Friday, 8 July 2011
Is Murdoch free to destroy tabloid’s records?
Here’s some News of the World news to spin the heads of American lawyers. According to British media law star Mark Stephens of Finers Stephens Innocent (whom The Times of London has dubbed “Mr Media”), Rupert Murdoch’s soon-to-be shuttered tabloid may not be obliged to retain documents that could be relevant to civil and criminal claims against the newspaper—even in cases that are already underway. That could mean that dozens of sports, media, and political celebrities who claim News of the World hacked into their telephone accounts won’t be able to find out exactly what the tabloid knew and how it got the information.
If News of the World is to be liquidated, Stephens told Reuters, it “is a stroke of genius—perhaps evil genius.”
Under British law, Stephens explained, all of the assets of the shuttered newspaper, including its records, will be transferred to a professional liquidator (such as a global accounting firm). The liquidator’s obligation is to maximize the estate’s assets and minimize its liabilities. So the liquidator could be well within its discretion to decide News of the World would be best served by defaulting on pending claims rather than defending them. That way, the paper could simply destroy its documents to avoid the cost of warehousing them—and to preclude any other time bombs contained in News of the World’s records from exploding.
“Why would the liquidator want to keep [the records]?” Stephens said. “Minimizing liability is the liquidator’s job.”
That’s a very different scenario, Stephens said, from what would happen if a newspaper in the U.S. went into bankruptcy. In the U.S., a plaintiff (or, for that matter, a criminal investigator) could obtain a court order barring that kind of document destruction. In the U.K., there’s no requirement that the estate retain its records, nor any law granting plaintiffs a right to stop the liquidator from getting rid of them.
Alison Frankel @'Reuters'
If News of the World is to be liquidated, Stephens told Reuters, it “is a stroke of genius—perhaps evil genius.”
Under British law, Stephens explained, all of the assets of the shuttered newspaper, including its records, will be transferred to a professional liquidator (such as a global accounting firm). The liquidator’s obligation is to maximize the estate’s assets and minimize its liabilities. So the liquidator could be well within its discretion to decide News of the World would be best served by defaulting on pending claims rather than defending them. That way, the paper could simply destroy its documents to avoid the cost of warehousing them—and to preclude any other time bombs contained in News of the World’s records from exploding.
“Why would the liquidator want to keep [the records]?” Stephens said. “Minimizing liability is the liquidator’s job.”
That’s a very different scenario, Stephens said, from what would happen if a newspaper in the U.S. went into bankruptcy. In the U.S., a plaintiff (or, for that matter, a criminal investigator) could obtain a court order barring that kind of document destruction. In the U.K., there’s no requirement that the estate retain its records, nor any law granting plaintiffs a right to stop the liquidator from getting rid of them.
Alison Frankel @'Reuters'
Murdoch closes down the News of the World after 168 years
In a fittingly sensational finale, the 168-year-old paper will print its last edition on Sunday after claims that it hacked the phones of a murdered girl and the families of dead soldiers, and that it paid police for stories.
"Having consulted senior colleagues, I have decided that we must take further decisive action with respect to the paper," said Murdoch's son James, chairman of News International, the British newspaper wing of Rupert Murdoch's News Corporation.
"This Sunday will be the last issue of the News of the World," he added.
The final edition would be free of advertising and proceeds would go "to causes and charities that wish to expose their good works to our millions of readers", he said in a statement.
"These are strong measures. They are made humbly and out of respect. I am convinced they are the right thing to do.
"While we may never be able to make up for distress that has been caused, the right thing to do is for every penny of the circulation revenue we receive this weekend to go to organisations - many of whom are long-term friends and partners - that improve life in Britain and are devoted to treating others with dignity."
One devastated staff member said the announcement went off like a "nuclear bomb" in the offices of Britain's second biggest selling newspaper, whose diet of kiss-and-tell stories sold 2.7 million copies a week.
Its closure sparked immediate speculation that Rupert Murdoch was offering the paper as a sacrificial victim to save his bid for control of pay-TV giant BSkyB, which is the subject of an upcoming government decision.
The BBC quoted sources as saying Murdoch would replace it with a Sunday version of The Sun, his daily tabloid, which is Britain's biggest selling newspaper.
Prime Minister David Cameron - who had himself faced pressure for his ties to Murdoch - said the closure of the News of the World should not distract from an ongoing police investigation into the hacking.
"What matters is that all wrongdoing is exposed and those responsible for these appalling acts are brought to justice," Cameron's Downing Street office said in a statement.
He repeated his pledge to hold public inquiries into practices at the News of the World and into an earlier botched police probe into the issue.
Cameron's former media chief Andy Coulson was editor of the tabloid at the time of much of the hacking, while the premier has faced scrutiny for his friendship with Rebekah Brooks, News International's chief executive.
The Guardian reported that Coulson will be arrested on Friday over suspicions he knew about the hacking.
Sky News reported that although News of the World employees were told Brooks offered to resign last night, she did not leave her job.
News International said she did not offer to quit, but had discussed her resignation with Rupert Murdoch.
A reporter at the tabloid who spoke to The New York Times anonymously said there was widespread anger in the newsroom and a belief that Brooks sacrificed the staff to save her position as chief executive of News International.
The unnamed reporter said: "If she had gone at the start of the week, we'd all still be employed. I hope she's worth it for Rupert."
But James Murdoch repeated his father's earlier defence of Brooks, saying he was confident she was not aware of hacking during her own stint as editor.
"I am satisfied that Rebekah, her leadership of this business and her standard of ethics and her standard of conduct throughout her career, are very good," Murdoch said in a television interview.
Two hundred staff will lose their jobs at the paper and they have been told they can apply for other jobs within News International.
News of the World associate editor David Wooding described the atmosphere in the newsroom when the closure was announced was as "if a nuclear bomb had gone off".
"Everyone was standing around looking dazed. Everyone kept saying - how could it get any worse?" he told the BBC.
In his statement, James Murdoch admitted that the paper had lied to parliament and to the public in its earlier statements on the long-running scandal.
He said that if allegations that a private investigator working for the tabloid hacked the voicemail of Milly Dowler, a 13-year-old girl who was later found murdered, were true, they were "inhuman".
"The News of the World is in the business of holding others to account. But it failed when it came to itself," he added. "Wrongdoers turned a good newsroom bad and this was not fully understood or adequately pursued."
He said the conviction in 2007 for phone hacking of the paper's royal correspondent Clive Goodman and private investigator Glenn Mulcaire had failed to cure the problem.
But the death blow for the News of the World came on Thursday when veterans' charity the Royal British Legion dropped its campaign partnership with the paper over claims in the Daily Telegraph that an investigator hired by the tabloid may have accessed the voicemails of relatives of dead soldiers.
Supermarket giant Sainsbury's, mobile phone operator O2, energy supplier Npower and high street stores Dixons, Boots and Specsavers had joined a growing list of companies to pull advertising from the paper.
Meanwhile, Scotland Yard said up to 4000 people may have had their voicemails accessed by the News of the World and added that it was probing claims that the paper had paid policemen for information.
@'SMH'
Thursday, 7 July 2011
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