On Friday, News Corporation will hold its annual stockholders’ meeting in the gated confines of Fox Studios in Los Angeles instead of its New York headquarters, as is customary, since the reception on the Big Apple’s streets might be just a bit harder to control.
This meeting should be an accountability moment—for News Corp, its founder, chairman and CEO, Rupert Murdoch, its board and the company’s subsidiaries.
A brief recap: News Corp is currently being investigated in the UK and the US for the bribery of foreign law enforcement officials, the hacking of September 11 victims’ phone lines, the hacking of a murdered 13-year-old girl’s voicemail account, possibly paying off other hacking victims, anti-competitive tactics and numerous other offenses.
A pattern of rotten practices has led to calls for Murdoch and his sons to be removed from the board, indeed for all of the board members to be replaced. As D.D. Guttenplan of The Nation’s London bureau notes, the Murdoch family controls 40 percent of the voting stock (but just 15 percent of the company), the likelihood of their ouster at this gathering is slim to none, but there is nevertheless mounting pressure for accountability.
The largest pension fund in the United States, the California Public Employees’ Retirement System, withheld its votes for Murdoch and his sons Lachlan and James, as well as other non-independent directors, according to the Los Angeles Times. And the California State Teachers’ Retirement System withheld its votes for News Corp’s entire slate of board nominees.
At the heart of the Murdoch issue is corrupt corporate governance, and more broadly the need for accountability—the same issues that lie at the heart of the Occupy Wall Street protests.
After all, one of the main grievances of the OWS protests is the lack of accountability and corrupt corporate governance that allowed Wall Street to package and peddle toxic securities and reward its employees for doing so; the lack of accountability and corrupt corporate governance that allowed CEOs to receive super-sized bonuses and salaries even when their performance took down our economy; and the lack of accountability and corrupt governance that allow jobs to be shipped overseas, profits concentrated in the hands of a few and poverty and income inequality to grow unchecked.
As Robert Monks, author of Corpocracy and The New Global Investors, writes in a recent Washington Post op-ed, shareholders “must promptly and credibly associate themselves with the protesters complaining against corporate unfairness—and then present themselves as legitimate vehicles for addressing the problem.”
That’s exactly what the two large California pensions are attempting to do. Two leading shareholder advisory groups are also urging votes against the Murdochs and other board members.
“The company’s phone hacking scandal…has laid bare a striking lack of stewardship and failure of independence by a board whose inability to set a strong tone-at-the-top about unethical business practices has now resulted in enormous costs,” Institutional Shareholder Services said in recommending that investors vote against the re-election of thirteen out of fifteen board members.
Glass Lewis, one of the top independent proxy advisory services in the United States, also recommended votes against Murdoch, his two sons and four other directors “in order to establish a board with proper independence levels and strong oversight.”
But Murdoch has much bigger problems than angry shareholders and advisory groups wising up to his act. Word is that the Department of Justice has devoted a very large team to the News Corp issue, and there is substantial work being done to explore the applicability of the Foreign Corrupt Practices Act, which prohibits US-based firms from bribing foreign government officials. (News Corp is a Delaware-registered corporation.)
Earlier this summer, the Murdoch coverage was strong. But then the US debt ceiling debate and British riots made Murdoch a happy man as the media’s attention flocked elsewhere. Now, attention is focused on OWS and the political debate’s center of gravity is shifting in a more democratic populist direction. Let’s not lose sight of holding our media accountable.
Murdoch and his lobbyists have been a constant, well-funded presence–pushing to rewrite media ownership rules so that one corporation, and one man, accumulated extraordinary power. After decades of collusion between Murdoch and public officials to serve his damaging agenda, a moment of accountability now lies within reach.