Rupert Murdoch denied 'wilful blindness'
in his evidence to the committee. He said: 'I have heard the phrase
before, and we were not ever guilty of that.' Photograph: Olivia
Harris/Reuters
The charge of "wilful blindness" and "wilful ignorance" is
referred to four times in the MPs' report into phone hacking and has
been instantly picked up by legal experts as one of the most damning
findings.
The allegation – levelled at Rupert and James Murdoch as well as the directors of
News International and its parent
News Corporation
– does not denote a specific legal wrongdoing but strongly points
towards an accusation that those at the top, and additionally those
responsible for scrutinising their actions, breached their fiduciary
duties.
News Corp non-executive directors include a spread of
prominent business and political figures, among them the former Spanish
president José María Aznar and the former British Airways boss Sir Rod
Eddington.
One lawyer, who would not be named, said he thought the
findings of MPs raised the prospect of News Corp shareholders launching
a class action claim in the US. "If I was a disgruntled shareholder and
I wanted evidence, this report gives some of that … I think it
potentially opens them [News Corp] up to a class action."
The MPs
found: "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."
The phrase came up during evidence to MPs and James Murdoch was
asked the direct question
by the Lib Dem MP Adrian Sanders: "Are you familiar with the term
'wilful blindness'?" Sanders described the phrase as "a term that came
up in the Enron scandal … a legal term. It states that if there is
knowledge you could have and should have had it."
In response
James Murdoch said he had not heard the term, but his father added: "I
have heard the phrase before, and we were not ever guilty of that."
Niri
Shan, head of media law at Taylor Wessing, said the phrase was not, in
fact, a formal legal term. That said, he added: "If you are wilfully
blind, from a corporate governance perspective, you have not fulfilled
your fiduciary duties."
He added that some of the sting of the MPs
report, in his opinion, had been removed by the fact that the committee
had been split on many issues down party-political lines.
The
allegation of wilful blindness – sometimes referred to in Britain as
turning the Nelsonian eye – is, in a legal context, often levelled by
prosecutors at defendants who acknowledge they have unwittingly played a
part in a criminal act of which they had no knowledge at the time.
When
it comes to the business world, however, the allegation can be more
powerful as directors of companies are required by law to exercise
proper responsibility on behalf of the company's shareholders. Wilful
blindness was the subject of a book by the
entrepreneur and author Margaret Heffernan
last year. She suggests the concept can be an unspoken attitude common
to a large group – the Catholic Church, the military in Afghanistan and
Nazi Germany are all example she cites.
Heffernan has been a stern critic of News Corp, publishing several articles
attacking the appointment of family members in key executive roles.
