The phone-hacking scandal at News Corp. may never again reach the intensity of its three weeks at the top of the news in July. Yet the alleged wrongdoing is so widespread and so nasty that, on any given week, there’s at least a couple of events or stories that keep the whole thing from taking even a slight turn toward oblivion.
Last week, it was the testimony before Parliament of key former News International executives, who contradicted previous remarks by their boss, James Murdoch.
Just today, we learned that James Murdoch will be recalled to testify. He has some explaining to do.
And now there’s commotion on the News Corp. shareholder-mutiny front as well. In March, a shareholder lawsuit against News Corp. alleged a whole bunch of misconduct by company officials. An amended complaint in July added in all the stuff about phone hacking. Now a second amended complaint throws in all kinds of wrongdoing charged in various lawsuits over the years against U.S. subsidiaries of News Corp. Those allegations are add-ons to a suit that was originally filed in a Delaware court; shareholders are represented by law firms Grant & Eisenhofer P.A. and Bernstein Litowitz Berger & Grossmann LLP.
A press release says that the latest amendments bring “fresh charges against the media giant’s senior management and board of directors for repeated failures to correct illegal conduct that has severely battered the company’s reputation and market value.” Here’s some text from the amended complaint:
By the late 1990s, the Board first received evidence that News Corp subsidiaries were engaging in systematic violations of third party privacy, when two subsidiaries, News America Marketing (“NAM”) and NDS Group plc (“NDS”), were accused by multiple parties of stealing computer technology, hacking into business plans and computers and violating the law through a wide range of anti-competitive behavior. NAM attempted to drive its competition out of business by, among other things, illegally hacking a competitor’s password-protected website on eleven separate occasions over a several-month period. The Board did not remain oblivious to this conduct, which required NAM to pay out more than $650 million in settlements to three competitors. Another subsidiary, NDS, was accused of illegally extracting software code from competitors’ smart cards and posting the information on the Internet.
So what’s new about these allegations? As the complaint itself notes, they date back to litigation long since resolved. Those cases got some attention when they were being litigated and settled; much more attention after the phone-hacking crisis erupted over the summer; and now, yet more attention as they’re appended to an ongoing shareholders’ suit.
Recycling of information — that’s how a scandal accretes.
