News Corp. Faces Expanding Scandal As More Reporters Arrested

News Corporation's The Sun faces a similar mess that sunk News of the World. In fact, the situation is even worse. Five more reporters were arrested for improper payments to police in a widening corruption and hacking scandal:

Four senior journalists from The Sun newspaper have been balied after they were arrested in dawn raids today over allegations of inappropriate payments to police.

In another devastating blow to News International police questioned five men from the paper on suspicion of corruption, aiding and abetting misconduct in a public office and conspiracy.

The five members of Sun staff, all believed to be men aged between 45 and 68, are thought to be deputy editor of the paper Geoff Webster, chief reporter John Kay, picture editor John Edwards, deputy news editor John Sturgis and chief foreign correspondent Nick Parker.

A 39-year-old Ministry of Defence employee and the 36-year-old member of the Armed Forces have also been bailed to a date in May, Scotland Yard said.

One other journalist from the newspaper is still in custody over the probe into inappropriate payments to police and public officials.

Fears that the latest arrests could lead to News International owner Rupert Murdoch closing the title as he did with the News of the World has led to the Australian reassuring staff of his commitment to the title.

The surprise move by police which comes on a day when nearly all Sun staff are out of its offices comes just a fortnight after the paper's former managing editor and three of its most senior journalists were also held and then bailed over corruption allegations.

This is part of an ongoing pattern of business carried out by News Corporation news outlets in the United Kingdom, and the carousel of editors and reporters that has gone between the newspapers shows that the problems are widespread and aren't necessarily limited to just The Sun (and the now defunct News of the World). That's why the investigations continue and arrests continue to be made.

But the real issue is that the culture of News Corporation aided and abetted these kinds of ethical and moral choices that have led to so many arrests.

Rupert Murdoch may be claiming that he's got zero tolerance for this kind of behavior, but his bottom line approach means that as long as his papers sell and he can out-scoop the competition, he'll look the other way. Thus far, he's saying that he wont shutter The Sun, even though the pattern of behavior at the paper is akin to that of News of the World, which he did close.

Pressure is only going to increase on Murdoch to shutter the paper, and will raise the stakes on his newspaper and reporting business even further.

News Corp. Settles With Victims Over Hacking Scandal

Jude Law, one of those who were victims of the hacking scandal, apparently settled with News Corporation for roughly $200,000:

The actor Jude Law received the highest disclosed payout of £130,000 damages plus costs as payments totalling £640,000 were made in 15 cases where the amount of amounts were made public.

The former deputy prime minister, John Prescott, received £40,000, Labour MP Chris Bryant received £30,000; Sadie Frost, Jude Law's former wife, received £50,000; and Gavin Henson, the Welsh rugby international £40,000. However, with damages from the other settlements and costs factored in, lawyers estimated that News International's bill could hit £10m.

That's an appallingly low sum considering what was going on here. It should also be sufficient to get further criminal charges going against all those involved in the scandal, particularly in the way some of the admissions were made.

Then again, the News Corp lawyers did their job too:

NGN made no admission as part of these settlements that directors or senior employees knew about the wrongdoing by NGN or sought to conceal it. However, for the purpose of reaching these settlements only, NGN agreed that the damages to be paid to claimants should be assessed as if this was the case."

They made sure that they limited liability and somehow managed to insulate key executives, made no further admissions, etc., but those admissions already made are pretty damning as it is.

Still, there are compelling reasons for a settlement by both sides. It would have been extremely costly and time consuming to the victims to pursue this in court while the bad press of delaying tactics would have harmed News Corp. Even if you're Jude Law, you don't have infinitely deep pockets to sustain a fight of this kind, despite the possibility of a jackpot verdict. News Corporation had every reason to delay and deny, but after a while that works against the company and they too want to limit the damage and potential of a massive verdict. It just came down to how much the sides were willing to forgo.

For News Corporation, it shows that they'll consider this as a cost of doing business and I wouldn't be surprised to see them engage in similarly disgusting behavior down the road. Heck, some of those involved in the scandal have ended up on their feet; one editor of News of the World landed on his feet at the New York Daily News as its editor-in-chief.

New Troubles For News Corp; Emails Show Top Execs Knew of Hacking

The smoking gun may have emerged that would strike at the heart of News Corporation as it continues to push back against allegations that top executives didn't know of the hacking work done by staffers at its various news outlets in the United Kingdom. Turns out that they did know, and they have the emails to prove it:

Clive Goodman, the former royal reporter jailed for his role in phone hacking, wrote a letter in 2007 claiming that phone hacking was "widely discussed" at editorial meetings, and that former editor Andy Coulson offered to let him keep his job if he agreed to say in court that he was a rogue element within the paper.

