Murdoch Again?

The Murdoch slime machine slithered into the news cycle again. Their people in China reportedly laid some hefty “gifts” (entertainment and travel) on sources over there. If true, that would seem to be a big no-no under US law. Wall Street Journal staffers in China were tagged with the bribery charges. They deny everything and say outsiders hired to investigate gave them a clean bill. They could have saved their money; hopefully our authorities will do the investigation and if it turns out that the Journal is clean, it will not cost Murdoch a penny. But if our investigation goes the other way, it will cost him big time. The FBI and the Justice Department are not commenting on these bribery charges.

However, this is not the only instance of the Murdoch empire being looked at for possible violations of our Foreign Corrupt Practices Act (FCPA). That’s the law that makes it illegal for American entities to bribe folks outside our borders as Murdoch has in Great Britain. His minions were nailed for unconscionable telephone hacking schemes and laying thousands of British pounds on police and other public servants for scoops. Murdoch is a US citizen and his organization is based in the United States; that would seem to put his London crew under FCPA.

That could be the least of Murdoch’s worries. The FCPA violations would go away after some healthy fines; just a cost of doing business for the ethically challenged like Rupert Murdoch. More serious is the finding of a committee of the British Parliament that Murdoch is "not a fit person" to run a major international entity like News Corp. Where that spills over into News Corp’s home in America is when Murdoch’s broadcast licenses come into play. He owns a couple dozen broadcast stations in America.  

Citizens for Responsibility and Ethics in Washington (CREW), a nonpartisan watchdog group, has been bugging the Federal Communications Commission (FCC) to revoke his licenses as the Communications Act would seem to dictate. Should that happen Murdoch’s American broadcast properties would be reduced to some used office furniture, used electronics gear and real estate. The tens of millions these facilities are worth would be gone, poof, just like that. We’ll see what the FCC does. They have had this issue before them for a couple years; it is past time for them to act.

Meanwhile the DOJ is juggling the FCPA implications raised by Murdoch’s bribery activities in Great Britain. The Brits have arrested Murdoch minions by the dozen including Rupert’s darling, Rebecca Brooks, who formerly headed all his smarmy Fleet Street newspaper operations. The DOJ ought to be arresting Murdoch executives here in the United States, perhaps even Murdoch himself, certainly his son James, who headed News Corp at least in theory. Don’t hold your breath, however. In the end the FCC and the DOJ will probably chicken out and do nothing; a pity.

A Return To Stability

Close to 3000 movers and shakers took to the world stage in Switzerland last week (01.25-29) for the annual World Economic Forum, commonly referred to as Davos. This year’s theme was The Great Transformation, Shaping New Models. And while there was much discussion on new models, most looked a lot like the model that emerged from the Great Depression and served America well for two generations. That would be the model we dismantled in the 1980s and 1990s.

As the doings began at Davos, Bloomberg released their Global Poll of more than 1.200 investors, analysts and traders who shared their thinking on the state of the economy. Surprising numbers; more than half agree with the Occupy Wall Street movement that income inequality harms the economy, harms growth. Seven in ten believe the banks have too much control over government. Two-thirds of the respondents think governments should pursue policies to tackle that issue.

A participant on the opening panel at Davos, Sharan Burrow, general secretary of the International Trade Union Confederation said, “If you’ve got a group that is too big to fail, what it means is that you are the biggest bullies on the planet. The financial sector has lost its moral compass.” More than 80% of the respondents to the Bloomberg study think banks need to be regulated so they’re not too big to fail.

 

About two-thirds see at least some truth in the argument that bankers’ actions are driven by greed and harm the economy. This is in line with studies showing that when executive pay scales escalate too far above the average employee in their company, it takes focus off what’s best for the company and moves it to what’s best for those at the top. When bankers start focusing on their pay, they forget their role in the community. They forget they are there to protect the funds the members of the community entrust to them. They forget that they are there to find local businesses that need loans to grow. They forget that they are there to help people in their community finance their homes. 

When it comes to the investment bankers on Wall Street, they get so focused on their paychecks that they forget they are there to help create capital. Instead they are busy devising ways to play high-stakes gambling games, all the while setting up their customers to take the fall if the bank’s bet goes south. Moral compass? There’s none to be found. While most business people and small businesses are striving to do the right thing every day, the Wall Street types have the morals of an alley cat.

A Jolly Good Time

A British High Court Room saw the Murdoch media empire humbled as never before last week. It was the first of what’s likely to be many “Pay-Up Days” for Rupert and his minions. After years of denials and reported cover-ups, the Murdochs were passing out cash like Halloween candy. In carefully worded and vetted statements one potential lawsuit after another was settled, tens of thousands, even hundreds of thousands of pounds in many instances, plus legal and court costs of course. Lots of big entertainment names, political types and the occasional ordinary person who got caught up in their mess.

Two very significant factors stood out for us. One was new: News Group News, the umbrella entity for the Murdoch London based newspapers caught up in the hacking scandal, as much as admitted that their senior executives were involved. In a statement the lawyers for the victims said, “News Group News has agreed to compensation being assessed on the basis that senior employees and directors of NGN knew about the wrongdoing and sought to conceal it by deliberately deceiving investigators and destroying evidence.” 

While that falls under the usual legal cover, “doesn’t admit nor deny,” it’s pretty clear that “documents relating to the nature and scale of the conspiracy, a cover-up and the destruction of evidence by News Group” in the hands of the victim’s legal counsel, has Murdoch painted into a corner. It’s pretty clear that a culture of deceit is at the core of the Murdoch organization and that it seeps down from the very top staining every corner of his vast domain. 

The second thing that popped out for us is not new, but it may be the first time it has emerged in a formal legal setting. Apparently two of Murdoch’s gossip sheets, The News of the World and The Sun, had a field day with details of the back and forth that went on between Jude Law and his ex-wife Sadie Frost. Of special interest to those of us on this side of the pond is that Law had his phone hacked while he was at JFK Airport on Long Island. We had heard that before, but never in a legal setting. It’s important because the laws regarding hacking are very different in America. 

The Murdoch Empire is headquartered in the United States. The parent company, News Corp, is a Delaware corporation and fully subject to the laws of the United States. Rupert Murdoch is a United States citizen. The Murdoch Empire is largely in America. Murdoch moved into the US in the early 70s with one newspaper and soon followed up by founding the Star a trashy supermarket tabloid; adding the New York Post, not much above that. Then came television, motion pictures and The Wall Street Journal, most devoted to spewing his sensationalist trademark views of the world.

By hacking Jude Law in the United States, Murdoch has put it all at risk. There will be no carefully vetted settlement in this case. Like the ethically challenged at Enron, Adelphia and others in our recent past, the Murdochs may very well be facing jail time.