NewsCorp Loses General Counsel When Rupert Murdoch Needs Legal Help the Most

As NewsCorp chairman and CEO Rupert Murdoch left the British parliamentary hearing last week to make his way back to the US, industry observers say that the billion-dollar media mogul is gearing up to face a new set of financial and legal troubles.

According to the Wall Street Journal, the US Department of Justice is in the process of preparing subpoenas as part of a probe into allegations that Murdoch’s NewsCorp sought to hack into the phones of Sept. 11 victims.

‘Murdoch could face criminal charges in the US such as violations of the Foreign Corrupt Practices Act, illegal wiretapping, mail or wire fraud, securities fraud, racketeering and conspiracy,’ says Barry Pollack a partner in law firm Miller & Chevalier’s Litigation practice. ‘He could also face civil lawsuits from the SEC as well as from private litigants, such as shareholders in NewsCorp or competitors of the company.’

The Financial Times reports that NewsCorp’s embattled in-house legal team is missing a group general counsel, after Lon Jacobs made an unexpected exit last week and the News of the World‘s lawyer, Tom Crone, left after the paper closed.

Currently, Jeff Palker, News Corp’s European and Asian general counsel, is heading up legal matters in London. Joel Klein and Viet Dinh, two high profile former US assistant attorney-generals, are providing board level supervision, the Financial Times reports.

‘News Corp has already gone on a hiring spree for a high profile outside counsel in the US who can carry out the role of conducting an ‘independent’ investigation and be the company’s legal spokespeople in negotiations with US law enforcement,’ says Pollack.

‘While plainly NewsCorp will need to replenish its in-house counsel ranks in a hurry, it will be the external counsel acting inconjunction with the board of directors or a committee of the board of directors who will be making the ultimate decisions going forward.’

As the news of corruption and other charges surrounding the world’s second largest media conglomerate continues to unfold, Pollack speculates that NewsCorp will try its best to settle any lawsuits that are likely to occur in the US.

‘They [the lawsuits in the US] will be hugely time-consuming and expensive but ultimately they will be settled to end the drain on resources,’ says Pollack. ‘The bottom line is that NewsCorp will want this sorry chapter of its corporate history to end as quickly as possible.’

[Article by Aarti Maharaj, Corporate Secretary]

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