As part of an investigation with major implications both in the United Kingdom and the United States, Rebekah Brooks and five others were charged with obstructing the investigation into phone hacking and other crimes by employees of Rupert Murdoch’s British newspapers. Separately, two others were charged with bribery. And over the past year dozens of people, including Brooks, have been arrested. Reportedly some forty others are awaiting to see if they will be charged.
Rupert Murdoch is a media tycoon, as Chairman, CEO and controlling stockholder of News Corporation (NASDAQ:AWSA), with media properties all over the world. In the U.S. alone his properties include The Wall Street Journal, the New York Post, Fox News, Fox Broadcasting Company and 20th Century Fox.
Rebekah Brooks was head of News Corp.’s British operations. Last year what seemed like an isolated case of phone hacking at one of News Corp.’s newspapers grew into a large scandal that included official corruption and computer hacking. Also, the British political establishment has been rocked as the inquiries revealed a very cozy relationship between the press and police and political leaders – including current Prime Minister David Cameron. Ms. Brooks was forced to resign as a result of the scandal.
In the U.S., remarkably little has been reported on this story even though Murdoch is an American citizen and News Corp. is an American company. But a number of allegations, as yet unproved, have been made about News Corp. activities in the U.S. Allegations have included phone hacking and corruption of public officials. Members of the House have urged the FBI to investigate and a Senate committee has asked British investigators for information.
Possibly the biggest danger for News Corp. in this country is the U.S. Foreign Corrupt Practices Act. A U.S. company involved with corrupt activities abroad can face heavy fines and even see its executives sent to jail.
Already in the U.K., top executives of News Corp. (including Murdoch’s son) face possible imprisonment and one of his most important assets has been closed. Findings of violations of U.S. law could further weaken Murdoch’s empire.