14 July 2011

News Corporation and the Murdoch media empire is facing political and judicial difficulties in Britain which will inevitably spill over into commercial strife.  The substantial reduction in share value this week is a start. But the consequence of being a transnational company is that actions in one country may constitute offences in another.  Newspaper reports indicate that there is substantial evidence that News Corp made payments to officers in the Metropolitan Police.  Such action constitutes bribery by the US parent company of a foreign official.  The OECD Convention Against the Bribery of Foreign Officials and the UN Convention Against Corruption specifically outlaw that type of conduct.

There has been extensive reporting of the provisions of the British Anti Bribery Act which came into force on 1 July, and which has broader application and potentially greater penalties than other jurisdictions.  But making a difference requires a commitment to taking action. The United States has shown considerable aggression in prosecuting companies that breach the Federal Foreign Corrupt Practices Act.

News Corp now seems an inescapable target for regulators.  A US Justice Department investigation may well encompass all parts of its international business to uncover bribery and deceptive accounting. The irony is that the costs incurred by the Justice Department in verifying whether News Corp has robust anti-corruption measures will be recovered from the company. And, like the investigation of Siemens which resulted in an $800m penalty in 2010, News Corp could be tied up by an investigation for several years.

There appears to be very little public sympathy for News Corp. Condemnation however needs to stop short of emasculating the investigative zeal of the media. The media is an essential counterweight to those with political power. British politicians, apparently constrained for more than a decade by a concern about being ridiculed by a well (and apparently illegally) informed media, may now sense an opportunity for retribution. Good government will not be enhanced.

Long ago, Thomas Jefferson recognised a need for balance.  His insight to the role of the media included the following observations;

“Our liberty depends on the freedom of the press, and that cannot be limited without being lost.“
“Were it left to me to decide whether we should have a government without newspapers or newspapers without government, I should not hesitate a moment to prefer the latter.”