Phone Hacking Scandal and its ethical implications:

Phone hacking scandal from start to finish and main cases:

There were always suspicions as to how Milly Dowler died and also the whole reporting of her murder. However the full phone hacking scandal did not become fully clear till it was revealed what the British newspaper, News of the World, part of Rupert Murdoch’s News Corporation had done with relation to Milly Dowler and many other celebrities and politicians.

The News of the World (NoW) had been illicitly hacking into the voicemail messages of prominent people to find stories. It was not the first time though that this had happened. One NoW journalist, admitting that he had intercepting voicemail messages on royal aides' phones (BBC – 2011). The judge into this case, which had targeted the Prince’s of Great Britain, William, Harry and Charles, said, “What you did was plainly on the wrong side of the line. This was serious criminal conduct to which we must not become numbed.” More than 600 calls were made to the three individuals to allow them to access the information they wanted.

The pair had used mobile phone numbers and secret codes used by network operators to hack into the voicemails to see if there was any information of interest. Neil Saunders, for Mulcaire, said his client accepted his conduct was morally and ethically wrong and represented "a gross invasion of privacy".

Millie Dowler:

What the company did which was most shocking to everyone was the case with Milly Dowler. She went missing in 2002 and it was later revealed that she had actually been murdered. The newspaper reporter had kept 11,000 pages of notes of the Dowler family to see what he could report on them. News of the World journalists intercepted – and deleted – the voicemail messages of Milly Dowler. Journalists deleted the messages in the first few days after Milly's disappearance in order to free up space for more messages. As a result friends and relatives of Milly concluded wrongly that she might still be alive. Police feared evidence might have been destroyed. The company did what is common among newspaper companies, and hired a private investigator, Glenn Mulcaire to find news stories for them. However this practice was illegal as the company begun to directly interfere, receive and tamper with other people’s phones and private lives. The journalists encountered a problem in that Milly’s voicemail had started to fill up, so they deleted them to allow for more messages to come in from her parents. They received $3,200,000 in cash and Murdoch personally donated $1,000,000 to a charity that the Dowler family could choose from.

The deletion of the messages also caused difficulties for the police by confusing the picture when they had few leads to pursue. It also potentially destroyed valuable evidence.

What NoW did was completely ethically incorrect and un-professional. However they did this for several reasons. Firstly, the company had to get access to exclusive news stories that it could put in its newspapers so that they would sell more than their competitors. Secondly, an investigation into the scandal found that many journalists had feared the increasing international competition from foreign media companies, which caused them to push the legal boundaries.

Celebrities:

Although Milly Dowler’s case was the one that rightfully attracted the most attention, she was not the sole victim. Sportsmen and women, politicians, film stars and other celebrities were all targeted. Below we will highlight the most important ones and also the cases, which have received the most press coverage.

Sienna Miller, international film star was one target. The News of the World admitted “misuse of private information, breach of confidence, publication of articles derived from voicemail hacking and a course of conduct of harassment over a period of more than 12 months”, according to Hugh Tomlinson QC, for Miss Miller.  She won more than $160,000 in compensation although she had sought more than $650,000.

Hugh Grant, another international film star was another victim of the newspapers crimes. He accused another newspaper, the Daily Mail as to have hacked his phone and it would have been the only way that a particular story about him could have been published. The article, which Mr Grant sued and won damages over, claimed his relationship with Jemima Khan was on the rocks because of his late night calls with a "plummy-voiced" studio executive from Warner Brothers. The actor said, “The story was completely untrue and could only have been written because people had been tampering with my voicemails”. This case has also yet to go to court because of the size of the allegations.

Gordon Brown, the former Prime Minister of the United Kingdom was also said to have had his phone hacked when he was the Chancellor. This was in 2005 / 2006 before the global financial crisis. The reason why he was supposedly targeted was because he had been involved in a battle to keep the UK out of the single currency, the Euro. News of The World wanted to know, as competition would suggest, the information first. That particular case has yet to go to court though.

Max Clifford is another individual who actually had his phone hacked. He is a leading Celebrity publicist, with clients such as Simon Cowell, which meant that NOW; being one of the leading Showbiz reporting newspapers would need all that they could from him. He received more than $1,200,000 of compensation.

