In addition to offering her “down and dirty” advice for retirees, Somers has strong views on socialism:
And then there is another consideration: It’s the dark underbelly of the Affordable Care Act reminiscent of what Lenin and Churchill both said. Lenin: “Socialized medicine is the keystone to the arch of the socialist state.” Churchill: “Control your citizens’ health care and you control your citizens.”
Unsurprisingly, Lenin never said that line — it’s a decades-old right-wing fabrication. The more curious line is the Churchill quote. It’s almost certainly fake, too; it does not appear in the LexisNexis database or in Google. Unless Somers has done original archival work on Churchill, she seems to have fabricated that quote on her own, or possibly received it via chain e-mail.
But the more interesting question is what does Somers think it means? Does she believe Churchill was warning the world of the dangers of a national health-care system? If so, that’s weird, because he strongly favored such a system. Given the latter, is she holding up Churchill as another European despot who, like Lenin, sought to impose universal health care on his citizens? Somers’s side-by-side listing of Churchill with Lenin, along with Churchill’s actual support for nationalized health care, makes the latter more plausible.
Her argument bounces around a bit, but centers on three things. First: Canadian health care doesn’t work and Canadian doctors want to come to the United States because “they want to reap financial rewards.” Second: Pre-existing condition coverage is good for seniors, but nothing else is. And, third: Lenin and Churchill saw health care as a tool to control the public.
The Canadian stuff is based mostly on an anecdote. That her sister-in-law had to wait to see a doctor is sad! But an old Maclean’s article isn’t terribly compelling, nor would be the idea that Canadian doctors want to come to America to make money. That’s the whole point! Doctors here have far fewer limitations on their ability to make money, which is one factor in increasing health care costs. If you were told you could make way more money doing the same thing somewhere else, you might move, too. That doesn’t mean you’re doing bad work where you are. Regardless, Somers’ claim is not true.
As for the elderly, Somers is very concerned about their health coverage, though in generally vague ways. She acknowledges the value of covering preexisting conditions, but then segues into “let’s get down and dirty; the word ‘affordable’ is a misnomer.” Why? Because premiums are “doubling and tripling” as you “hear on the news” and “most frightening of all, your most intimate and personal information is now up for grabs.” In this case, “the news” probably means Hannity, and “personal information” means … no idea. No idea what that means. She of course misses the whole point about pre-existing conditions: yes, premiums for some people with pre-existing conditions will go up — since many pay no premiums, since they can’t get coverage. And that’s good for kids with cancer just as it is for the elderly.
update: apparently, Mr. Murdoch’s fact checker army had been furloughed, but are now back in the office. The WSJ appended this to the bottom of the story later on today:
CORRECTIONS AND AMPLIFICATIONS:
An earlier version of this post contained a quotation attributed to Lenin (“Socialized medicine is the keystone to the arch of the socialist state”) that has been widely disputed. And it included a quotation attributed to Churchill (“Control your citizens’ health care and you control your citizens“) that the Journal has been unable to confirm.
Also, the cover of a Maclean’s magazine issue in 2008 showed a picture of a dog on an examining table with the headline “Your Dog Can Get Better Health Care Than You.” An earlier version of this post incorrectly said the photo showed and headline referred to a horse.
The iPad only News Corporation experiment called The Daily is shutting down, surprising few. I’m amazed it lasted as long as it did.
Marco Arment speculates that one reason is that The Daily expenses were greater than its revenue. Of course Rupert Murdoch could have chosen to continu losing money on The Daily – the New York Post supposedly loses nearly $100,000,000 a year, but a leaner organization would have served News Corp better:
Well-established news sites are much better for news. Editorials and feature articles need to either be free, like most blogs, or consistently great and worth paying for, as in magazines such as The New Yorker or The Atlantic. But The Daily offered an overreaching mix of ineffective news coverage and unmemorable editorials and features. I’ve never seen anyone share a link to something in The Daily saying that we had to go read this great article that would make us want to subscribe. (In fact, I’ve simply never seen anyone post a link to anything in The Daily.)
The Daily required an extremely large staff to produce. And even with supposedly over 100,000 subscribers, netting them at least about $3 million per year plus ad revenue, that’s simply not enough to pay for a staff that large. (Not even close.)
Murdoch reading News of the World – source unknown
Jack Shafer thinks Murdoch just got bored with it…
When you’re as wealthy as Rupert Murdoch ($9.4 billion) and you control a company as resource-rich as News Corp (market cap $58.1 billion), shuttering a 22-month-old business like The Daily doesn’t signify failure as much as it does surrender.
Murdoch knew what he was getting into when he launched the iPad-only (and then smartphone, Android tablet, and Kindle Fire) publication in February 2011. At a press conference, the mogul claimed to have invested $30 million pre-launch and assumed running costs of about $500,000 a week. According to a report in the New York Observer, attributed to a “source,” the operation was amassing annual losses of $30 million. But again, for someone like Murdoch, $30 million is chump change. His New York Post loses up to $70 million a year, according to some accounts, and you don’t see him closing it. Such losses are rounding errors in the company’s entertainment budget.
To place The Daily venture in scale, the last attempt to start a national, general-interest print newspaper from the ground up—USA Today—lost $600 million over the course of a decade before turning its first profit in 1994. (In today’s money, that’s more than $1 billion.) The National, the national sports daily, lost $150 million (about $250 million, corrected for inflation) in 18 months before closing in June 1991. In the late 1990s, when Murdoch was trying to crash the China satellite TV market, he had invested $2 billion and was losing $2 million a week according to his former right-hand man in that enterprise. So, please, let’s not obsess too much over Murdoch’s squandering of $30 million a year on a failed experiment. In the history of journalistic bets, this was a trivial gamble.
There are almost as many diagnoses of what killed The Daily as there are dollars lost. And most of them are right.
I was never a subscriber, but I did read The Daily during its free month. There was rarely anything of interest to me- it seemed to be a lite version of Newsweek and the New York Post. I won’t miss it.
If there were justice in this world, Rupert Murdoch would have long ago been stripped of his media empire, and forced to rot in a dungeon. But since money and power trump justice 99 times out of a 100, Rupert Murdoch can continue smiling, and thumbing his nose at the law.
David Carr writes, in part:
There are many reasons Rupert Murdoch has avoided any serious consequences from the scandal despite hundreds of British citizens having had their phones hacked, dozens or more being bribed in law enforcement and several dozen more of his employees having been arrested.
