In his opening testimony during a high-stakes parliamentary hearing, News Corp.’s CEO Rupert Murdoch said that today “is the most humble day” of his life. But he denied prior knowledge of the phone-hacking scandal that has engulfed his media empire and left his company’s reputation in tatters. Murdoch said that responsibility for the alleged phone hacking of murder victims, members of the royal family and others rests with those he trusted to run the recently shuttered News of the World. While Murdoch said he was “shocked, appalled and ashamed” he claimed he was not aware of any wrongdoing until after the fact. When asked why he didn’t investigate Rebekah Brooks’ 2003 admission that the paper had paid off British police for inside information, Murdoch again claimed ignorance, adding that the tabloid “is less than 1 percent” of News Corp., which employs 53,000 people. Today’s testimony raises many questions about corporate ethics. How likely is it that the top bosses didn’t know about the ethically dubious behavior their reporters and editors are accused of? If it wasn’t Murdoch’s responsibility, who was in charge of making sure no one crossed the line? Who establishes the culture and ethics in any corporation? Have you ever worked for a company in which the top bosses didn’t know what their underlings were doing? Or does this kind of conduct generally trickle down from the top?
Charles Elson, Professor of Corporate Governance and Director of the John L. Weinberg Center for Corporate Governance at the University of Delaware