The DCMS Select Committee has today published its report into phone hacking at News International. The Committee’s report finds that Rupert Murdoch exhibited “wilful blindness” (at paragraph 229) to what was going on in his companies, and lays the same charge also at James Murdoch:
“In failing to investigate properly, and by ignoring evidence of widespread wrongdoing, News International and its parent News Corporation exhibited wilful blindness, for which the companies’ directors—including Rupert Murdoch and James Murdoch—should ultimately be prepared to take responsibility…”. (Paragraph 275 of the report.)
It appears that Rupert and James Murdoch were both statutory directors of News International Limited (as it then was) during the phone hacking period.
The finding of “wilful blindness” by the DCMS Committee is not a judicial finding. If that finding was repeated by the court, it would suggest that these directors of News International had breached their duties as directors of the company, as set out in section 174 Companies Act 2006 (“a director of a company must exercise reasonable skill, care and diligence”) and also presumably section 172 (the duty to promote the success of the company).
Given that News International is a subsidiary of News Corporation, there is little prospect of a shareholder derivative action (under Part 11 of the Companies Act 2006) to confirm that the court would equate “wilful blindness” with breach of the section 174 duty to exercise reasonable skill, care and diligence.