…Mr. Murdoch also remains mostly unscathed because much of News Corporation’s business and most of its profits lie here in the United States, where the scandal is viewed as something happening on a distant island.
There have been reports of corporate misdeeds in America, including computer hacking at its News America Marketing division, but other than some faint rumbles in Washington about further investigations, it’s been mostly smoke, no fire.
…But the primary reason Mr. Murdoch has not been held to account is that the board of News Corporation has no independence, little influence and no stomach for confronting its chairman.
Like many media companies (including the one I work for), News Corporation has a two-tiered stock setup that gives the family control of the voting shares. The current board includes family members and several senior executives; the independent slots are filled by a host of familiars.
Viet Dinh, a former Bush administration official, is godfather to Lachlan K. Murdoch’s son. Roderick Eddington was deputy chairman of a division of the company in the late 1990s. Andrew S. B. Knight and Arthur M. Siskind are both former senior executives, and John L. Thornton, the former Goldman Sachs president, served as an adviser to News Corporation on several major deals.
The board also includes Natalie Bancroft, a trained opera singer who made a great deal of money when her family sold Dow Jones, which included The Wall Street Journal, to Mr. Murdoch in 2007, and José Maria Aznar, a former prime minister of Spain, who is a friend of Mr. Murdoch’s.
Being a board member of News Corporation is not a bad gig; it pays over $200,000 a year and requires lifting nothing heavier than a rubber stamp. The directors apparently haven’t asked why the company maintained its “rogue reporter” defense after it became clear that “rogue enterprise” was a more apt description. They appeared to sit silently by while Mr. Murdoch and his son James waited for law enforcement officials to finally ferret out employees of the company’s British newspaper division who were accused of engaging in criminal conduct.
Still, the board may regret being quite so quick to throw its full support behind Mr. Murdoch and the current management. The parliamentary report, as scathing as it was, is only the first of many dominoes expected to fall in the next few weeks and months. Ofcom, the British broadcasting regulator, is assessing whether News Corporation should be allowed to continue to hold its stake in British Sky Broadcasting. For its part, BSkyB was quick to get out the 10-foot pole, reminding everyone that the two companies are separate even though News Corporation owns a 39 percent stake.
A public company in name only, in other words. A true public company would have to do what was best for shareholders, and a public company’s Board of Directors is supposed to lead a corporation down the Straight and Narrow. Instead, News Corporation smiles at corruption, blinks at lawlessness, and counts profit.
“Rupert Murdoch is not a fit person to exercise the stewardship of a major international company”, couldn’t have said it better myself. Fox News should lose their broadcast license, and News Corporation should lose their corporate charter. If corporations are “people”, they should suffer the same penalties…
LONDON — A damning report on the hacking scandal at Rupert Murdoch’s British newspapers concluding that Mr. Murdoch is “not a fit person” to run a huge international company has convulsed Britain’s political and media worlds and threatened a core asset of Mr. Murdoch’s American-based News Corporation.
The parliamentary report, issued Tuesday, found that three senior Murdoch executives misled Parliament in testimony. It also alleges that the company sought to cover up widespread phone hacking that Mr. Murdoch’s News of the World, a tabloid newspaper now shut down, used to gather information about politicians, celebrities and other people in the news.
It has opened deep divisions between the main political parties, accentuated the challenge Prime Minister David Cameron faces in explaining his past ties to Mr. Murdoch and some of his top executives in Britain, and added new momentum to regulators’ scrutiny of Mr. Murdoch’s controlling interest in the British Sky Broadcasting network, or BSkyB, which is one of the most lucrative Murdoch investments.
It also offers new details that suggest further damaging revelations may lie ahead. Sprinkled through its 121 pages are tantalizing references to potentially damaging sealed documents in dozens of lawsuits from the scandal, and an audio recording in police hands of a conversation between two News of the World journalists that may implicate an unnamed Murdoch executive.
The members of Parliament rejected the defense of Mr. Murdoch, 81, that his executives kept him in the dark about the hacking, saying he “exhibited willful blindness to what was going on in his companies and publications.”
It said the use of illegal reporting methods and the efforts to thwart inquiries into the practice came from a culture that “permeated from the top throughout the organization and speaks volumes about the lack of effective corporate governance at News Corporation and News International,” its British newspaper subsidiary.
“We conclude, therefore, that Rupert Murdoch is not a fit person to exercise the stewardship of a major international company,” the report said.
Wow, that’s amazingly brazen, if true. The tough part will be proving it, seems as if News Corporation used the mafia model of having a guy tell a guy to suggest to another guy he might do something illegal…
Part of Rupert Murdoch’s News Corporation empire employed computer hacking to undermine the business of its chief TV rival in Britain, according to evidence due to be broadcast by BBC1’s Panorama programme on Monday .
The allegations stem from apparently incriminating emails the programme-makers have obtained, and on-screen descriptions for the first time from two of the people said to be involved, a German hacker and the operator of a pirate website secretly controlled by a Murdoch company.
The witnesses allege a software company NDS, owned by News Corp, cracked the smart card codes of rival company ONdigital. ONdigital, owned by the ITV companies Granada and Carlton, eventually went under amid a welter of counterfeiting by pirates, leaving the immensely lucrative pay-TV field clear for Sky.
The allegations, if proved, cast further doubt on whether News Corp meets the “fit and proper” test required to run a broadcaster in Britain. It emerged earlier this month that broadcasting regulator Ofcom has set up a unit called Project Apple to establish whether BSkyB, 39.1% owned by News Corp, meets the test.
…James Murdoch, who is deputy chief operating officer of News Corp and chairman of BSkyB, was a non-executive director of NDS when ONdigital was hacked.
and meanwhile, the noose tightens on James Murdoch:
In a continuing effort to distance himself from News Corporation’s embattled British newspaper unit, James Murdoch has stepped down from the board of Times Newspapers Holdings.
The group, established by Rupert Murdoch, chief executive of News Corporation and James’s father, was created to safeguard the editorial independence of The Times of London and The Sunday Times after the media conglomerate bought the British newspapers in 1981, according to public filings with the British government.
James, the youngest son of Rupert Murdoch and once the heir apparent at the $50 billion media company, has over the last several months resigned from a string of corporate boards, both with ties to the British papers and unrelated.
