Ethical Event In July 2011, billionaire Rupert Murdoch's News of the World tabloid newspaper was engulfed in a media scandal that jeopardized his media empire, News Corporation. On July 4, 2011, a reporter for the British the Guardian broke the scandalous news that employees from Murdoch's News of the World tabloid had hacked cell phone messages of Milly Dowler, a 13-year-old murder victim. An employee had hacked into Milly’s voice-message system to delete messages. This in turn gave her family and police hope that she was still alive. News of the World used the material obtained from the phone hacking to write stories about the murder victim in an effort to prolong the story and continue selling millions of copies. The interference on behalf of the newspaper obstructed the police investigation and appalled the nation (Kellner, 2012).
Furthermore, it was revealed that in an effort to sensationalize the headlines, employees hacked into cell phones belonging to the families of soldiers killed in Iraq and Afghanistan and family members of victims of the London terrorist attacks. The exposé revealed more than 4,000 allegations of phone hacking by employees of News of the World. Amongst the people being monitored were celebrities, politicians, the monarchy and ordinary citizens. The tabloid newspaper was implicated from information obtained from a convicted hacker’s detailed notebook, which contained about 11,000 pages of notes. Indignation and disapproval grew on a daily basis as more allegations of bribery were revealed and additional major figures in the Murdoch media empire were arrested (Kellner, 2012).

Course-Relevancy As the scandal of the 2008 economic meltdown was slowly fading, another scandalous event was exposed to the world and authorities. Rupert Murdoch’s global media empire was being exposed for it’s questionable business practices. As investigators examined the allegations in-depth, they uncovered anomalies and important issues were raised. Rupert Murdoch and his media empire, News Corporation, lacked corporate social responsibility (CSR) while operating its business. Corporate social responsibility can be defined as the "economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time" (Carroll & Buchholtz, 2003, p. 34).
Traditionally, corporations viewed that its primary responsibility was to the organization’s owners and stockholders. Nevertheless, organizations have embraced and broaden their responsibilities to not only include stockholders, but also stakeholders that are affected by the actions of the organization (Carroll & Buchholtz, 2011, p. 30). Unfortunately, News of the World did not consider the severe impact its actions would have on society. Top executives at the newspaper decided to conduct operations under the traditional view of responsibilities, to owner Rupert Murdoch. Under corporate social responsibilities, legal responsibilities are established by society in the form of laws. An organization’s duty toward stakeholders is to comply with the laws set forth by society. These laws “embody basic notion of fair practices established by lawmakers” (Carroll & Buchholtz, 2011, p. 34). At the core of the scandal, it was revealed that employees at the Murdoch’s tabloid newspaper deviated from its legal responsibilities and violated several laws in attempting to get a story. Employees at News of the World neglected their ethical responsibilities in lieu of sensationalized headlines, of which the corporation profited. High-ranking executives and key personnel disregarded “norms, standards, values and expectations” stakeholders “regard as fair, just, consistent with respect of stakeholder’s moral rights” (Carroll & Buchholtz, 2011, p. 35). As society evolves, changes in values are frequently accompanied by the enactment of new laws and regulations. In a sense, ethical responsibilities are continually changing and organizations are expected to adapt to the changing concepts to adhere to ethical practices (Carroll & Buchholtz, 2011, p. 35). Another important issue raised by the Rupert Murdoch media scandal is the power the media has and the extent of its abusive powers. Critics of corporate social responsibility have argued that giving business more power is not appropriate. Organizations already possess economical and technological powers; any further power would throw off the balance between business and society (Carroll & Buchholtz, 2011, p. 41). News of the World at its climax was considered the best newspaper in the English language. The tabloid had a loyal audience that helped sell millions of copies weekly in England with its captivating front headlines. The manner in which a corporation is presided over determines the direction it conducts business. Corporate governance is a method by which a company directs and controls itself in an effort to balance the interests of all its stakeholders. The board of directors usually oversees this when shareholders of large firms are absent to steer the company adequately (Carroll & Buchholtz, 2011, p. 96). Corporate governance was imperialistic for Rupert Murdoch’s News Corporation. Rupert Murdoch’s empire encompasses hundreds of publications globally; thus, the board of directors for his corporation would managed it and with major input from Murdoch. The board of directors was comprised of people with long-established ties to Murdoch, his family and company (Lin, 2011). Although Murdoch governed his corporation like an emperor, he accused his employees for the wrongdoing and said he had no knowledge of their illegal actions. News of the World was presided over by a team of immoral managers. Their decisions and practices contradicted established ethical principles. Management’s primary objective is profitability and success by whatever means necessary. Immoral managers see law and regulations as hurdles they must steer clear of in order to accomplish their goal (Carroll & Buchholtz, 2011, p. 197). High-ranking executives at the newspaper allowed subordinates to write and publish articles that shamed, hurt, damaged and jeopardized citizen’s reputations. All this was done with the sole purpose of economic gain. When the allegations of phone hacking and bribery surfaced top executives such as Rebekah Brooks, former editor of News of the World/ News of the World, and Murdoch’s assistant Les Hilton resigned from their positions (Nicoll, 2011). Ethical issues at industry or professional level were also an important issue raised by the phone hacking scandal. Management encounters ethical dilemmas on a daily basis at different stages, presenting unique challenges for organizations (Carroll & Buchholtz, 2011, p. 226). Journalists working for the Murdoch’s tabloid were faced with the ethical dilemma presented by their profession. Employees had a choice of practicing ethical journalism with accurate and properly sourced information or unethical journalism with compromised information. Several journalists succumbed to illegal and unethical journalistic practices in lieu of attracting consumers. Technological advances pose endless ethical dilemmas; such was the epicenter of this scandalous event. One of the ethical issues that arise is the use of surveillance. Is it ethical to invade the privacy of a person by watching, monitoring and checking on the individual? With all the technological advances, surveillance can be carried out with computers, telephones and video (Carroll & Buchholtz, 2011, p. 282). In the case of News of the World, journalist utilized telephones to listen in on conversations, tape conversations and delete voicemails of people. Employees would hire hackers to give them easy access to thousands of people ranging from common citizens to political figures and even England’s royal family. Reporters disregarded that the conversations were private, thus illegally intruding on their privacy (Nicoll, 2011). Furthermore, corruption, bribes and questionable payments played an essential role in this unethical event. Corruption is the behavior of officials in the public or private sector that illicitly elevate their economic position by abusing their status or power. These acts are privately performed and often accompanied with bribes. Offering something, such as money or gifts, in order to obtain an advantage constitutes a bribe. In most places, bribes are considered illegal yet they are amongst the most frequent ethical problems in business (Carroll & Buchholtz, 2011, p. 318). It is alleged that News of the World bribed several senior police officers. Paul Stephenson, Metropolitan Police Commissioner, and the chief of the anti-terrorist policing resigned after allegations of their subordinate officers accepting bribes by the employees of newspaper for providing information for stories (Gruenbaum, 2011). Close ties with politicians and elected officials also played an integral part of the Murdoch’s media scandal. Nowadays, government plays a significant role in influencing business activity not only by establishing laws, but also as a competitor, purchaser and supplier. Personal relationships between any employee and politicians dramatically increase the probability of receiving preferential treatment, thus gaining a competitive advantage over competitors (Carroll & Buchholtz, 2011, p. 370). Rupert’s actions and those of top executives were calculated and used to influence politicians to acquire a competitive advantage to make profit. The corporation’s nexus with the government went all the way up to the current Prime Minister of England, David Cameron; he hired former editor Andy Coulson as his communications director. A week before the scandalous exposé by the Guardian, the government had approved a bid for News Corporations to purchase England’s dominant pay-per-view telecast (Gruenbaum, 2011). Lastly, the crisis management team handling the News of the World ethical scandal attempted to resolve the problem as fast as it could. An organization crisis constitutes as a drastic and unforeseen event that threatens likelihood of an organization. To successfully manage a crisis, an organization must “identify areas of vulnerability, develop plan to deal with threats, form a crisis team, simulate crisis drills and learn from experience” (Carroll & Buchholtz, 2011, p. 167). Within 14 days of allegations surfacing, Murdoch decided to close News of the World, abandoned his bid for taking over pay-per-view broadcast network, published several apologies written by Rupert Murdoch and a three hour televised appearance before parliament (Nicoll, 2011).