The claims are deeply damaging to Coulson, who has always maintained that he did not know about the hacking going on at his paper. They are also politically perilous for Cameron, who took Coulson on even as evidence mounted against him. Moreover, they raise fresh danger for James and Rupert Murdoch, both of whom claimed to know nothing about hacking. Before the documents were released, the select committee for the Department for Culture, Media and Sport announced that it is "likely" to recall James Murdoch when Parliament resumes in September.

The letter was one of several documents published by a parliamentary committee on Tuesday afternoon.
Goodman's letter is from March 2, 2007, after he was released from prison. In the letter, Goodman says he is appealing his firing from the News of the World specifically because he carried out his duties with the "full knowledge and support" of top journalists on the paper, and because the practice was so widespread at the paper.

The letter claims that hacking was so frequently talked about that Coulson—who went on to become David Cameron's top spin doctor—eventually was forced to ban mention of the practice. Goodman also says that he was repeatedly promised to be kept on, even after he was arrested. He further claims that the paper continued to pay and consult him on stories, even after it was known that he would plead guilty.

"[The paper's top lawyer] Tom Crone and the editor promised on many occasions that I could come back to a job at the newspaper if I did not implicate the paper or any of its staff in my mitigation plea," Goodman writes. "I did not, and I expect the paper to honour its promise to me."

The Guardian's Nick Davies also reports that Les Hinton, the former Dow Jones chief who resigned amidst allegations about his role in the scandal, received a copy of Goodman's letter but failed to pass it to the police. He then told Parliament that Coulson was completely unaware of the hacking going on.

Expect to see the Murdoch's hauled back before the British Parliament to deal with the new revelations, particularly because their earlier statements now look more and more like a coverup.

News Corp Gearing Up For Scandal Spreading To US?

News Corp is busy hiring big-name lawyers to represent different portions of the company in the US against possible legal action from the hacking scandal that threatens to overtake the company in the UK.

The company's nine independent directors hired former Manhattan U.S. Attorney Mary Jo White and former Attorney General Michael Mukasey, who served under President George W. Bush.

The directors are said to be increasingly concerned about Rupert Murdoch's stewardship of the firm and appear to be bracing for new U.S. legal trouble.

By denying knowledge of the phone hacking, bribery and hush money rampant at News of the World, experts said Rupert Murdoch and his son James may have left themselves open to shareholder charges of incompetence.

Separately, The Wall Street Journal reported News Corp. hired Washington lawyer Mark Mendelsohn, a top expert in the Foreign Corrupt Practices Act.

These are prudent moves that any corporation would have to take, but it also signals just how serious the company is considering the possibility of charges in the US. They're worried about shareholder suits and criminal investigations.



At the same time, there are reports that there are still other news outlets in the UK that engaged in similar behavior, including ones that aren't affiliated with News Corp. They include The People (operated by The Mirror Group) and even Piers Morgan was accused of such tactics before coming to CNN.

On Tuesday, a member of Parliament accused the CNN anchor Piers Morgan of phone hacking when he was the editor of The Daily Mirror. Mr. Morgan strenuously denied the accusations and demanded an apology. And last week, news reports showed that the actor Jude Law has brought a hacking lawsuit against The News of the World’s sister newspaper, The Sun.

Five former journalists at The News of The World’s rival Sunday newspaper, The People, run by the Mirror group, said in interviews that they regularly witnessed hacking in that newsroom in the late 1990s to early 2000. “I don’t think anyone quite realized the criminality of it,” said one former reporter at The People, who spoke on condition of anonymity. A former reporter for the Sunday Mirror, another News of the World rival, described the extensive use of private detectives to obtain personal information. A former senior News of the World editor, Neil Wallis, who has been arrested on unspecified accusations of phone hacking, left The People in 2003 to join the Murdoch tabloid.

Nick Fullagar, director of communications for Trinity Mirror, the parent company of The Daily Mirror and The People, said, “Trinity Mirror’s position is clear. Our journalists work within the criminal law and the P.C.C. code of conduct,” referring to Britain’s press regulatory body, the Press Complaints Commission. Within Mr. Murdoch’s empire, the flagship daily tabloid The Sun has also been accused of hacking phones. The lawsuit by Mr. Law, filed last month, says that four articles published in 2005 and 2006 were based on intercepted voice mail.