Last week, the auction house Sotheby’s said in a filing with the United States Securities and Exchange Commission that James Murdoch would not return to his board position. Earlier this year he gave up his position on the board of the pharmaceutical company GlaxoSmithKline.
It remains to be seen whether Mr. Murdoch will hold onto his role as chairman of the British broadcaster BSkyB, of which News Corporation holds a minority stake. The company dropped its $12 billion bid to take over BSkyB last summer when a phone hacking scandal thrust News Corporation under increased government scrutiny.
This week, Metropolitan police deputy assistant commissioner Sue Akers told the Leveson inquiry, which is investigating the state of the British press following the phone-hacking scandal, that there was a “culture of illegal payments” at the Sun to a “network of corrupted officials”.
The Sun and its former sister paper, the News of the World, are owned by News International, a wholly owned subsidiary of News Corp, the US media gaint that owns Fox, the Wall Street Journal and a controlling stake in Sky, among other assets.
“This is obviously a very significant development with regards to the likelihood of a US prosecution,” said Mark MacDougall, partner in the Washington office of the law firm Akin Gump Strauss Hauer & Feld and a former federal prosecutor. “If the British authorities are articulating a pattern, a defined scheme, to bribe officials, that is a very big deal.”
The latest allegations significantly increase the likelihood of an FCPA action, said Mike Koehler, professor of business law at Butler University and author of the FCPA Professor blog.
“Last July, when we first started talking about this, there was one newspaper, the News of the World, and one category of foreign official, the police. Now we have another newspaper and a much broader category of foreign officials,” said Koehler.
“The evidence seems to suggest that there was a recognition that these payments may have been illegal and the notion that there were attempts to disguise the nature of these payments,” said Koehler. These elements would fall under the remit of the FCPA.
The original investigation centered on payment to police officers, and there had been some argument that the police did not fit the FCPA’s definition of “foreign government officials”.
Tom Fox, a Houston-based lawyer who specialises in FCPA cases and anti-corruption law, said Akers’s allegations that payments had been made to “police, military, government, prison and health and others” had destroyed that argument.
“Speaking of a culture of corruption is really bad,” said Fox. “There are two main types of FCPA case. In the first, a company has policies in place but fails to detect corruption. The second is far worse. And that’s when there is a programme in place and you ignore it.”
Let’s hope by this summer, or even autumn, the House Corrupt of Rupert Murdoch begins to fall. Just in time for the 2012 election, and Fox News’ ramp up of lies, damn lies, and false statistics…
Nick Davies reports:
On Saturday morning, the police arrested four journalists who have worked for Rupert Murdoch. For a while, it looked as though these were yet more arrests of people related to the News of the World but then it became clear that this was something much more significant.
This may be the moment when the scandal that closed the NoW finally started to pose a potential threat to at least one of Murdoch’s three other UK newspaper titles: the Sun, the Times and the Sunday Times.
The four men arrested on Saturday are not linked to the NoW. They come from the Sun, from the top of the tree – the current head of news and his crime editor, the former managing editor and deputy editor.
Nothing is certain. No one has been convicted of anything. The four who were arrested on Saturday – like the 25 others before them – have not even been charged with any offence. But behind the scenes, something very significant has changed at News International.
Under enormous legal and political pressure, Murdoch has ordered that the police be given everything they need. Whereas Scotland Yard began their inquiry a year ago with nothing much more than the heap of scruffy paperwork seized from the NoW’s private investigator, Glenn Mulcaire, Murdoch’s Management and Standards Committee has now handed them what may be the largest cache of evidence ever gathered by a police operation in this country, including the material that led to Saturday’s arrests.
They have access to a mass of internal paperwork – invoices, reporters’ expense claims, accounts, bank records, phone records. And technicians have retrieved an enormous reservoir of material from News International’s central computer servers, including one particularly vast collection that may yet prove to be the stick that breaks the media mogul’s back. It is known as Data Pool 3.
The US Department of Justice, on its website, helpfully offers links to the text of the Foreign Corrupt Practices Act (FCPA) in fifteen languages, from Arabic to Urdu. The English version is sixteen pages long, and probably ought to be in Rupert Murdoch’s iPad so he can skim through it during his flight this week from New York to London, where the British branch of his media empire made more headlines on Saturday.
…But as the Guardian’s Nick Davies, the reporter who broke the hacking scandal this summer, explained last week, what makes this handover particularly dangerous for the Murdochs is that this data, “which was apparently deliberately deleted from News International’s servers,” might also “yield evidence of attempts to destroy evidence the high court and police were seeking.” Destroying such evidence, or perverting the course of justice, as it’s known here, is a felony in Britain. But it is also a crime under the FCPA—§ 78m (b) 5, which states: “No person shall knowingly circumvent or knowingly fail to implement a system of internal accounting controls or knowingly falsify any book, record, or account.”
Although Davies’s reporting exploded the “rogue reporter” defense, until now the Murdochs have just about managed to maintain plausible deniability for themselves. But the traditional prosecution strategy of picking off the guilty underlings and then flipping them up the corporate ladder has gotten uncomfortably close to James Murdoch—and that was before the company started throwing employees off the train, which is how even longtime Murdoch minions like Trevor Kavanagh, the Sun’s former political editor, see this weekend’s arrests.
As the evidence mounts that much of Murdoch’s journalism was built on illegal invasions of privacy and corrupt relationships with police, three questions remain in urgent need of answers: Why should British authorities permit an in-house News Corporation committee, regardless of how fragrant its members may be, to serve as gatekeepers of the company’s records—especially when there is abundant evidence of efforts to destroy or delete incriminating evidence? In light of the latest arrests relating to corrupt payment to government officials, and bearing in mind actor Jude Law’s claim that his phone was hacked on his arrival at JFK airport, when will the Justice Department get serious about its own investigations? (There is also the lesser question of whether we are really to believe that methods which consistently delivered tabloid gold for editors and reporters in Britain would be too sleazy to tempt the high-minded hacks at the New York Post?)
