Rupert Murdoch says News Corp. is shaking up compliance structure in the wake of the phone-hacking scandal
News Corp. is strengthening its anti-bribery training programs and reviewing its anti-corruption controls in the wake of the hacking scandal that erupted in its U.K. tabloids, Rupert Murdoch said in a memo to staff Wednesday.
In addition, the company's chairman wrote that News Corp.'s business units will be organized into five compliance groups: the L.A. Cable and Broadcast Group; the L.A. Film and TV Production Group; the Europe and Asia Group; the Australia Group; and the New York News and Information Group.
Each group will be headed by a chief compliance officer, who will report directly to Gerson Zweifach, the newly minted compliance chief for the entire company.
"We recognize that strengthening our compliance programs will take time and resources, but the costs of non-compliance — in terms of reputational harm, investigations, lawsuits and distraction from our mission to deliver on our promise to consumers — are far more serious," Murdoch wrote.
Murdoch said that the reforms were instituted as part of a promise to the Leveson Inquiry, an investigation led by the U.K. parliament into phone hacking and bribery that took place at the News of the World.
That U.K. tabloid was shut down by News Corp. last summer after evidence emerged that reporters had used illegal news-gathering tactics to get scoops on stories ranging from celebrity romances to murder investigations.
Here's the full text of the memo:
As you are all aware, our company has been under intense scrutiny in the United Kingdom. I assured Parliament and the Leveson Inquiry that we would move quickly and aggressively to redress wrong-doing, cooperate with law enforcement officials and strengthen our compliance and ethics program company-wide. With the support of our Board of Directors, I am pleased to tell you that we have made progress on each of these important steps.
Gerson Zweifach, Senior Executive Vice President and Group General Counsel, News Corporation, is now our Chief Compliance Officer and has assumed overall responsibility for our effort to create a more robust global compliance and ethics program. Lisa Fleischman, Vice President and Associate General Counsel, News Corporation, is our Deputy Chief Compliance Officer and will exercise day-to-day operational responsibility for the global compliance and ethics program. In these capacities, Gerson and Lisa will report regularly to the Board of Directors and the Audit Committee regarding the content and operation of the compliance and ethics program.
For purposes of the compliance and ethics program, all of our business units will be organized into five compliance groups: the L.A. Cable and Broadcast Group; the L.A. Film and TV Production Group; the Europe and Asia Group; the Australia Group; and the New York News and Information Group. Each group will be headed by a Group Chief Compliance Officer who will report directly to Gerson and will focus full-time on compliance issues.
We have already strengthened and expanded our anti-bribery training programs. To ensure the effectiveness of our entire compliance and ethics program, we have recently initiated a review of anti-corruption controls in selected locations around the globe. The purpose of this review is to test our current internal controls and identify ways in which we can enhance them. Let me emphasize that the review is not based on any suspicion of wrongdoing by any particular business unit or its personnel. Rather, it is a forward-looking review based on our commitment to improve anti-corruption controls throughout the company.
We recognize that strengthening our compliance programs will take time and resources, but the costs of non-compliance – in terms of reputational harm, investigations, lawsuits, and distraction from our mission to deliver on our promise to consumers – are far more serious.
As one of the world’s most innovative media companies, News Corporation serves a vital role in the global marketplace of ideas. Every day, hundreds of millions of people rely on us to provide high-quality news, sports programming, and entertainment. To continue to be worthy of the trust of our audiences around the world, we all have an affirmative obligation to adhere to the highest standards of ethical behavior, consistent with our Standards of Business Conduct. The enhancements to the compliance function that are already underway and that we are planning will help us to maintain those standards.
Please join with me in this important effort and give it your full cooperation and support.