Other places:

As News Corp operates on a Global scale with operations in Australia, the UK, US and Europe, when this case broke out, governments from those countries and locations looked into whether this had been done within their own borders. The main case, which has been brought to light, is that the FBI is set to investigate News Corporation over allegations that News International had hacked the phones of the victims of the 9/11 terrorist attacks. It got to such a serious and important stage that the Republican, Peter King who is the chairman of homeland security had written to the FBI for a case to be opened and to be “…examined thoroughly.” 

Court Cases and the Leveson Inquiry:

Incredible public pressure to investigate what had been going on as well as British law had forced the Police and the government to begin an investigation. There have been enquiries before and some are still underway. They include the Leveson inquiry and Operation Weeting. Piers Morgan, the former News of the World and Daily Mirror Editor, was questioned about references he made in articles and interviews that suggest he was aware of phone hacking. On Desert Island Discs in 2009, Mr Morgan responded to a question about unethical methods by saying a lot of the work was done by third parties rather than reporters employed by newspapers. “That’s not to defend it, because obviously you were running the results of their work,” he continued. “I’m quite happy to be parked in the corner of tabloid beast and to have to sit here defending all these things I used to get up to, and I make no pretense about the stuff we used to do.”

Also, the Metropolitan Police has faced criticism for their initial inquiry in 2006 into phone hacking at the paper. In 2009 the Police chose to re-launch their investigation despite claims by some that hacking was more widespread than one "rogue" reporter. In January 2011 the police did re-open the investigation. On the same day the NOW sacked Ian Edmondson, an assistant editor, when e-mails relating to phone hacking were allegedly found on the newspaper's systems. Those arrested and bailed by police also included Mr Edmondson, NoW chief reporter Neville Thurlbeck, senior NoW journalist James Weatherup, freelance journalist Terenia Taras, an unnamed 63-year-old man, two more unnamed sources and the former CEO of News International and the papers editor. Meanwhile, a third investigation - Operation Elveden - is examining allegations that journalists from News International made "inappropriate" payments to police.

Egoism Ethics

A common phrased used in the practice of journalism is “Get it first. But first, get it right.” This phrase means that not only are you supposed to make sure you are the first to publish the story, you have to also make sure that the information, and how you obtained the information, is also right. (Pressman 2011)

However, in the case of the News Corp phone hacking scandal this no longer seemed to apply. The only portion they paid attention to was: “Get it first.” They did this by whatever means necessary. In order to get a story first, NoW was willing to sacrifice the privacy, peace of mind and rights of others. In doing so they demonstrated a Teleological Moral Philosophy. More specifically, they demonstrated egoism.

Teleology is the moral philosophy under which an act is considered morally right and justified if it produces desired results. Under egoism, a subcategory of teleology, a person will justify their actions if the results are of great benefit to themselves.

Examples of Egoist Behavior

Violation of Privacy

Not only is the concept of phone hacking and accessing someone’s personal messages an immoral invasion of privacy, it is also illegal in many countries. The following are three examples of laws defending a person’s right to privacy. “Appropriate technical and organizational measures shall be taken against unauthorized or unlawful processing of personal data and against accidental loss or destruction of, or damage to, personal data.”- UK (Data Protection Act 1998)

“No one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honor and reputation.”- Hong Kong (Kellogg 2005).

“…the intentional surveillance of an individual’s activities or conversations can have a corrosive effect on his sense of privacy and is generally considered as a serious affront to the integrity of the individual subjected to this practice.”- Australia (Kellogg 2005).

These reporters and private investigators put themselves and the potential of a prime story above the privacy and rights of others. This is a clear demonstration of egoist behavior. The dean of the CUNY Graduate School of Journalism, Stephen Shepard said, “It’s not a gray area. What they did was illegal and even if it weren’t, it’s just plain wrong. There’s no defense for it. Even the government needs a warrant to get into a house or a computer. You can’t break into something like this and get away with it.” (Pressman 2011)

Milly Dowler

There were several aspects of the Milly Dowler case that were unethical and egoist. First, following along with the rest of the victims, there was a clear invasion of privacy. Members of News Corp found the passcode to Milly’s voicemail. They then used the information they learned from her messages to feed their own ambitions of achieving a top story.

Secondly, they gave Milly’s family false hope that she was still alive. The reporters, after listening to the voicemail, deleted several messages. This would ensure the mailbox to not meet its limit allowing new messages to be saved. However, since messages were being read and deleted, Milly’s parents believed that their daughter was still alive and accessing her phone. 