And finally, what did the Murdochs know and when did they know it? Unlikely as it might have seemed in July, we may be about to find out. As more News Corp. executives come to believe they are being sacrificed to protect Rupert’s succession plan, the probability increases that someone who knows the answer will decide to cooperate with authorities. This gives the Justice Department, in particular, enormous leverage. In 2009 Siemens paid $800 million in fines for violating the FCPA—which also provides for possible prison sentences of up to five years. Amid the steady drumbeat of revelations from London it is important to keep an eye—and ear—on Washington. That’s where you’ll hear the sound of the other shoe dropping.
A nice stiff fine would be nice, or even better, take away their FCC license…
Submerged Danger Object
Lois Beckett reports:
This weekend, five more journalists from a Rupert Murdoch-owned British tabloid were arrested as part of an ongoing bribery investigation.
The arrested journalists, all from the The Sun, were later released, and have yet to be charged with any crimes. (As the Wall Street Journal explained this summer, arrests in the U.K. are often made early in a criminal investigation, and may not be followed by any charges.)
But the arrests have once again raised questions about whether Murdoch’s News Corporation might face prosecution for bribery in the U.S. under the Foreign Corrupt Practices Act.
Reuters reported last week that U.S. authorities are “stepping up investigations” into the potential bribery by Murdoch employees. An FBI spokeswoman told ProPublica, “We’re aware of the allegations and we’re looking into it.”
As we noted during the unfolding of the phone hacking scandal this summer, the U.S. has stepped up prosecutions of companies for bribery of foreign officials in recent years, and the fines for these violations can be steep. Companies can face prosecution by the Justice Department if they record bribery payments, or be pursued by the Securities and Exchange Commission for fake record-keeping if they falsify documents to conceal the bribes.
The statute of limitations on civil Foreign Corrupt Practices Act charges is five years. The New York Times reported Saturday that it was not clear when the allegations that led to the Sun arrests had taken place, “though some of those arrested have told friends that they were questioned on events from almost a decade ago.”
Here’s the biggie: in order for a specific device to get a license for the apps, it must pass the Android Compatibility Test Suite and meet the Android Compatibility Definition. How Google exactly determines what passes the test is really the core issue in this case — Skyhook claims Google uses the threat of incompatibility to act anti-competitively.Interestingly, the license allows Google to change the applicable Compatibility Test Suite and Android Compatibility Definition at will up until the time a device is certified for launch… by passing the CTS. So basically there’s nothing keeping Google from changing the CTS or ACD any way it wants in order to keep a particular device off the market.
Rupert Murdoch, James Murdoch and their former editor Andy Coulson all face embarrassing new allegations of dishonesty and cover-up after the publication of an explosive letter written by the News of the World’s disgraced royal correspondent, Clive Goodman. In the letter, which was written four years ago but published only on Tuesday, Goodman claims that phone hacking was “widely discussed” at editorial meetings at the paper until Coulson himself banned further references to it; that Coulson offered to let him keep his job if he agreed not to implicate the paper in hacking when he came to court; and that his own hacking was carried out with “the full knowledge and support” of other senior journalists, whom he named.
I saw a Bloomberg report on the reverse break-up fee Google and Motorola Mobility (MMI) agreed upon: it’s a whopping, mindboggling $2.5 billion that Google has to pay to MMI if the deal falls through. I’m still researching this but it seems that this is, in relative terms, the highest-ever break-up fee agreed upon in this industry. “On an equity value basis, Google’s fee amounts to 20 percent, compared with the 4.2 percent median since last year”, reports Bloomberg. The same source that told Bloomberg the $2.5 billion figure claims that MMI “would pay a $375 million breakup fee if it decides not to sell to Google”.
How stupid and reckless is the Tea Party? In addition to shrugging off a default threat – or perhaps welcoming one – they believe austerity is the correct medicine for a weak economy!! Where did they study economics, in a cornfield outhouse?? It defies belief that Tea Party members actually think spending cuts will create jobs. No – spending cuts will eliminate jobs. The Know-Nothings don’t understand that, but hey — it’s good for my bonds !!
While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors. These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.
But a simple step that may lower the risk, especially in warm weather, is to stay properly hydrated. Dehydration causes blood volume to drop, researchers say, resulting in less blood and oxygen flow to the brain and dilated blood vessels. Some experts suspect that a loss of electrolytes causes nerves in the brain to produce pain signals. Anyone who has ever woken up dehydrated after a night of heavy drinking knows this feeling as a hangover. But migraine sufferers may be more sensitive to the effects of dehydration.
Look, I can understand if you get frustrated with Barack Obama. Like all politicians, he’s imperfect. He has taken some positions that are completely wrong (his education policy leaps to mind; his foreign policy has been at best a mixed bag), and he certainly hasn’t done a good job of articulating the counterargument to the nihilism that defines current Republican policy. I believe that he’s better in many ways than his liberal detractors think, but that doesn’t mean he’s perfect, it doesn’t mean he never deserves criticism, and it doesn’t mean you can’t state that frustration and still be a supporter of liberalism. Indeed, sometimes being a supporter of liberalism requires it. But when you take the next step, and declare that you’d rather vote for Michele Bachmann than support Barack Obama for president, you have completely lost the thread.
Now, I personallly have little patience for people trying to prove how hard they are generally speaking, and especially when said people are highly privileged liberals preening like they’re tough because they’ll “punish” the Democrats with their precious, precious votes—didn’t you know their votes count five times as much as yours? Well, they should anyway. The belief that the choice is to do things 100% your way or to give up altogether is what drives the Tea Party, which is why Rhodes has functionally become a Tea Partier, who will give the resentment vote to whatever asshole the GOP runs. I’m not going to argue the relative merits of Obama over fucking Bachmann, or Perry, or Romney. That just creates more opportunity for idiots and assholes to preen about how they’re lefter-than-thou, so left that they’re willing to destroy this country in order to make a point about how superior they are to everyone else.
Michael Wolff of Adweek has been a follower of the Rupert Murdoch News Corporation for a long time, even written a book1 about Murdoch a while ago (before the current, seemingly ever-escalating scandal). Mr. Wolff is not surprised that the FBI and the DOJ are considering pursuing RICO statute investigations into News Corp.
In my biography of Rupert Murdoch, I referred to News Corporation as Mafia-like, provoking the annoyance of my publisher’s libel lawyers. I explained to them that I did not mean to suggest this was an organized crime family, but instead was using “mafia” as a metaphor to imply that News Corp. saw itself as a state within a state, and that the company was built on a basic notion of extended family bonds and loyalty.
