Crone, Myler, Murdoch and the What the Hell was Going on Question

I have written a number of posts on the lawyers’ roles in the Hacking saga.  Rather  than re-rehearse the ins and outs, interested readers can read those posts by clicking here.  Lord Justice Leveson’s analysis of two aspects of the involvement of Tom Crone are below.  His analysis is constrained somewhat by ongoing investigation of Mr Crone (by the police and possibly by the Bar Standards Board) and News International’s refusal to waive privilege with regard to the Burton Copeland roles in an early internal investigation of hacking allegations.  Also, his focus in on wider issues than Mr Crone himself.  Nevertheless, this passage is well worth a read:

7.48 Both Mr Myler and Mr Crone strongly denied that there was a culture of cover up at the NoTW. Mr Crone accepted that everyone hoped that “it would all go away” if it could be kept quiet,426 but contended that the thinking was not to cover up criminality but to avoid reputational damage through bad publicity.427 There is undoubtedly a fine line between the two. Mr Myler, similarly, said: 428  “I don’t believe it was a cover-up….and I don’t believe it’s wrong or unreasonable of any business to try to protect the reputation of itself, particularly after what had happened in the course of 2006 and 2007.”

7.49 Whatever the truth of what was discussed on 10 June 2008, the evidence outlined above points to a serious failure of governance within the NoTW, NI and News Corporation. There was a failure on the part of the management at the NoTW to take appropriate steps to investigate whether there was evidence of wrongdoing within the organisation. Although I endorse the right of any business to seek to protect its reputation, it surely must first take every step to get to the bottom of what had happened. To argue that the decision by the police to conclude their criminal investigations precluded the requirement for a proportionate  but robust internal investigation is, in the circumstances, of real concern; and the attitude at NoTW to the police investigation equally meant that reliance could not be put on their having done so. In any event, if the explanation of James and Rupert Murdoch is correct, far from simply limiting external damage to reputation, one or more parts of the management at the NoTW was engaged in a determined cover-up to keep relevant information about potential criminal activity within the organisation from senior management within NI.

7.50 Having made that point, however, I must make it clear that if James Murdoch was unaware of the allegations, his lack of knowledge is, at least in part, only as a result of chance, rather than as the consequence of a sustained campaign by Mr Myler or Mr Crone (if there was one) deliberately to keep him in the dark. The fact is that had he read, in detail, the entirety of the email that he received on 7 June 2008, there was sufficient to put him onto a line of enquiry which could have led to an investigation of the entire issue. It also depends on precisely what he was told on 10 June 2008.

7.51 It is sufficient to say that if James Murdoch had been the victim of a cover-up, or an attempt to minimise the gravity of the position, then the accountability and governance systems at NI would have to be considered to have broken down in an extremely serious respect. If  James Murdoch was not the victim of an internal cover up then the same criticism can be made of him as of Mr Myler or Mr Crone in respect of the failure to take appropriate action to deal with allegations of widespread criminality within the organisation.

7.52 A similar analysis stands in respect of News Corporation. Although there is no evidence from which I could safely infer that Rupert Murdoch was aware of a wider problem, it does not appear that he followed up (or arranged for his son to follow up) on the brief that he believed had been given to Mr Myler to “find out what the hell was going on”, leaving the matter solely in the hands of Mr Hinton. If News Corporation management, and in particular Rupert Murdoch, were aware of the allegations, it is obvious that action should have been taken to investigate them. If News Corporation were not aware of the allegations which, as  Rupert Murdoch has said, have cost the corporation many hundreds of millions of pounds, then there would appear to have been a significant failure in corporate governance and in particular in the effective identification and management of risks affecting NI and, thus, the corporation.

7.53 I have given careful consideration as to whether I should go further, and conclude that Mr Crone’s version of events as to what occurred on 10 June 2008 should be preferred to that of James Murdoch. There are aspects of the account of Mr Murdoch that cause me some concern: in particular, it is surprising if the gist of Mr Silverleaf’s opinion was not communicated to him in circumstances where the potential reputational damage to the company, of which he was CEO, was likely to be great if an early settlement of the claim brought by Mr Taylor were not achieved.