And lastly, the actions taken by the reporters are classified as obstruction of justice. The messages that had been deleted off of Milly’s phone were considered to be evidence. These messages could have provided the police with information to help find Milly and her killer. The case of Milly Dowler was debatably the most unethical aspect of the whole News Corp scandal. Those involved risked the life of a young girl, the capture of a serial killer and the peace of mind of a family simply to gain information for a story to advance their own careers.

Conflict of Interest

It was claimed that there were several police officers involved in this situation. Police officers were bribed to find personal information on several of the phone hacking victims. (BBC 2012) This, outside of being illegal, creates a conflict of interest. The police officers are supposed to be against actions such as these. However, by accepting these bribes they put their own personal gain and advancement over their job and the moral implications.

Influence of Unethical Behavior

It is said that Rupert Murdoch created a culture in his media industry that promoted the idea of getting the story by any means necessary. By doing this he taught that the end story justified to means. Therefore, many believe that the upper levels of the company condoned the idea of breaking laws and hacking phones. (Bernstein 2011)

Industry Implications

A study conducted by PBS and YouGov showed that 58 per cent of Britons lost trust in the written press, in particular, and the national media in general (with 51 per cent saying their trust in all media had been reduced after the incident) (Marketing Week Nov 14, 2011). After the scandal unfolded and industry practices came into the limelight, it became clear that questionable or unethical practices were common throughout the British press, not only within News of the World or the Murdoch Empire itself.

Intuitively, in an aggressive business environment where firms compete for sales and market share business practices are bound to converge over time across firm. In our case, since all actors within the media industry are also racing to get the same input – the story – this intuition grows even stronger.

Given the public’s changed perception of the honesty and honorability of the entire media industry, it is not only the companies within the Murdoch Empire and the reporters found guilty of wrongdoings that have to stand for the implications. This scandal shook the sector of the British written press and the consequences thereof – as in every case of industry scandals – will change industry practices for good. As unethical and unlawful behaviour is openly discussed and condemned, public frustration and disapproval will increase and ultimately change the cognition of and the attitudes towards ‘unethical’ conduct (Conroy and Emerson, 2006).

Looking back at other major scandals the implications have always been felt across the industry. The common denominator for scandals such as Enron, Madoff and the GFC is that the public’s (consumers, investors, citizens) confidence in all industry players was affected. As we shall see below, history has shown that even the ‘innocent’ firms must take additional measures to rebuild that confidence and restore the industry image. A crisis in an industry is a crisis for the industry. To highlight the wide-ranging impacts on an entire industry and the business practices of all stakeholders we will use the standard case of the Enron collapse in 2001 for illustrative purposes. Just as the Enron/Andersen debacle made investors lose faith in the market mediators the phone hacking scandal made the public lose faith in the press. This industry image will however effect perceptions of all firms and institutions involved, not only the ones at the eye of the storm. 

Enron And Arthur Andersen

Enron’s and its auditing firm Andersen’s collapse in 2001 affected first-hand the energy sector and the accounting and investing industries. In short, the accounting industry was regulated and new auditing standards were introduced and the investment industry reacted to investors heightened level of concern through tougher scrutiny and valuation practices. Besides introducing new business practices to conform to requirements from the accounting and investment industries, firms in the energy sector also had to adapt policies for image restoration to detach themselves from the shadow of Enron and Arthur Andersen. 

After the scandal, the US Government Accounting Office found four major problematic areas that allowed for the Enron/Andersen scandal, namely: corporate governance, independent audit of financial statements, oversight of the accounting profession, and accounting and financial reporting issues (Stinson 2004). Below is a brief outline of the main impacts the Enron/Andersen debacle had on several different sectors of the business environment (Stinson 2004):

• Accounting and Auditing Standards: regulation of record retention policies of accounting firms, internal/external auditors – auditing vs. non-auditing activities
• Consulting: Separation of auditing and consulting services to different firms
• Corporate Governance: The role of the board was revaluated
• Management Accountability: CEO and CFO have to sign off on financial statements (Sarbanes-Oxley Act)
• Energy industry: All firms were feared to have had similar unethical practices. E.g. rating agencies required energy firms to lower their debt-to-equity ratio to 50 %.
• Education: Ethics into accounting curriculums. Management and corporate culture.
• Debate:  Purpose of the firm – a profit-making machine or a stable, productive economic unit?