But just because it’s a metaphor doesn’t mean it isn’t the real thing, too.Well-sourced information coming out of the Department of Justice and the FBI suggests a debate is going on that could result in the recently launched investigations of News Corp. falling under the RICO statutes.
RICO, the Racketeer Influenced and Corrupt Organizations Act, establishes a way to prosecute the leaders of organizations—and strike at the organizations themselves—for crimes company leaders may not have directly committed, but which were otherwise countenanced by the organization. Any two of a series of crimes that can be proven to have occurred within a 10-year period by members of the organization can establish a pattern of racketeering and result in draconian remedies. In 1990, following the indictment of Michael Milken for insider trading, Drexel Burnham Lambert, the firm that employed him, collapsed in the face of a RICO investigation.
Right Turn Ahead
Michael Wolff continues with some more details about the criminal culture of News Corporation, and Rupert Murdoch:
As it happens, much of this pattern of conduct at News Corp. has long been hiding in plain site. How the company has gotten away with such behavior is, in fact, a subtext of the investigations that are now unfolding.
Partly, the company has escaped legal scrutiny because this is a boys-will-be-boys sort of story. News Corp.’s by-any-means aggressiveness has become so much a part of its identity that it seemed almost redundant to find fault with it. Everybody knew but nobody—for both reasons of fear and profit—did anything about it; hence its behavior has become, however unpleasant, accepted.
And partly, it’s because the fundamental currency of the company has always been reward and punishment. Both the New York Post and Fox News maintain enemy lists. Almost anyone who has directly crossed these organizations, or who has made trouble for their parent company, will have felt the sting here. That sting involves regular taunting and, often, lies—Obama is a Muslim. (Or, if not outright lies, radical remakes of reality.)
Threats pervade the company’s basic view of the world. “We have stuff on him,” Murdoch would mutter about various individuals who I mentioned during my interviews with him. “We have pictures.”
Similarly, the Post and Fox News heap praise and favors on partisans, who in turn do them favors (the police, in New York as well as London, receive and return the favors). This reward and punishment has translated into substantial political power, both in terms of regulatory advantages and, too, in the ability of the company to shield itself from the kind of scrutiny that it has taken a perfect storm of events to have it now receive.
Then, too, as one of the largest media organizations, it has insured a hands-off attitude (if not policy) from other media organizations—those which have business with it, or whose executives want to protect their prospects of working for it, or that extend courtesies in the hope they will be extended back. There’s also the money. Ultimately, if you have the goods or the savvy with which to damage the company, you get paid off. In London, that’s how News Corp. thought it could contain the hacking scandal, with big cash payments to and confidentiality agreements with the hacking victims.
Nothing relevatory, but still, any more discussion of Rupert Murdoch’s criminal enterprise is good…
Tim Dickenson reports, in part:
At first glance, the systemic campaign of bribery and wiretapping at the News of the World certainly does seem extraordinary. Reporters and editors at what was the largest-circulation Sunday paper in the English-speaking world stand accused of bribing police, hacking the private voicemails of everyone from the royal family to the parents of soldiers killed in Iraq and Afghanistan, and paying more than $2 million in gag settlements to victims — allegedly with the full knowledge of Murdoch’s son and heir apparent, James.
But the corruption exposed at the News of the World is not the work of a “rogue” element within News Corp. — it’s a reflection of the lawless culture that defines the company. As CEO, Murdoch not only tolerates employees and executives who push the boundaries of legality and good taste, he celebrates them — at least until the cops show up. “There’s a broader culture within the company,” Col Allan, editor of Murdoch’s New York Post, crowed in 2007. “We like being pirates.” Whatever veneer of integrity News Corp. may have accrued after its purchase of The Wall Street Journal the very same year masks an ingrained corporate ethos that believes integrity is for suckers. The attitude passed down from the top, says one veteran of Murdoch’s tabloids, is aggressive and straightforward: “Anything we do is OK. We’re News Corp. — so fuck you and fuck your mother.”
Indeed, an examination of Murdoch’s corporate history reveals that each of the elements of the scandal in London – hacking, thuggish reporting tactics, unethical entanglements with police, hush-money settlements and efforts to corrupt officials at the highest levels of government – extend far beyond Fleet Street. Over the past decade, News Corp. has systematically employed such tactics in its U.S. operations, exhibiting what a recent lawsuit filed against the firm calls a “culture run amok.” As a former high-ranking News Corp. executive tells Rolling Stone: “It’s the same shit, different day.”
HACKING AND HUSH MONEY News America Marketing, a News Corp. subsidiary based in Connecticut, has been accused of engaging in “illegal computer espionage,” repeatedly hacking a rival firm’s computer system between 2003 and 2004 — a period that happens to coincide with NOTW’s voicemail hacking in London. According to a lawsuit against News America, which dominates the lucrative market for ads on supermarket shelves and shopping carts, the Murdoch subsidiary grew alarmed when a competitor called Floorgraphics Inc. entered the market in the late 1990s with a novel concept — ad decals pasted on supermarket aisles. Paul Carlucci, the CEO of News America, responded by convening a meeting with FGI executives and allegedly delivering a Mafialike ultimatum: Sell to Murdoch or be destroyed. “I work for a man who wants it all,” Carlucci warned, “and doesn’t understand anyone telling him he can’t have it all.”
When FGI rebuffed the takeover bid, according to a lawsuit the company filed in 2004, News America embarked on a campaign of “illegal, anti-competitive and unfair business practices.” After hacking into FGI’s database, the suit alleged, News America used the information to steal away top clients like Safeway, effectively destroying its rival’s business. FGI petitioned Chris Christie, then a U.S. attorney, to launch a criminal investigation into the alleged hacking, but the future governor of New Jersey refused to file charges. By then, the damage was done. News America was able to snap up FGI for $30 million — not only achieving Murdoch’s original goal of market domination but also quashing FGI’s lawsuit in the process.
News Corp. shareholders have paid far more to hush up other complaints about News America’s monopolistic abuses. To box out two more rival firms, Valassis Communications and Insignia, News America used its market position to hike ad rates for supermarket clients who refused to also advertise in Murdoch newspaper circulars. “It feels like they are raping us and they enjoy it,” an executive at Sara Lee complained. In 2009, a Michigan court awarded Valassis $300 million for News America’s illegal attempt to corner the market. News Corp. eventually silenced the affair with a $500 million payment to Valassis that blocked the threat of further litigation. It also reached a $125 million settlement with Insignia. The combined settlements of $655 million more than wiped out the profits News Corp. reaped from its record box-office smash Avatar.
