Governmental investigators have
indicated that the phone-hacking scandal may be broader than previously
indicated and that early knowledge may have gone high up in News
International, Rupert Murdoch's UK holding company for media properties.
U.S. authorities have begun new inquiries
into whether News Corp, a U.S. company, may have violated the U.S. Foreign corrupt Practices Act, which prohibits bribing of foreign officials
(although the inquiry is at a very preliminary stage).
The source of the
information that led to these disclosures and arrests was an independent, internal
News Corp investigation that has been implacably pouring through more reams of
evidence at the News Corp UK newspapers, including 300 million emails and other documents.
To the consternation
of News Corp's UK employees, this meticulous inquiry has been
giving the British authorities unfettered access to all suspicious or damning
information -- acting as the arms and legs of three police investigations (into
phone hacking, computer hacking, and bribery of public officials), a
parliamentary inquiry, and an independent judicial inquiry. Numerous civil suits
by alleged victims of journalistic misdeeds have settled or are pending, with
more expected to come. They will, where possible, use information that the News Corp internal
investigation has given to government inquiries.
There are two
important dimensions of this internal inquiry right now.
First, unlike some corporate internal
inquiries, this one is and will remain an
independent finder of facts. The Murdochs created it and gave it unlimited
powers. It will continue to turn up
damning information for government investigators, given the apparent likelihood that illicit
practices were widespread. Rupert Murdoch has traveled to London to mollify The Sun's restive staff. But rather than launch a Watergate-like Saturday Night Massacre by firing the independent investigators, he issued a
letter affirming his support for their efforts.
Second, these facts
and the governmental investigations now pose a greater likelihood of serious
damage to the UK properties and news
personnel, to James Murdoch, and perhaps to News Corp itself than the threat last July, when the Murdochs let go News
International's CEO, Rebekah
Brooks, and precipitously shut down The
News of the World.
The internal inquiry's
independence and broad mandate stem from
its origins. After both Rupert and James
Murdoch admitted last summer that their UK properties had failed for years to
get to the truth of "repeated wrong-doing that occurred" (James's
words), News Corp created the Management
and Standards Committee (MSC) in
July 2011 to conduct a full
investigation of all UK practices and to give full information and cooperation
to all authorities.
In a recent press
release following the arrest of The Sun employees, News Corp said the Committee was created to:
undertake a review of all News International titles [The Sun, The Times and the Sunday Times],
regardless of cost, and to proactively co-operate with law enforcement and
other authorities if potentially relevant information arose at those titles...to
take responsibility for all matters in relation to phone hacking, payments to
the police and other related matters....The MSC structure is autonomous and independent of
News International. It has powers to
direct News International staff to co-operate fully with all external and
internal investigations, and to
preserve, obtain and disclose appropriate documents. [Emphasis
In his letter on
February 17, to "colleagues" at
The Sun, Murdoch praised their
"exceptional journalism" but went on to say:
My continuing respect makes this situation a source of great pain
for me. ... We will obey the law, illegal activities simply cannot and will not be
tolerated. ... [the Management and Standards Committee] has been instructed to
cooperate with the police. We will turn
over every piece of evidence we find---not just because we are obligated to but
because it is the right thing to do.
The MSC structure is filled with accomplished
lawyers. The chair of the MSC is a
noted British Queen's Counsel, Lord Grabiner. Among its members is the new News Corp General Counsel, Gerson Zweifach, who
until recently was a partner at a top U.S. firm, Williams and Connolly. Linklaters, a respected UK firm, is in charge
of the internal inquiry and has hired dozens of people, including forensic
accountants and forensic computer technicians. The Committee reports to Joel Klein, News Corp Executive VP and
director, and through Klein to Viet Dinh, a non-employee responsible
for keeping the whole News Corp board informed. Klein was head of the New York public school system after serving as
assistant attorney general (antitrust) under Bill Clinton. Dinh, a professor at Georgetown, was an assistant
attorney general (federal legal policy) under George W. Bush.