The Wall Street Journal newspaper has been accused of using a questionable scheme to inflate its circulation numbers in Europe by permitting sponsor companies to purchase copies in bulk for as little as one cent each.
According to a report in Britain’s The Guardian newspaper, the Journal was apparently funneling money through European firms in order to purchase thousands of copies of its own paper, thereby inflating (and misleading) the true circulation figures for readers and advertisers.
The elaborate scheme also involved a contract under which the Journal would publish articles favorable to the companies that bought the papers – a clear violation of journalistic ethics.
The Wall Street Journal is owned by News Corp. (NYSE: NWS.A).
Following the release of The Guardian’s revelations, Andrew Langhoff, one of company Chairman Rupert Murdoch's senior European executives, resigned on Tuesday.
According to e-mails and internal documents obtained by The Guardian, Langhoff, the former European managing director of the Journal's parent company, Dow Jones and Co., was at the center of the scheme.
The alleged scam was centered in London and concerned the Journal’s European edition, which is widely circulated across Europe, Russia and Africa. Last year, Les Hinton, the former head of Dow Jones in New York, and other senior executives were made aware of the unethical practice, but reportedly chose to do nothing about it. (Hinton has since been forced to resign in connection with the phone-hacking scandal that has already engulfed News Corp.’s UK subsidiaries.)
In response to The Guardian’s accusations, Dow Jones angrily denied the inflammatory charges that it was operating a circulation scam.
Dow Jones further stated that: “Andrew Langhoff resigned because of a perceived breach of editorial integrity, not because of circulation programs.”
A Guardian spokesperson told BBC: We stand by our story completely... Dow Jones failed to rebut a single fact.