U.S. Investigations Of Phone-Hacking Scandal Unlikely To Move Quickly

James Murdoch

As the heat continues to be on News Corp.’s activities in the U.K., an investigation of any U.S. links is proceeding-albeit very slowly. Any real progress will likely have to wait for the results of the U.K. investigations, reports the AP.

The most serious allegation that News Corp (NSDQ: NWS). is facing in the states is the suggestion that reporters may have hacked the phones of 9/11 victims. The company has flatly denied that this happened. And the AP notes that the allegation rests on “a single, thinly sourced news story in the Daily Mirror, a London tabloid rival to Murdoch’s The Sun.”

However thin the sourcing may be, the allegation does seem to have taken on a life of its own. U.S. Attorney General Eric Holder has accepted an invitation to meet with families of 9/11 victims to discuss the allegation. An attorney who has worked with 9/11 families for years was circumspect, saying only: “We hope that the cell phones of the 9/11 victims and their relatives have not been hacked.”

The other serious legal threat is the idea that News Corp. employees may have violated the tough U.S. anti-bribery law known as the Foreign Corrupt Practices Act. But to pursue this legal claim, British authorities would have to first establish that such bribery really took place. So that’s an accusation that is going to take a while to sort out.

If the SEC or another regulator did bring an FCPA claim, it could be a case of first impression with major legal significance. Companies that get busted under the FCPA are typically doing things like paying officials to get lucrative contracts; the law has never been used against journalists paying for information, and it isn’t crystal clear that it would apply in such a situation.

Finally, the FBI also intends to question actor Jude Law, according to the BBC. Law has already filed a lawsuit in the U.K. alleging that his phone was hacked. If any of that hacking happened while Law was in the U.S., it could potentially become part of any U.S. criminal case.

Other developments in phone-hacking:

»  State authorities aren’t involved yet, but at least one state attorney general has said the phone-hacking scandal has inspired him to call for a summit on privacy in electronic communications, the AP reports. Missouri Attorney General Chris Koster added that state laws need to be updated to keep pace with technology.

»  James Murdoch will spend a good portion of this week fighting off allegation that he lied to Parliament by saying he had no knowledge of phone-hacking-despite the fact former News Corp. execs say that by 2008 James Murdoch did know more.

But even if Murdoch was found to have lied to Parliament, it’s not quite clear what, if any, repercussions there would be. In the U.S. Congress, testimony is generally under oath, and lying in testimony to Congress is a serious crime. But as the Guardian explains, taking an oath to tell the truth before testifying to a committee of Parliament is “extraordinarily rare” in the U.K., and neither James nor Rupert Murdoch were testifying under oath.

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