It also comes as no surprise that News Corp affiliates are soft-pedaling the news coverage; the Fox News Network has devoted a fraction of the coverage that CNN or MSNBC has done, and the NY Post has all but buried the scandal as compared to either the Daily News or the NY Times. The Wall Street Journal has covered the story prominently, but that's the exception rather than the rule.

The scandal is also threatening to take down the British government as new revelations about the hiring of former News of the World editor Andy Coulson as Prime Minister David Cameron. Apparently, he didn't undergo the usual top level background checks of others up for similar positions.

News Corp. Subsidiary Involved in NJ Hacking Case?

New Jersey Senator Frank Lautenberg is calling on the FBI to investigate claims that a New Jersey company was hacked by a subsidiary of News Corporation, which is already under scrutiny for hacking allegations and admissions of wrongdoing in the UK. The allegations go back to 2005 and Lautenberg is now asking the FBI to look at this case in light of the more recent allegations and admissions:

Lautenberg initially wrote to U.S. Attorney General Alberto Gonzales in 2005 asking him to look into a claim by Hamilton Township-based FLOORgraphics that its computers were hacked by News Corp. subsidiary News America Marketing on 11 occasions over a two-year period.

FLOORgraphics later sued the company for the computer hacking and other questionable competitive practices.

"News employed numerous illicit tactics in a prolonged and concerted effort to destroy (FLOORgraphics)," said a complaint filed by the company in 2006.

FLOORgraphics settled with News America Marketing and was later bought out for $29.5 million.

"At the time of my letter in 2005, I was informed by FLOORgraphics that the U.S. Attorney’s Office for the District of New Jersey, the FBI and the U.S. Secret Service initiated an investigation into allegations that News America illegally gained access to FLOORgraphics’s password-protected computer system and obtained FLOORgraphics’s confidential data," Lautenberg wrote today.

He also wrote that the Department of Justice and FBI should consider the case as it may be relevant to the current investigation of News Corp. subsidiaries.

Bloomberg News reported today that an attorney for News America Marketing conceded a computer there had been used to access the FLOORgraphics site.

That story reported that an investigation by New Jersey's Divison of Criminal Justice ended without charges being filed, according to Rachel Goemat, a spokeswoman for Division of Criminal Justice.

A 2009 trial included revelations that News America Marketing hacked into FLOORgraphics on several occasions in an effort to gain market share. That case was settled when the company was bought out by News America Marketing for $29.5 million. Apparently, the hacking began after the company refused to sell itself to News America.

The News Corp. Hacking Scandal Grows Out of Murdoch's Control

Rupert Murdoch attempted to engage in damage control on Friday, even as two of his top corporate allies resigned on Friday, Les Hinton and Rebekah Brooks. This morning, the other shoe dropped on Brooks, as she was arrested in connection with the British hacking scandal.

No amount of apologies and promises of compensation will make good on the fact that Murdoch's company condoned all manner of illegal activities in the United Kingdom over a period of years.

All the years of shady behavior, criminal violations, and unethical behavior is coming home to roost and Murdoch's media empire is crumbling all around him.

British Labour Party leader Ed Miliband is calling for an overhaul of British media ownership rules, essentially breaking up News Corp's hold on media outlets.

In a fresh salvo against Mr Murdoch's News Corp, the Labour leader said he wanted to forge a cross-party agreement on plans that would reduce the media mogul's UK market share.

In an interview with The Observer, he said: ''I think he has too much power over British public life.''

The News Corp empire has been diminished with the closure of the News of the World over the phone hacking scandal, but it still owns The Sun, The Times, The Sunday Times and 39 per cent of BSkyB.

Having already called successfully for the resignation of Rebekah Brooks, the News International chief executive, Mr Miliband said the Government now needed to look at media ownership rules.

He said: ''I think that we've got to look at the situation whereby one person can own more than 20 per cent of the newspaper market, the Sky platform and Sky News.

The scandal is also likely to claim individuals within Scotland Yard, and the all too cozy relationship between the police force and the media outlets has turned into efforts to control the damage. Heads should roll within the police force:

Inside was a treasure-trove of evidence: 11,000 pages of handwritten notes listing nearly 4,000 celebrities, politicians, sports stars, police officials and crime victims whose phones may have been hacked by The News of the World, a now defunct British tabloid newspaper.

Yet from August 2006, when the items were seized, until the autumn of 2010, no one at the Metropolitan Police Service, commonly referred to as Scotland Yard, bothered to sort through all the material and catalog every page, said former and current senior police officials.

During that same time, senior Scotland Yard officials assured Parliament, judges, lawyers, potential hacking victims, the news media and the public that there was no evidence of widespread hacking by the tabloid. They steadfastly maintained that their original inquiry, which led to the conviction of one reporter and one private investigator, had put an end to what they called an isolated incident.

