Giant US pension fund is latest to oppose Murdochs

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The Independent Online

Calpers, the giant US public pension fund, emerged yesterday as the latest News Corp shareholder to withhold support for Rupert Murdoch and his sons.

In a new twist, The California Public Employees' Retirement System announced that it will vote against the re-election of Mr Murdoch, his sons James and Lachlan as well as board members Arthur Siskind and Andrew Knight at the News Corp annual meeting on Friday. Calpers is one of many shareholder funds, such as Hermes, ready to put up a fight at the AGM.

A defiant Mr Murdoch is facing a renewed scandal – this time from the European operation of his Wall Street Journal which is being investigated after an alleged circulation scam at the newspaper.

The latest allegations come as the Murdoch empire fights back against the phone hacking scandal at the now defunct News of the World. However despite the hostility analysts believe Rupert Murdoch will survive attempts by shareholders to oust him from his News Corp board at this week's Los Angeles annual general meeting.

Shareholder outrage was backed up by US-based corporate governance adviser Institutional Shareholder Services, which issued a damning report last week calling for the heads of 11 board members – including Mr Murdoch and his sons.

The report said the phone hacking scandal "laid bare a striking lack of stewardship and failure of independence" by Mr Murdoch's board.

But US experts say Mr Murdoch and the board will remain unaltered. Laura Martin, the managing director at analyst Needham & Co, said: "The board meeting will be acrimonious and contentious. But I don't expect any material change to the board. It will be drama and theatre rather than substance."

Since the scandal first hit the headlines in July, News Corp's shares have tumbled from $19 a share to $14 by mid-August. The stock has since edged up, closing at $17.28 on Friday.

The Murdoch family has almost 40 per cent of the voting rights in the company while owning only 12 per cent of the equity, ensuring control of the board.