I tend to avoid cross posting material from my work at the Daily Beast, but this is an important unintended consequence of Murdoch's reaction to the Phone Hacking scandal which has sent a chilling effect through Fleet Street
News Corp. chief Rupert Murdoch holds up a copy of the newly launched The Sun on Sunday newspaper last February in London. (Carl Court/AFP/Getty)
"What Rupert Murdoch has done is unprecedented in the free world," says the veteran journalist Nick Cohen, author of a recent award-winning book about censorship, You Can't Read This Book. "Managers have been tasked to go over every expense claim and emails for signs of wrongdoing," he told The Daily Beast. In the process, Murdoch has "basically given up his journalists and their sources."
Over a hundred people have been arrested since the phone hacking scandal engulfed Murdoch's UK paper in the summer of 2011. Fifty five of them journalists. And the reason is not as simple as you would think:
During the height of the phone-hacking crisis that hit Murdoch's London subsidiary in 2011, parent company News Corp. faced an even greater threat-an investigation in by the U.S. Department of Justice into alleged breaches of the Foreign Corrupt Practices Act, which bans payments to foreign officials. To reduce the potential hefty corporate fines and indictments of senior executives in New York, Murdoch created a beefed-up Management and Standards Committee (MSC), with access to a recovered database of more than 300 million emails from its London newspapers and a remit to cooperate with the police.
Since the phone-hacking scandal that shuttered the News of the World broke, there have been more than 100 related arrests. Fifty-five of these have been of journalists, and the majority not for suspicion of phone hacking, as in the six new arrests Wednesday, but on suspicion of corrupt payments to public officials, most of it on evidence provided by the MSC.
"Seriously," Cohen points out, "more journalists have been arrested in Britain this year than in Iran."
I've missed you guys. Though it's great to be covering the Leveson Inquiry for the DailyBeast and Newsweek, it's on teh blogs in the US that I built up the support, courage and debating skills to devote these last few months to covering the Hacking Scandal and the Leveson Inquiry, and doing my bid to purge the UK of years of monopolistic media practices and abuse of power.
Just so you know, the hacking scandal has finally moved into a much bigger area of illegality, which was the first reason two years ago my interest (and concern) about Murdoch's News Corp was piqued. James Murdoch's bid for BSkyB would have given News Corp. a distorting monopoly in broadcast that it already has in newspapers here (40 percent of the readership.)
Not the cover: just a quick promo by Eric Lewis
We were days away from becoming a banana republic, with a foreign, non tax paying dynasty controlling our means of communication. Only the brave work of lawyer (Mark Lewis) and a journalist (Nick Davies) prevented this catastrophe happening by exposing the industrial scale of phone hacking and surveillance deployed by News International - against celebrities, lawyers, and political opponents.
Now, like Saigon in 1975, the Murdoch helicopter is on the roof of News International. Last weeks revelations about back door channels between senior ministers and News Corp. over the $16 billion takeover of our pay TV monopoly, BSkyB, are a clear sign that the Murdochs are burning their bridges, and trying to take down the Coalition Government which - under considerable pressure and only after the Hacking scandal - finally stood up to News Corp., blocked the BSkyB bid, and set up the Leveson Inquiry which is beaming a scorching torchlight through 30 years of political blackmail, back room deals, and illegality.
Whew! This has been an exhausting weekend of revelations and arrests as the Hackgate scandal at News of the World has spread, via an email hacking scandal at The Times, to the arrest of ten journalists, many of them senior, at Britain's most popular paper, The Sun.
Without doubt, from the multiple angry responses from NI journalists, the British arm of Newscorp is now at war with its corporate masters in the News Corp headquarters in New York. The latter are in charge of the 100 plus lawyers at the Management and Services Committee which is directly co-operating with 161 officers in the Met Operations Weeting, Tuleta and Elveden engaged in investigating phone, email hacking and bribery of state officials. It's the latter which are behind the recent spate of arrests, and directly threatens the News Corp base with the threat of prosecution under FCPA violations.
I haven't got long because all these developments have to be incorporated in my book with Eric Lewis, Bad Press: Fall of the House of Murdoch. But in short the DOJ, the FBI and the SEC have all been investigating News Corp since the summer. Mark Lewis, the sterling lawyer for the hacking victims is heading to New York this week to launch civil claims on this basis. In the meantime it's the FCPA violations which could land senior News Corp Executives in the dock.
There are so many sources on this, from Reuters, the NYT, even the WSJ, I'm just going to link to the most recent: Ed Pilkington on the US Guardian site:
The perils to News Corp of an FCPA prosecution in the US against the company and its executives was underlined by the revelation that a grand jury has been convened in the case of Avon Products. The Wall Street Journal reported that US authorities are probing an internal audit report compiled in 2005 that found that Avon employees had bribed officials in China, yet the company only launched an official inquiry into possible violations three years later.
In the Avon case, the grand jury is likely to be asked to consider whether executives were culpable under the "willful blindness" provision of the FCPA.
Professor John Coffee, a specialist in white-collar crime at Columbia law school in New York, said that executives were at risk of prosecution in cases where they failed to ask relevant questions about a suspicious persistent pattern of payments. He gave the metaphorical example of a driver used by a Mexican drugs cartel to transport cocaine across the border who was aware that the vehicle contained a secret storage panel but made no attempt to find out what packages had been placed inside.
