UK government turns against Murdoch BSkyB bid

UK gov't joins calls for Murdoch to withdraw bid for BSkyB as papers face hacking scandal

FILE - This is a Tuesday, April 5, 2011 file photo of former British Prime Minister Gordon Brown answers question during an interview with The Associated Press in Geneva, Switzerland. British media say that former Prime Minister Gordon Brown had his personal information targeted by elements of Rupert Murdoch's media empire. (AP Photo/Salvatore Di Nolfi, File)

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Danica Kirka and Robert Barr, Associated Press, On Tuesday July 12, 2011, 11:58 am

LONDON (AP) -- The British government on Tuesday joined in calls for Rupert Murdoch to shelve his ambition of taking full control of British Sky Broadcasting as his newspapers are embroiled in a spreading investigation of alleged phone hacking and bribery.
Prime Minister David Cameron's office said the government will vote with the opposition Labour Party on Wednesday to support a motion calling for Murdoch to abandon the bid.
Labour leader Ed Miliband said this would be the simplest way to ensure that the bid isn't considered until criminal investigations are complete. A News Corp. spokeswoman declined to comment on the government's announcement.
The decision capped a day in which former Prime Minister Gordon Brown accused Murdoch's U.K. newspapers of employing criminals to obtain confidential information about his family and ordinary people, and police officers came under sharp criticism for failing to turn up evidence of some of the most serious spying allegations.
Brown's furious denunciation of the politically powerful News International papers came after it was revealed The Sun newspaper obtained confidential information in 2006 that Brown's infant son Fraser had cystic fibrosis.
They "really exploited people -- I'm not talking so much about me here now, I'm talking about people who were at rock bottom," Brown told the BBC. Brown said he knew of no legitimate way The Sun could have found out about his son's illness, though the newspaper said it used legitimate means.
"They will have to explain themselves," he said.
Besides disrupting the media mogul's plans to take over highly profitable satellite broadcaster British Sky Broadcasting, the widening allegations have slashed billions off the value of Murdoch's global conglomerate, News Corp. It has put his top editors in the U.K. under pressure and renewed anger at London's Metropolitan Police for dropping an earlier investigation into company practices.
At a tense House of Commons parliamentary committee hearing, one current and two former senior officials of London's Metropolitan Police said they regretted that an investigation of the News of the World in 2006 had not uncovered the extent of the alleged phone hacking, which allegedly spread to The Sun tabloid and the upmarket Sunday Times.
They blamed the News of the World and News International for not cooperating and pleaded that the force was preoccupied with terrorism investigations.
Resources were stretched and there weren't enough officers to fully staff 70 terrorist investigations running at the time, said Peter Clarke, former commander of the anti-terrorist branch.
The hacking case yielded convictions and prison sentences for a reporter and a private detective working for News of the World.
Documents gathered in the first investigation yielded 3,870 names, 5,000 landline numbers and 4,000 mobile numbers that may potentially have been hacked, Deputy Assistant Commissioner Sue Akers told the committee. So far, she said, police had contacted 170 potential targets of hacking.
Outrage exploded last week when it was claimed that News of the World employees hacked the phone of Milly Dowler, a 13-year-old murder victim, as police searched for her in 2002. The hacker allegedly deleted some voicemail messages, giving her parents false hope that the girl was still alive and using her phone.
The scandal has broadened, with among others accusations, the allegation that Murdoch reporters paid Queen Elizabeth II's bodyguards for secret information about the monarch, potentially jeopardizing her safety.
Cameron said Brown had highlighted what "looks like yet another example of an appalling invasion of privacy and the hacking of personal data," and said he was determined that current investigations would get to the bottom of it.
In an interview with the BBC, Brown said he and his wife Sarah were in tears after being informed by Rebekah Brooks, then the editor of The Sun and now the chief executive of News International, that the paper knew about his son's illness.
Brown also accused The Sunday Times of employing criminals to hack into his bank and tax records.
"Rock bottom was the rock upon which The Sunday Times founded their reputation, and other newspapers in News International founded their reputation, for purely commercial gain, and in some cases to abuse political power," Brown said.
"What about the person, like the family of Milly Dowler, who are in the most desperate of circumstances, the most difficult occasions in their lives, in huge grief and then they find that they are totally defenseless in this moment of greatest grief from people who are employing these ruthless tactics with links to known criminals?" Brown added.
Brown did not identify anyone he believed to be a criminal employed by News International.
In a brief statement responding to Brown, News International said: "So that we can investigate these matters further, we ask that all information concerning these allegations is provided to us."
A News International official, speaking on condition of anonymity, asserted that the information was obtained legitimately.
Members of the House of Commons Home Affairs committee repeatedly expressed incredulity that police had not gone further with their original investigation.
But Ian Blair, who led the Metropolitan Police from 2005 to 2008, told legislators that phone hacking by newspapers "was never a major issue in my time."
"It was a tiny fragmentary event in the events that were taking place across London at the time," Blair said.
Assistant commissioner John Yates faced a barrage of questions about his decision following a one-day review not to reopen the investigation in 2009 after fresh allegations surfaced.
"In hindsight, had I known what I should have known, it was a poor decision," Yates said.
Meanwhile, opposition Labour Party legislator Tom Watson said Brooks, Murdoch and his son James had been invited to appear next week before the House of Commons committee which deals with media issues. There was no immediate response from News International.

