Murdoch Media Hacking Scandal Gets Serious, Goes Global

Bloomberg reports that Labour party lawmaker Tom Watson has requested the UK’s Serious Fraud Office to investigate News of the World (NoW) journalists for corruption. NoW is reportedly already the subject of two police investigations, the first into allegations of widespread phone hacking, and the second into claims that the company bribed police for confidential information.

Meanwhile, the New York Times (NYT) reports that the US Federal Bureau of Investigation have commenced a preliminary investigation into allegations that News Corporation journalists hacked the phones of victims of the September 11 terrorist attacks in 2001.
ABC News: Former News of the World editors arrested (8 July 2011)
NYT: F.B.I. Opens Inquiry Into Hacking of 9/11 Victims’ Phones (14 July 2011)
Bloomberg: U.K. Fraud Prosecutors Receive Phone-Hacking Probe Request (18 July 2011)

The Economist reports that the current News Corporation scandal has placed political pressure on the ethics of a private enterprise to an extent not seen since the 19th Century winding up of the East India Company.

The Age reports that company directors faced a parliamentary inquiry on 19 July 2011, denying any knowledge of, or involvement in a culture of impropriety. Deputy director James Murdoch reportedly defended his approval of out-of-court settlements previously paid for privacy breaches, but denied that the practices were widespread.

According to Transparency International, the unfolding crisis raised doubts over the government’s ability to deal with a corrupt media enterprise that they are so closely connected with.
The Economist: An empire at bay (14 July 2011)
The Age: ‘Most humble day of my life” (20 July 2011)
Transparency International: Corruption crises requires coordinated response (18 July 2011)

The Independent reports that the scandal has damaged the media empire’s reputation so severely that investors are planning to appoint a new chief executive in September. According to The Independent, this move is supported by analysis suggesting that the company would be valued between 30-50% higher without Mr Murdoch at the helm, suggesting that his mishandling of unethical behaviour could see him toppled from the top job within his longstanding media empire.
The Independent: David Prosser: Investors look forward to change at the top of News Corp (20 July 2011)

The scandal has reportedly highlighted the need for a general privacy right in Australian, with Privacy Minister Brendan O’Connor announcing that the federal government will release a public issues paper seeking responses on a possible “statutory cause of action for serious invasions of privacy”.

The Age reports that media companies are keen to participate in the consultation process, despite historically opposing the introduction of such a right.
Privacy Minister’s media release (21 July 2011)
The Age: Canberra to move on privacy law (21 July 2011)

(Source: ABC News; NYT; Bloomberg; The Economist; The Age; Transparency International; The Independent; Privacy Minister)