James Murdoch Resigns at News Corp. News Updates

02.13.12

Murdoch Foe Mark Lewis May File Suit in the U.S.

As new arrests roil News Corp., a prime antagonist in the hacking cases may be readying a stateside challenge. Mike Giglio on the latest threat to Murdoch’s American empire.

Rupert Murdoch may be heading to London this week, but his primary antagonist seems ready to take the fight to the heart of the media mogul’s empire in America.

Over the weekend, police in Britain launched a spate of headline-grabbing arrests of senior reporters and editors from The Sun, Murdoch’s flagship daily tabloid, as part of an ongoing investigation into the bribing of police and other public officials. The increasing number of arrests—on top of the broadening of the net of potential bribery targets, with a defense ministry official and member of the armed forces detained in addition to a police officer—has already increased speculation that Murdoch’s News Corp. could face legal action in the United States.

Under the U.S. Foreign Corrupt Practices Act (FCPA), which prohibits American companies from paying bribes to foreign officials, company executives could be liable if they either authorized bribes or knew about them but didn’t stop them. Meanwhile, it was reported this morning that the U.S. Securities and Exchange Commission is also making inquiries, and could be interested in cases in which the company’s books contained false names or accounts to disguise bribes paid to public officials or police.

But perhaps most threatening to Murdoch are reports that Mark Lewis—the lawyer who this summer negotiated a massive settlement for the family of Milly Dowler, the murdered schoolgirl whose phone was hacked by News of the World and who has played a crucial role in bringing the phone-hacking scandal to light—may be bringing the legal battle to the States. Lewis was reported last night to be moving ahead with at least one case against News Corp. in America.

When asked by The Daily Beast if he was pursuing a U.S.-based case against News Corp., Lewis said only that he was “not prepared to deny” it. It’s unclear what kind of case Lewis is pursuing, but the thought of the high-profile lawyer on their home turf promises to be a disconcerting one for News Corp. brass.

Lewis was the lawyer for Gordon Taylor, the soccer official whose lawsuit 2008 lawsuit made the first inroads into the phone-hacking case, helping to establish that phone hacking was endemic at News of the World and not just confined to a single “rogue reporter,” as the company had claimed. And the lawsuit continues to plague News Corp. to this day. James Murdoch, in his efforts to avoid being implicated in the scandal, maintained before Parliament last summer that he was unaware that phone hacking was widespread when he authorized an unprecedented $1.1 million settlement to Taylor. Yet an email chain unearthed recently shows company officials alerting the younger Murdoch to the scale of the problem before the settlement. (Murdoch has since claimed that he didn’t fully read the emails at the time.) Lewis has gone on to lead the charge on a number of high-profile phone-hacking cases.

Claire Enders, a London-based media analyst and expert on the Murdoch empire, points out that there is little precedent for pursuing the FCPA against newspapers. FCPA settlements are usually based on profits gained from the bribes, she says, and individual news stories are just one part of a newspaper's profit margin, which in the case of the Sun is not that large to begin with.

The thought of the high-profile lawyer on their home turf promises to be a disconcerting one for News Corp. brass.

But the issue, she says, opens a “massive can of worms” for News International—and for Fleet Street more generally—at a particularly sensitive time, as the public inquiry into potentially corrupt journalism practices will begin addressing the relationship between journalists and police next month. “This is going to very substantially put oil onto the fires,” she says.

And she notes that things went poorly for Murdoch the last time he came to town—when his storied News of the World tabloid was shuttered, and he and his son James were grilled before Parliament. “Rupert Murdoch has not been at the center of the fray since last summer, and many thought his performance at the time was underwhelming and worrying,” she says. “So we have other possibilities in terms of excitement ahead.”