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Wall Street Journal Scandal: Investigation Possible, Says UK

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LONDON — Britain's newspaper auditor said Thursday that it may move to investigate The Wall Street Journal's European circulation figures after a former employee accused it of propping up its subscriptions by effectively paying for its own papers via third parties.

The Wall Street Journal Europe's publisher, Andrew Langhoff, has already resigned over the paper's links to the Netherlands-based Executive Learning Partnership, a consultancy that former program manager Gert Van Mol says was receiving payments and getting press in return for buying up thousands of copies of the Journals' papers.

"In essence you're providing money to somebody who uses that money to buy your copies," Van Mol told The Associated Press in a telephone interview. He added that the group had also been "promised articles and interviews" as part of the deal.

Journal publisher Dow Jones insisted that the payments were for legitimate services, and while it acknowledged that its complex arrangement might have appeared questionable, it had been vetted and approved by Britain's Audit Bureau of Circulations, also known as ABC.

But ABC suggested Thursday that it didn't have all the facts at its disposal when it signed off on the deal, saying that "there now appears to be additional new information which may give grounds for further investigation."

ABC declined to release any further detail or say how likely such an investigation would be. As a rule, the group doesn't confirm whether investigations have been opened unless they result in corrective action.

Such an action could include revising down the Journal's stated circulation figure of 74,800 papers per day, said Rob Lynam, the head of press for U.K. media agency MEC. Because the figures are a key way of gauging a newspaper's reach, Lynam said that could lead to a fall in ad revenue – although he noted that the bigger risk was to the respected paper's prestige.

"It's embarrassing more from a reputation point of view, particularly with everything that is going with News Corp. at the moment," he said.

News Corp. is Dow Jones' parent company and it's already under the spotlight over allegations that the company tolerated illegal espionage and police corruption at its biggest-selling Sunday tabloid, the News of the World. If ethical problems surface at the Journal, it could feed criticism that the company leadership's has been complacent about shady dealings across its holdings, which include the Fox News Channel and The New York Post.

"The magnitude is not as big a deal as criminally hacking into a private individual's phones, but there is once again a flavor of cutting corners in a fairly big way in pursuit of business," Rick Edmonds, with the Florida-based journalism school The Poynter Institute, said Tuesday.

Van Mol said he attempted to flag the issue to senior executives, including Journal publisher Les Hinton, in late 2010. But instead of taking action, he said the company ordered him not to talk about the issue. In January, Van Mol was made redundant.

Hinton, who oversaw News Corp.'s U.K. newspaper arm before moving to Dow Jones, has since resigned over the phone hacking scandal. He has not returned repeated calls seeking comment over the past few months.

Dow Jones said that Van Mol had been "first investigated by the company because of concerns around his business dealings." Van Mol said he knew of no such investigation.

Dow Jones spokeswoman Bethany Sherman added that her company been in communication with the Audit Bureau of Circulations since July regarding aspects of the issue and reached out again to the body on Thursday.

"We have always been transparent with the ABC, and they have certified this program over recent reporting periods," she said. "We plan to meet with them soon and review all the details with them again."

The Executive Learning Partnership, or ELP, said it had done nothing wrong, rejecting suggestions that the Wall Street Journal had used it to effectively pay for its own circulation.

"Any suggestion that ELP was involved in a scheme to artificially boost the circulation of WSJE (Wall Street Journal Europe) is not based on facts," partner Nick Van Heck said in a lengthy statement emailed to reporters. He acknowledged that his group had accepted payments from third parties arranged by the Journal on a "couple" of occasions but said that in each case it was for services rendered.

Van Heck also acknowledged that the Journal had agreed to produce reports based on his group's research, although he said his group had no control over their content. The Journal said it accepted that the coverage it afforded Van Heck's organization "could give the impression that news coverage can be influenced by commercial relationships" and has since attached disclaimers to the stories involved.

ELP is a business consulting agency that "empowers talent to act into the unknown," according to its website. It also has personnel ties to the paper – Rien van Lent, an ELP partner, was publisher of The Wall Street Journal Europe from 2001 to 2006.

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Cassandra Vinograd and Robert Barr contributed to this report.

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Online:

Audit Bureau of Circulations: http://www.abc.org.uk/