It is important to note that many corporations and accounting firms adopted these changes before state regulations took effect. For example, Disney and Apple responded by separating their auditing and non-auditing activities. Additionally, the concerns about accounting standards were worldwide and e.g. in Singapore there was a push for companies to rotate their auditors on a regular basis. (Stinson 2004)

Essentially, Enron revealed the downside – and the failure – of the self-regulated business model that was a product of liberalization, deregulation and globalization promoted in America at that time. Similarly, the phone hacking scandal reviled the failure of the British media’s self-regulatory organ – the Press Complaints Commission – which is now to shut down and be replaced, in time, by a new system under design to take charge of press regulation (Guardian, March 8, 2012).

However, whereas heavier regulation followed the Enron/Anderson saga, regulation of the media – the fourth estate – has always been controversial. In a western society freedom of press and speech are the cornerstones of democracy and the state’s control over this raises an array of other ethical questions.

Karl Grossman, of SUNY Old Westbury, argued that Murdoch was “a dishonest, unprincipled and corrupt man,” who was “making a travesty of what journalism is supposed to be about.” (Grossman 2011)

There are two segments of the teleological moral philosophy: egoism or utilitarianism. Utilitarianism is the ethical option to choose actions that generated the greatest good for the greatest number of people. Unfortunately, NoW chose egoism and focus solely on there own desires and personal advancement.

With scandals such as Enron and the phone hacking, ethical business practices have become a hot discussion topic in the public. The business practices of multinationals and small firms alike will be molded by the public’s judgment of their behavior, and therefore the cognitive perceptions of right and wrong. Practical modifications to industry business practices will indisputably follow, although one must ask how pervasive these changes were, are, or can be, given the cyclical nature of public outcry and policy change and then an inevitable return to either finding loopholes in the new legislation, or returning to breaking rules.

For companies caught up in an industry crisis policies, image restoration need to be a priority and voluntary actions preceding regulations are generally viewed favorably by the public eye.

Moral of the story: No drama and don’t be pigs!

Extension to the Blog about for the Phone hacking scandal:

Over the last few weeks there have been further developments in the phone hacking scandal which has now become a major global invent, in which countries such as Australia, America and Canada are now investigating as to whether News Corporation had in fact hacked the phones of high profile celebrities and also ordinary citizens. However the most important event since the revelations first came out is that Rupert Murdoch, the Chairman of the company has been deemed “Not fit to run a Media empire such as that of News Corporation. The conclusion to the Leveson Inquiry, which has been, recognized as an ethics enquiry because of the behavior of the newspaper’s and the other media companies, said, “…that Mr. Murdoch exhibited willful blindness to what was going on in News Corporation.” There is one main consequence from this, which is considerably significant to the future of the company and also media.

 The fact that British MP’s have said that they do not see him as someone who can control such a media empire means that the organizational structure will surely have to change, and with that the way that the company conducts its business. The board of directors and the company as a whole are still looking into the situation themselves. News Corp said in a statement it was "carefully reviewing" the report and would "respond shortly", adding: "The company fully acknowledges significant wrongdoing at News of the World and apologies to everyone whose privacy was invaded" (BBC – 2012).

Overall we believe that there are many lessons that can be learned from this scandal. Although companies are always meant to abide by a correct and acceptable ethical standard, they often do not. If we apply the Business Ethics theory of Utilitarianism, all organizations, irrespective of size and power should aim to follow these principles whereby there is the over aching aim that the end outcome, for a business this being the product or service that is offered should benefit the greatest amount of people possible, whilst attempting to harm as few people as it can. Although there are laws and governments which are meant to regulate un-ethical behavior, we believe that for cases such as the phone hacking scandal to not happen again, each time a new product is going to be launched, there should be a government organization that does a serious review of it and must first allow it to pass. The ever changing world of business and globalization will always make it harder and harder for firms to be honest and behave morally, however if examples can be made of good companies and individuals who do behave correctly, then this might make society as a whole to behave and act in the ways they should. What needs to be done for now though is for officials to take a tougher standpoint.

Response to Comments

As “Anonymous” questioned below, shouldn’t some of the blame in phone hacking scandals lye with the phone companies? Situations such as these prove that there are security issues and limitations when it comes to mobile phones. However, except for basic precautionary measures, it is nearly impossible for the phone company to prevent entirely. If the phone company is selling off customer information, then yes, clearly they are to blame. However, even though accusations were made in the NoW scandal, no evidence could be provided. 

