News Corp.s move to take Glenn Mulcaire off its books and its public apologies… (Adrian Dennis, AFP/Getty…)
Looking to build some good will with British lawmakers, News Corp. said it would no longer pay legal bills for Glenn Mulcaire, the private investigator convicted in 2007 of hacking into phones for the media giant's now closed News of the World tabloid.
In a statement, News Corp.'s Management and Standards Committee, the media company's in-house watchdog, said it had decided to "terminate any arrangement to pay the legal fees of Glenn Mulcaire with immediate effect."
That News Corp. was still covering Mulcaire's legal tab was a subject of much interest to Parliament's Culture, Media and Sport Select Committee, which on Tuesday grilled News Corp. Chairman Rupert Murdoch and his son James over the phone hacking scandal that threatens to tear through the global media conglomerate.
News of the World was found to have hacked into the voice mails of crime victims as well as celebrities and the royal family. The Murdochs apologized to Parliament while at the same time claiming to have no knowledge about just how corrupt the culture within the paper had become.
When questioned about Mulcaire's legal fees at Tuesday's hearing, Rupert Murdoch said he was unaware that News Corp. had been paying them, and his son said he was "as surprised as you are" when he learned about it.
The hacking debacle not only cost News Corp. the 168-year-old News of the World, but it also derailed the company's plans to buy outright the powerful British broadcaster BSkyB. Two top executives — Les Hinton and Rebekah Brooks, each of whom had stints overseeing News of the World — have had to resign. Brooks was subsequently arrested. The imbroglio has spread to Scotland Yard, where two top officials quit because of their close ties to the tabloid.
News Corp.'s move Wednesday to take Mulcaire off its books and its public apologies about the hacking debacle after digging in its heels underscores how desperate the company is to get the heat taken off it.
The media giant has no fewer than four crisis communications firms advising it on everything from shareholder lawsuits to blowback from lawmakers and regulators in the U.S, where the bulk of its holdings are based.
In the U.S., there continues to be an FBI probe into whether there were attempts by News of the World operatives to hack into voice mail accounts of 9/11 victims and their families. Asked about it by Parliament, Rupert Murdoch said there was no evidence of that.
Some lawmakers aren't ready to let News Corp. off the hook. Sen. Frank R. Lautenberg (D-N.J.) on Wednesday sent a letter to the FBI and the Department of Justice to remind the agencies that News Corp. has been accused of bad behavior in the U.S. in the past.
In an amended complaint filed in 2006 in a New Jersey federal court, a marketing company called Floorgraphics sued a unit of News Corp., alleging among other things that News Corp.'s News America hacked into its computer systems and took sensitive information. The suit was later settled and News Corp. ended up buying Floorgraphics in 2009.
Lautenberg said in his letter that in 2005 he was informed by Floorgraphics that the FBI and Secret Service launched an investigation into the company's allegations against News America. "I wanted to make sure that you were fully aware of the case of Floorgraphics and News America as it may be relevant to your current investigation," Lautenberg wrote.
Sens. Barbara Boxer (D-Calif.) and Jay Rockefeller (D-W.Va.) also wrote to an in-house committee at News Corp.'s Wall Street Journal to "ensure that no News Corporation senior executives at United States properties were aware of or complicit in any wrongdoing in the burgeoning hacking scandal and that no misconduct occurred in our country."
Analysts are concerned that if News Corp. is found guilty of violating the Foreign Corrupt Practices Act, it could affect the company's vast holdings in the U.S., which include television stations as well as the 20th Century Fox movie studio, the Fox network and the Fox News cable channel.
News Corp. stock closed Wednesday at $16.42, up 17 cents.