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News Corp. says no settlement with U.S. Department of Justice

June 11, 2013|By Meg James
  • News Corp. said Tuesday that it had not reached a settlement with U.S. officials over a corruption probe. Members of the media surround former News International chief executive Rebekah Brooks, center, as she gets into a car to leave Southwark Crown Court in London on June 5 after attending a hearing in the phone-hacking scandal. Brooks, former chief executive of Rupert Murdoch's British newspaper wing News International, pleaded not guilty on June 5 to charges linked to the phone-hacking scandal.
News Corp. said Tuesday that it had not reached a settlement with U.S. officials… (Ben Stansall / AFP/Getty…)

Representatives for Rupert Murdoch's News Corp. say there is no truth to rumors that the media giant is poised to pay huge fines in order to settle allegations that it bribed foreign officials.

News Corp. has been plagued by talk that it violated federal laws that prohibit U.S.-based companies from bribing foreign government officials since the company's phone hacking scandal exploded in Great Britain two summers ago.

News Corp. has spent several hundreds of millions of dollars in the last two years on legal fees and settlements with dozens of phone hacking victims. In recent months, there have been reports the company has been in discussions with the U.S. Department of Justice to potentially pay a fine should federal prosecutors determine that News Corp. had violated the U.S. Foreign Corrupt Practices Act.

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Tuesday, the question of a settlement with the Department of Justice was raised during a special meeting of News Corp. shareholders to vote on measures allowing the company to split into two separately traded entities.

Julie Tanner, assistant director of socially responsible investing for Christian Brothers Investment Services, asked Murdoch and other company executives if there was an impending settlement. Tanner asked how much News Corp. would have to pay to resolve the corruption allegations.

Gerson Zweifach, News Corp. group general counsel and chief compliance officer, forcefully shot down the suggestion that News Corp. was on the verge of paying an enormous fine.

Zweifach said Tanner's question was most likely triggered by a report published Monday in the Guardian newspaper. 

The article, written by Michael Wolff, who has become a thorn in Murdoch's side ever since Murdoch opened up to Wolff for his 2010 book "The Man Who Owns the News," suggested that News Corp. would have to pay $850 million or into the "billions" to settle the claims.

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Zweifach dismissed Wolff's allegations as uninformed.

"This is a testament to the old adage: Those who are talking don't know and those who know aren't talking," Zweifach said.

"The reality is there is no settlement that has been arranged with the Department of Justice," Zweifach said. "There has been no discussion of amounts. There have been no discussion of fines. Period. We have an ongoing and cooperative relationship with the Department of Justice and that is where things stand."

Zweifach went on to say News Corp. has decided that 21st Century Fox, the larger corporate entity based in New York, would bear responsibility for any liability coming out of the Department of Justice's probe. 

"We don't think there should be one," Zweifach said, but he added that 21st Century Fox would be responsible for resolving the DOJ probe. 

However, he said, any criminal liability coming out of Great Britain for the phone hacking and bribing claims would be shouldered by the publishing company, which will take the name News Corp.

"Again, we don't think there should be any," Zweifach said.


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