Dark Clouds Over News Corp

The News Corp scandal started with phone hacking in the U.K., and alleged bribes to police there that could have violated U.K. laws and the FCPA.

Now it’s spreading.

The BBC’s Panorama reported allegations this week that a News Corp subsidiary hacked pay-TV access codes and pirated rival satellite channels in Europe.

A day later, the Australian Financial Review said News Corp also pirated rivals in Australia, and that a subsidiary had a special account for making payments to British police and informants. It posted a company email that purportedly identified the budget code for the payments.

With smoking-gun evidence of police bribery in the U.K., criminal prosecutions there against News Corp executives seem likely.

The expanding allegations will also complicate things for News Corp in the U.S.

The SEC, for example, will be asking if the company has been keeping accurate books and records, as the FCPA requires issuers to do. Are there more ‘special accounts?’ If the new piracy allegations are true, who paid for the black ops? What about internal controls to prevent bribery and other illegal activity?

No one knows where the News Corp scandal is going.

But here’s what media mogul Ted Turner said about it back in September, just a couple of months after the first reports of trouble.