The highly controversial activities were organised in London and focused on the Journal’s European edition. Top executives in New York, including Murdoch’s righthand man, Les Hinton, were alerted to the problems last year by an internal whistleblower and apparently chose to take no action. The whistleblower was then made redundant. In what appears to have been a damage limitation exercise following the Guardian’s inquiries, Langhoff resigned, citing only the complaints of unethical interference in editorial coverage. Neither he nor an article published in the Journal yesterday made any reference to the circulation scam nor to the fact that the senior management of Dow Jones in New York failed to act when they were alerted last year. The affair will add weight to shareholder fears that NewsCorp has become a ’rogue corporation’. Some of them have launched a legal action in the US, attacking the Murdochs after the News of the World phone-hacking scandal and following lawsuits in which NewsCorp subsidiaries were accused of hacking into competitors’ computers and stealing their customers. The Journal’s decision secretly to buy its own papers began with an unusual circulation-boosting scheme called the Future Leadership Institute. In January 2008, the Journal linked up with European firms who sponsored seminars for university students who were likely to be future leaders. The Journal rewarded the sponsors by publishing their names in the paper. The sponsors paid for that publicity by buying copies of the Journal at no more than five cents each. Those papers were then distributed to students. The sponsors enjoyed a prestigious link to the Journal, and the Journal boosted its circulation. The scheme was controversial. The sponsors were neither reading nor seeing the papers and they were buying them at highly reduced rates. The students to whom they were distributed may or may not have read them, but they did not pay for them. But the Audit Bureau of Circulation ruled the scheme was legitimate and by 2010, it was responsible for 41% of the European edition’s 75,000 daily sale.

In early 2010 the scheme began to face trouble when its biggest single sponsor, Dutch firm Executive Learning Partnership, threatened to back out. ELP was responsible for 16% of the Journal’s European circulation, sponsoring 12,000 copies a day at one cent per copy. Over the year it sponsored 3.1m copies costing EUR31,080. ELP said the publicity it received was not enough of a return on its investment. On 9 April 2010, Langhoff emailed ELP with a new deal, explaining ‘‘our clear goal is to add a new component to our partnership’’ and offering to ‘‘provide a well-branded showcase for ELP’s valuable services’’. On 30 April, ELP agreed to sponsor 12,000 copies at the same rate. But that deal included a new eight-page addendum, which the Guardian has seen. The addendum included a collection of side deals: the Journal would give ELP free advertisements and, in exchange, ELP would produce ‘‘leadership videos’’ for them; they would jointly organise more seminars and workshops; but, crucially, Langhoff agreed the Journal would publish ‘‘a minimum of three special reports’’ based on surveys of the European market that ELP would run with the Journal’s help. It is this agreement that is being cited as the reason for Langhoff’s resignation. It led to the Journal publishing a full-page feature on 14 October 2010 that reported a survey conducted by ELP about the use of social media in business, quoting ELP’s chief executive at length. The story carried no warning to readers that it was the result of a deal between the Journal and ELP. Similarly, there were no warnings on a second story, published on 14 March 2011, that consisted of an interview with a senior ELP partner, Ann de Jaeger, about the role of women in company boardrooms. Some Journal staff complained that running stories promoting ELP was unethical.

On 12 July 2010, a London executive emailed that ‘‘some elements of the deal do not fit easily within best practice, brand guidelines and company policy’’. In autumn 2010, ELP complained the Journal was failing to deliver its end of the deal and threatened to withhold a EUR15,000 payment, due in December, for copies of the Journal they had sponsored since 30 April. Without the payment, the paper could not record the sales and its circulation would dive by 16%, undermining the confidence of advertisers and readers. So Langhoff set up a complex scheme to channel money to ELP to pay for papers it had agreed to buy - effectively buying the papers with the Journal’s own cash. This involved the use of other firms but it is not suggested that they were aware they were taking part in a scam. The best-documented example involved Indian firm HCL, which separately agreed to pay the Journal EUR16,000 to organise an event at London’s Grosvenor House hotel in September 2010. Langhoff proposed that instead of paying the Journal, HCL should pass some of the money to a Belgian publishing company, which would then pass it on to ELP. Invoices and emails seen by the Guardian show that in November 2010, ELP sent two invoices, for EUR2,000 and EUR6,000, to the Belgian publisher of a magazine called Banking and Finance. The Belgians paid EUR8,000 to ELP. ELP had not provided goods or services, but according to the invoices the magazine was paying ELP sponsorship for an event run by the Journal in Bree and Schilde, Belgium, in November 2010. The magazine was sent EUR2,000 by HCL. A second payment of EUR6,000 was never made because HCL fell into dispute with the Journal. In December 2010, as part of a bid to persuade the Journal to pay the missing EUR6,000, the Belgian publishers’ managing director, Michel Klompmaker, signed a letter that ‘‘hereby states that there has never been a contract between us and ELP regarding the sponsorship of a Wall Street Journal Bree/Schilde summit for EUR6,000. We agreed to be a facilitator in a payment process between the Journal, HCL and ELP per request of the Journal’’.

