James Murdoch will come under attack from shareholders at BSkyB’s annual meeting today after the telecoms watchdog called his “competence” and “attitude” into question.
Mr Murdoch stepped down as BSkyB chairman amid fears that the News International phone-hacking scandal would damage the firm, but he stayed on as non-executive director.
Shareholder group Pensions Investment Research Consultants (Pirc) has urged shareholders to vote against his re-appointment due to the criticisms levelled at Mr Murdoch by communications regulator Ofcom.
Mr Murdoch is not considered to be independent as his father Rupert Murdoch is the ultimate controlling shareholder through News Corporation, the group said.
“Although Ofcom stated that the evidence available to date did not provide a reasonable basis to conclude that James Murdoch deliberately engaged in any wrongdoing, it was severely critical of him,” a statement from Pirc said.
Meanwhile, BSkyB is expected to unveil a 2% rise in operating profits to £300m (€372m) and a 4% rise in revenues to £1.7bn (€2.1bn) in its first quarter as it added 49,000 net customers.
Ofcom hit out at Mr Murdoch’s failure to uncover problems at News International earlier during its review of Sky’s broadcasting licence in the wake of the hacking allegations.
The regulator determined that BSkyB was “fit and proper” to hold a licence but Mr Murdoch was spared no criticism in its concluding report.
Ofcom said: “We consider that the events set out above raise questions regarding James Murdoch’s competence in the handling of these matters and his attitude towards the possibility of wrongdoing in the companies for which he was responsible.”
As well as Pirc, investment campaigners FairPensions have called for Mr Murdoch to resign in light of Ofcom’s comments.
The charity, which promotes responsible and ethical investment in UK pension funds, has set up a petition calling for Mr Murdoch to step down.
Catherine Howarth, FairPensions chief executive, said: “Non-executive directors of major British companies are responsible for oversight of management on behalf of shareholders, including pension savers.
“Whatever Murdoch’s talents as an executive, his failure to ask difficult questions over phone hacking shows he lacks of the requisite skills for this role on BSkyB’s board.
“Shareholders and the wider public have a clear interest in his departure.”
Ofcom launched its review of Sky after Mr Murdoch and News Corporation, which owns 39% of its shares, were engulfed in the hacking scandal which led to the closure of News Corp’s News of the World.
Mr Murdoch had no involvement with News International until the end of 2007, almost a year after the sentencing of News of the World’s royal editor Clive Goodman and private investigator Glenn Mulcaire for phone hacking.
But after he took over as chief executive he received an email suggesting that criminal activities were more widespread, although he claimed that he failed to read the correspondence fully.
News Corp defended Mr Murdoch at the time of September’s Ofcom report, arguing that the statements relating to his actions as an executive and director were “not at all substantiated by evidence”.