News of the World: An Organization’s Ethical Culture on Trial

News of the World Scandal Puts an Organization’s Ethical Culture on Trial

When asked by a U.K. Member of Parliament whether he was ultimately responsible for the alleged misconduct of journalists at News of the World, Rupert Murdock flatly replied “no.” He said the responsible parties are people he trusted to run his massive empire, or people they trusted. Murdoch did vow, however, to “clean up” the mess as he was the right one for the job.

Allegations of phone hacking by journalists at the now-defunct tabloid have led to arrests of several of the paper’s prominent journalists and its editor. And as more information is revealed questions arise about whether the activities, if proven true, were undertaken by rogue individuals or if they were part of an organizational culture that valued success at all costs.

Jeffrey L. Seglin, author of the syndicated column “The Right Thing” for various newspapers throughout the U.S. and Canada, and Lecturer of Public Policy and Director of the Communications Program at Harvard's Kennedy School, commented on the 80-year-old CEO’s ethical duties.

“Murdoch may find a way to not be held legally responsible for the actions of his editors and reporters, but the ethical responsibility is there. If he built a culture that encouraged breaking laws to get scoops or rewarded such behavior, then he's certainly responsible for sending a message to his people that getting the news first at any cost is the way to succeed at Murdoch’s company. For that he is ethically responsible,” Seglin said.

A Passion for Excellence

Seglin drew parallels between the News of the World scandal and a lawsuit brought in 1998 against the textile firm Milliken & Company. The suit, brought by competitors, accused Milliken of encouraging a culture of dishonesty.

“[The company] had won a Malcolm Baldrige Quality Award and been featured in Tom Peters' A Passion for Excellence. Plastered all over the place were signs on the shop floor that read ‘steal shamelessly,’ referencing how they took the best ideas they could find and used them. But it turns out that some employees took this too far and actually stole ideas from competitors,” Seglin said.

Richard Bortnick, an attorney with Cozen O’Connor, said the allegations involved in News of the World scandal are similar to those raised in the Drexel Burnham Lambert insider trading scandal that took place in the late 1980s.

“People create an environment whereby it’s more important to succeed than it is to do it the right way. [To them] the end justifies the means,” said Bortnick.

The ‘Big Story’

“And the allegations are that the culture at News Corporation was such that you had to get the big story – it didn’t matter how you got it. You just had to nail it. To quote Charlie Sheen, it’s all about winning,” Bortnick said.

Bortnick thinks the scandal will have a dramatic effect on the culture of Murdoch’s company going forward, as editors and staff members of News Corporation properties will be extra vigilant, thinking that they may be operating under the microscope of regulators and shareholders alike.

“I don’t know that other companies behave that way. As a former journalist the newsrooms in which I worked were never like that. But if such a culture does exist in other environments, I’m not sure that it will cause them to stop. I think it will cause them to tell their people to be a hell of a lot more careful,” he said.

As for the potential for damaging the reputation of other Murdoch properties, Bortnick doesn’t see that happening. “I see News of the World as a different beast than I do other News Corporation properties,” Bortnick said. “I don’t see this happening at The Wall Street Journal.”

Bortnick offered some advice for lawyers working at companies that they know or suspect are engaging in unethical or illegal behavior, regardless of what business they are in. “Is it worth risking your reputation, maybe your freedom, for your job? What is your reputation, what is your career worth? And if you don’t want to turn people in, maybe you should find a new job . . . quickly,” he suggested.