Motley Moose – Archive

Whew! This has been an exhausting weekend of revelations and arrests as the Hackgate scandal at News of the World has spread, via an email hacking scandal at The Times, to the arrest of ten journalists, many of them senior, at Britain’s most popular paper, The Sun.

Without doubt, from the multiple angry responses from NI journalists, the British arm of Newscorp is now at war with its corporate masters in the News Corp headquarters in New York. The latter are in charge of the 100 plus lawyers at the Management and Services Committee which is directly co-operating with 161 officers in the Met Operations Weeting, Tuleta and Elveden engaged in investigating phone, email hacking and bribery of state officials. It’s the latter which are behind the recent spate of arrests, and directly threatens the News Corp base with the threat of prosecution under FCPA violations.

I haven’t got long because all these developments have to be incorporated in my book with Eric Lewis, Bad Press: Fall of the House of Murdoch. But in short the DOJ, the FBI and the SEC have all been investigating News Corp since the summer. Mark Lewis, the sterling lawyer for the hacking victims is heading to New York this week to launch civil claims on this basis. In the meantime it’s the FCPA violations which could land senior News Corp Executives in the dock.

There are so many sources on this, from Reuters, the NYT, even the WSJ, I’m just going to link to the most recent: Ed Pilkington on the US Guardian site:

News Corp executives at risk of US prosecution for ‘willful blindness’

The perils to News Corp of an FCPA prosecution in the US against the company and its executives was underlined by the revelation that a grand jury has been convened in the case of Avon Products. The Wall Street Journal reported that US authorities are probing an internal audit report compiled in 2005 that found that Avon employees had bribed officials in China, yet the company only launched an official inquiry into possible violations three years later.

In the Avon case, the grand jury is likely to be asked to consider whether executives were culpable under the “willful blindness” provision of the FCPA.

Professor John Coffee, a specialist in white-collar crime at Columbia law school in New York, said that executives were at risk of prosecution in cases where they failed to ask relevant questions about a suspicious persistent pattern of payments. He gave the metaphorical example of a driver used by a Mexican drugs cartel to transport cocaine across the border who was aware that the vehicle contained a secret storage panel but made no attempt to find out what packages had been placed inside.

As part of its response to the billowing phone hacking scandal, News Corp has amassed the most formidable team of FCPA lawyers ever assembled. “They have appointed not just one of the best lawyers in this field, they have appointed most of the best lawyers,” Coffee said.

“That’s not normal defensive strategy,” he added.

And in other ‘news’ (I use the term lightly in the Fox news sense), there are rumours that the government scientist David Kelly, who committed suicide after the Iraq invasion over allegations of sexing up WMD threat, could have been a hacking victim. Michael Wolff, Murdoch’s official biographer speculates that James could be arrested this week. And dozens of tabloid journalists, more than happy to see others arrested in dawn raids or suffer trial by media, are whining loudly, in a liberal way, about human rights, due process, and innocent before being proven guilty.

Sweet is it in this dawn to be alive.  

Events are moving so fast this is already out of date: first the resignation of resignation of Rebecca Brooks as head of News International. For a small personal vignette of my encounter here, you can read the whole thing here.

But it’s the US where Newscorp is based, and both Rupert and James are US citizens, and this is where the scandal will finally engulf him I believe. As Carl Bernstein said earlier this week, making the explicit comparison with Watergate these revelation “are the beginning, not the end, of the seismic event.”  He also stresses how important this US is to Murdoch

Murdoch associates, present and former-and his biographers-have said that one of his greatest long-term ambitions has been to replicate that political and cultural power in the United States. For a long time his vehicle was the New York Post-not profitable, but useful for increasing his eminence and working a wholesale change not only in American journalism but in the broader culture as well.., Then came the unfair and imbalanced politicized “news” of the Fox News Channel-showing (again) Murdoch’s genius at building an empire on the basis of an ever-descending lowest journalistic denominator…. And finally, in 2007 The Wall Street Journal‘s squabbling family owners succumbed to his acumen, willpower, and money, fulfilling Murdoch’s dream of owning an American newspaper to match the influence and prestige of his U.K. holding, The Times of London-one that really mattered, at the topmost tier of journalism.

Between the Post, Fox News, and the Journal, it’s hard to think of any other individual who has had a greater impact on American political and media culture in the past half century.

If we live in an information economy, then Newscorp is the Standard Oil of the 21st Century. Murdoch built up both horizontal and vertical monopoly power in the UK and Australia, leading to vast inefficiencies, corruption and unaccountable political power.

That was his aim in the US also: so it’s crucial to strike at the pillars of his power while they are beginning to crumble.

Now Rebekah Wade has gone (she “fucked the company” according to Elizabeth Murdoch), and her predecessor at News International, Les Hinton, has resigned as CEO of the Dow Jones (‘Les is no more’ as someone brilliantly put it)….

…the firewalls between the public outrage and the Murdoch family itself have fallen:

Yes, it’s working. The storm of outrage is crossing the Atlantic to Newscorp’s US base. As we’ve learned, the FBI have now launched an investigation into allegations of phone hacking by the Murdoch Empire thanks to the instigation of Pete King as I diaried yesterday. This is leading The Guardian and is featured heavily both on the the BBC, The New York Times and CNN.

Even Rupert himself is showing signs of flagging. He’s just released a rather dispirited, desultory but defiant interview in his own Wall Street Journal in which the main message really seems to be:

I’m tired.

Though many of you have been sceptical that the US public or MSM would pay attention to this, it seems some of the massive public revulsion here in the UK is beginning to transfer to Murdoch’s adopted homeland and commercial base – the United States.

But there’s more to this than just law-breaking: there’s Murdoch’s nefarious role in law-making.