Murdochs in showdown with British government

The latest bombshell in this fast developing story came after British PM David Cameron announced a broad, multi-pronged enquiry into the growing scandal around Rupert Murdoch's newspapers, press regulation and allegations of police corruption relating to the scandal.

Kevin Anderson July 14, 2011 17:43:45 IST
Murdochs in showdown with British government

Bowing to ever-mounting pressure, News Corp withdrew its bid on Wednesday for the remaining 61% of BSkyB that it doesn't already own.

The bid was withdrawn after British Prime Minister David Cameron joined voices from all three major parties urging Rupert Murdoch and News Corp to abandon the bid.

“What has happened at the company is disgraceful, it's got to be addressed at every level and they should stop thinking about mergers when they've got to sort out the mess they've created,” he said.

The Murdochs now face pressure to appear before a Parliamentary committee investigating the phone hacking charges, but cannot be compelled to appear before the committee because they are not British citizens. Read James Murdoch's response here.

Murdochs in showdown with British government

Activists dressed as British PM David Cameron (L), News Corporation owner Rupert Murdoch (C) and Deputy PM Nick Clegg in a stunt outside a media and broadcasting conference in London. Peter Macdiarmid/Getty Images

Deputy Prime Minister and Liberal Democrat leader Nick Clegg said that if senior executives refuse to appear, they should be “frogmarched” before the committee, according to The Guardian.

News Corp may also face investigations in the US and Australia. News Corp is a publicly traded US company, and although the alleged criminal activity happened outside of the US, a law called the Foreign Corrupt Practices Act, which punishes bribery of foreign officials by US companies even if abroad, is expected at the very least to trigger an investigation in the US. The US has increased resources to prosecute such cases, according to investigative news site ProPublica.

Senior US senators have called on the Securities and Exchange Commission and Attorney General Eric Holder to open up an investigation to determine if hacking occurred in the US or other laws broken.

The British prime minister welcomed News Corps' decision. The announcement came only hours before a heated debate in Parliament which had originally been to set to approve a non-binding motion urging Murdoch to abandon his BSkyB bid.

Analysts now asked whether News Corp might also sell all of its papers in the UK, The Sun, The Times and The Sunday Times. However, most analysts see the Murdochs as only taking a pause and not completely giving up on their ambitions to own the rest of BSkyB. News Corp could restart their bid in as little as six months.

The latest bombshell in this fast developing story came after British Prime Minister Cameron announced a broad, multi-pronged enquiry into the growing scandal around Rupert Murdoch's newspapers, press regulation and allegations of police corruption relating to the scandal.

Pressure is also increasing daily on embattled News International executive Rebekah Brooks.

Opposition leader Ed Miliband said it was an insult to the family of murdered schoolgirl Milly Dowler that Brooks remained in her job.

Brooks was editor at the News of the World when the schoolgirl's phone was hacked on behalf of the paper and messages were deleted. Those deleted messages gave hope to the police and her family that she still might be alive, and these revelations ignited public outrage and set off the flood of revelations in the last week.

Brooks is said to have offered her resignation, but it is being reported that her offer was not accepted. Cameron said, “She was right to resign, that resignation should have been accepted.”

Cameron put executives not only at News Corps' News International but also at other papers on notice.

“Not only should those responsible be brought to justice, but they should have no future role in running a media company in this country,” he said.

In addition to investigating illegal activities by the press, the enquiry will also look into corruption at the police as allegations surfaced that officers sold contact details for the Queen and other members of the royal family. The police had launched a new investigation with a team independent of the original one that investigated the claims of phone hacking.

The last element of the enquiry would look into a new scheme of press regulation to replace the system of self-regulation in place at the time the scandal broke. Cameron called for a system of independent regulation to be put in place.

“Too much time has been spent courting the media rather than confronting its problems,” Cameron said.

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