Labour MP Chris Bryant writes to shareholders urging them to vote against Murdoch over handling of phone-hacking scandal
Pressure continued to mount on James Murdoch before next week's annual meeting of BSkyB, after the Labour MP Chris Bryant wrote to 40 major shareholders urging them to vote against his re-election as chairman of the satellite broadcaster.
Bryant, who intends to attend the annual meeting, told major investors that he was "deeply concerned that the re-election of James Murdoch as chairman would do serious damage to BSkyB and to the overall reputation of the UK's standards of corporate governance".
He is concerned that Murdoch may have misled parliament about what he knew about the phone-hacking affair and reckons investors share his concern.
"Whether you consider James Murdoch has misled the committee, as I do, or instead consider that he failed to investigate and manage this issue competently, I believe that shareholders must hold him accountable. In any other FTSE 100 company failure on this scale would merit removal," Bryant said.
He is not the first MP to take matters into their own hands over the management of Murdoch companies. Tom Watson, who sits on the culture, media and sport committee which has taken evidence from Murdoch, flew to Los Angeles to attend the shareholder meeting of News Corporation in October. News Corp withdrew its £8bn bid to take full control of BSkyB in July after the phone-hacking affair escalated.
Bryant pointed out in his letter to BSkyB shareholders that 35% of News Corp's investors voted against Murdoch's re-election to the News Corp board at the Californian meeting. "This clearly affects BSkyB, since the exposure of the phone-hacking scandal and the expensive cover-up led directly to the failure of News Corp's bid for the outstanding shares of the company," Bryant said.
Shareholder bodies, which help advise major institutions on how to vote, share his calls for an independent chairman to be appointed to the BSkyB board. UK-based Pirc, the US corporate governance expert Glass Lewis and other agencies have expressed concerns, along with the Association of British Insurers.
Investors do not expect to be able to vote off Murdoch as News Corp is the largest investor in BSkyB with a 39% stake and the directors of the pay-TV company are backing him. Sky's deputy chairman, Nick Ferguson, who is also the leading independent director and acts as the main contact for investors, told shareholders that Murdoch had "always acted with integrity" during his time at the company.
Ferguson said soundings taken from shareholders had found most were supportive of the chairman or the board's position. Odey Asset Management is said to be among the supportive investors.
Murdoch was chief executive for four years until his appointment as chairman in 2007. "We have known James for some eight years, and during that time he has always acted with integrity in the eyes of both the board and the senior management. If this was to change, clearly the independent directors would re-evaluate the position," Ferguson said. The meeting is on 29 November.
The Local Authority Pension Fund Forum (Lapff), whose members invest in BSkyB, are also calling for change at the top of the company and in The MJ, a local government magazine, will on Thursday step up their call for change.
"The forum's mission is to ensure that the companies in which local authority pension funds invest adhere to high standards of corporate governance and social responsibility," Ian Greenwood, chairmain of Lapff, writes in an article due to appear on Thursday.