WASHINGTON, Sept. 14, 2011 /PRNewswire-USNewswire/ -- In a letter to Michael Sovern, Sotheby's Independent Chairman of the Board and Chairman of the Board's Nominating Committee, Teamsters General Secretary-Treasurer Tom Keegel urged that James Murdoch be asked to immediately step down as a director of the company.
The letter, sent on behalf of the Teamsters Affiliates Pension Plan, a shareholder of Sotheby's (NYSE: BID), argues that recent developments in the phone-hacking scandal at News Corp (Nasdaq: NWSA) cast doubt over Murdoch's ability to serve as an effective and credible director at Sotheby's. Murdoch has become a central focus of numerous investigations, in the U.S. and abroad, examining the failures of judgment, oversight and accountability that allowed a five-year old hacking scandal to escalate into a full-blown corporate crisis.
The ongoing investigations include a UK judicial inquiry into the extent of unlawful or improper conduct at News International; an investigation by the Commons Culture, Media and Sport Select Committee into the entire scandal; ongoing police investigations in the UK and U.S.; civil actions from alleged hacking victims; various shareholder legal actions; and an internal investigation by News Corp.
Together these lengthy and high-profile probes raise concerns as to how Murdoch will be able to devote the necessary time and energy to the board and serve with the required integrity. Even should these investigations clear Murdoch of misconduct, his relationship with key stakeholders, including the public, regulators, the media, and sections of the investment community, will remain damaged.
It is also not clear if Murdoch brings unique qualities and expertise to the board that could not be found in equal or greater measure elsewhere.
"He has arguably no experience providing critical, independent oversight, as his business experiences stem entirely from positions within News Corp, or affiliated entities. In essence, the family business," Keegel said.
Sotheby's notorious price-fixing scandal a decade ago resulted in anti-trust convictions for former chairman Alfred Taubman and former CEO Diana Brooks and cost the company hundreds of millions of dollars in fines and settlement costs. These events demonstrated how highly sensitive Sotheby's stock is to reputational risks as Sotheby's shares lost more than half their value in just the short period from Nov. 1999-Feb. 2000. Sotheby's shareholders need to have confidence in the board's ability to rigorously manage risk and oversee management.
"The board has a duty of loyalty to shareholders, not to Mr. Murdoch," Keegel said. "And we believe that a pragmatic response to recent events dictates that James Murdoch should be asked to resign from the board."
Founded in 1903, the Teamsters Union represents more than 1.4 million hardworking men and women in the United States, Canada and Puerto Rico. Visit http://www.teamster.org/ for more information.
SOURCE International Brotherhood of Teamsters