Friday, 11 November 2011

Murdoch Mysteries or The Sopranos?

It's hardly front page news now - single unremarkable lions on the BBC website, a small article in the Daily Telegraph. James Murdoch, having been sensationally recalled to face a Commons Committee again for allegedly lying to the last sitting, walked away with the moral high ground as self-seeking theatrics took over from pragmatic, forensic analysis. By trying to trying to sensationalise the News of The World's (NOTW) sensationalism, its proprietors could actually walk away under the smokescreen of naivety. James Murdoch must have spent a great deal of money being trained as to how to parry tough questions by his legal team. In the end, it was money wasted as the MPs hadn't prepared their questions or their line of thinking. Maybe that was the way a good 'Mafia' trial should be - if the law of 'Omertà' exists and the Newspaper itself was 'Corporately Murdered' so evidence was 'torched' by a callous, professional 'Hit', then there was no longer a reason to search for the truth? The NOTW and its former employees sleeps with the fishes, indeed.

In reality, the questions about who authorised what were never asked with any fervour to get the truth. Instead of unravelling the Murdoch Mysteries we got the histrionics of the fictional Sopranos. James Murdoch walked away unscathed. All because the questions asked were the ones he could deny and say it was his word against others. Nobody thought to ask, why, in such a well run massive corporation, was governance and management procedure not in evidence whereas everyone knows that it actually does exist in the company?

In asking how such widespread, illegal phone hacking or other unpleasant activities were going on under the noses of managers we might have got somewhere near to understanding how a company could be run without proper management procedures, governance and ethics. How could such large, regular payments be made to outside agencies for 'information' without a proper authorisation procedure? Why, in allowing such payments to be made without authorisations (if they were), was there no counterbalancing inquiries into whether the products of the payments (information) were actually worth the expenditure? In other words, if lower level managers were being authorised/allowed to spend cash, without sign off, where was the management governance to have allowed this to have happened in the first place and was there any assessment of the results of allowing such 'no questions asked' payments to be made? You can't have one without the other in a properly run company - ideally neither.

So, the questioning really should have tackled the issue of why management allowed such activities to have been paid for, because surely the reason management would have allowed 'unauthorised illegal activities' would have been lapse procedures and corporate negligence or because it gained them competitive advantage. Someone would have seen large sums of money being spent by someone or some people without management sign off and question what the results were. For example, if there was management ignorance perhaps it was because the results of the spend were so good as to drive circulation and profits, which is a form of guilt. Or if there was true management ignorance then they were guilty of not only allowing unauthorised spend and but also of not managing the business in terms of matching costs with results.

And, when James Murdoch himself signed off the £700k cheque to Gordon Taylor as compensation, why did he not ask the questions himself to try and gauge how extensive these payments were and therefore understand what the total potential exposure to further payments could be so that he could accrue cost for it and let his Board know? When that huge sum was paid, why on earth did his father not step in and ask the same questions - or anybody for that matter? It's unfeasible in a well run, indeed any, company.

You see you cannot have it always here. The Murdochs are trying to tell us that they run companies without asking questions about the basics like looking over accounts or having procedures and authorisations for spend levels and there was no corresponding scrutiny of the results. This does not match the highly aggressive and ruthless way that the family has run News Corporation. You don't make money without setting out the rules for employees - or will they have us believe that there was a truly delegated structure of authority down to reporters themselves that allowed them all to spend what they liked on anything they liked so long as the numbers look good? Regardless of legal consequence, corporate failure or ethical issues? 

Sound like the Murdoch family? I think not.

In fact, the opposite. When the questions got tough, they showed what they cared about customers, shareholders, employees, suppliers and all - they simply killed a company with a single 'shot'. The NOTW was shut down to kill an annoying line of questions. With it went 165 years of company history, the severed contracts of employees, the contracts of suppliers, building leases, the regard for customers (it had the largest Sunday circulation), and finally any regard to the law. Ethics were long gone. Ruthless Murdoch management rose up and defied common business practice and shut a viable company down in front of authorities and in the public eye.

For all the employees, they took the full blame for all the illegal activities. In reality, it should have flowed up the management tree because if the parent companies truly did not know what was going on then it HAD to be due to lack of procedures, lack of normal management practice, lack of codes of practice, lack of ethics, lack of care to the law, lack of diligence to the shareholders and basic malpractice in business as well as total disregard to the procedures of obtaining news stories which are the very heart of the entire business. That means it wasn't the employees' faults - it was management's inability to run the company responsibly. The closure of the NOTW was itself in violation of every contract that existed in the company. It was a total violation of the rights of every employee - not one was consulted beforehand, no inquiry made as to how they illegalities came about and who was to blame - every one goes. Like a kid not liking the way the game is going, they take the ball away.

In that case, every employee has a bone fide case for Unfair Dismissal in the eyes of the Law, suppliers have every right to claim illegal severance of contracts, customers would have a right to compensation as they would each have implied supply contracts with NOTW (an interesting assertion) and creditors would have every right to ask for full payment of debts and then some.

The MPs missed all this. It became about grandiosely trying to insinuate that James Murdoch had personally known specific details. There was no real teeth to it all. Someone personally signed off the accounts for NOTW and under US Sarbanes Oxley regulations, that person has culpability along with the companies' board for any illegalities or irregularities - you sign off saying you know every detail about all spend. If you haven't taken care, then you are liable for the consequences. That's the rules.

You see it wasn't about phone hacking per se, this was about Corporate Governance. If the MPs had studied how News Corporation makes decisions down to the last penny, they would have found their 'smoking gun'. Instead, we got a lot of grandstanding, pathetic shenanigans ending in a veiled threat by a senior executive of a Corporation to shut down another viable business in the UK flaunting every Corporate and Employment Law. If such a consideration is being made at his level on grounds which are not financial then surely he has already put the employees of The Sun under unofficial notice that their jobs are at risk. Not just a couple of jobs - the lot. Every supplier has been served notice of potential breach of contract, every lessor the notice that a lease will be broken etc.

This is Corporate irresponsibility of the highest order. One family seems to be able to get away with that, allegations of phone hacking, allegations of police bribery and flaunting every employment law in the land.

And James Murdoch walked away. Indeed, we may have felt sorry for him had he not got those rather odd looking glasses on that makes him look like Herr Flick - even the black tie in preparation for the death of The Sun?

Shareholders, customers, suppliers and employees alike should have got the clear message - this is about family, not about you. It was not Murdoch Mysteries or The Sopranos - this was The Untouchables.

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