Wishful thinking re: the News Corporation scandal – that corporate media will crumble into smaller, diverse parts. That ship has already sailed, as the phrase goes.
In the United States, politicians have called for investigations into whether News Corporation entities hacked into the phones of Americans, including the victims of Sept. 11 terrorist attacks. The Federal Bureau of Investigation is now investigating; on Tuesday, Mr. Murdoch said that he was aware of no evidence that any 9/11 American victims had been affected.
But media reform groups like Free Press, which advocates for more diversity in media ownership, say their interest extends far beyond any single investigation.
“I think this is the moment to contend with the serious damage the Murdoch empire has done to our media system over the past few decades,” Craig Aaron, the head of that group, said last week.
The 2004 book “The New Media Monopoly” by Ben H. Bagdikian found that more than half of the radio and television stations, daily newspapers, magazines, publishers and movie studios in the United States were owned by five companies. In January, in the most recent case of consolidation, the government approved a bid by Comcast to take control of NBC Universal.
Proponents of media mergers say such combinations improve consumer access to news, information and entertainment. They say the Internet has fostered competition, creating new choices for consumers.
Groups like Free Press say the opposite — that such combinations reduce the country’s journalistic corps and decrease the diversity of voices in print and on the air. Mr. Aaron said he sensed that most Americans were aware of big media brands like Fox and NBC but unaware that their owners also controlled dozens of other brands. Media companies present an obstacle to awareness: “Most media outlets don’t like to cover themselves.”
But “when people find out just how much those companies own, they are worried about it and want to know more,” he said, adding that the who-owns-what chart was the most popular feature on the Free Press Web site.
The New York Times Co. owns more than 50 websites, including: www.about.com, NYTimes.com, global.nytimes.com, Boston.com, www.telegram.com, www.timesdaily.com, www.gadsdentimes.com, www.gainesvillesun.com, www.hendersonvillenews.com, www.houmatoday.com, www.theledger.com, www.the-dispatch.com, www.star-banner.com, www.arguscourier.com, www.pressdemocrat.com, www.busjrnl.com, www.heraldtribune.com, www.groupstate.com, www.dailycomet.com, www.tuscaloosanews.com, www.starnewsonline.com, times.discovery.com, www.nytsyn.com/nytsyn.html, www.nytimesdigest.com, Calorie-Count.com, UCompareHealthCare.com, ConsumerSearch.com and www.blssi.com.
20 Newspapers: The New York Times; International Herald Tribune; The Boston Globe; Sarasota Herald-Tribune, Sarasota, FL; The Press Democrat, Santa Rosa, CA; The Ledger, Lakeland, FL; Star-News, Wilmington, NC; Herald-Journal, Spartanburg, SC; Star-Banner, Ocala, FL; The Gainesville Sun, Gainesville, FL; The Tuscaloosa News, Tuscaloosa, AL; The Gadsden Times, Gadsden, AL; Times-News, Hendersonville, NC; The Courier, Houma, LA; The Dispatch, Lexington, NC; Petaluma Argus-Courier, Petaluma, CA; North Bay Business Journal, North San Francisco Bay Area, Calif; The Winter Haven News Chief, Winter Haven, FL; Worchester Telegram & Gazette, Daily Comet, Thibodaux, LA.
The allegations were first reported by BNET in 2009, and touched upon again by the New York Times today.
In the case, FGI alleged News engaged in a number of anti-competitive practices, including using stolen passwords to illicitly enter its computer system to review or download sales information. George Rebh, the owner of FGI, testified in a New Jersey federal court in 2009 that he had been contacted by Smuckers in January 2004 after the client became curious that News seemed to have confidential information about its business stored on FGI’s password-protected website for advertiser clients. Rebh testified:
We — our IT people looked at our password-protected site to see if there was any access to that site by unauthorized users.
They discovered that beginning in October of 2003 through the time that we discovered this, in January of 2004, in fact, right up to the day before, there had been unauthorized accesses into our system by people utilizing computers registered with an IP address to News America Marketing. IP address is registered to News America Marketing in Connecticut.
… There were 11 separate accesses over that four-month period.
The unauthorized access allowed users to see FGI’s clients’ advertising plans and sales records — crucial information that competitors could use to undercut FGI in negotiations with clients. Rebh testified that was exactly what happened: FGI lost its key account with Safeway supermarkets, and the company dwindled to just 25 employees at the time of the case, Rebh said:
In short, the loss of the Safeway contract marked the beginning of the end of our company.
FGI also alerted former U.S. Attorney Chris Christie (now governor of New Jersey) and former U.S. Attorney General Alberto Gonzalez asking for an investigation of the hacking. When the company got no response, it asked former U.S. Sen. Jon Corzine, current U.S. Sen. Frank Lautenberg, and U.S. Rep. Rush Holt to write to Christie and Gonzalez again, asking for an update. (Download the FGI v. News hacking memos here (PDF).) Christie’s former commercial crimes chief, Deborah Gramiccioni responded that the case was:
…under review by Assistant U.S. Attorneys in our Commercial Crimes Unit. Because the above-references matter may involve fraud, we are also forwarding copies of your letter and the attached information to the Febreal Bureau of Investigation for review.
The office of Republican Gov. Chris Christie of New Jersey is claiming that Fox News chairman Roger Ailes is a confidential adviser whose interactions with the governor should remain secret under New Jersey’s executive privilege. Last month, after New York magazine reported that Ailes met with Christie last summer and called him this year to urge him to run for president, Gawker filed a request under New Jersey’s Open Records Act seeking any correspondence between the two men, as well as any records of meetings or phone calls with Ailes from Christie’s schedule or call logs.
Last week we received a rather surprising response: While declining to confirm the existence of any such records, Christie’s office said they “would be exempt from disclosure…based upon the executive privilege and well-settled case law.” In other words, Christie’s staff refused to search for any records—which, given the undisputed reports of a dinner and phone call, almost certainly exist—on the basis that Ailes is a confidential adviser whose comments should be shielded from public scrutiny.