After the past week, that assertion has been reduced to tatters, torn apart by a spectacular avalanche of contradictory evidence, admissions by News International executives that hacking was more widespread, and a reversal by police officials who now admit to mishandling the case.

Murdoch is likely to be grilled by British parliamentarians on Tuesday, and some of the luster and fear of crossing him has faded in the UK.

Another News Corp. Exec Resigns: Dow Jones CEO Hinton Resigns

Les Hinton has submitted his resignation on the same day as Rebekah Brooks. The Hinton resignation qualifies as a Friday night news dump considering the timing late on Friday. Try to get the big names out of the way before the weekend when no one pays attention.

Les Hinton, who headed News Corp.'s News International unit when the phone-hacking allegations roiling the media empire first arose, on Friday will resign his post as chief executive officer of Dow Jones & Co., according to a person familiar with the matter.

Mr. Hinton had come under increasing scrutiny recently as a cascade of allegations indicated the problems at the center of the scandal were more widespread than he had twice led a parliamentary committee to believe.

In 2007 and 2009, Mr. Hinton told the committee that the company had carried out a full investigation into the matter and was convinced just one of its journalists was involved.

Dow Jones & Co. is publisher of The Wall Street Journal.

Hinton is a key figure in the scandal, and his statements before Parliament are in question as to whether he purposefully misled the British government over the scandal, or whether his investigations didn't uncover more malfeasance in News Corp's outlets.

He claims ignorance of the matter, but admits that his ignorance is not an excuse.

"I have watched with sorrow from New York as the News of the World story has unfolded," Hinton wrote in a section addressed to Murdoch. "I have seen hundreds of news reports of both actual and alleged misconduct during the time I was executive chairman of News International and responsible for the company. The pain caused to innocent people is unimaginable. That I was ignorant of what apparently happened is irrelevant and in the circumstances I feel it is proper for me to resign from News Corp, and apologize to those hurt by the actions of the News of the World."

Murdoch has issued an apology to his readers/viewers, but apologies aren't going to be sufficient, not when your company has broken multiple laws and possibly across multiple jurisdictions (UK and possibly the US). His company has broken what little trust the public had in his reporting and ethics.

Insufficient heads have rolled, and while I understand his need to contain the problem to the UK outfits, with all the people have have swapped jobs in his organization, it would appear that more head will have to roll to clean up the mess and more will have to be done to set things right.

FBI Opens Investigation Into News Corp. At Behest of Bipartisan Political Pressure

The noose is tightening around News Corporation and Rupert Murdoch's media empire. Rep. Peter King (R-NY) has penned a letter to the FBI demanding that it open an investigation into whether any of News Corporation's affiliates engaged in wrongdoing, including wiretapping or hacking into voice mail accounts of victims of the 9/11 attacks.

The inquiry was prompted in part by a letter from Representative Peter T. King, Republican of New York, to Robert S. Mueller III, the F.B.I. director, in which he asked that the bureau immediately open an investigation of News Corporation, citing media reports that journalists working for its subsidiary, The News of the World, tried to obtain the phone records of 9/11 victims through bribery and unauthorized wiretapping, the people said.

The decision to open a case in New York stemmed from the mushrooming hacking scandal that has wracked Britain for days, ever since The News of the World admitted that it had illegally intercepted the voice mail of Milly Dowler, a 13-year-old girl abducted and murdered in 2002. It also follows a decision by the News Corporation chairman, Rupert Murdoch, to withdraw from the biggest media takeover bid in British history.

The investigation was expected to be handled jointly by two F.B.I. squads in the bureau’s New York office, one that investigates cybercrimes and another that focuses on public corruption and white collar crimes, one of the people said. They all spoke on the condition of anonymity because they were not authorized to discuss the case.

That follows similar calls from Senators Frank Lautenberg (D-NJ), Jay Rockefeller (D-WV) and Barbara Boxer (D-CA) and Rep. Louise Slaughter (D-NY) among others.

The British Daily Mail had alleged that the News of the World attempted to access the voice mails of victims of the 9/11 terrorist attacks or other Americans but thus far the Guardian has been unable to verify that report. With the FBI entering into the fray, this matter is going to come to a head.

If the FBI finds that one of News Corporation's outfits engaged in this kind of action, the gig will be up for the company and puts everyone associated with those media outlets in jeopardy - particularly editors and reporters who used that information or knew or had reason to know how such information was obtained, or condoned those kinds of activities.