BSkyB board backs James Murdoch despite scandal

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James Murdoch on the hot seat

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Story highlights

  • The letter is being sent to investors by the board of British broadcaster BSkyB
  • James Murdoch has done a "first class job" of leading the board of BSkyB, it says
  • News Corp. pulled out of a takeover bid for BSkyB amid the phone hacking scandal
  • Murdoch has faced public questioning over his knowledge of the hacking claims
The board of directors for broadcaster BSkyB has declared its unanimous support to chairman James Murdoch, in a letter sent to investors ahead of the company's annual meeting.
Murdoch was grilled Thursday by British lawmakers for a second day over a phone hacking scandal that has embroiled News International, of which he is also chairman.
Parent company News Corp, which owns 39% of BSkyB, pulled out of a takeover bid for the company this summer amid the furor over the hacking claims.
The board of directors, the majority of whom are independent, discussed then whether they were in favor of Murdoch remaining chairman of BSkyB -- and opted to maintain their support.
The letter explains why, before Murdoch and all the other directors go up for reelection at the annual meeting on November 29.
News International was forced to shutter News of the World, its best-selling Sunday tabloid, after public outrage at claims the newspaper intercepted cellphone calls and messages of almost 5,800 royals, politicians, celebrities and business leaders -- and most controversially of all, a 13-year-old murder victim.
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Its senior executives, including James and his media tycoon father Rupert Murdoch, have since faced public questioning about what they knew and when about the extent of illegal behavior at the paper.
The letter, sent to a number of investors in recent weeks from Nick Ferguson, BSkyB's deputy chairman, explains why the board decided to stand behind James Murdoch despite the scandal.
"We are quite clear that it is an important issue and we have handled it as such. The Independent Directors have always acted in the interest of all the shareholders and we will continue to do so," the letter says.
It states there has been no "negative reputational effect" as a result of the scandal at News of the World, saying: "We have seen no effect on sales, customers or suppliers over the last five months."
The letter raises the question of speculation over Murdoch's integrity, in light of questions over his handling of alleged wrongdoing within News International, but says the board will only deal "with substance."
Over the past eight years, the letter says, Murdoch "has always acted with integrity in the eyes of both the Board and the senior management. If this was to change, clearly the independent directors would re-evaluate the position."
It also says Murdoch has done a "first class job" of leading the board and dealing with the company's senior management team.
At the hearing Thursday, Murdoch rejected allegations his company had behaved like a Mafia organization over the News of the World scandal as offensive and untrue, and stood by his previous testimony to the Culture, Media and Sport committee.
Murdoch's position at the helm of News International is widely believed to have been jeopardized by the scandal, which has cost its parent company $150 million.
Thursday's hearing came only days after News International admitted the Sunday tabloid hired a private detective to spy on lawyers defending hacking victims. Murdoch said he had no knowledge of the "appalling" and "unacceptable" action for which he apologized "unreservedly."