Labour MP Tom Watson questioned Rupert Murdoch about the use of covert surveillance techniques by News Corp employees as the company held its first shareholders meeting since the phone-hacking scandal broke.
More than 100 people demonstrated outside the annual meeting at News Corp’s Fox Studios in Los Angeles on Friday evening last week, with some holding up signs saying: “Fire the Murdoch Mafia.”
Watson asked Murdoch whether he was aware that a person who had left prison had been hired by News Corp and hacked into the computer of a former Army intelligence officer.
Murdoch said he was not aware of it and board director Viet Dinh said the company would look into the allegation.
“I promise you absolutely that we will stop at nothing to get to the bottom of this and put it right,” Murdoch told the MP.
Watson recalled private investigator Glenn Mulcaire, who was jailed in 2007 for eavesdropping on the phones of royal staff, as he warned that News Corp faced fresh trouble.
“News Corp is potentially facing a Mulcaire 2,” Watson said. “You haven’t told any of your investors about what is to come.”
Watson got up twice and spoke for a few minutes during the 90-minute meeting, the Associated Press (AP) news agency reported.
Murdoch faced shareholders with small stakes in his company for the first time since the phone-hacking scandal broke in July.
Watson, representing shares owned by the labour group AFL-CIO, used the event to disclose new details of what he claims was the use of covert surveillance techniques by News Corp staff.
The MP has spear-headed a two-and-a-half-year probe into phone-hacking and alleged police bribery at the company’s British newspaper unit.
Murdoch and his son James, who is in line to succeed him, were quizzed by Watson and other politicians in a Westminster parliamentary committee hearing in late July.
Rupert Murdoch said he was ashamed at what happened but declined to take personal blame, maintaining that he e was the best person “to clean this up”.
Rupert Murdoch controls News Corp through his family trust’s 40% stake of voting shares. A key backer is Saudi Prince Alwaleed bin Talal, who controls 7%. The voting stock represents less than a third of the company’s total 44.4 billion US dollars (GBP27.8 billion) market value.
The company’s dual-class share system has come under renewed fire.
Critics say the company’s board is dysfunctional and management has poor oversight of the company.
Several shareholders took issue with a chart Murdoch displayed at the meeting which showed the stock’s upbeat performance compared with most other media peers since the beginning of the year and since the start of July.
They said its performance over 10 years or more had lagged behind its peers, but Murdoch said the chart was being used to address criticism that the company had been hurt by the hacking scandal.
Watson noted with irony that a graphic behind the board members showed the Duke and Duchess of Cambridge, both of whom are alleged victims of hacking by News Corp employees in Britain.
News Corp’s stock is down about 6% from when the scandal broke in early July, although it has been boosted recently by a share buyback plan.
Proxy advisory firm Institutional Shareholder Services had recommended voting out all existing board members, including Murdoch and his sons James and Lachlan. Two other firms, Glass Lewis and Egan-Jones, recommended voting against the sons, among others.
Jay Eisenhofer, co-lead attorney in a shareholder lawsuit against News Corp on charges of mishandling the affair, said on a conference call with Watson yesterday that if even 20% of votes are cast against the re-election of Murdoch and his two sons, it would be a victory.
That is because that would be nearly half the 53% of votes unaffiliated with the family, he said.
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