Paul McIntyre: Murdoch's not the One.Telling

What a relief. Even billionaire media heirs cry.

In a packed Sydney court this week, Lachlan Murdoch dobbed on his mate James Packer about a tearful session in 2001 just days before their combined A$600 million investment in phone company One.Tel went belly up with debts of A$2 billion.

Murdoch's Supreme Court appearance was the talking point of the Australian business scene and it was surprising just how bad a memory Rupert Murdoch's son has.

The Australian Securities and Investment Commission is seeking A$92 million in damages from One.Tel co-founder Jodee Rich and former finance director Mark Silbermann, alleging they misled the One.Tel board about its financial position.

Junior Murdoch and Packer were both board directors of the company after James convinced Lachlan to invest in it in 1999.

But Murdoch used "I don't recall", "I can't recall" and "I have no recollection" so often in the box that Justice Robert Austin intervened.

"Mr Murdoch, could you listen carefully to the questions before you answer them?" the judge said. "Sometimes the answer 'I do not recall' is not an answer to the question asked."

If the good judge seemed frustrated, Jodee Rich's counsel, David Williams, SC, was even more uptight at Murdoch's empty brain space - and there were echoes of the infamous memory loss defence used by convicted entrepreneur Alan Bond.

On one occasion, Williams showed Murdoch an email from Rich dated February 7, 2001, requesting a chat about various matters including the make-up of the One.Tel board, year-end forecasts and "life".

After drawing a series of blank answers, Williams asked: "You don't recall very much about One.Tel, do you?"

"Not outside of board meetings, no," said Murdoch.

"You don't even recall very much about what happened in the board meetings, do you?" retorted Williams.

"My memory is hazy, to use your words, yes", Murdoch said.

"You don't even know if you were at the January [2001] board meeting, do you?"

"I have a question mark over the January board meeting, yes."

And on it went. In all, Murdoch used various "don't recall" responses more than 200 times but as Murdoch painted it, the last days of One.Tel were a blur for him.

But the clouds suddenly lifted when he actually did recall events on Sunday, May 27, 2001 in Murdoch's kitchen downstairs in his Sydney harbourside pad when James Packer stared at him whitefaced and woeful, just days before One.Tel's collapse, repeating the words: "I'm sorry."

Until last week, Murdoch had omitted this little incident from previous witness statements.

It has since been described as the "money shot", as it kept the media focus well and truly on James Packer and not the media heir who recently dumped his executive responsibilities at News Corp.

Indeed, Lachlan happily disclosed in court that his new free-range lifestyle by the Sydney beach suburb of Bronte meant he no longer checked his emails daily.

You could argue it wouldn't matter if he did - based on his court performance there was little chance of it fusing with any grey matter.

Both Packer and Murdoch have said they were "profoundly misled" on One.Tel's financial position when it collapsed in May 2001 and now they've got to prove it.

So back to the money shot. In an affidavit tendered to the NSW Supreme Court last week, Murdoch said he had a private meeting in the kitchen of his Sydney home with Packer on May 27, 2001.

"I also recall Mr Packer appearing to be shocked and very upset during the private conversation and saying to me repeatedly, words to the effect 'I'm sorry'," Murdoch said.

Williams asked Murdoch if Packer mentioned during their private meeting whether Kerry Packer was angry with his son.

Murdoch replied "no".

That proved to be wrong as James was sent to the PBL sin-bin for a long period by his father before returning to executive responsibilities.

Williams asked Murdoch if Packer was crying by the end of their kitchen session.

"Yes,"' Mr Murdoch replied.

He was asked if Packer was saying he was sorry.

"Yes," Murdoch said.

Williams asked Murdoch if he too had cried. "No," he said.

According to Murdoch, Packer asked him what they should do about One.Tel needing extra cash and broke down when told News Corp would not put in any more money.

"I believe it was at that point that he became emotional," he said.

Murdoch told the court he comforted Packer.

Interestingly, there wasn't much due diligence prior to the media barons blowing their hundreds of millions on One.Tel.

In fact, Murdoch told the court he didn't bother doing any formal due diligence on One.Tel before investing A$340 million.

No one else at News Corp did either. There was a dinner with James Packer in 1999 to discuss the deal and a meeting in New York with Rupert, News number two Peter Chernin, James Packer and the One.Tel boys, Jodee Rich and Brad Keeling. (Keeling has since rolled to the commission, admitting to failing in his duties as a director.) There were also two more meetings in Sydney, where a few business plans and forecasts were traded.

With Murdoch's time in the stand now up, the attention will now turn to James Packer. We shall see what grenades he will lob Murdoch's way - if he can remember.