Methods of Phone Hacking

There are multiple techniques that a hacker can use to gain access to your phone:

1)      As used by NoW, a hacker can gain access to you voicemail remotely through use of a pin number. Phones are provided with default pins (typically something generic such as the last 4 digits of your phone number) when first purchased and many users never change this. Hackers know this and take the chance that their targets have not changed the pin. (Drury 2011)

2)      Hackers can also attempt to access the voicemails remotely with a pin after impersonating the target. If a pin number has been changed, the hacker can call the phone provider pretending to be the owner of the phone and request to reset the pin on the phone. (Dunn 2011)

3)      When a user tries to access their voicemail from their own phone, typically they will not have to enter the pin number. Hackers take advantage of this by using “spoofing” programs that fool the phone’s caller ID into believing that it is being called from the same number. (Mills 2011)

4)      The “Man in the Middle” tactic is a little more complex. This routes all transactions to a phone to a third party before actually being sent to the intended user. This can be done by the hacker introducing malware to the target’s phone through a Spam text message or fake application. (Murphy 2012)

Security Precautions by Users

There are several basic safety measures that a person can take to protect their cell privacy.

First is to use strong passwords. Steven Rambam, an investigator and director of Pallorium, Inc. stated that “90% of voicemail-specific problems can be prevented if strong passwords are put into place.” When a phone provider gives you a default passcode, change it. Default pins make hacking easier. For added security, change your pin numbers regularly.

Secondly, if you receive a message from your provider asking permission to update of reconfigure your phone do not automatically select yes. Contact your provider first to make sure it is valid. Some hackers use these messages to configure your phone to allow them access.

And finally, only purchase Apps from reputable distributors. Fake Apps are an easy way for hackers to gain access to your phone. Once you download their app, you also download their malware into your phone.

(Murphy 2012)

Providers at a Disadvantage

There are very few measures that phone providers have the ability to take in order to prevent phone hacking. First, the provider can make it mandatory for the user to change their pin. And second, they can be more stringent with their methods of identifying callers to their service desks looking to rest passwords. Other than this, at the moment, phone customers are at the will of a growing technologically savvy population. (Nguyen 2011)

There are literally step-by-step directions posted on the internet that tell someone how to go about hacking a phone. And the tricky part about phone hacking is that it is nearly impossible to tell if someone has read your voicemails. Once the owner has opened the message it just read as being opened. It does not track if it is viewed again at a later point. Therefore, a hacker could continue reading messages indefinitely unnoticed. (Nguyen 2011)

Chuck Bokath, an engineer at the Georgia Tech research Institute describes hacking phones as “trivial”. In a growingly tech savvy world, more and more people have the capability to hack much more than cellphones. Supporting Bokath’s point, Kevin Mitnick, a security consultant, states that “Any 15 year old that knows how to write a simple script can find a VoIP provider that spoofs caller ID and set this up in about 30 minutes… If you’re not adept at programming, you could use a spoofing service and pay for it.”

Conclusion

A phone provider can only be as safe as their security technology. The problem with this however, is that the hacking technology, is many cases, is stronger. Therefore, even though it may seem as if phone service providers should also be at fault, there is only so much security that they can reasonably provide for their customers.

Drury, Paul. 2011. “Mobile Phone Hacking and How to Prevent It.” Security and Protection Agency. < http://www.security-protection-agency.com/2011/07/mobile-phone-hacking-and-how-to-prevent-it/>

Dunn, John. 2011. “Mobile Phone Hacking- Can you Stop it?” PCWorld. < http://www.pcworld.com/article/217647/mobile_phone_hacking_can_you_stop_it.html>

Mills, Elinor. 2011. “Kevin Mitnick Shows How Easy it is to Hack a Phone.” CNET News. < http://news.cnet.com/8301-27080_3-20077732-245/kevin-mitnick-shows-how-easy-it-is-to-hack-a-phone/>

Murphy, Kate. 2012. “Build up Your Phone’s Defenses Against Hackers.” New York Times. < http://www.nytimes.com/2012/01/26/technology/personaltech/protecting-a-cellphone-against-hackers.html

Nguyen, Tuan. 2011. “How Phone Hacking Works.” Smart Planet. < http://www.smartplanet.com/blog/thinking-tech/how-phone-hacking-works-and-other-lessons-from-the-news-corp-scandal/7872>