Look At Murdoch's Lawyers

By John Dean, Guardian UK

13 August 11

For all you need to know about Rupert Murdoch, look at his lawyers. As Nixon's counsel during Watergate, I can tell from the cost of News Corp's legal team the scandal will not be contained long.

mericans are extremely interested in Rupert Murdoch's unfolding scandal in the UK. As I wrote a few weeks ago, it has striking parallels with Watergate, an observation I offer based on personal knowledge and experience. (I am sure I speak for many Americans when I shout out a thank you to the Guardian, whose journalism on the Murdoch story is every bit as good, and in many instances better, than the legendary work of the Washington Post during Watergate.) Many Americans wonder if this scandal will leap the Atlantic or remain "contained" in Britain. Because of Watergate, I have some familiarity with containment - when it works and when it does not.

The answer depends on the width and depth of illegal behaviour. Cover-ups seldom work. At this time we know little about any cover up at News Corp, but hints have emerged. While not an ideal measurement of wrongdoing, I find there is usually a direct correlation between lawyers hired and the seriousness of the problem. Accordingly, I've been watching the lawyers who have become key actors in this story, and their actions suggest that this scandal will not be contained in the UK. Rather, with time, it will become an American scandal, although possibly with less consequences than in the UK, given the skilled legal team now at work.

News Corp has retained one of London's most expensive commercial lawyers, Lord Grabiner, who reportedly bills at £3,000 per hour. While Grabiner has a reputation for litigating miracles, it appears he was hired to give credibility to an independent management and standards committee investigation of the phone-hacking, police bribery and related criminal allegations. To assist Grabiner, News Corp retained the London office of a prominent Washington law firm, Arnold & Porter - whose London partner, Kathleen Harris, happens to be an experienced criminal defence lawyer. Harris formerly served as a senior strategic policy adviser in the fraud business group at the Serious Fraud Office.

This UK self-investigation committee reports to Murdoch's top US attorney, a relatively recent hire: Joel Klein, who joined News Corp after a stint as chancellor of the New York City school system. Klein collects his reported $2m salary to bring the firm into the for-profit education business - work which he has probably now set aside.

When the UK scandal erupted, Klein was with Murdoch at a conference in Sun Valley, Idaho. And Murdoch had an ideal fixer. Klein was too new to News Corp to be implicated in anything improper, plus he has impeccable legal credentials (Harvard Law, US supreme court law clerk, and a successful law practice). Klein had served as deputy White House counsel during Bill Clinton's Whitewater scandal, and as the assistant attorney general for antitrust. Known for his ego, persistence and integrity, Klein was placed in charge by Murdoch.

Klein in turn reports to Viet Dinh, a member of the News Corp board since 2004, a former assistant attorney general in the George W Bush department of justice, and currently a law professor at Georgetown University as well as a private attorney. Viet Dinh, another Harvard Law graduate and former US supreme court law clerk, is considered the conservatives' "Mr Fixit" in Washington DC legal circles. His law firm, Bancroft Associates, is known for its ability to get defendants off on legal technicalities. It appears Klein and Dinh have hired all the key players who might be helpful in dealing with News Corp's criminal problems in the US.

In addition to Arnold & Porter, Klein and Dinh retained another top Washington law firm, Williams & Connolly, and the firm's highly skilled criminal defence attorney, Brendan Sullivan, to assist with the criminal investigation in the US. Klein and Dinh retained Mark Mendelsohn, who until recently had been the deputy chief, fraud section, criminal division, of the US department of justice, and understands the department's thinking about prosecuting under the Foreign Corrupt Practices Act (which prohibits American businesses from bribing foreigners to assist their business, and appears applicable to some of the allegations against News Corp).

In addition, they hired Bush's former attorney general Michael Mukasey and former Manhattan US attorney Mary Jo White, both of Debevoise & Plimpton, to assist with the investigation. Criminal prosecutions are always a matter of discretion, and Klein, Dinh and their hires are friends and former associates of those who might undertake any prosecution of News Corp.

Klein and Dinh surely now know the full extent of their problems. If they could state that no person remaining in the News Corp organisation, or the corporation itself, was involved in any criminal misconduct, there would be no reason for them to remain silent. Such a statement would largely end the story. The fact that the lawyers have absolved no one suggests to me that they have discovered potentially serious problems. Only Murdoch is suggesting the scandal will remain in the UK, and he is not the most reliable source.

News Corp's board held its first meeting since the UK scandal erupted in Los Angeles on 9 August. What the lawyers did or did not report to the board is unknown. Following the meeting, on 10 August, Murdoch gave a less than illuminating public statement, largely absolving all of the company except the UK operations, during a conference call to financial analysts. Indeed, he claimed he was "shocked" to learn of the criminality at News of the World. (This was voice only, so we don't know if he winked or crossed his fingers when he made his claims.)

On 10 August, News Corp filed a report with the Securities and Exchange Commission that included a carefully vetted statement reporting the close of the News of the World "after allegations of phone hacking and payments to police. As a result of these allegations, the company is subject to several ongoing investigations by UK and US regulators and governmental authorities, including investigations into whether similar conduct may have occurred at the company's subsidiaries outside of the UK. The company is fully co-operating with these investigations." This statement is much less assuring than Murdoch's more sweeping assertion during the 10 August call.

If the problems are half as serious as the level of legal talent retained suggests, I would not be surprised if News Corp co-operates with the prosecutors to get this matter behind the organisation. Rupert might throw his son James to the wolves. If evidence of wrongdoing by senior figures is found, the lawyers can defend it while requiring the government to prove its case, but they cannot assist in a cover up - a reality I learned the hard way. Rather they must withdraw from representation. And if that happens, we will all know they are fleeing a sinking ship.