I’ve been paying close attention to the escalating Rupert Murdoch scandal because not only is News Corporation and its subsidiaries like Fox News and the New York Post, and increasingly the Wall Street Journal, an insult to liberal, fair-minded citizens everywhere, but also I have some direct dealings with News America Marketing, the in-store marketing division of Murdoch’s empire. Let’s just say they were not pleasant dealings, and cost my company significant loss of income. I have met dozens or more ex-News America employees, most are decent enough folks, on the surface anyway, but the anti-competitive cut-throat behavior of News America emanates from the top.
Legal Tender – London
David Carr of The New York Times has published a great article about News America – you should really read the whole thing, if you are at all interested, but I’ve excerpted a few paragraphs below:
“Bury your mistakes,” Rupert Murdoch is fond of saying. But some mistakes don’t stay buried, no matter how much money you throw at them. Time and again in the United States and elsewhere, Mr. Murdoch’s News Corporation has used blunt force spending to skate past judgment, agreeing to payments to settle legal cases and, undoubtedly more important, silence its critics. In the case of News America Marketing, its obscure but profitable in-store and newspaper insert marketing business, the News Corporation has paid out about $655 million to make embarrassing charges of corporate espionage and anticompetitive behavior go away.
That kind of strategy provides a useful window into the larger corporate culture at a company that is now engulfed by a wildfire burning out of control in London, sparked by the hacking of a murdered young girl’s phone and fed by a steady stream of revelations about seedy, unethical and sometimes criminal behavior at the company’s newspapers.
So far, 10 people have been arrested, including, on Sunday, Rebekah Brooks, the head of News International. Les Hinton, who ran News International before her and most recently was the head of Dow Jones, resigned on Friday. Now we are left to wonder whether Mr. Murdoch will be forced to make an Abraham-like sacrifice and abandon his son James, the former heir apparent.
The News Corporation may be hoping that it can get back to business now that some of the responsible parties have been held to account — and that people will see the incident as an aberrant byproduct of the world of British tabloids. But that seems like a stretch. The damage is likely to continue to mount, perhaps because the underlying pathology is hardly restricted to those who have taken the fall.
As Mark Lewis, the lawyer for the family of the murdered girl, Milly Dowler, said after Ms. Brooks resigned, “This is not just about one individual but about the culture of an organization.”
In 2009, a federal case in New Jersey brought by a company called Floorgraphics went to trial, accusing News America of, wait for it, hacking its way into Floorgraphics’s password protected computer system.
The complaint summed up the ethos of News America nicely, saying it had “illegally accessed plaintiff’s computer system and obtained proprietary information” and “disseminated false, misleading and malicious information about the plaintiff.”
The complaint stated that the breach was traced to an I.P. address registered to News America and that after the break-in, Floorgraphics lost contracts from Safeway, Winn-Dixie and Piggly Wiggly.
Much of the lawsuit was based on the testimony of Robert Emmel, a former News America executive who had become a whistle-blower. After a few days of testimony, the News Corporation had heard enough. It settled with Floorgraphics for $29.5 million and then, days later, bought it, even though it reportedly had sales of less than $1 million.
News America paid more money to other competitors rather than have the embarrassment of public trials:
But the problems continued, and keeping a lid on News America turned out to be a busy and expensive exercise. At the beginning of this year, it paid out $125 million to Insignia Systems to settle allegations of anticompetitive behavior and violations of antitrust laws. And in the most costly payout, it spent half a billion dollars in 2010 on another settlement, just days before the case was scheduled to go to trial. The plaintiff, Valassis Communications, had already won a $300 million verdict in Michigan, but dropped the lawsuit in exchange for $500 million and an agreement to cooperate on certain ventures going forward.
and Murdoch’s minion, Paul Carlucci was a News Corporation man through and through. Meaning he was slimy, corrupt, and full of hatred towards liberals:
News America was led by Paul V. Carlucci, who, according to Forbes, used to show the sales staff the scene in “The Untouchables” in which Al Capone beats a man to death with a baseball bat. Mr. Emmel testified that Mr. Carlucci was clear about the guiding corporate philosophy.
According to Mr. Emmel’s testimony, Mr. Carlucci said that if there were employees uncomfortable with the company’s philosophy — “bed-wetting liberals in particular was the description he used” Mr. Emmel testified — then he could arrange to have those employees “outplaced from the company.”
Clearly, given the size of the payouts, along with the evidence and testimony in the lawsuits, the News Corporation must have known it had another rogue on its hands, one who needed to be dealt with. After all, Mr. Carlucci, who became chairman and chief executive of News America in 1997, had overseen a division that had drawn the scrutiny of government investigators and set off lawsuits that chipped away at the bottom line.
So what became of him? Mr. Carlucci, as it happens, became the publisher of The New York Post in 2005 and continues to serve as head of News America, which doesn’t exactly square with Mr. Murdoch’s recently stated desire to “absolutely establish our integrity in the eyes of the public.”
And meanwhile, the corrupt culture of Rupert Murdoch’s organization is being slowly exposed in England. Rebekah Brooks hasn’t yet been formally charged, but the British system operates a bit differently:
Ms. Brooks has not yet been formally charged, but it is significant that she was questioned in connection with two separate investigations. One, called Operation Weeting, is examining allegations of widespread phone hacking at The News of the World, the tabloid at the center of the scandal, where Ms. Brooks was editor from 2000 to 2003. The other is Operation Elveden, which is looking into charges that News International editors paid police officers for information.
…The arrest was a shock to the News Corporation, the parent company of News International, and the other properties in Mr. Murdoch’s media empire, which is reeling from the traumas of last week: the forced withdrawal of its cherished $12 billion takeover bid for British Sky Broadcasting and the resignations not only of Ms. Brooks but also of Les Hinton, a longtime Murdoch ally and friend who was the chairman of Dow Jones and the publisher of The Wall Street Journal.
Speaking of Ms. Brooks, an official at News International said: “When she resigned on Friday, we were not aware that she would be arrested by the police.” Another person briefed on the News Corporation’s plans said that on Friday, when the company was preparing to announce her exit and the departure in New York of Mr. Hinton, the possibility of her arrest was not discussed.
Investor unease about the scandal appeared to be affecting News Corporation shares, which were down nearly 6 percent in early Monday trading on the Australian exchange in Sydney.
Until Ms. Brooks arrived at a London police station by prearranged appointment on Sunday, she believed she would merely be helping the police as a witness, her spokesman said.
