The explosion of bad publicity that has led Rupert Murdoch’s News Corporation to shutter a scandal-ridden UK tabloid has inspired a group of investors in the US to file an amended complaint against the communications multinational, adding material tied to the News of the World scandal to earlier complaints of nepotism and failed corporate governance.
The lead law firms on the case are Grant & Eisenhofer P.A. and Bernstein Litowitz Berger & Grossmann LLP, and they are working on behalf of shareholders led by Amalgamated Bank, which oversees investment funds for LongView, as well as Central Laborers Pension Fund and other public pension funds.
The plaintiffs, who are filing their action in the State of Delaware court system, not that James Murdoch admitted to being insufficiently informed as the what was going on in the News of the World case, and admitted to paying two million pounds to hush lawsuits without full knowledge of the situation.
The loss of the business adds to other complaints already standing.
The complaint charges, “[Rupert] Murdoch has treated News Corp. like a family candy jar, which he raids whenever his appetite strikes. Ignoring the distinction between public and family business, the Board has repeatedly permitted Murdoch to: (i) intertwine rampant nepotism in the conduct of Company business; (ii) undertake actions designed to maintain his control over News Corp.; (iii) use News Corp. resources for his own personal and political objectives; and (iv) reward himself handsomely with excessive compensation.”
Bernstein Litowitz’s Mark Lebovitch stated, “The amended complaint documents a seemingly endless stream of self-dealing and disregard for corporate governance by News Corp.’s board of directors. The latest revelations serve as the final straw for News Corp shareholders, who are now fighting to keep another Murdoch family member from joining the board and perpetuating the culture that has made News Corp. a family fiefdom for so long.”
Observers also believe that New Corp.’s proposal to acquire 61% of program service BSkyB is now imperiled. It already owns the other 39%. However, according to reports, the decision to refer the deal to the government for review, while delaying any action, should take pressure off all concerned for the time being.