More bad news over at newscorp. It looks like the FBI is going to investigate over potential violations of the Foreign Corrupt Practices Act. See below;
This week, Rupert Murdoch will again fly to London to confront a crisis, after Saturday’s arrests of five journalists from The Sun newspaper over allegations of payments to the police and other officials widened the UK press corruption investigation.
This time, however, he will walk the floor of a hostile newsroom, where staff are asking whether he can contain a scandal that is spreading and even threatening to reach the centre of his wider empire in New York.
Last summer’s eruption of a five-year-old investigation into how journalists accessed voicemails swept away the News of the World, his bid for full control of BSkyB and his political clout in Britain.
Last July, after he jetted in to be by the side of Rebekah Brooks, then chief executive of his News International UK newspapers, he said she was his priority, but within days she had resigned.
This weekend, executives relayed the “personal assurance” of Mr Murdoch’s “total commitment” to the profitable and influential Sun and its editor, Dominic Mohan. But furious journalists wondered what Mr Murdoch’s assurance was worth as investigations shake old certainties about his control.
Mr Murdoch made no mention of the arrests but told Twitter followers they were wrong to credit him “with non-existent power and money”. Now, the threats to his power and money are mounting as the arrests of a Ministry of Defence official and a member of the armed forces imply that bribery investigations have spread beyond the police.
A police probe into potentially corrupt payments is running alongside investigations into phone-hacking and computer-hacking. News Corp said last week that its phone-hacking settlements and legal bills had already cost it almost $200m, but bribery allegations pose a risk that is harder to quantify.
Mark Lewis, a British solicitor for phone hacking victims, is in the “advanced stages” of bringing at least one case against News Corp in the US, according to people close to the process. It is not clear what the substance of any case would be.
News Corp is subject to the Foreign Corrupt Practices Act, a US law against bribing foreign officials, that has wide-ranging powers. Lawyers remain divided on whether payments for stories would classify as corrupt, but News Corp could be liable to big fines if found guilty of such practices.
“Since July, News Corp has faced the potential of an FCPA enforcement, and these developments I think escalate that,” said Mike Koehler, a law professor and FCPA specialist at the US’s Butler University.
The Federal Bureau of Investigation, the Department of Justice and the Securities and Exchange Commission have each opened inquiries into News Corp but these have taken a back seat to the Metropolitan Police probes.
The FBI has found no evidence of phone-hacking in the US, one person familiar with the matter said, and its investigation is focusing on potential FCPA violations.
At The Sun, there was more anger at News Corp’s internal investigators on the independent management and standards committee (MSC).
The MSC, under the chairmanship of Lord Grabiner QC, reports to the News Corp board through Joel Klein, one of Mr Murdoch’s closest executives, and Viet Dinh, a non-executive who has steered the board’s response.
With about 100 lawyers, forensic IT specialists and accountants, the MSC is poring over 300m emails dating back 10 years. Information passed to the police is stripped of details that could reveal legitimate sources, to calm worried reporters.
One focus of the MSC’s work, a person close to the group said, is the system that allowed journalists to make cash payments to sources. The Sun has long told readers it paid for news tips, and one veteran said reporters might have disguised the identity of their sources when seeking cash from their superiors.
The scale of those payments and how they were accounted for remains unclear.
News Corp’s need to be seen to be leaving no stone unturned has brought it into conflict with journalists who expected the company to stand behind them. One said: “You’re damned if you do and damned if you don’t.”
“When you work for The Sun you accept you don’t have many friends,” The Sun veteran said, noting that this was the source of its camaraderie. Now, he said, some of its best reporters “have been taken by their own people”.
Chris Bryant, a Labour MP and phone-hacked target, raised concerns that journalists were “paying the price” for News Corp’s actions. “I would much rather that The Sun came under new management.” The tabloid’s problems were endemic, he argued. “It wasn’t just one rotten apple, it was a whole orchard.”
Other risks remain. Jeremy Hunt, the culture secretary, on Sunday also highlighted pressure for new press regulation as Tom Watson, a Labour MP and News Corp critic, told the FT the police should take the investigation wherever the evidence led them.
Sun journalists’ anger is also targeted at James Murdoch, who took over News Corp Europe in 2007, and is under pressure over suggestions that he should have known in 2008 that hacking was widespread.
With James Murdoch’s UK team being thinned down and the Wapping headquarters where Rupert Murdoch battled print unions a generation ago up for sale, they worry that London is turning from a source of the Murdochs’ power into a lonelier outpost in the empire.


Reply With Quote

