NEWS CORPORATION’S audit committee found itself unexpectedly dragged into the spotlight on Tuesday, as the UK tuned in to watch the Murdochs and Rebekah Brooks get a parliamentary grilling.
Normally busy behind the scenes, the audit committee’s activities are rarely the focus of much attention, unless something has gone very wrong. The whole of News Corp is probably feeling rather hot under colour, but this bunch was among those singled out in the moguls’ defence of their hackneyed empire.
Rupert Murdoch (pictured) said the company has “a very strong audit committee” which would know about sums paid for civil litigation, such as out-of-court legal settlements stemming from News of the World misdemeanours.
Does it follow, therefore, that they would – or should – have known about cash being filtered off for other nefarious purposes?
Murdoch does not directly suggest this, but he does use the audit committee as another rivet in his “delegation” shield, arguing that as the tsar of a multinational behemoth, he trusted others to keep an eye on such things for him.
By denying that he should be aware of legal payments “because the audit committee would know about this”, Murdoch shines a light on executive insight. Who should be aware of goings-on now considered unacceptable, and who should be aware of payments to fund them?
Paying private detectives is an accepted newspaper practice and at NOTW, generous cash expenses were not uncommon, potentially making it hard to lay the burden of responsibility for knowing about bribes or hacking at executives’ feet.
Son James touched on the issue, saying: “Alleged criminality [and] violations of our own code of conduct … are the things that the audit committee [and] senior executives expect to be made aware of”.
Mini-Murdoch insisted upon “thresholds of materiality”, saying issues have to be of a certain magnitude before top-level management takes an interest. It is arguable that this also applies to audit committee work, meaning relatively small sums could be hidden from them, but large, unexplained payments would be more likely to ruffle feathers.
Whatever the true situation, there is no doubt that members will strenuously deny knowledge of payments to private dicks and police officers. However, the case may make audit committees sit up and take note, as it appears no one is safe from the flames of a corporate funeral pyre.
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