Murdoch Scandal Heats Up in the United States

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Rupert Murdoch Photo: Getty Images / Scott Olson

In Britain, the Murdoch hacking scandal has come to a boil: The head of Scotland Yard has resigned over links to a former News of the World executive, Rebekah Brooks has been arrested, and Rupert and James Murdoch are set for a painful father-and-son grilling by vengeful British politicians on Tuesday.

In the United States the temperature is still rising, with an FBI investigation into the alleged hacking of 9/11 victims, calls for a probe under the Foreign Corrupt Practices Act, and a slew of U.S. journalists who are now combing through the company's records to find similar misdeeds. How hot will it get for the Murdochs on this side of the pond?

The 9/11 hacking investigation, prompted by Representative Peter King, may yet uncover wrongdoing, but its underlying basis is pretty slim: An article in the Daily Mirror, which quoted an anonymous source saying an unidentified private investigator had been approached by unnamed News of the World journalists — and turned them down. The Mirror, a bitter rival to Murdoch's papers, has not printed any follow-up stories.

More substantially, any payments by News of the World to Scotland Yard — now under even more scrutiny since the ex–Scotland Yard boss received a 12,000 pound spa visit from a company that employed ex-News of the World exec Neil Wallis — could violate the U.S. Foreign Corrupt Practices Act, which bans bribes by employees of U.S.-listed companies to foreign officials. Senator Jay Rockefeller has already called for a congressional investigation, and Senator Dick Durbin joined the call on Sunday. Depending on the Murdochs' performance on Tuesday (they are receiving tutelage from Steven Rubenstein, son of Rupert's BFF Howard), expect increased pressure from Congress for the FBI to look at the bribery angle more closely.

The hunt for other possible Murdoch misdeeds in the U.S. is in full swing:

David Carr discovers a marketing firm called Floorgraphics that sued News America, claiming it “illegally accessed plaintiff’s computer system and obtained proprietary information.” News Corp. settled for $29.5 million and immediately bought the company. The executive who ran News America at the time, Paul Carlucci, was fond of rallying his sales staff with this scene; he now also runs the New York Post.

Ken Auletta notes that News Corp. will also have to explain "why their unethical behavior does not disqualify them under F.C.C. rules that require that those who license TV stations must be of solid moral character."

The Nation unearthed a 2008 post by Jeff Bercovici that asked: "Has Roger Ailes been keeping tabs on your phone calls?" The story traces back to a disgruntled former Fox News staffer who was quoted anonymously by David Brock for a New York article, "Roger Ailes Is Mad As Hell."

The spiraling damage, and the fevered hunt for the next scandal revelation, has News Corp.'s independent directors finally waking up to pose some pointed questions. Bloomberg reports that directors "have begun questioning the company’s response to the crisis and whether a leadership change is needed, said two people with direct knowledge of the situation who wouldn’t speak publicly."

With the Murdoch family reportedly squabbling and anonymous quotes flying ("The curtain is pulled back, and now no one’s afraid anymore," said the Murdoch peer. "He’s lost his ability to intimidate and cow people"), U.K. politicians want the company split up. One option being floated is to sell off the U.K. newspaper business, or even (much more fancifully) for News Corp. to get out of the news business altogether.

One corner of the empire appears to be uncowed, and perhaps didn't get the PR memo: The Wall Street Journal's famously intransigent editorial board launched a tin-eared tirade against the haters, justifying the hacking by noting that "British tabloids have been known for decades for buying scoops and digging up dirt on the famous," and adding in jabs at WikiLeaks and ProPublica for good measure.

"The Schadenfreude is so thick you can't cut it with a chainsaw," the editorial noted. But the true measure of how big this scandal has become wasn't on the opinion page of the Journal, but the front, where the paper's own reporters summed it all up: "News Corp. is attempting to do on U.S. soil what it failed to accomplish in London: contain the damage."


Troubles That Money Can’t Dispel [NYT]
News Corp. Scrambles to Contain Damage in U.S. [WSJ]