Chatter focuses on U.S. Foreign Corrupt Practices Act
LONDON — The latest arrest of British journalists employed by News Intl. has led to a drumbeat of speculation in this hacking-obsessed nation that U.S. prosecutors could soon turn up the heat on Rupert Murdoch’s worldwide media empire.
So far, New York lawyers seeking evidence of hacking Stateside, including tapping phones of 9/11 victims, have remained mum. But Mark Lewis, a lawyer for U.K. hacking victims, told Variety he is planning a trip to the U.S. in several weeks, prompting buzz that there could be developments around then.
Chatter is focused on the U.S. Foreign Corrupt Practices Act, which can go after companies for paying bribes to government officials anywhere in the world they do business. The Dept. of Justice doesn’t have to wait until charges are filed or convictions logged overseas, but can move at any time to indict, says New York lawyer Norman Siegel who is working with Lewis. Conspiracy charges have a five year statute of limitations, which may be fueling conjecture that the government will move.
An FCPA probe can cover record-keeping of payments and transactions. Prosecution is concerned “less with the measurable size of the specific gain from any one instance of bribery” than whether bribery was a widespread business practice and, crucially, whether directors at News Corp. were aware of it or “willfully blind,” said Claire Enders, who runs U.K. media research company Enders Analysis.
News Corp. declined to comment on any DOJ action. But it did hire New York lawyer Mark Mendelsohn, who had run Justice’s FCPA section.
The DOJ, which has moved against other big companies, including Siemens, Daimler Chrysler and Johnson & Johnson, as well as individuals, doesn’t comment on investigations unless charges are brought.
U.S. Attorney General Eric Holder said in August he was concerned at allegations that News Corp. employees may have hacked phones of Sept. 11 victims or their families, and that the DOJ was looking at it.
Meanwhile, the pressure in Blighty shows no signs of abating. The second phase of a government investigation into press ethics, the so-called Leveson Inquiry, sparked by the scandal, is scheduled to begin Feb. 27. The first part looked at the press’s relationship with the public. Leveson’s new focus will be the dealings between the press and police.
Also in late February, Parliament’s Culture Committee is planning to issue the results of its investigation into the scandal, part of which included grilling News Corp. chairman-CEO Rupert Murdoch and his son James Murdoch, deputy chairman and head of international, at several public hearings.
James, who was his father’s clearly anointed heir apparent before the scandal cast a shadow over his tenure, has said he was ignorant of the goings-on at the newspapers, as has Rupert Murdoch.
The latest arrests — of five senior journalists on allegations of bribing police and other public officials, including a member of the U.K. armed services and a civil servant at the Ministry of Defense — were significant because they hit employees at the Sun newspaper and spread the scandal beyond the News of the World where it originated and which was closed down over the summer in a dramatic attempt by News Corp. to eradicate the problem.
The arrests were part of the Operation Elveden investigation by British police into alleged corruption at News Intl., and repped the most serious development of the scandal since last July when it emerged that members of the public, including a teenage girl who was murdered, were victims of phone hacking. Other victims have included thesps Hugh Grant and Steve Coogan, and the former British deputy prime minister, John Prescott.
News Corp. has said that information it provided helped lead to the arrests, and company execs have apologized profusely for any transgressions. President and CEO Chase Carey reiterated last week during a conference call to discuss quarterly earnings that the company will do or pay whatever is necessary “to make things right” in the U.K.
But the earnings themselves — profits surged 65% to $1 billion — are testament to how little impact the scandal is having on the bulk of the company’s business. (The earnings did show close to $200 million in charges in the U.K., including $104 million for shuttering News of the World.)
News Corp. continues to muscle up. Last week, it assigned its new general counsel, Gerson Zweifach, to head the Management and Standards Committee, based at News Intl.’s East London headquarters, which is overseeing the internal investigation.