David Prosser: Why James Murdoch must step down as chairman of BSkyB - Business Comment - Business - The Independent

David Prosser: Why James Murdoch must step down as chairman of BSkyB

Outlook: Sky, now a prominent FTSE 100 company, deserves a chairman who is able to devote the sort of time to its affairs that befits an operation of such scale

Should James Murdoch step down as chairman of BSkyB, a move for which there is a growing clamour? Of course he should: even putting aside the controversies of the past two weeks, Mr Murdoch should never have become chairman in the first place. That he did so in 2007 was a breach of not one but two principles of the UK's Combined Code on corporate governance, the City's rulebook on such matters.

The code makes it clear that it is not good practice for a company's chief executive (the post Mr Murdoch previously held at Sky) to become its chairman, since this encourages a cosy game of musical chairs in which senior executives are not properly held to account. The code also makes it clear that a company's chairman should not have a connection to a major shareholder. Mr Murdoch could hardly be more in breach.

Sky and Mr Murdoch were able to overcome these difficulties, because the code operates on a "comply or explain" principle – whereby if a company chooses not to abide by its provisions, it must give an account of its actions. Sky's explanation wasn't particularly convincing – it said the board had decided Mr Murdoch was the best man for the job – but it was enough. Although some shareholders did vote against Mr Murdoch's elevation, the rebellion, in the end, was relatively small.

Three-and-a-half years on, it is worth noting that one of the prominent figures doing the explaining for Sky back then was its senior independent director, Nicholas Ferguson, the man now being tipped to replace Mr Murdoch should he stand down. We shall have to see if Mr Ferguson presses his independence more forcibly this time around.

He must. For never mind the theory of corporate governance, think about more practical matters. Sky, now a prominent FTSE 100 company, deserves to have a chairman who is able to devote the sort of time to its affairs that befits an operation of such scale. Can Mr Murdoch really make that commitment, given the rather pressing demands of his day job just now, as the man in charge of News Corp's European operations?

Then there are the conflicts of interest to worry about. One of them, it is true, has gone. MrMurdoch had to absent himself from all board discussions of News Corp's bid to buy the company in full, but that matter is resolved, for now at least. Unfortunately, it has been replaced by the worry that Ofcom might declare News Corp not fit and proper to hold such a large stake in Sky. That one is going to be tricky for the current chairman too.



Taking a leaf outof BAE's book?

If News Corp previously underestimated the toxicity of this scandal, as many of its critics believe, the response it announced yesterday suggests it is beginning to get the picture. For the appointment of an independent peer to oversee ethics at News International is a play taken from the book of BAE, which did something very similar in an attempt to put the affair of its arms contracts with Saudi Arabia behind it.

At BAE, it was Lord Woolf who was charged with improving transparency and raising ethical standards at a company that, until political pressure was brought to bear on the Serious Fraud Office, had been facing claims that it had bribed senior Saudi officials to win arms deals.

At News International, it is Lord Grabiner who yesterday agreed to head an independent management and standards committee reporting back to the News Corp board. The equivalence of the remedies put in place at the two companies is an indication of just how serious this has become.

Still, News Corp will be aware that BAE played its cards very smartly. Lord Woolf's inquiries at the defence company have improved its standing – not least because of a number of valuable recommendations he made – but he was not asked to look into the original controversy of the Saudi deals, which meant, rather usefully, that there was no chance of another round of embarrassing revelations. We do not yet have the terms of reference for the committee that Lord Grabiner will chair, but it will be interesting to see whether News Corp has learned this lesson from BAE too.



When are train builders British?

Is there about to be another outcry over public sector procurement? Reports yesterday suggested that Invensys, the British engineering company, may have to shed several hundred jobs because it lost out, earlier this year, to a foreign company when tendering for work on the London Underground.

The identity of that foreign company may surprise you. It hails from Canada and its name is Bombardier. Only a fortnight ago, of course, the boot was on the other foot, with Bombardier warning of big job losses at its UK operation after it lost out to Germany's Siemens on a contract to build rolling stock for Thameslink.

The row over that contract rather missed the point that Siemens intends to do much of the work in Britain (although not all of it, to be fair), just as Bombardier would have done. This was essentially a spat between two foreign companies over who should get to employ more British workers.

With Bombardier having won this time, will those who said it should have been favoured during the tendering process, because of it large British business, complain about the treatment of Invensys and its employees? Don't bet on it.

The underlying principles in these arguments remain the same, however. Under European law, Britain cannot favour bidders perceived to be British and nor should it – value to the taxpayer is the paramount issue. As it turns out, the "Britishness" of the bidder may well vary depending on the result of the tendering process.

News
Paper trail: the wedding photograph found in the rubble after 9/11 – it took Elizabeth Keefe 13 years to find the people in it
newsWho are the people in this photo? It took Elizabeth Stringer Keefe 13 years to find out
Arts and Entertainment
Evil eye: Douglas Adams in 'mad genius' pose
booksNew biography sheds light on comic genius of Douglas Adams
Sport
FootballFull debuts don't come much more stylish than those on show here
News
i100
PROMOTED VIDEO
Life and Style
Kim Kardashian drawn backlash over her sexy swimsuit selfie, called 'disgusting' and 'nasty'
fashionCritics say magazine only pays attention to fashion trends among rich, white women
Arts and Entertainment
TVShows like Agents of S.H.I.E.L.D are little more than marketing tools
Arts and Entertainment
Hit the roof: hot-tub cinema east London
architectureFrom pools to football pitches, rooftop living is looking up
Travel
travel
News
The ecological reconstruction of Ikrandraco avatar is shown in this illustration courtesy of Chuang Zhao. Scientists on September 11, 2014 announced the discovery of fossils in China of a type of flying reptile called a pterosaur that lived 120 millions years ago and so closely resembled those creatures from the 2009 film, Avatar that they named it after them.
SCIENCE
Life and Style
tech
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Matisse: The Cut-Outs exhibition attracted 562,000 visitors to the Tate Modern from April to September
art
Life and Style
Models walk the runway at the Tom Ford show during London Fashion Week Spring Summer 2015
fashionLondon Fashion Week 2014
News
Kenny G
news
News
peopleThe black actress has claimed police mistook her for a prostitute when she kissed her white husband
Life and Style
techIndian model comes with cricket scores baked in
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Senior BA - Insurance **URGENT**

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Training Coordinator / Resource Planner - City, London

£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week