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Senators call for U.S. probe of News Corp. in wake of scandal

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Three U.S. senators are urging the Justice Department and Securities and Exchange Commission to investigate whether News Corp. violated U.S. law as a scandal over phone hacking unfolds in Britain.

Democratic Senators Jay Rockefeller of West Virginia, Barbara Boxer of California, and Frank Lautenberg of New Jersey made their requests in letters today to Attorney General Eric Holder and SEC Chairman Mary Schapiro.

The lawmakers asked the agencies to investigate whether New York-based News Corp. violated the Foreign Corrupt Practices Act in light of allegations that employees of the company’s now- defunct London tabloid News of the World bribed U.K. police. News Corp. today abandoned its $12.5 billion bid for full control of British Sky Broadcasting Group Plc amid a growing political backlash.

"The reported allegations against News Corporation are very serious, indicate a pattern of illegal activity, and involve thousands of potential victims," Boxer and Rockefeller said in their joint statement. "It is important to ensure that no United States laws were broken and no United States citizens were victimized."

The U.S. Justice Department will review the senators’ letters, spokeswoman Laura Sweeney said, declining to comment further. SEC spokesman John Nester also declined to comment. White House spokesman Jay Carney said the Obama administration is aware of the situation and referred questions about the Justice Department and SEC to the two agencies.

Teri Everett, a spokeswoman for News Corp., declined to comment. Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.

News of the World reporters are alleged to have hacked into hundreds of mobile-phone voicemails, including those of murder and terrorism victims, and bribed police for confidential information. The scandal prompted News Corp. Chairman and Chief Executive Officer Rupert Murdoch to close the 168-year-old newspaper.

"The limited information already reported in this case raises serious questions about the legality of the conduct of News Corporation and its subsidiaries under the FCPA," Lautenberg said in a statement, referring to the Foreign Corrupt Practices Act. "Further investigation may reveal that current reports only scratch the surface of the problem at News Corporation."

Boxer and Rockefeller also cited news reports that News Corp. may have hacked into phone records of victims of the Sept. 11 terrorist attacks, and they urged U.S. authorities to investigate whether any U.S. citizens had their privacy rights violated by the alleged hacking. Rockefeller, chairman of the Senate Commerce Committee, called for such an investigation in a statement yesterday.

The Federal Communications Commission won’t involve itself in the U.K. probe of allegations that journalists at the now-defunct News of the World newspaper tapped phones and paid police for stories, FCC chairman Julius Genachowski said yesterday in Washington.

"Obviously there is a process going on in the U.K., and that is a U.K. process, and I don’t expect we will be involved with that," Genachowski told reporters after an unrelated FCC meeting. Neil Grace, an agency spokesman, said the FCC wouldn’t comment on the licensing question.

News Corp.’s licenses to operate 27 U.S. broadcast television stations probably aren’t at risk from the U.K. scandal, said Rebecca Arbogast, a Washington-based analyst with Stifel Nicolaus & Co. The FCC has a high standard for revoking such licenses, Arbogast said earlier this week.

A U.S. law requiring broadcast licensees to be of "good character" is rarely used by the FCC to revoke licenses, Arbogast said. Typically, licensees are judged to have violated the standard when they have been convicted of a felony or of lying to the government, she said.

 

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