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GREEK DEFAULT

Europe considers Greek default, leaders to meet

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BRUSSELS (Reuters) - European Union leaders are poised to hold an emergency summit after finance ministers acknowledged for the first time that some form of Greek default may be needed to cut Athens' debts and stop contagion to Italy and Spain.
"There will be an extra summit this Friday," a senior euro zone diplomat told Reuters, suggesting policymakers have been seized with a new sense of urgency after markets started targeting Italian assets.
A French government source said Paris was in favor, although the timing was not yet fixed, and in Spain, European Council President Herman Van Rompuy said he had not ruled out a meeting.
Earlier, Germany's finance minister had said a second Greek rescue package could wait until September after euro zone finance ministers effectively accepted that private creditor involvement meant a selective debt default was likely, despite the European Central Bank's vehement opposition to such a move.
"We have managed to break the knot, a very difficult knot," Dutch Finance Minister Jan Kees de Jager told reporters.
Asked about whether a selective default was now likely, he replied: "It is not excluded any more. Obviously the European Central Bank has stated in the statement that it did stick to its position, but the 17 (euro zone) ministers did not exclude it any more so we have more options, a broader scope."
Participants said a buy-back of Greek debt on the secondary market and a German proposal for a bond swap for longer maturities were under consideration after a complex French plan to roll over bonds made no headway.
Both would likely be regarded by ratings agencies as a default, or at best a selective default, which although it would not necessarily cover all Greek debt and could be lifted quickly, would have major repercussions for financial markets.
The Institute of International Finance, the lobby group representing private creditors, said the EU and IMF needed to deliver a plan for Greece, including a debt buyback, within days to avoid markets "spinning out of control.
The increased likelihood of some form of default, and a lukewarm response from the IMF, hit European bank stocks and debt markets and propelled the euro sharply lower against the dollar although markets settled later.
Ten-year bond yields in Italy, the euro zone's third-largest economy, shot above six percent for the first time since 1997 but then subsided to around 5.7 percent, still at a level which bankers say will put heavy pressure on finances.
Borrowing costs at an Italian 12-month bill sale surged to their highest since the 2008 financial crisis, putting a Thursday bond auction firmly in focus.
There is now acute concern about contagion to Italy, where political tensions between Prime Minister Silvio Berlusconi and Finance Minister Giulio Tremonti have exacerbated concerns, and to Spain, the euro zone's fourth largest economy.
In Rome, Berlusconi tried to calm fears Italy could be swept into full-scale crisis, pledging to accelerate debt-cutting measures and run a primary surplus this year.
Willem Buiter, chief economist at Citi and a former UK central banker, said there was a clear spread beyond Greece, Ireland and Portugal, the three nations bailed out so far.
"We're talking a game changer here, a systemic crisis," he said. "This is existential for the euro area and the EU."
The euro fell to a four-month low against the dollar before recovering, in part because IMF Managing Director Christine Lagarde said the lender and its EU partners were not yet ready to discuss terms for a second Greek bailout.
"Nothing should be taken for granted," she told reporters in Washington.
FUNDAMENTAL SHIFT
While the finance ministers were not explicit about how they planned to tackle Greece's debt, saying only that proposals would be discussed "shortly," they acknowledged that the debt pile -- at around 160 percent of GDP -- had to be reduced.
"We stress the need to make Greek debt more sustainable," Jean-Claude Junker, the chairman of the Eurogroup of finance ministers, said after more than eight hours of talks on Monday.
Economists regarded Junker's words and the comments from other finance ministers as a fundamental shift.
"The euro area now seems to be moving more explicitly toward debt relief via EFSF-funded purchases of secondary market debt," JPMorgan economist David Mackie wrote in a research note, referring to the euro zone's 440 billion euro emergency loan fund, which as it stands would not have enough resources to bail out Italy.
"Greece will need debt relief at some point, but it is not clear it is much of a help now. More likely the shift toward debt relief is intended as an attempt to limit contagion."
The decision to call an extra leaders' summit helped counter negative market reaction to an apparent absence of hurry, after German Finance Minister Wolfgang Schaeuble said there was time to wait on Greece, with no new tranche due until September.
That lack of urgency prompted stern criticism from Greece's prime minister but the finance ministers did hint at the prospect of more fundamental steps to come.
"Ministers stand ready to adopt further measures that will improve the euro area's systemic capacity to resist contagion risk, including enhancing the flexibility and the scope of the EFSF, lengthening the maturities of the loans and lowering the interest rates, including through a collateral arrangement where appropriate," they said in a statement.
There was no indication, though, that they had broken a stalemate over how to make banks, insurers and other funds share the cost of additional funding for Athens.
A senior member of Germany's governing coalition acknowledged, however, that a debt restructuring was coming.
"We just need to ensure that it's as orderly a process as possible," he said, adding that it could come in the autumn.

Germany, the Netherlands, Finland and others want the private sector to provide at least 30 billion euros in a new package for Greece that could total 110 billion euros.

(Additional reporting by John O'Donnell, Leigh Thomas, Dan Flynn in Brussels, Silvia Westall in Vienna, Huw Jones in London, Stephen Brown in Berlin, Lesley Wroughton in Washington and Milan/Rome bureaus, editing by Mike Peacock).

Enyinnaya Nnamdi
Sloane International Investments ltd
CEO
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