An email from Langhoff on 26 November 2010 includes a diagram indicating money was channelled to ELP through two other middlemen. This suggests Langhoff wanted EUR15,000 sent to ELP via the Belgian firm Think Media. An invoice dated 2 December 2010, shows ELP invoiced Think Media for EUR15,000. An email from 20 December shows Think Media paid the EUR15,000 to ELP. The Guardian put it to Think Media that ELP had provided no goods or services for this payment, and that it was made at the request of the Journal. Think Media declined to respond. The diagram suggests Langhoff wanted EUR2,000 channelled to ELP through Belgian technology company Nayan, which occasionally sponsored Journal events. Nayan confirmed to the Guardian that they had paid ELP EUR2,000 in December 2010. They say they understood ELP were owed the money by the Journal because they had worked on a Journal event, and Nayan paid it as part of their agreement to sponsor the event. A Journal source with direct knowledge of the event says Nayan was misled by the paper: ELP provided no services at the event for which they were due to be paid. While these payments were being made, a whistleblower from the Journal in Europe contacted Dow Jones management in New York to alert them to the circulation scam and the agreement to publish articles promoting ELP. Emails seen by the Guardian indicate that the whistleblower’s complaint was seen by New York executives, including Hinton - then Dow Jones’s chief executive. Hinton resigned in July in the wake of the News of the World phone-hacking scandal. The emails show Dow Jones’s chief human resources officer, Gregory Giangrande, organised a meeting in London on 14 December at which the whistleblower detailed claims to a Dow Jones lawyer, Tom Maher, and Dow Jones’ European human resources executive Carol Bosack. After the meeting, Bosack emailed the whistleblower: ‘‘You are expected to keep details and your reaction or beliefs about the recent events confidential and not shared with anyone external or internal to the business.’’

No action was apparently taken at that time on the whistleblower’s claims. The whistleblower, who had worked for Dow Jones for nine years, was made redundant in January. According to a source, Guardian inquiries among ex-Journal staff and firms involved in ELP payments caused ‘‘panic’’ at Dow Jones. The Journal yesterday reported Langhoff’s resignation, ‘‘following an internal investigation into two articles published in the Wall Street Journal Europe that featured a company with a contractual link to the paper’s circulation department.’’ It quoted an email sent to staff by Langhoff about the agreement to publish the ELP stories: ‘‘Because the agreement could leave the impression that news coverage can be influenced by commercial relationships, as publisher with executive oversight, I believe that my resignation is now the most honourable course.’’ Asked about payments from the Journal to ELP via various middlemen, ELP chairman Nick van Heck, said it was the company policy not to comment on contracts. He added: ‘‘I am confident every member of our staff is fully aware of European norms, which are very rigid when it comes to accounting. I’m pretty confident that what we did was in line with the law.’’ Yesterday Dow Jones said it initiated the original investigation into the deals in question and the employees involved in late 2010.

‘‘The circulation programmes and the copies associated with ELP were legitimate and appropriate, and the agreement was shared with ABC UK before the deal was signed,’’ the statement said. ‘‘All circulation periods during the ELP arrangement have been certified. ‘‘We came to the conclusion that ELP was only compensated for valid services; however, we were uncomfortable with the appearance of these programmes and the manner in which they were arranged. We subsequently eliminated the position of one of the employees responsible for those deals in January 2011. ‘‘At this point, we no longer have relationships with the employees or third parties directly involved in these agreements, and we continue to believe that these deals were valid. We were not fully aware of the details of the editorial component of the relationship until last week, when we immediately took action.’’ The Guardian