U.S. Authorities Looking Into Murdoch Foreign Payments

The FBI has found scant evidence of phone hacking, but foreign bribery may fell some of Rupert Murdoch’s employees

U.S. authorities are stepping up investigations, including an FBI criminal inquiry, into possible violations by employees of Rupert Murdoch's media empire of a U.S. law banning corrupt payments to foreign officials such as police, law enforcement and corporate sources said.

But U.S. investigators have found little to substantiate allegations of phone hacking inside the United States by Murdoch journalists, the sources added.

The FBI is conducting an investigation into possible criminal violations by Murdoch employees of the U.S. Foreign Corrupt Practices Act (FCPA), a law intended to curb payment of bribes by U.S. companies to foreign officials, a U.S. law enforcement official said.

The U.S. official said that if any law enforcement action was pursued by U.S. authorities against Murdoch employees, it would most likely relate to FCPA.

If it is found to have violated the FCPA, Murdoch's News Corp, which has its headquarters in New York, could be fined up to $2 million and barred from U.S. government contracts, and individuals who participated in the bribery could face fines of up to $100,000 and a jail sentence of five years.

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Executives could be liable if they authorized bribes or knew about the practice but failed to stop it.

In practice, U.S. authorities have usually settled FCPA cases in return for large cash payments from companies, who can sometimes avoid legal admissions of guilt.

Much of the evidence police are examining in the News Corp case was handed over to investigators by the company, who have set up a special clean-up unit in London and hired batteries of lawyers in Britain and the United States, some of whom specialize in FCPA cases, company sources said.

The U.S. Justice Department and Securities and Exchange Commission also have jurisdiction to pursue civil cases against alleged violators of the law.

Bloomberg news service reported last year that Justice Department prosecutors sent News Corp, U.S. parent of Murdoch's UK media properties, a request for information on alleged payments which journalists made to British police officers in return for news tips.

LAWYERS

Sources close to News Corp said the Management Standards Committee of News International (MSC), the unit which the company set up to deal with phone hacking and related investigations, for some time had been concerned about the consequences of U.S. investigations of possible FCPA violations.

Both News International and parent company News Corp declined to comment. Reuters is a competitor of Dow Jones Newswires, a unit of News Corp.

Last July, the company retained Mark Mendelsohn, who served as deputy chief of the Fraud Section in the Criminal Division of the U.S. Justice Department. Mendelsohn, now in private practice, was internationally respected as an architect of the DOJ's Foreign Corrupt Practices Act enforcement program.

News Corp sources confirmed that the Management Standards Committee was also working with Williams & Connolly, a prominent Washington law firm specializing in white-collar crime cases.

The New York Times reported last year that one of the lawyers working on the News Corp case was Brendan Sullivan, a Williams & Connolly partner known for his public defense of White House aide Oliver North during Congressional investigations into an arms-for-hostages scandal during the administration of U.S. President Ronald Reagan.

News Corp announced last month that another Williams & Connolly partner, Gerson Zweifach, would become its top new in-house lawyer. He is also expected to join the Management Standards Committee.

Company sources said that, via the MSC, News International was routinely sharing with its outside lawyers, including Williams & Connolly, evidence which had been uncovered of suspected questionable practices including payments to British police officers.

The MSC declined to comment.

Among evidence turned over by the company to British authorities are emails and financial records which allegedly chart the payment of more than 100,000 pounds ($158,000) to police contacts, mostly in sums of under 1,000 pounds.

A company source said the records showed many or most of the payments intended recipients were listed in company records under false names.

THREE INVESTIGATIONS

London's Metropolitan Police Service for months has been investigating an assortment of suspected abusive practices which journalists at the News of the World and other Murdoch London newspaper properties are alleged to have routinely employed in recent years.

British detectives are conducting three parallel investigations.

One inquiry, known as Operation Weeting, is investigating alleged phone hacking, and a second inquiry, Operation Tuleta, is investigating allegations of computer hacking. The third investigation, Operation Elveden, is investigating allegations that journalists paid police officers bribes in return for story tipoffs. The head of the three investigations said this week she was increasing the number of police looking at police payments.

The law enforcement source said U.S. authorities found no evidence to substantiate allegations that potentially illegal reporting tactics that were alleged to have been widespread in Britain were also employed by Murdoch journalists in the United States.

Law enforcement and corporate sources said no evidence had turned up to corroborate a Daily Mirror accusation that journalists from Murdoch's now defunct News of the World sought to hack into voice mail messages of victims of the al Qaeda attacks on New York and Washington of September 11, 2001. The Mirror is a competitor of Murdoch's London tabloid, the Sun.

London police have arrested 30 people, including journalists and police officers, in connection with its three journalism-related investigations. Last month, four current and former journalists on the Sun, the largest-circulation British paper, as well as a serving police officer were arrested in connection with Operation Elveden.

Sue Akers, the officer in charge of all the investigations, said on Monday that 14 people so far had been arrested in connection with Operation Elveden, but indicated that more investigators were likely to be added to the inquiry, which she said still had some time to run.

To date, no criminal charges have been filed against any of the individuals arrested over the past year, who include Rebekah Brooks, a former CEO of Murdoch's London papers, and Andy Coulson, a former Murdoch editor who became top media adviser to Prime Minister David Cameron.

However, current investigations trace their roots back to the 2006 arrests, and subsequent guilty pleas, of News of the World royal reporter Clive Goodman and private detective Glenn Mulcaire on phone hacking charges.