You can’t have failed to notice the media furore in the UK over the past couple of weeks (and widely reported abroad) over the alleged phone hacking by the British newspaper The News Of The World (“NOTW”), which is owned by media mogul Rupert Murdoch and his family. Day by day, hour by hour, the news empire itself has turned into one of the biggest scandals of the 21st century so far, with allegations pouring out of various sources including from the newspaper’s holding company and the police of a huge number of phone hackings of celebrities, politicians, royals and ordinary citizens who just happen to have become newsworthy because of some tragedy (including the family of the murdered school girl Milly Dowler and the relatives of fallen British soldiers in Afghanistan to name but a few). Other un-newsworthy people who happen to be friends or acquaintances of these many different classes of people may also have had their phones hacked. It is potentially a very large number of people. Several executives from News International have now resigned as a result of the investigations and mishandling of previous investigations. Some are now under arrest.
But it doesn’t end there: evidence is emerging from News International that their NOTW reporters may have been bribing police officers for confidential information including from a royal protection officer who held details of the royal family’s movements, a tightly held secret due to terrorist risks. It is said that many journalists and police officers could be involved. The House of Commons has united with cross-party political agreement to condemn the NOTW and its owners for this scandal and to demand News Corporation’s bid for the remaining shares of the satellite broadcaster BSkyB be withdrawn. The House was successful in having the bid withdrawn even before an embarrassing vote for News Corp.
Clearly in so far as journalists and police officers (and others, I suppose) have been involved in corruption they must now face the music. As such acts would have occurred before 1st July 2011 the police officers appointed to investigate these alleged offences will have to look at the old UK laws on corruption. The old laws are not redundant yet and in theory prosecutions under them may proceed for some time to come for offences which took place prior to 1st July. I have little doubt that where there is evidence that the politicians will want the police to pursue as many convictions because of the damage that NOTW has done to the reputation of the press and of the police. The police haven’t covered themselves in glory, having twice previously reviewed the hacking allegations and concluded that there was nothing to pursue. There appears to have been institutional incompetence as well as individual instances of fraud by officers. On 17th July 2011 the Metropolitan Police Commissioner, Sir Paul Stephens resigned for having hired ex NOTW executive Neil Wallis as an adviser. he felt that his position had been compromised by having been too close to the Murdoch empire.
Already there are many court cases being pursued by those politicians and celebrities with sufficient money and determination to pursue a wealthy organisation. Many more will follow unless News Corporation intends to set up a larger fund than the one it has already established to settle all the expected claims.
Stateside, it is widely reported that some US politicians have become particularly exercised by News Corp’s involvement in this enormous fracas with the political establishment in the UK, albeit apparently indirectly with these illegal acts (but in my view, its a question of “watch this space” as to what they really did know). It is reported that the DOJ and or the SEC may become involved in pursuing claims against News Corp under the US Foreign Corrupt Practices Act. These could either be for principal offences of corruption of foreign public officials under that statute or for the much more common “books and records” offence which it is easier to prove and to which most companies being investigated under the FCPA usually plead guilty. News Corp, being American, is undoubtedly under the jurisdiction of the US courts. Also it may well be that NOTW and some of its UK stablemates was involved in corrupting police officers on both sides of the pond (although in relation to corruption of US officers, different US statutes may apply).
Criminal and civil penalties levied by the DOJ and SEC for FCPA offences can often be huge, dwarfing any similar penalties in the UK. For many people in the UK (politicians, celebrities and members of the public alike), Mr Murdoch’s organisation would be getting its long deserved come-uppance if these allegations are proved. The mood of the country is ugly – worse than under the recent parliamentary expenses scandal, for which Members of Parliament and Lords are still being tried and sent to prison. But Mr Murdoch still has a powerful voice in the UK as he still owns many major newspaper titles: it remains to be seen how he battles it out over the coming months and years. In the meantime he has been asked to face cross-examination by a cross-party House of Commons committee but initially refused to appear. Presumably with a view to a future bid for BSkyB shares, he felt he needed to appease the political establishment and made a volte face and agreed to speak to the Commons’ Culture Media and Sport Committee next week on 19th July 2011. In any event, a slew of criminal cases against individuals whom he previously (and currently) employed may follow in due course together with the inevitable long tail of civil law suits in the UK and almost certainly in the US too.
News Corp’s small (very small, given the vast number of problems) consolation is that the new Bribery Act 2010 with its unlimited fines and ten year prison sentences will not apply because the acts being investigated all pre-date 1st July 2011, when the Act came into force. Monty Raphael, a white collar crime solicitor in London and occasional writer for the Guardian newspaper, shares this view in his article dated 15th July. Set against having had to close NOTW (said to be one of the most popular English language newspapers in the world) and to withdraw from his bid for the remaining shares for BSkyB, and then to deal with the clean-up of this almighty legal mess for the next few years, not to mention the untold brand damage done to News International and News Corp, I don’t suppose its much consolation at all.
As always, we will return to this fascinating story if there are interesting corruption aspects to it.