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04.25.12

Murdoch Confirms U.S. Department of Justice Investigation Into News Corporation

In a statement to the Leveson Inquiry, the News Corp. mogul said he was cooperating with the DOJ.

Rupert Murdoch’s witness statement to the Leveson Inquiry today confirmed one important, if long-suspected, fact: that his News Corporation has been actively cooperating with a U.S. Department of Justice investigation into the company.

The statement outlined how an internal company inquiry--set up by Murdoch this summer in the wake of the phone hacking scandal to investigate News International, News Corp.’s U.K. media arm--has turned over thousands of potentially incriminating company emails and other documents to authorities. The Management and Standards Committee, headed by senior News Corp. lawyer and former New York City school reformer Joel Klein, has spent months pouring through archives from News International and passing relevant information to Scotland Yard.  Murdoch’s statement confirmed that News Corp. has shared this with the U.S. Department of Justice as well.

“Since July 2011,” the statement read, “the MSC, working with a legal team, has actively cooperated with the Metropolitan Police as well as with the United States Department of Justice, turning over evidence of alleged or suspected illegality, and responding to all requests for information. This has led to the arrests of a number of [News International] employees.”

The info dump has helped fuel an investigation into allegedly corrupt payments made by journalists to police and other public officials. This investigation, called Operation Elveden, led to the recent arrests of a number of senior journalists from Murdoch’s flagship daily tabloid, the Sun. The arrests prompted Murdoch to fly to London to address an embittered newsroom in February, and soon afterwards he announced the launch of the Sun on Sunday, which many observers saw as a bid to win back staff and regain the upper hand in the company crisis.

It is this issue of allegedly corrupt payments—and not phone hacking—that has also been the subject of a U.S. Department of Justice investigation, as such payments could potentially violate the U.S. Foreign Corrupt Practices Act, which prohibits illegal payments to foreign officials. Proactive cooperation is looked on favorably by American authorities and can help to lessen potential FCPA fines-- a detail that experts have assumed to be a driving motivation behind Murdoch’s internal inquiry and its investigation into potential company wrongdoing.

“News Corp. really, since the first weeks of this scandal, has been saying that they’re cooperating in the DOJ and any investigations. And I took that [to mean] turning over documents and witness statements and the like,” says Butler University’s Mike Koehler, one of America’s leading experts of FCPA law. “News Corp. has every incentive in the world to do that. Among other things, it’s going to make this whole episode go faster for it. […] This is very standard procedure in cases of this nature.”

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Rupert Murdoch faces the Leveson inquiry.

FCPA cases typically take between two and four years (and sometimes longer) to play out, Koehler points out, and the end result of a successful prosecution is usually a corporate fine. He adds that company executives--and often the employees suspected of making illegal payments--rarely face criminal charges, which require proof of either direct knowledge of the payments or willful blindness. “The DOJ knows that when you charge an individual, their liberty is on the line and they’re going to fight,” Koehler says. “With a company, the case is likely going to result in a settlement. And as a result the DOJ will not be held to its high burden of proof.”

It is the issue ofallegedly corrupt payments—and not phone hacking—that has been the subject of a U.S. Department of Justice investigation, as such payments could potentially violate the U.S. Foreign Corrupt Practices Act.

A News Corp. spokesperson declined to comment for this article, but the company has previously stated that it is cooperating with all relevant investigations.

The documents from the internal inquiry and the FCPA investigation form a different U.S. legal front altogether than the one forecast by a recent announcement from prominent U.K. lawyer Mark Lewis, who has said he intends to pursue at least three cases against News Corp. in America. Earlier this month, Mark Lewis confirmed in an exclusive interview with The Daily Beast that he “imminently” intends to file the suits, which he says will accuse Murdoch’s British reporters of hacking the phones of targets on U.S. soil. Such a move would allow Lewis to take aim at the parent company News Corp., in lieu of News International, in pursuit of damages. It might also, Lewis said, pave the way for his own investigation into News Corp., via the legal discovery process that would presumably go along with his potential U.S. suits.

Murdoch will take the stand again at the Leveson inquiry tomorrow for another day of testimony.