7.54 Furthermore, Mr Myler and Mr Crone had no reason or motive to conceal relevant facts from the senior man, as borne out by the former sending James Murdoch the chain of emails containing the ‘bad news’ on the afternoon of Saturday 7 June 2008. Not merely does this throw light on Mr Myler’s state of mind on that date, it provides some indication as to what the agenda might have been for the meeting three days later. On the other hand, I also have serious concerns about the evidence of Mr Crone and Mr Myler about this meeting: given the significance of the issue, it is surprising that there was not a full blown risk analysis with options for James Murdoch to consider. After all, this litigation represented the first of a number of potential actions and there was, at the very least, a real risk that the problems were likely to get worse as the other known victims (as represented by the criminal investigation if none other) could and doubtless would also pursue claims.

7.55 It is here that I must return to the Terms of Reference and to recognise that the detail of who knew what is properly part of Part 2 of this Inquiry not least because of the ongoing criminal investigation. Furthermore, the nature of the process of this part of the Inquiry has meant that, in relation to these extremely fact sensitive meetings, there has been insufficient opportunity for detailed cross examination of precisely what was said by whom to whom. In the circumstances, I do not seek to reach any conclusion about precisely what transpired at this meeting. For present purposes, it is sufficient to repeat that whoever’s account is correct as to what happened on 10 June 2008, there was no subsequent analysis of the consequences in relation to oversight and internal governance.

7.56 In truth, at no stage, did anybody drill down into the facts to answer the myriad of questions that could have been asked and which could be encompassed by the all embracing question “what the hell was going on”? These questions included what Mr Mulcaire had been doing for such rewards and for whom?; what oversight had been exercised in relation to the use of his services?; why had Mr Goodman felt it justifiable to involve himself in phone hacking?; why had he argued that he should be able to return to employment and why was he being (or why had been) paid off. On any showing, these questions were there to be asked and simple denials should not have been considered sufficient. This suggests a cover up by somebody and at more than one level. Although this conclusion might be parsimonious, it is more than sufficient to throw clear light on the culture, practices and ethics existing and operating at the News of the World at the material time. The way in which further litigation was managed (including the action brought by Max Clifford) only serves to underline the same issue both justifying and reinforcing the same conclusion.

Another passage meriting attention is this one:

8.212  On the remit of the internal investigations [conducted by Burton Copeland] Mr Myler said: 596

“My recollection was that a very thorough investigation took place where there was  a review of everything from how cash payments were processed …”

When asked about the width of the internal enquiry Mr Crone gave the following account: 597

“… By the time I got back, which must have been August 15, Burton Copeland were in  the office virtually every day or in contact with the office every day. My understanding  of their remit was that they were brought in to go over everything and find out what  had gone on, to liaise with the police … What I think was being enquired into was  what had gone on leading to the arrests; what, in the relationship with Mulcaire, did  we have to worry about. Burton Copeland came in; they were given absolutely freerange to ask whatever they wanted to ask. They did risk accounts and they have got  four lever-arch files of payment records, everything to do with Mulcaire, and there is  no evidence of anything going beyond in terms of knowledge into other activities.”

8.213  Again, these assertions cannot be tested because legal professional privilege has not been  waived in relation to the instructions given to Burton Copeland, the material provided, or,  indeed, any aspect of the work done. I do no more than record what Mr Crone said.

I am not sure Leveson LJ was correct to assume that privilege needed to be waived.  I think there was at least an argument that privilege had been impliedly waived by NI/NGN when they sough to rely on Burton Copleand’s investigation as evidence of their bona fides before the Culture Media and Sport Committee and there is also the potential application of the crime fraud exception (see here for example).  I am not criticising the judge; he may have felt that he did not need to take this issue on.  The testimony he had may have been  sufficient to deal with the questions under his remit, and I am guessing a ruling from him that Burton Copeland’s advice and instructions were no longer privileged would have provoked ancillary litigation.  Still, the police investigation and, if there is one, a Bar Standards investigation may yet prove more revealing.