Cracks in the Worldwide Murdoch Empire

Eric Alterman looks at the widespread alleged illegal activity at Rupert Murdoch’s News Corporation.

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Former News International Executive Chairman James Murdoch arrives at News International headquarters in London, Tuesday, July 19, 2011. (AP/Sang Tan)
Former News International Executive Chairman James Murdoch arrives at News International headquarters in London, Tuesday, July 19, 2011. (AP/Sang Tan)

James Murdoch stepped down from his post as News International executive chairman yesterday morning after details came out about allegations of bribery at The Sun, a tabloid newspaper published by News International in London. This is just the latest in a series of tumultuous events surrounding News Corporation—News International’s parent company, founded by James’s father, Rupert Murdoch.

The Guardian reports that on Sunday, just hours after Rupert Murdoch’s “defiant gamble of launching a Sunday edition of The Sun, the head of the police investigations into illegal behaviour by journalists spelled out startling details of what she called a ‘culture of illegal payments’ at the title.” According to British Metropolitan Police Deputy Assistant Commissioner Sue Akers, one public official was blessed with more than £80,000 ($127,600) in cash payments from the newspaper.

The cases are not about drinks or meals (or even hookers) but ones “in which arrests have been made involving the delivery of regular, frequent, and sometimes significant sums of money” to a “small network of corrupted officials," according to Akers. In turn, these officials provided The Sun with "salacious gossip,” among other things, including, in former News International chief executive Rebekah Brooks’s case, the use of a police horse.

"There appears to have been a culture at the Sun of illegal payments,” Akers said, “and systems have been created to facilitate such payments whilst hiding the identity of the officials receiving the money."

Also according to Akers, "retainers" appear to have landed in the pockets of all manner of police officers and other officials—one Sun reporter paid out more than £150,000 ($239,260) over time—in an apparent mutual backscratching arrangement whereby the reporters would get inside information and the officials were free to plant stories in the tabloid that were not checked too carefully. Just one private investigator, Glenn Mulcaire, received more than $1.5 million for his hacking. And it turns out that police informed Brooks, Rupert Murdoch’s most trusted lieutenant, way back in 2006 of evidence of illegally hacking the phones of literally dozens of celebrities, including athletes and politicians.

Legal scholars agree that the language of Akers’s testimony is an all-but-engraved invitation to the U.S. Justice Department to begin investigations of Murdoch properties under the U.S. Foreign Corrupt Practices Act, or FCPA, which carries potential fines of hundreds of millions of dollars if News Corporation is not able to demonstrate that that it has cooperated in seeking to uproot this behavior. This is especially treacherous because unless it can show it has cooperated vigorously with the authorities in rooting out malpractice, News Corporation can be assumed to be guilty of allowing it to happen.

For instance, Mike Koehler, an expert in FCPA law at Butler University, noted, “The evidence seems to suggest that there was a recognition that these payments may have been illegal and the notion that there were attempts to disguise the nature of these payments. These elements would fall under the remit of the FCPA.”

And Tom Fox, a Houston attorney with a specialty in FCPA cases and anticorruption law, said Akers’s allegations regarding particularly the “culture of corruption [are] really bad. … there are two main types of FCPA case. In the first, a company has policies in place but fails to detect corruption. The second is far worse. And that’s when there is a program in place and you ignore it." He added, however, that it could take as many as two years for American authorities to decide exactly how to proceed.

Unfortunately for Rupert Murdoch, his family, and his lieutenants, we have also learned, independent of this investigation, that efforts to investigate News of the World—the paper that Murdoch shuttered upon discovery of its phone- and computer-hacking tendencies—were apparently stalled due to News International’s obstruction of the investigation, along with a less-than-vigorous investigation by Murdoch-friendly police, and the possible destruction of evidence.

Robert Jay, chief counsel to the official inquiry, said, "The relationship between the police and the media, and News International in particular, was at best inappropriately close and if not actually corrupt, very close to it.” Murdoch responded to the inquiry testimony, saying, in a statement, "As I’ve made very clear, we have vowed to do everything we can to get to the bottom of prior wrongdoings in order to set us on the right path for the future. That process is well under way."

Whatever. It was not a great week for this to happen, given not only the launch of the new Sunday paper, but also the announcement that he would be paying out nearly $1 million to Charlotte Church, a one-time child singing star whose private communications were repeatedly hacked by News of the World and provided the fodder for 33 separate articles. Church took the money but explained, “They are not truly sorry. They are just sorry they got caught.”

Indeed, despite the befuddled character he presented when testifying publicly before Parliament, the 80-year-old Rupert Murdoch has been anything but contrite in the face of these revelations. On February 17 he made what The New York Times termed “a grand entrance into the Sun newsroom,” when, “marching around in shirtsleeves, he vowed to reinstate journalists suspended in the criminal investigation, offered to pay their legal bills, issued a robust statement about the paper’s probity and announced that he was defying conventional industry wisdom by starting a Sunday issue.”

And the employees are not sounding terribly contrite either. Kelvin Mackenzie, a former Sun editor, wrote in The Daily Mail:

The Sun journalists who have been arrested are not accused of enriching themselves — they were simply researching stories about scandals at hospitals, scandals at army bases, and scandals in police stations that they believed their readers were entitled to know about. … if the whistle-blower asks for money, so what?

But the Sun reporters’ emails that were not destroyed allegedly reveal substantial knowledge they were engaging in criminal behavior, according to The New York Times. These emails contain references to their fears of “risking losing their pension or job” and the necessity of “tradecraft” to hide the true purpose of their payments. Murdoch apologists like the conservative New Republic magazine, however, argue that “[a]s the investigations have intensified, Murdoch’s role in it has become ever more peripheral.” Oh, really?

In fact, beyond this apparent criminal behavior, here’s the question we need to ask ourselves. Given the culture that apparently ruled News Corp.’s journalistic operations over in England, is the American side of this out-of-control organization similarly compromised?

Is Fox CEO Roger Ailes too morally and politically fastidious to bend the rules of journalistic and business practices designed to uphold the professionalism of the profession? And what about Fox News commentators Bill O’Reilly, Sean Hannity, and Dick Morris?

When you’re done over in England, Ms. Akers, we’ve got a job for you across the pond.

Eric Alterman is a Senior Fellow at the Center for American Progress and a CUNY distinguished professor of English and journalism at Brooklyn College. He is also “The Liberal Media” columnist for The Nation. His newest book is The Cause: The Fight for American Liberalism from Franklin Roosevelt to Barack Obama, to be published in April. This column won the 2011 Mirror Award for Best Digital Commentary.

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Eric Alterman

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