Why is News Corp. Lawyering Up for a Potential FCPA Investigation?
The scandal involving News Corp. rocked both the U.K. and U.S. news media and political scenes. Commonly referred to as “Hackgate,” allegations against News Corp. range from hacking into private voicemails of victims of murder and terrorist attacks to bribing high level officials from police and government agencies. What has also become apparent is that News Corp. is anticipating an even further fall out from this scandal. Reports are in that News Corp. has hired some very expensive attorneys with expertise in Foreign Corrupt Practices Act (FCPA) investigations and litigation.
Although some may argue that the FCPA’s anti-bribery provisions only forbids an American corporation from making payments to a foreign official in order to help the company obtain or retain government contracts, nothing in the FCPA actually limits the statute’s reach in such a way. And although it is true that the statute is not a general foreign bribery statute, the statute is aimed at the problem of American companies buying business overseas.
So why is News Corp. so worried about an FCPA violation? News Corp. was allegedly bribing the police with the motivation that its tabloid magazine would have an inside scoop on lucrative newstories in order to sell more papers. Thus it seems, News Corp.’s conduct satisfies the literal requirements of the FCPA.
The FCPA is generally divided into two broad categories of offenses, the anti-bribery provisions and the accounting provisions. Although News Corp.’s conduct seems to implicate both provisions of the FCPA, this post will only discuss the anti-bribery provisions.
First, News Corp. is a person subject to U.S. jurisdiction because it is an entity traded and listed in the U.S. Under the FCPA domestic concerns and U.S. parent corporations may be held liable for the acts of foreign subsidiaries where they authorized, directed, or controlled the activity in questions. So it does not really matter that News Corp.’s U.K. subsidiary, New of the World, was the actual entity making the bribes so long as News Corp. authorized, directed, or controlled the activity in question. Determining whether News Corp. authorized, directed, or controlled the activity in question will likely be subject to heavy opposition by News Corp. throughout the course of the investigation.
The payments made must also have a corrupt intent, and the payment must be intended to induce the recipient to misuse his or her official position to direct business wrongfully to the payer or to any other person. The Justice Department have broadly construed the FCPA to prohibit any corrupt payment intended to influence any act or decision of a foreign official. Should the allegations against News Corp. prove true, payments paid to police officials to hack into private voicemails would surely satisfy the corrupt intent because they were paid with the intent to influence the officer to give News Corp. access to potentially lucrative voicemails of newsworthy individuals. It isn’t likely that these payments will be excepted from the FCPA as “facilitating payments for routine governmental action.” Such routine payments tend to be limiting for things such as permits, licensing, phone, mail pick-up etc.
The FCPA also requires payment. Technically, payment includes actually paying but it also includes offering or promising to pay money or anything of value. Should the allegations against News Corp. prove true, satisfying the payment requirement will not challenge the Department of Justice.
It must also be proven that the recipient of a payment be a “foreign official.” The FCPA defines foreign official as any officer or employee of a foreign government, a public international organization, or any agency therof. The allegations against News Corp. involve bribing British police officers for access to private voicemail accounts of newsworthy individuals. Police officials of a foreign government clearly qualify as foreign government officials.
As a person subject to U.S. jurisdiction, News Corp. cannot make corrupt payments to foreign police officers inducing them to hack into the voicemails of newsworthy individuals with the intent of selling more papers without violating the FCPA. Thus it seems that News Corp.’s conduct meets the technical requirements of the FCPA statute. They are lawyering up accordingly.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or firstname.lastname@example.org.