Recommendation In an attempt to prevent future scandals of this global magnitude, top management of an organization must establish a compliance program and assess the organization’s compliance risks. Management should be on alert and examine for employee’s personal ties to elected officials, ensure high-ranking executives commit to compliance message and have independent investigatory teams readily available. Historically, businesses that have maintained friendly ties with politicians and elected officials are more likely to succumb to corruption. Personal relationships between any employee and politicians dramatically increase the probability of receiving preferential treatment. Such special treatments go hand in hand with improper gifts, payments and other types of bribes. To avoid this from occurring, employees should restraint themselves from having personal associations with political figures. This includes meeting them on a regular basis and socializing with them at private events. Organizations that want to be certain that personnel are not succumbing to corruption and unethical practices must ensure that high-ranking executives commit to the company’s compliance program. It is essential that management fully grasps that paying bribes and invading the privacy of others is unethical and illegal. Top management must enforce an ethical code of conduct throughout the organization. Management’s decisions and actions will dictate how the rest of the personnel will see the organization’s commitment to compliance. Business should have an independent body readily available to conduct internal investigations and cooperate with authorities if necessary. In the event that allegations surfaced, an organization should be able to conduct an internal investigation in an effort to demonstrate to authorities their good faith. These investigations should be shielded from personnel who might be tempted to conceal the company’s dirt. Such teams would not answer to the board of directors of the organization but to independent directors.

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