Wall Street Journal accused of 'circulation scam'
Published 13/10/2011 | 09:08
THE European publisher of Rupert Murdoch’s Wall Street Journal (WSJ) has resigned amid allegations of a circulation scam and a furious row with The Guardian.
Andrew Langhoff left abruptly on Tuesday following an investigation into articles that featured a company, Executive Learning Partnership (ELP), with contractual links to WSJ’s circulation department.
At the time, News Corp’s Dow Jones business, which owns WSJ, said Mr Langhoff had “opted to resign” because the company had entered into a “broad business agreement” which could “give the impression that news coverage can be influenced by commercial relationships”. A spokeswoman added that the company had "zero tolerance for even the appearance of a breach of ethical standards".
However, the reasons for Mr Langhoff’s departure are now alleged to be much more complex.
The Guardian has claimed that WSJ may have been channelling money through European companies in order to buy thousands of copies of its own paper secretly, in order to boost its apparent readership to advertisers. Dow Jones says the claims are “replete with untruths and malign interpretations”.
According to The Guardian’s version of events, the alleged scam had its roots in WSJ’s “Future Leadership Scheme”, an initiative begun in 2008 which saw European companies sponsor a series of seminars for promising university graduates by buying copies at a tiny fraction of the cover price.
Although it was highly unlikely that the copies were read, the sales were technically legitimate and counted towards WSJ’s official ABC figures.
However, one of the major participants in the scheme, ELP, twice threatened to withdraw from the, leaving WSJ with the threat of a large dent in its numbers.
The first time it threatened to pull its custom, Mr Langhoff allegedly offered ELP additional benefits including inclusion in “a minimum of three special reports”.
On the second occasion, in late 2010, ELP is said to have been growing unsatisfied that WSJ had kept up its end of the bargain and declined to buy thousands of copies. On this occasion, Mr Langhoff allegedly responded by setting up a complex arrangement whereby WSJ gave money to ELP so that it could directly buy more papers. ELP did not necessarily know they were taking part in the scam.
Dow Jones said yesterday that ELP was only compensated for "valid services" but that it was "uncomfortable with the appearance of these programmes and the manner in which they were arranged".
“We continue to believe that these deals were valid. They were however of poor appearance. We were not fully aware of the details of the editorial component of the relationship until last week, when we immediately took action,” it said.
A few hours later the company issued a third statement, lambasting The Guardian’s “characterisation” of the “circulation programme” between WSJ and ELP. It also raised question marks over the quality of The Guardian’s sources.
“The Guardian mischaracterizes a former employee as a ‘whistleblower’. In fact, that employee was first investigated by the company because of concerns around his business dealings,” the Dow Jones spokeswoman said.