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Wall Street Journal Europe executive out in scandal

By the CNN Wire Staff
updated 12:57 PM EDT, Thu October 13, 2011
Allegations have arisen that circulation figures for the European edition of the Wall Street Journal were boosted by complex cut-price deals with a sponsor.
Allegations have arisen that circulation figures for the European edition of the Wall Street Journal were boosted by complex cut-price deals with a sponsor.
STORY HIGHLIGHTS
  • The paper is accused of using underhanded methods to boost circulation numbers
  • The Wall Street Journal Europe says its circulation is properly audited
  • Dow Jones executive Andrew Langhoff left over allegations of a related scandal
  • The News of the World closed in July amid a scandal over phone hacking

London (CNN) -- A top executive at the company that publishes the Wall Street Journal left Dow Jones this week amid allegations that the paper's European edition used underhanded methods to boost circulation figures, the newspaper itself reported Thursday.

Andrew Langhoff, the executive, left on Tuesday, following an internal probe which found he had pushed for two articles favorable to a company involved in the alleged circulation subterfuge, the paper said.

The Guardian, a rival newspaper, alleged that the Journal's publisher secretly directed funds to the company that was buying copies of the paper in bulk.

In an official statement, Dow Jones rejected the Guardian's characterization of the arrangements.

Wall Street Journal Europe "circulation programs were fully disclosed and certified," the company said in a statement.

The controversy comes on the heels of another scandal surrounding another newspaper in the British newspaper empire of Rupert Murdoch's News Corp.

The News of the World, the company's flagship Sunday British tabloid, was closed in July on the orders of Murdoch's son James, following accusations that it had illegally eavesdropped on the phone of a missing girl and many others to get stories.

The girl, Milly Dowler, later turned out to have been murdered.

News Corp. owns both Dow Jones, which publishes the Wall Street Journal, and News International, which published News of the World and continues to publish the Sun and the Times of London.

The Wall Street Journal Europe scandal centers on the allegation that the paper arranged for 12,000 copies a day to be sold, for one European cent each, to a company called Executive Learning Partnership, the Journal reported.

That boosted the daily circulation of the paper to 75,000 -- meaning the bulk sales to ELP made up more than 15% of daily circulation.

The number of copies a newspaper sells is important in determining how much advertisers are willing to pay for ads, among other factors.

The British agency that audits circulation figures does not differentiate between papers that are sold at face value and those distributed in bulk -- unlike the American agency, the Journal said.

Dow Jones said its circulation reports were above board.

"The practice of sponsored distribution to business schools and universities is common in the industry and clearly identified in all WSJE publisher statements. ELP was paid for legitimate services rendered," the company said.

Langhoff and a Journal circulation department employee named Gert Van Mol also directed thousands of euros to ELP in side deals, the newspaper said Thursday, citing unnamed "people familiar with the matter."

Van Mol's job has since been eliminated, the paper said.

Dow Jones said the payments were for legitimate services rendered, but that the manner in which they were paid was "admittedly complex."

It said it canceled the deal because it was uncomfortable with it, the Journal reported, also noting that ELP denied that account and that the company was "not pleased that our name appears in this context."

ELP partner Nick Van Heck said the company had invoiced for services it had actually provided, but that the invoices went to "different organizations and not to the Wall Street Journal Europe," the paper reported.

The firm said in a statement that Langhoff had "never promised us editorial coverage," the Journal said.

The internal probe found that Langhoff had advocated for two articles favorable to ELP, the Journal said.

The Dutch company describes itself as "strategy and learning architects."

An ELP representative told CNN the company would respond to a request for comment as soon as possible.

The accusations against Dow Jones and the Wall Street Journal Europe were first reported by Nick Davies, a reporter for the Guardian who has been investigating scandals at News Corp. newspapers for several years.

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