FBI opens inquiry after report that News Corp. tried to hack phones of 9/11 victims
By Jerry Markon and David S. Hilzenrath,
The FBI has opened a preliminary inquiry into allegations that News Corp. employees sought to hack into the phones of victims of the Sept. 11 terrorist attacks and tried to bribe law enforcement officers for information, U.S. officials said Thursday.
FBI agents are reviewing information on the phone-hacking scandal engulfing Rupert Murdoch’s British media operations and trying to determine if U.S. laws were broken, the officials said. Murdoch is chairman and chief executive of News Corp., which is based in New York and has extensive U.S. operations.
While it is unclear if the review will expand into a full investigation, the FBI’s involvement heightens the scrutiny faced by the media giant, which is under intense fire in Britain over allegations that its journalists hacked into the phones of thousands of people.
The FBI probe also raises the politically delicate possibility that the Obama administration— which has questioned the objectivity of News Corp.’s Fox News — could bring criminal charges against employees of the network’s parent company. Murdoch is a political conservative, and last year he directed a $1 million contribution to the Republican Governors Association on behalf of News Corp.
U.S. officials cautioned that it is too soon to tell if charges will be filed, and they indicated that the probe could face a range of complexities, including jurisdictional issues and statutes of limitation that may have expired. Federal investigators also are expected to consult with their counterparts in Britain, which could slow their pace.
The officials spoke on the condition of anonymity because the inquiry is unfolding.
Supervisory Special Agent Timothy Flannelly, a spokesman for the FBI’s New York Field Office, said the bureau is “aware of the allegations into News Corp. and we are reviewing the matter.’’ Laura Sweeney, a Justice Department spokeswoman, said the department “has received letters from several members of Congress regarding allegations related to News Corp. and we’re reviewing those.’’ They declined to comment further.
A spokeswoman for News Corp. did not return telephone calls seeking comment. In an interview with the Wall Street Journal, which is owned by News Corp., Murdoch said his company had handled the crisis “extremely well” and he pledged to set up an independent committee to “investigate every charge of improper conduct.”
A White House official in 2009 called News Corp.’s Fox News — which has been home to several staunch critics of President Obama — an “arm of the Republican Party,” and officials said the administration would begin to treat the network as “an opponent.’’
The White House has toned down its criticism since then.
Officials said the FBI probe was triggered by calls on Wednesday by several U.S. lawmakers for investigations into whether Murdoch’s British media operations violated U.S. laws. That followed a British newspaper’s report that Murdoch’s London-based journalists had tried to tap into phones of victims of the Sept. 11, 2001, attacks. That report, however, has not been corroborated by other news organizations or confirmed by official sources.
The scandal escalated last week after the Guardian newspaper reported that News of the World reporters had hacked the phones of the families of dead British soldiers and a 13-year-old girl who was abducted and slain in 2003. News Corp. closed the 168-year-old newspaper this week.
The revelations have imperiled Murdoch’s British operations, leading to the withdrawal Wednesday of his $12 billion offer for the country’s largest satellite television operator, British Sky Broadcasting. They have also posed a major political test for British Prime Minister David Cameron over his close personal ties to News Corp. executives.
If the FBI review leads to charges, they could be filed under the Foreign Corrupt Practices Act (FCPA), legal experts said. Drafted in the aftermath of Watergate, it criminalizes the bribing of foreign officials to obtain or retain business. It also says companies cannot keep false books.
The act is ordinarily used against companies accused of paying bribes to win contracts. But some U.S. lawmakers and experts have suggested it could be used against News Corp. because News of the World journalists allegedly bribed British police officers to gain information.
To prosecute News Corp. for bribery, the U.S. government would have to show that some element of the wrongdoing touched the United States, said Claudius O. Sokenu, a lawyer at the firm Arnold & Porter who specializes in FCPA cases.
The government has taken the position that the connection could be as slender as a wire transfer of funds from this country, a transatlantic e-mail, a decision made in the United States or a phone call from a News of the World editor in England to a News Corp. executive sitting in a New York hotel, Sokenu said.
But Jacob S. Frenkel, a former federal prosecutor and lawyer at the Securities and Exchange Commission, said making a case against News Corp. under the FCPA would be “a stretch.” The government may have difficulty proving that payoffs for information were meant to help News Corp. obtain or retain business, Frenkel said.
The mere possibility of a Justice Department or SEC investigation of News Corp. could cause the company significant trouble and expense, lawyers said. Companies involved in FCPA probes are often pressed to conduct broad internal investigations that turn up unexpected violations and could lead to legal and accounting fees that run as high as hundreds of millions of dollars.