Hackety hack

So, the verdicts in the hacking trial are in (though Coulson and Goodman may face a retrial on the bribery charge). The two big decisions - Coulson guilty, Brooks not - might seem to make this more of a political story now than a corporate one. And indeed the last two days have mainly seen Cameron in the frame.

But hold on. We now have convictions against several former News Corp employees (remember, away from the headlines, that several pleaded guilty). There is no question that extensive illegal activity went on, and now people have been convicted of it. One of those that pleaded guilty was Neville Thurlbeck, of the famous 'for Neville' email. And there are more trials to come.

One important unanswered question is whether a corporate charge is likely. It is obvious that the police were interested in this (as they should be). We now know that Rebekah Brooks and Andy Coulson were cautioned by the police in relation to a corporate charge, and Les Hinton was also reportedly interviewed.

There has been no forward movement on a corporate charge to date because the police needed to see what happened in the hacking trial. And - on the hacking issue alone - we now have several convictions of editorial staff. According to The Guardian they also agreed to not interview Rupert himself until the verdicts were in. Now they are, an interview looks to be on the cards.

I don't know much about corporate charges, though Section 79 of RIPA doesn't require knowledge for a director to be held liable, you can be negligent too (and plenty of senior News Corp staff seem to have had no idea what was going on under their watch...). A corporate charge would also have a bearing on 21st Century Fox's relationship with BSkyB. Surely Ofcom would have to revisit the 'fit and proper' test?

Also worth noting, in passing, that Tom Crone was arrested a second time last November. This is the guy who has claimed several times that he told James Murdoch all about the 'for Neville' email, and who was dumped on by Rupert Murdoch. He was previously arrested in August 2012 for conspiracy to intercept communications. I haven't seen what the second arrest was for.

And this is before we get into the business of payments to public officials and the Foreign Corrupt Practices Act and other possible action in the US. There's still quite a few challenges for the Murdoch empire (and Trinity Mirror may follow). This is (still) a long way from over.

And finally, I couldn't help but find this amusing (from here):

Brooks’s lawyers tried and failed to persuade the judge to ban all trade union members from the jury on the grounds that they were bound to be antagonistic.

Caledonia gives up on the Tories?

An interesting little snippet, today the investment trust Caledonia Investments issued its notice for the forthcoming AGM which includes the list of resolutions that will be put to the meeting. The thing I looked for straight away was if they were seeking authority to make political donations, as the company has been a regular Tory donor in the past, and quite noisy about it.

But there's nothing there - no such resolution. And this is, of course, the last AGM before the election where the company could seek such an authority. It looks to me like they may have, finally, backed off. For completeness, I checked whether the Cayzer Trust, the major shareholder in Caledonia, was still making donations, and indeed it is.

But the majority of Caledonia shareholders are not linked to the Cayzer family, and that's why I've always thought it was inappropriate for the company's money to be spent supporting a particular political party (though others - like Fidelity - obviously disagree).

So, hopefully, it looks like common sense has prevailed.

Andy Haldane vs 'win win'

Andy Haldane gave a very interesting speech recently on inequality. What particularly caught my eye was the section at the end where he talked about the competing claims on firm resources, and how corporate governance structures can favour one outcome (and one party) over another.

There's a regrettable tendency to focus on 'win wins', and how there aren't really any competing interests, if we only look to The Long Term. I don't think this is true, and it would be better if we focused on the need to mediate between competing claims. So it's nice to hear someone a lot smarter than me making the same point.

Here's the key bit:

If there are legs to this story, then one important element is corporate governance. This defines decision-making within firms - how much to invest, how much to distribute, and to whom. Company Law in a number of countries, such as the UK, gives primacy to the interests of shareholders when defining the objectives of a company and its decision-making. The objectives and rights of a broader set of stakeholders, including workers, suppliers and wider society, tend to be secondary (Mayer (2013)).
This governance structure has stood the test of time. But it is not without distributional consequences. If power resides in the hands of one set of stakeholders, and they are short-termist, then we might expect high distribution of profits to this cohort, at the expense of ploughing back these profits (as increased investment) or distributing them to workers (as increased real wages). To some extent, this matches the stylised facts on rising inequality - rising executive and shareholder compensation and faltering real wage growth. The shareholder model may, ironically, have contributed to unfair shares.
If so, this suggests that one avenue worth considering further is corporate governance reform. A set of corporate incentives which had as its fulcrum long-term company value and which more fully reflected the interests of a wider set of stakeholders might help rebalance the scales - for example, towards investing rather than distributing. Such an alternative model is certainly not without precedent. It is found in a number of countries around the world (Mayer (2013)).
Inequality and corporate governance are deep, structural issues. Central banks do not have many, perhaps any, of the solutions to these problems. But the stakes - a more stable, faster-growing, fairer society - could not be higher. There is a collective public policy interest in getting them right.