As part of its response to the billowing phone hacking scandal, News Corp has amassed the most formidable team of FCPA lawyers ever assembled. "They have appointed not just one of the best lawyers in this field, they have appointed most of the best lawyers," Coffee said.
"That's not normal defensive strategy," he added.
And in other 'news' (I use the term lightly in the Fox news sense), there are rumours that the government scientist David Kelly, who committed suicide after the Iraq invasion over allegations of sexing up WMD threat, could have been a hacking victim. Michael Wolff, Murdoch's official biographer speculates that James could be arrested this week. And dozens of tabloid journalists, more than happy to see others arrested in dawn raids or suffer trial by media, are whining loudly, in a liberal way, about human rights, due process, and innocent before being proven guilty.
Yes, the Murdoch story may be flying under the mainstream media radar, but with three British police investigations ongoing, two Parliamentary committees, a televised public enquiry with full powers of subpoena starting tomorrow, a DOJ enquiry stateside, and other investigations and legal cases in the US, Australia and Italy into Newscorp anti-competitive and/or criminal behaviour, this is not about to go away any time soon.
As an early indication of this, it has just been announced that over sixty separate claims (some filed in multiple names) have been filed in the UK civil claims court against News International: these include dozens of celebrities and prominent politicians, but also the families or partners of murder victims, or casualties of other high profile incidents such as the 7/7 London bombings.
These weren't people who thrust themselves into the limelight - but people who had already been violated by some awful event, only to have their own privacy violated by illegal means by a company whose only interest was profit and using press exposure to exert political power.
Bernstein on the Watergate Analogy and the Culture of Lawlessness
If you think the Watergate analogy is hyperbolical or fanciful, don't forget it was first made by Carl Bernstein himself in The Daily Beast nearly three months ago
The circumstances of the alleged lawbreaking within News Corp. suggest more than a passing resemblance to Richard Nixon presiding over a criminal conspiracy in which he insulated himself from specific knowledge of numerous individual criminal acts while being himself responsible for and authorizing general policies that routinely resulted in lawbreaking and unconstitutional conduct. Not to mention his role in the cover-up. It will remain for British authorities and, presumably, disgusted and/or legally squeezed News Corp. executives and editors to reveal exactly where the rot came from at News of the World, and whether Rupert Murdoch enabled, approved, or opposed the obvious corruption that infected his underlings.
The parallels with Watergate... Had to do with the culture itself that made this possible. In the Nixon Whitehouse Nixon was responsible for the sensibility that permeated the place, that had to do with unconstitutional acts with a cynicism about the political process and how it was practised, and a disregard for the law. And it became apparent to me, as I read more and more what was happening here, that really at bottom what this hacking furore is about, it's about a culture in the newsroom that has nothing to do with real journalism, real reporting (which is very simply put the best obtainable version of the truth) but rather has to do with serving up both the lowest common denominator of information and calling it news, and obtaining it through a methodology which is outrageous, whether you're talking about hacking or other kinds of invasions of privacy, and that the atmosphere in that newsroom is a product of the culture that Murdoch in the News of the World .
This needs must be quick because the unofficial news has just hit the street, but for those of you who think Holder and the Department of Justice aren't taking the what Gordon Brown has called the 'criminal media nexus' seriously, Bloomberg just has this
News Corp. was sent a letter by U.S. prosecutors investigating foreign bribery, requesting information on alleged payments employees made to U.K. police for tips, according to a person with knowledge of the matter.
The letter is part of an effort by the U.S. Justice Department to determine whether News Corp. violated the Foreign Corrupt Practices Act, or FCPA, according to the person, who declined to be identified because the matter isn't public. News Corp. fell 1.7 percent on the news.
But it's the US where Newscorp is based, and both Rupert and James are US citizens, and this is where the scandal will finally engulf him I believe. As Carl Bernstein said earlier this week, making the explicit comparison with Watergate these revelation "are the beginning, not the end, of the seismic event." He also stresses how important this US is to Murdoch
Murdoch associates, present and former-and his biographers-have said that one of his greatest long-term ambitions has been to replicate that political and cultural power in the United States. For a long time his vehicle was the New York Post-not profitable, but useful for increasing his eminence and working a wholesale change not only in American journalism but in the broader culture as well.., Then came the unfair and imbalanced politicized "news" of the Fox News Channel-showing (again) Murdoch's genius at building an empire on the basis of an ever-descending lowest journalistic denominator.... And finally, in 2007 The Wall Street Journal's squabbling family owners succumbed to his acumen, willpower, and money, fulfilling Murdoch's dream of owning an American newspaper to match the influence and prestige of his U.K. holding, The Times of London-one that really mattered, at the topmost tier of journalism.
Between the Post, Fox News, and the Journal, it's hard to think of any other individual who has had a greater impact on American political and media culture in the past half century.
If we live in an information economy, then Newscorp is the Standard Oil of the 21st Century. Murdoch built up both horizontal and vertical monopoly power in the UK and Australia, leading to vast inefficiencies, corruption and unaccountable political power.
That was his aim in the US also: so it's crucial to strike at the pillars of his power while they are beginning to crumble.
Even Rupert himself is showing signs of flagging. He's just released a rather dispirited, desultory but defiant interview in his own Wall Street Journal in which the main message really seems to be:
Though many of you have been sceptical that the US public or MSM would pay attention to this, it seems some of the massive public revulsion here in the UK is beginning to transfer to Murdoch's adopted homeland and commercial base - the United States.
But there's more to this than just law-breaking: there's Murdoch's nefarious role in law-making.