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Danger zone: Murdoch empire may face Foreign Corrupt Practices Act charges

Posted by Charles II on February 12, 2012

(Cartoon from Dave Brown, the London Independent)

Ed Pilkington, The Guardian:

The latest Operation Elveden arrests sharply increase the danger to News Corporation of potential multimillion dollar fines by US authorities as part of the continuing investigation into alleged bribery of public officials under the Foreign Corrupt Practices Act (FCPA).

The threat of prosecution under the FCPA constitutes the greatest danger of the phone-hacking scandal for Rupert Murdoch’s media empire. It could expose the company to tens of millions of dollars in fines and the risk of imprisonment of its executive officers.

It would also bring the scandal to America, which is the financial heart of the global company.

They seem to be doing this rather than let the police ransack the place.

Ed Pilkington, Dan Sabbagh, and Andrew Sparrow, The Guardian:

The scale of any penalties that flow from the FCPA investigation would be based on a calculation of how much benefit the company derived from any corruption. Against that, mitigating factors would be taken into account such as the extent of co-operation given to the investigating authorities by the company.

That helps explain why News Corp has bent over backwards in recent months to assist the police by handing over evidence of possible wrongdoing, to the dismay of some of its own journalists. British law also states that the police cannot serve warrants on News Corp for evidence if the company is co-operating with inquiries.

The problem is that since the Management and Standards Committee is the one turning sacrifices over to the cops, the rest of the cattle are not-so-surprisingly nervous.

Jamie Doward, The Guardian:

Toxic allegations that the Yard failed to take allegations of endemic phone hacking on the News of the World seriously did for the careers of both the Met’s commissioner, Paul Stephenson, and his deputy, John Yates.

Now it is the mirror image of this relationship that is damaging the Sun. The paper’s journalists are said to be furious that the arrests have been triggered by information supplied to the Yard by the Management and Standards Committee (MSC), an independent committee set up by the New York-based News Corporation, the parent company of News International. Following the first set of arrests, a News International source suggested it was intent on “draining the swamp”, a comment that provoked fury among the company’s journalists.

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8 Responses to “Danger zone: Murdoch empire may face Foreign Corrupt Practices Act charges”

  1. chet said

    The problem is that since the Management and Standards Committee is the one turning sacrifices over to the cops, the rest of the cattle are not-so-surprisingly nervous.

    At which point comes to mind

    “All animals are equal, but some animals are more equal than others”.

    Or, possibly, mutually assured defense may instead become mutually assured destruction.

    • This is starting to eat into Murdoch’s revenue streams. I’m not sure that his TV operations will suffice to keep subsidizing News Corp.

      • Charles II said

        They had $9B of cash as of December. It would take a lot more than a few tens of millions in fines to seriously affect the empire. Over the last year, the stock is up 15% vs. the S&P up bupkis plus a point.

  2. They had $9B of cash as of December. It would take a lot more than a few tens of millions in fines to seriously affect the empire. Over the last year, the stock is up 15% vs. the S&P up bupkis plus a point.

    But if they have to shut down the Sun, in addition to NotW, the newspaper arm of the empire’s in big trouble.

    • Charles II said

      Sure, but that’s probably why the stock is up.

      The newspapers have been money losers. Sell them, and the telecomm empire is worth a lot more. Shareholders have been trying to get Rupe to sell them for years.

  3. joel hanes said

    I take what comfort there may be in reflecting that both Rupert Murdoch and (the bad) Roger Ailes are old men: Murdoch is 80, and Ailes 71. Maledictions on them both — together, they’ve done more damage to the US than Al Queda and Fidel Castro combined.

    • Charles II said

      Certainly Castro has done some damage to the Cuban people. But I’m trying to think what damage he’s done to the US. It seems to me that most Castro-related damage suffered by the US has been self-inflicted.

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