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Sell the Sun: Times’s ethical options after phone hacking scandal

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Rupert Murdoch has promised to “make amends” for the damage caused by the News of the World phone hacking scandal – and he also needs to make amends to the Times newspaper, suffering reputational damage by association. The answer? Sell the Sun and create the new ethical Times – spun off from the News International empire and beyond its mephitic influence.

News International lawyers are apparently working hard on spinning off the papers so why not separate the Times and Sunday Times from their grubby stable mates – and incidentally take £45m of losses off the company’s books? Short of selling the Times to an oligarch, what are the ethical options?

Form a Trust

This would be the ultimate irony – or perhaps the ultimate revenge on the Guardian, which has brought Murdoch’s empire low with its revelations. For years the Guardian trumpeted its trust status. The Scott Trust, formed in 1936, meant the paper had no shareholders or control by an overweening Murdoch-style dictator. Instead of sale of the Times, why not put it on the same footing as its antagonist, challenging the Guardian’s role as the only ethical beast in the newspaper jungle? There is already a “Rupert Murdoch chair of language and communication” at Oxford. “Murdoch Trust” has a similarly convincing ring to it, pleasingly linking those two words in perpetuity, well after the current unpleasantness has passed (one hopes).

The then Manchester Guardian’s aims were enshrined in a trust deed: that the paper be “be carried on as nearly as may be upon the same principles as they have heretofore been conducted”. For the Times, of course, that would not do – in fact the opposite might be more appropriate: that it “be carried on upon quite different principles from those heretofore obtaining during the 30 years of News International control”.

There is a problem with a trust: the rule against perpetual trusts (or rule against inalienability). A trust transfers the beneficial interest of an asset from its owner. But the asset must vest at some point in the future – it must be realized and the trust wound up after a period of “a life in being plus 21 years” in the arcane Common Law formulation that still applies to “purpose trusts”. New rules in the Perpetuities and Accumulations Act 2009 set the term at 115 years for property trusts and those accumulating assets – which the Times is most unlikely to do.

However, there is nothing about a trust that makes it ethically or politically independent. It is simply a tax-saving device to separate (temporarily) ownership from the financial benefits of ownership.

A charity?

The exception to the rule against perpetual trusts is charities. Unfortunately producing newspapers is not a charitable activity according to the law on trusts (though some might feel that giving employment to members of the beleaguered journalistic profession is very much a charitable thing to do these days). Seeking to get round this by giving papers some moral purpose won’t work. This was established in Re Astor’s Settlement Trusts, a 1952 case in which the owners of the Observer sought to create a purpose trust with noble aims: “(i) the maintenance of good understanding between nations; (ii) the maintenance of the independence and integrity of newspapers; and (iii) the protection of newspapers from being absorbed and controlled by combines”. Would that they had succeeded – British journalism might not be in the pickle it is now. But the Astor aims did not benefit individuals, so were not charitable; and nor were they suitable to build a purpose trust around being “void for uncertainty” – not having clear objectives.

If Murdoch sought to set up a non-charitable purpose trust in which “the only beneficiaries are purposes”, who could initiate proceedings to enforce the purpose? Roxburgh J in Re Astor cited Sir William Grant in Morice v Bishop of Durham, 1804: “There must be somebody, in whose favour the court can decree performance” – someone who could make a legal claim against trustees for the benefits of the trust. It is unlikely that the Times readers would count as beneficiaries however beneficial the effect of the excellent articles in that newspaper.

Could the words of Murdoch’s advertisement apologizing for the misdemeanors of the News of the World form a starting point? He wrote: “Our business was founded on the idea that a free and open press should be a positive force in society. We need to live up to this.” He might wish to enshrine such fine sentiments in a trust deed, but it would undoubtedly be considered “void for uncertainty”.

Private company

Even if a trust could be set up it would last only for the “perpetuity period”. The Guardian had a good run as a trust (in reality not a purpose trust despite its high-flown aims) but in 2008 it opted to turn itself into a private company with its board initially made up of members of the old trust and bound by a company constitution with the previous aims. The advantage of going private for the Times would be that it could thereafter pursue its aims in perpetuity – or until the no doubt highly generous Murdoch monetary settlement upon it runs out.

Rather than selling the Times, Murdoch could hand it over to a trusted team of the great and the good. He doesn’t have a great track record on this, however. He promised in 1981 that the Times would have an independent board of such people, made similar promises in 2007 when he was negotiating to buy the Wall Street Journal and also in March 2011 when he offered to spin off Sky News into a separate entity. In the first two cases “his commitment to editorial integrity was swiftly questioned” according to the Financial Times.

This time it has to be serious, with a board comprising weighty and respected figures able to stand up to Murdoch – people with bottom such as John Prescott, a man unlikely to take any nonsense from an over-mighty magnate; or Jemima Khan, recently taken on at the Independent as an associate editor, so certainly having the experience to move up to a more challenging journalistic role – and similarly likely to be more than happy to face down a Murdoch throwing his weight around.

The MP George Galloway would be another popular choice as member of the board, and the selection of a prince of the realm such as Wills or Harry would add a certain éclat.

Mutualisation

If selling the Times and trust or charitable status are not options, perhaps the paper could go down the John Lewis route with the workers as partners sharing in the success of the enterprise. If this sounds a bit wishy-washy and liberal for the blue-in-tooth-and-claw Murdoch, then maybe the paper could start to show real support for Conservative values and the David Cameron “Big Society” agenda. All it needs to do is sack its journalists, just like at the News of the World – and then ask them to pop in to run the paper on a voluntary basis now and then.

Note:

A piece on the Leveson inquiry and privacy law is here

Two new European Court press freedom cases are discussed here

Since publication of this post in August, columnist and Murdoch biographer Michael Wolff has proposed selling the Sun to endow a Times trust here

Also since this post the Telegraph has suggested all the newspapers are to be put into a trust

Key quotes from Astor’s Settlement Trusts [1952] Ch. 534:

Roxburgh J: “The second ground upon which the relevant trusts are challenged is uncertainty. If (contrary to my view) an enumeration of purposes outside the realm of charities can take the place of an enumeration of beneficiaries, the purposes must, in my judgment, be stated in phrases which embody definite concepts and the means by which the trustees are to try to attain them must also be prescribed with a sufficient degree of certainty.” (At 547)

“The purposes must be so defined that if the trustees surrendered their discretion, the court could carry out the purposes declared, not a selection of them arrived at by eliminating those which are too uncertain to be carried out.” (At 548)

“If it were to assume this (as I think) novel jurisdiction over public but not charitable trusts it would, I believe, necessarily require the assistance of a custodian of the public interest analogous to the Attorney-General in charity cases, who would not only help to formulate schemes but could be charged with the duty of enforcing them and preventing maladministration. There is no such person. Accordingly, in my judgment, the trusts for the application of income during “the specified period” are also void for uncertainty. (At 548)

But while I have reached my decision on two separate grounds, both, I think, have their origin in a single principle, namely, that a court of equity does not recognize as valid a trust which it cannot both enforce and control. This seems to me to be good equity and good sense.” (At 549)


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About alrich

Journalist and blogger on legal and financial/economics issues

One response »

  1. Pingback: Joan Edwards’ will: whose money is it anyway? | Alrich Blog

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