which leads them to take risks and break boundaries where "News of the World" there's illegal action of wrongdoing, people broke the law, in order to get scoops?

RUPERT MURDOCH: No, I think it was terribly wrong. I -- I -- there's no excuse for breaking law at any time. (INAUDIBLE) excuse, if I may say so, and I think rightful for what newspapers, more newspapers, when they wish to campaign for a change in the law, but never to break it.

COLLINS: Just two, two further questions if I may. RUPERT MURDOCH: I'll just say I -- this is perhaps addressing some of that, I just wanted to say that I was brought up by a father who was not rich but was a great journalist. And he, just before he died, bought a small paper specifically, and he was always saying, (INAUDIBLE) given a chance to do good. And I remember what he did and what he was most proud of and for which he was hated in this country by many people for many, many years, which was expose the scandal in (INAUDIBLE), which I remain very, very proud of.

COLLINS: I think all students of history are well aware of it.

RUPERT MURDOCH: That just addresses the question of being a family business. But I would love to see my sons and daughters follow everything, if they're interested.

COLLINS: Rupert Murdoch, you said earlier on that that you have had frequent meetings with prime ministers during your career. In the period after the arrest --

RUPERT MURDOCH: I wish they'd leave me alone.

(LAUGHTER)

COLLINS: -- of Clive Goodman, which you said you aware -- you said earlier on you were aware of the situation when Clive Goodman was sent to prison and you were at the case of that stage. In the years after that where there were numerous reports, investigations, hearings of this committee, we've heard a lot about them today, did any senior politicians that you are in contact with or you were in contact with during that period raise this as an issue with you? Raise concerns about phone hacking?

RUPERT MURDOCH: Absolutely never. The politician I met most in those days was Mr. Brown when he was chancellor (INAUDIBLE). His wife and my wife struck up quite a friendship, and our children played together on many occasions.

And I'm very sorry that I'm no longer -- I felt he had great values, which I shared with him. I'm sorry that we've come apart, and I hope one day we'll be able to put it together again.

COLLINS: This is all -- one point of question to Rupert Murdoch, which is, you said in your interview you gave to "The Wall Street Journal" that you thought that your fellow executives for the News Corporation had handled this crisis very well with just a few minor mistakes.

Do you stand by that statement, or do you believe the level of mistakes was far greater than that?

RUPERT MURDOCH: Well, they seem big now. I mean, what we did was terrible as far as handling the crisis. The -- I'm sorry. I've decided to just tell it (INAUDIBLE)

(LAUGHTER) RUPERT MURDOCH: I don't believe that either he or Mr. Hinton made any great mistakes, or any -- but were mistakes made within the organization, absolutely. Were people I trusted or that they trusted badly betrayed, yes.

COLLINS: Referring this to James Murdoch, it was reported when Rebekah Brooks aspect of the -- the staff, when "News of the World" -- they asked to close "News of the World" was made, that she said that in a year's time they might understand why the paper had to close.

What do you think -- I want to ask you to comment on what she thought in saying that. Do you think -- what's the significance of that period of time of a year? Are you expecting there to be significantly more revelations that will come out that made the closure of "News of the World," in hindsight, inevitable?

JAMES MURDOCH: I don't -- I can't speak to what she was specifically referring to as -- when she was saying goodbye sadly to the staff.

But I can say that, you know, what happened at the "News of the World" in the events leading up to the 2007 affairs and prosecutions and what we know about those things now were bad, and there were things that should not have any place in our organization, and there are things we unreservedly and really sincerely am sorry for.

We haven't seen the end of this in terms of the ongoing police investigations that are there. As you know, Mr. Collins, there are a number of people who have been arrested. We don't know what's going to happen in the future around those things.

But given the breach of trust, given the allegations that were emerging at a rapid pace, you know, it was clear to me, anyway, and I think that the future will bear this out without any specific knowledge of the future, obviously, that it was the right thing for the paper to cease publication.

COLLINS: Your father said in his "Wall Street Journal" interview that you, Mr. James Murdoch, had acted as fast as he could the moment he could.

Does that suggest that you were held back at any point, have you been frustrated in this process in the last few weeks?

JAMES MURDOCH: As I said to the committee earlier, I can't remember which member, my apologies, but Mr. Collins, you know, this has been a frustrating process. And actually, you know, my frustration I think, my real anger to learn that there was new evidence emerging as late as the end of 2010 was real and is real.

And you know, what I've done and what the company has tried to do is take new information, adjust our course, behave with propriety, behave quickly, behave in a humble way with respect to what's happened and with respect to trying to really put it right. And that's what we're trying to do. It was enormously frustrating. That does not mean that I have any knowledge of anyone intentionally misleading me in the company, I don't, which makes it doubly frustrating. But it is -- we are where we are. New information emerged through a legitimate due process of a civil trial. The company acted on it as fast as possibly could be expected. And actually, still new information or new allegations are emerging that, you know, the company is -- we are trying to deal with in as right away as we can, in the best way possible.

