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Fair Pensions

Breaking more than just the news

Believing the hype, I've been watching the BBC's latest drama ‘The Hour'. I was expecting, as promised, period authenticity, quality acting and great writing.

What I wasn't expecting was a story featuring tapped phone lines, the powers that be putting pressure on journalists not to run with particular stories and police officers accepting money from journalists for access to evidence. In other words a drama that, although set in the 1950s, perfectly captures the current crisis engulfing the political establishment and the Fourth Estate. Plus ça change, Plus c'est la même chose indeed!

But joining this fictional drama in reminding us all of the value of a free and public-interest driven investigative press has been Nick Davies' reporting for the Guardian on the News International scandal which has how escalated to the extent that it has acquired the obligatory ‘gate' suffix: ‘hackgate'. And while the Guardian's role in revealing the truth is a testament to that most traditional of mediums - print journalism - hackgate's ‘success' relied on our ever growing reliance on modern forms of telecommunications such as mobile phones, internet and social media. And while they can be a force for good, as demonstrated during the Arab Spring, the flip side has been shown to include industrial-scale unjustified invasions of privacy and the hijacking of internet and phone networks by repressive regimes to stamp out peaceful protest.

So for the past few weeks as well as watching TV and reading the papers, FairPensions has been hard at work encouraging investors to get media and telecom companies to ensure that the pace of their risk analysis matches that of their technological development. As well as providing comment on the continuing and seemingly ever-escalating revelations around News International, FairPensions teamed up with US NGO, Access on the issue of telecoms and human rights.

Since the hacking scandal broke, we've maintained that it was an investor issue - indeed, it's a textbook example of how unethical behaviour can not only create massive reputational risks for companies, but also raise alarm bells about bigger corporate governance problems. In particular, we suggested the revelations should give investors pause for thought over whether the BSykB takeover was in their beneficiaries' best interests - interpreted not just in terms of the price they'd be paid for selling their shares, but also the deal's wider implications for media plurality and standards. That deal is now off the table, but investor concerns certainly are not. The hacking scandal has put the spotlight on the Murdoch dynasty's governance of its media empire - and, with US investors, with whom FairPensions has been working, hoping to raise the issue at News Corp's AGM later this year, that spotlight doesn't look like shifting any time soon.

And while News Corp have come under fire for hacking phones, Vodafone is coming under increasing scrutiny for shutting its phone and internet networks during the Egyptian uprising earlier this year. Vodafone argued that it had no choice but to comply with the regime's request, and that its staff would have been in danger if it refused. But the next telecoms company to face the same dilemma may find it harder to sell this explanation. Our investor briefing with Access  argues that all telecoms should have a clear response plan in place for such situations, and that the industry should come together to accept principles for negotiating government contracts which ensure this can't happen again. FairPensions secured a proxy to allow Access Executive Director Brett Solomon to attend the Vodafone AGM and put a question directly to the board of directors. Attending the AGM also gave Brett the opportunity to speak with senior board members including the CEO and Vodafone's initial response has been positive. Coverage in the Financial Times, the Guardian and the New Statesman has put this issue firmly on the agenda, and the reputational risks for firms who remain complacent could become increasingly difficult to ignore.

Whether it's phone hacking or phone blocking, it's right that the companies involved should face scrutiny - but it's also important that the public and investors alike look beyond the instinct to bash companies who transgress. Instead, we need to ask the bigger questions about what this means for the sector - and how we can all work to prevent the next scandal.


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