James Murdoch has badly damaged his chances of taking over his father's US-based media empire, write DOMINIC RUSHEin New York and JILL TREANOR
JAMES MURDOCH and News Corp could face corporate legal battles on both sides of the Atlantic that involve criminal charges, fines and forfeiture of assets as the escalating phone-hacking scandal risks damaging his chances of taking control of Rupert Murdoch’s US-based media empire.
As deputy chief operating officer of News Corp – the US-listed company that is the ultimate owner of News International (NI), which in turn owns the News of the World, the Times, the Sunday Timesand the Sunin London – the younger Murdoch has admitted he misled parliament over phone hacking, although he has stated he did not have the complete picture at the time. There have also been reports that employees routinely made payments to police officers, believed to total more than £100,000, in return for information.
The payments could leave News Corp – and possibly James Murdoch himself – facing the possibility of prosecution in the US under the Foreign Corrupt Practices Act (FCPA) – legislation designed to stamp out bad corporate behaviour that carries severe penalties – and in the UK under the Regulation of Investigatory Powers Act 2000 which outlaws the interception of communications.
Tony Woodcock, a partner at the London law firm Stephenson Harwood, said section 79 of the 2000 Act enabled criminal proceedings to be brought against not only a company, but also a director where the offence was committed with their “consent or connivance” or was “attributable to any neglect on their part”. Woodcock said: “This could embrace a wide number of people at the highest level within an organisation, such as a chief executive.”
While the UK phone-hacking scandal has been met with outrage in the US, the hacking itself is unlikely to prompt Washington officials into action. But because NI is a subsidiary of the US company, any payments to UK police officers could trigger a justice department inquiry under the FCPA. The 1977 Act generally prohibits American companies and citizens from corruptly paying – or offering to pay – foreign officials to obtain or retain business.
Mike Koehler, assistant professor of Business Law at Butler University, Indianapolis, an FCPA expert, said: “I would be very surprised if the US authorities don’t become involved in this [NI] conduct.” Koehler said the US justice department was increasingly keen to bring cases against individuals as well as companies, because prosecuting people brought “maximum deterrence”. – (Guardian service)