“She was very surprised, I think, to then be arrested,” said the spokesman, David Wilson, chairman of the Bell Pottinger public relations firm. Mr. Wilson said it all happened so quickly that both her lawyer and he were brought in to handle her case over the weekend.
Could Murdoch be jettisoned by his own company? Probably not, though never say never. Just ask Steve Jobs…
Rupert Murdoch could be facing a coup. If a recent report from Bloomberg is correct, at least some of the independent directors of News Corp. have, due to the phone hacking scandal that is engulfing the company and taking down some of its seniormost executives, begun asking “whether a leadership change is needed.” Fortunately for Murdoch, he’s built himself something of a firewall. Of the 16 voting members currently on the board, three are Murdoch family members—there’s Rupert himself, of course, along with his sons James and Lachlan—and another four are current News Corp. executives. (Elisabeth Murdoch, whose Shine Group was just purchased by News Corp., is expected to join the board as a voting member at some point though the current scandal may delay that move a bit.) But even those seven presumably reliable votes don’t get Rupert Murdoch an automatic majority. So he’s stacked the rest of the board with loyalists and puppets. . Many have ties with Murdoch that stretch back decades—and involve mutually beneficial financial transactions.
So he’s stacked the rest of the board with loyalists and puppets. . Many have ties with Murdoch that stretch back decades—and involve mutually beneficial financial transactions. “It’s an open secret, a joke inside News Corp., that the board is designed to be obsequious to Rupert,” a source close to the company says.
Nicely done – no mention of journalistic ethics, or reporting facts, still all about slant, and “setting the agenda”. A Murdoch loyalist until the end.
First Site of Scotland Yard
and The Metropolitan Police are a bit nervous too, as their corruption seems likely to be exposed:
The company’s woes increased on Thursday when yet another former senior editor of The News of the World, now defunct, Neil Wallis, became the ninth person since January to be arrested in the phone-hacking scandal. Mr. Wallis also appears to have unusually close ties to top officers at the Metropolitan Police Service, and worked for them as a public relations consultant last year.
Mr. Wallis’s arrest, while bad news for the company, is doubly worrying for the Metropolitan Police Service. The police are already under attack for failing to adequately pursue the phone-hacking inquiry in 2006, and again for failing to reopen the investigation in light of new evidence in 2009. While Mr. Wallis is not the most important figure yet to be arrested — that would be Mr. Coulson, a former editor of The News of the World who until January was Prime Minister Cameron’s chief spokesman — he is close to Scotland Yard.
After leaving The News of the World in 2009, Mr. Wallis became a media consultant, whereupon he was immediately hired to “provide strategic communication advice” to Scotland Yard officials from October 2009 to September 2010, according to a police spokesman. His firm offered the lowest rate, the spokesman said, explaining how he got the job.
But his ties to the police went back longer. In September 2006, one month after The News of the World’s royal correspondent, Clive Goodman, was arrested on suspicion of phone hacking and the paper Mr. Wallis worked for was supposedly under investigation, Mr. Wallis had dinner with Sir Paul Stephenson, then Scotland Yard’s deputy commissioner, and Dick Fedorcio, its chief spokesman.
Sir Paul, now the police commissioner, said on Thursday that he was “very satisfied with my own integrity.”
More recently, Assistant Commissioner John Yates, another top police official, told a parliamentary committee in March that he could not remember exactly when he last had lunch with Mr. Wallis, but that it “may well” have been in February.
A police spokesman said he did not know the precise date of this engagement. But if it was indeed in February, that meant that it took place after the police had already opened Operation Weeting, the investigation into phone hacking under which Mr. Wallis has now been arrested.
Evening Newspapers at Monument Station
Ken Auletta of The New Yorker adds:
The only surprise in the resignation of Rebekah Brooks is that it took so long. She was the editor of the News of the World when a good deal of hacking was done, when police were paid bribes for documents and news tips. When she left the newsroom, she became the News Corp. executive responsible for overseeing at least one newspaper that continued these practices, as well as others that we may learn more about. And when she testified before Parliament, she offered misleading and contradictory answers. Yet she remained in place. When Rupert Murdoch flew to London last weekend to quarterback his company’s defense, a reporter asked: What’s your foremost concern?
He might have said, protecting my company’s good name. Or getting to the bottom of who was responsible for these dastardly acts. Instead, with Brooks standing beside him, he said: protecting this woman.
Why was Murdoch, who is not known for loyalty, so loyal to Brooks? Because outside of his family, Brooks is only one of two people he is said to treat as a genuine friend. His closest friend is Robert Thomson, editor of the Wall Street Journal and former editor of his London Times. (I wrote about Thomson for The New Yorker.) Although he is three decades younger than Murdoch, he is more of a peer. Brooks has been more of a daughter. And she is treated as a member of the family by many in the Murdoch brood. Letting her leave must have been personally painful.
What a surprise, News Corp is a tax scofflaw as well as a regular criminal enterprise…
Over the past four years Murdoch’s U.S.-based News Corp. has made money on income taxes. Having earned $10.4 billion in profits, News Corp. would have been expected to pay $3.6 billion at the 35 percent corporate tax rate. Instead, it actually collected $4.8 billion in income tax refunds, all or nearly all from the U.S. government.
The relevant figure is the cash paid tax rate. This is the net amount of corporate income taxes actually paid after refunds. For those four years, it was minus 46 percent, disclosure statements show.
Even on an accounting basis, which measures taxes incurred but often not actually paid for years, News Corp. had a tax rate of under 20 percent, little more than half the 35 percent statutory rate, company disclosures examined by Reuters show. News Corp. had no comment.
No excuses. But I will explain how I made such a bonehead error.
The other facts I reported remain:
* Among the 100 largest companies in the United States, News Corp has the third largest number of subsidiaries in tax havens, a Government Accountability Office study found in 2009.
* On an accounting basis, which measures taxes incurred but often not actually paid for years, News Corp had a tax rate of under 20 percent, little more than half the 35 percent statutory rate, its disclosures show.
* Murdoch has bought companies with tax losses and fought to be able to use them, which reduces his company’s costs.
* News Corp lawyers and accountants are experts at making use of tax deferrals, though the company’s net tax assets have shrunken from $5.7 billion in 2007 to $3.3 billion last year as the benefits were either used or expired.