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Justice Department Prepares Subpoenas in NEWS CORP Inquiry


From WSJ:

The U.S. Justice Department is preparing subpoenas as part of preliminary investigations into News Corp. relating to alleged foreign bribery and alleged hacking of voicemail of Sept. 11 victims, according to a government official.

The issuance of such subpoenas, which would broadly seek relevant information from the company, requires approval by senior Justice Department leadership, which hasn’t yet happened, the person said.

The issuance of subpoenas would represent an escalation of scrutiny on the New York-based media company. While the company has sought to isolate the legal problems in the U.K., it has been bracing for increased scrutiny from both the Justice Department and the Securities and Exchange Commission, according to people familiar with the company’s strategy.

The Justice Department has said it is looking into allegations that News Corp.’s now-defunct News of the World weekly in the U.K. paid bribes to British police. It has been unclear whether the Justice Department or the SEC have begun formal probes.

The Federal Bureau of Investigation separately has begun an inquiry into whether News Corp. employees tried to hack into voice mails of Sept. 11 victims, people familiar with the early-stage probe have said.

A person close to News Corp. said the preparation of subpoenas is “a fishing expedition with no evidence to support it.”

News Corp. owns The Wall Street Journal.

Commenting on the FBI inquiry, a News Corp. spokeswoman said: “We have not seen any evidence to suggest there was any hacking of 9/11 victim’s phones, nor has anybody corroborated what are clearly very serious allegations. The story arose when an unidentified person speculated to the Daily Mirror about whether it happened. That paper printed the anonymous speculation, which has since mushroomed in the broader media with no substantiation.”

The spokeswoman also said the company hasn’t seen any “indication of a connection or similarity between the events, allegations and practices being investigated in the U.K. and News Corp’s U.S. properties.”

News Corp. and its recently bolstered legal team expect a possible broad investigation by the Justice Department into whether the alleged bribes paid to British police violated the Foreign Corrupt Practices Act, or FCPA, according to the people familiar with the company’s strategy. The law is typically used to pursue charges against companies that bribe foreign officials to give them business contracts.

News Corp.’s team also is anticipating a possible FCPA-related investigation by the SEC, the people said. The SEC also could examine News Corp.’s prior disclosures, one of the people said. By law, companies must adequately alert investors to potential litigation or business pitfalls on the horizon.

A spokesman for the SEC declined to comment.

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