Home Store In Memoriam Deborah Newsletter Forum Topics Blogfeed Blogroll Facebook MySpace Contact Us About

News Corp. Shareholders Accuse Murdoch, Et Al. Of Wrongdoing In The U.S.

Reported by Ellen - September 13, 2011 -

A group of large American shareholders in News Corp. have amended their complaint against Rupert Murdoch, his son, James, and other members of News Corporation’s board of directors, alleging corporate misconduct at two of the conglomerate’s American subsidiaries. This is in addition to the shareholders’ complaint over the phone hacking scandal in the U.K. and their complaint about a "sweetheart deal" that netted Murdoch's daughter, Elisabeth, a $250 million windfall.

According to a press release on PR Newswire,

The new filing sheds light on wrongdoing at two U.S. subsidiaries, News America Marketing and NDS Group. NAM, a leading in-store marketer, was subject to five separate lawsuits alleging extreme forms of anticompetitive behavior, some of which foreshadows the phone hacking conducted by News of the World. In one case, a former NAM director testified that the company issued false press releases impugning a rival it was trying to purchase, while mutilating and removing the competitor's signage from retailers. Equally disturbing, the NAM competitor learned that its secure computer system had been breached on at least 11 separate occasions. The company "had evidence that someone working at NAM hacked into a password-protected website containing confidential information intended only for (it) and its customers."

The amended complaint also highlights troubles at News Corp.-owned smart card unit NDS, which was accused by satellite company EchoStar of illegally extracting software code from competitors' cards and posting the information online, allowing hackers to create counterfeit cards that could be used to intercept television programming. A federal jury found that NDS's practices were illegal and the court subsequently granted EchoStar an injunction preventing NDS from intercepting its satellite signal.

…In the newly amended complaint, shareholders also accuse board members of breaching their fiduciary duty in approving a $5 billion share buyback this past July as a means of buttressing the company's waning stock price in the face of the hacking scandal. Investors assert that the buyback mechanism potentially increases Murdoch's voting power and could permit him to obtain absolute voting control without providing any premium to News Corp.'s current public majority shareholders. The buyback plan, shareholders contend, is just another illustration of the way in which Murdoch runs News Corp. like a "personal fiefdom."

As Britain’s Guardian notes in a report on the new complaint:

The latest complaint from Amalgamated and its co-plaintiffs provides the most detailed and serious allegations yet against News Corp for alleged business improprieties carried out within the US. The company is already under investigation by the FBI, which is looking into suggestions that News of the World reporters tried to gain access to the phone records of 9/11 victims.

The justice department is also carrying out a wide-ranging inquiry in the wake of the phone-hacking scandal into News Corp's corporate behaviour to see whether any US laws were broken.

submit to reddit