COLLINS: Thank you.

WHITTINGDALE: (INAUDIBLE) And finally, Louise Mensch.

LOUISE MENSCH, BRITISH CULTURE, MEDIA AND SPORT COMMITTEE: The good news is that I am your last questioner, and I will try to be -- I have a few very specific questions that I would like to ask you.

Starting with you, Mr. James Murdoch, I know we have been over at length the differences in the size of the settlements paid, the Taylor settlements and the other settlements that followed. Can you tell me whether or not the Taylor settlement included a confidentiality clause and maybe the other settlement did not?

(DISTURBANCE WITHIN ROOM)

UNIDENTIFIED MALE: Outrageous.

This hearing is suspended for 10 minutes.

RICHARD QUEST, CNN INTERNATIONAL CORRESPONDENT: What seems to have happened is a -- what seems to have happened is a disturbance in the committee room in terms of the normal protocol. The picture has immediately gone to the wall so we can't see what that disturbance was.

From the vantage point of looking at the picture, there was a lot of noise, something happened off to the left. It's not clear if anybody had tried to approach the Murdochs or not. Certainly, it was just a question of noise and a lot of shouting, which is somewhat surprising, since the hearing has been going on for nearly two and a half hours, why it should happen at this particular moment isn't clear.

Judging from the seconds that we saw before the camera moved off the committee and on to the wall -- that picture you're looking at at the moment, by the way, is bluntly the wallpaper above the committee, and that is the normal protocol both in parliament and in these committees, if there is an incident then it tends to move away.

The only other incident there has been during this particular hearing was right at the beginning, a sign was held up saying. "The people against Murdoch" and there was a lot of to'ing and fro'ing and a bit of shouting.

We're going to show you exactly what happened so you can see for yourself again. Let's just look at those pictures. The moment when the incident happened.

(VIDEO CLIP)

QUEST: OK. Now, that's what happened.

So what did we see? We heard a noise, a lot of shouting. You saw James Murdoch leaping, looking to go to his father's defense. His father, Rupert Murdoch, remains seated throughout. And it doesn't seem at that point -- there we go. Look -- it doesn't seem as if anything happened in terms of actually getting to the Murdochs, then a member of the police, traditional British bobby right the way down to the helmet goes and joins in.

We don't know what it's all about. And there you see the pictures again, we'll keep showing you that so you can make your own judgments.

What have we heard over the last two and a half hours? Long, detailed testimony.

Jeffrey Robertson is a leading human rights attorney, he has argued many landmark media cases, acted both for and against Rupert Murdoch. Jeffrey is with us now.

Very detailed, Jeffrey Robertson, but what do you make of what we've heard?

JEFFREY ROBERTSON, HUMAN RIGHTS ATTORNEY: Well, the first interjection, Rupert said this is the most humble day of my life. That was his carefully rehearsed interjection because the strategy of the Murdochs, father and son, was clearly to let James do all the talking in his rather management-speak, Donald Duck accent, doing generalizations that were difficult to pin down.

And this committee did rather badly, I have to say, in cross- examination. They were feckless, they weren't forensic. They didn't get at very much truth.

I think the two things that came through, first the symbol, which Rupert admitted of going to number 10 Downing Street, at the prime minister's suggestion going in the back door, to be congratulated and thanked for his electoral support, and he had done that with previous prime ministers as well. So there is a symbol of the seamy side of British democracy, the proprietor who delivered the verdict being snuck in like a rat at the back door.

The other interesting shaft of light which had both Murdochs I think on the run, it was asked by Paul Farrelly and He didn't follow it up too well, but it was have you paid Glenn Mulcaire's legal fees and are you still paying them.

Well, the Murdochs didn't know which way to look. Father and son mumbled something about legal advice, it was obvious they admitted they had paid Glenn Mulcaire. Murdoch said maybe the contract requires us to still pay him. This is the man who hacked Milly Dowler's phone, who hacked the phones that -- of the grieving relatives after their sons and daughters had been killed by terrorists or in action, and for whom the Murdochs have pretended to have apologized for, for this man's action, yet they may still be paying his legal fees as they've done in the past.

Now, what the committee should have said is will you stop paying them immediately --

QUEST: If I may, please.

ROBERTSON: -- will you call upon Mr. Mulcaire to tell us the truth whatever your contractual arrangement.

QUEST: OK, Jeffrey, I'm sorry, I'm going to interrupt you there. I do need to interrupt you because I just need to give some more facts about the incident that we have just seen take place.

And apparently, the police have removed an individual from the hearing room with a white substance. Whether that is paint or some sort of powder, we don't know, but somebody has been removed from the room. Police are laughing it off in some ways and sort of saying that it's not a terribly serious incident that took place.

But -- oh, and there's Big Ben chiming 5:00 in the afternoon. The day has moved on quite rapidly.