Goodspeed Analysis
The growing scandal over phone hacking in Britain is threatening to jump across the Atlantic and contaminate Rupert Murdoch’s U.S.-based media empire.
In an angry backlash to fresh allegations that News of the World journalists may have tried to hack the voicemail messages of victims of the Sept. 11, 2001 terrorist attacks, U.S. senators, a think- tank and media watchdog groups are calling for immediate investigations into News Corporation’s U.S. operations.
U.S. Senator Jay Rockefeller, of West Virginia, Democratic chairman of the Senate’s commerce committee, opened the door to a Washington inquiry Tuesday, saying it is possible Mr. Murdoch’s companies broke U.S. laws.
“The reported hacking by News Corporation newspapers against a range of individuals — including children — is offensive and a serious breach of journalistic ethics,” he said in a statement. “This raises serious questions about whether the company has broken U.S. law, and I encourage the appropriate agencies to investigate to ensure that Americans have not had their privacy violated.
“I am concerned that the admitted phone hacking in London by the News Corp. may have extended to 9/11 victims or other Americans. If they did, the consequences will be severe.”
Earlier this week, the British tabloid the Daily Mirror reported a former New York detective, now working as a private investigator, was approached by News of the World reporters and asked to help obtain the voicemail and call records of victims of the 9/11 terror attacks.
The detective declined to get involved, the newspaper said.
A U.S. think-tank, run by John Podesta, the former chief of staff of former U.S. president Bill Clinton, is already circulating a petition calling on the U.S. Attorney-General and the U.S. Securities and Exchange Commission (SEC) to launch investigations into News Corp.’s U.S. operations.
“Although initial reports focused on the U.K. paper News of the World, recent reports suggest that this disturbing conduct extended to several other News Corp. properties,” the petition says. “Given the seriousness of these allegations, we ask that you immediately begin an investigation of all entities controlled by News Corp., including domestic subsidiaries such as Fox News, The Wall Street Journal, and the New York Post.”
Mr. Murdoch already faces a number of investigations by police and politicians in Britain. On Wednesday, Prime Minister David Cameron named Lord Justice Leveson as the chairman of a public inquiry looking into the ethics and culture of the British press, phone hacking and police bribery.
But it may be in the United States that Mr. Murdoch will face his toughest and most expensive legal action.
Mr. Murdoch is now a U.S. citizen and his main holding company, News Corp., is headquartered in New York and derives most of its revenue from the Twentieth Century Fox movie studio, the Fox News Channel and the Fox broadcast network.
Les Hinton, the chief executive of Dow Jones in the U.S. was formerly head of News International in Britain when the current scandals started. Robert Thomson, editor of The Wall Street Journal, formerly edited The Times of London, which has been accused of spying on former prime minister Gordon Brown.
Those U.S. links may leave Mr. Murdoch and his companies vulnerable to U.S. prosecutions even if the scandals are limited to Britain.
U.S. Senator Frank Lautenberg of New Jersey, another Democratic party member of the Senate commerce committee, sent a letter to the Attorney-General and the SEC on Wednesday demanding they investigate charging Mr. Murdoch and his companies under the Foreign Corrupt Practices Act (FCPA), a 1997 law that makes it illegal for U.S. companies to pay bribes to win overseas business.
Allegations have surfaced that the News of the World paid more than US$150,000 in bribes to police in exchange for information.
“The limited information already reported in this case raises serious questions about the legality of the conduct of News Corporation and its subsidiaries under the FCPA,” Mr. Lautenberg’s letter says.
Mr. Lautenberg also suggested News Corp. could be prosecuted under the Foreign Corrupt Practices Act if it tried to disguise bribe payments in the company’s accounts or had insufficient internal accounting controls.
An FCPA investigation could end up costing Mr. Murdoch millions, even if it doesn’t result in a prosecution.
In one recent case, Avon Products Inc., the U.S. cosmetics, perfume and toy seller, had to spend more than US$170-million to defend itself in a three-year investigation into allegations involving bribes paid in China.
The Siemens engineering conglomerate paid US$1.6-billion in fines and legal fees to settle bribery charges under a FCPA investigation in 2008.
Two media watchdog groups, Media Matters for America and Citizens for Responsibility and Ethics in Washington (CREW) have already joined the call to launch investigations into News Corp.’s U.S. operations.
“Just as the British Parliament has held hearings and heard the testimony of witnesses, Congress has the ability to subpoena News Corp. employees and require them to explain themselves,” said CREW’s executive director Melanie Sloan.
“The idea that News Corp. may have sought to exploit the victims of one of the darkest days in U.S. history for financial gain is grotesque,” she said.
National Post
pgoodspeed@nationalpost.com
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