Shareholders sue News Corp. honchos over hacking


A shareholder lawsuit over alleged malfeasance by CEO Rupert Murdoch and other top officials of News Corporation continues to expand. The latest amendment to the suit claims that phone hacking by company tabloid newspapers was widespread and the board failed to do anything about the illegal activity.

The lawsuit by Amalgamated Bank as trustee for a number of mutual funds which own News Corp. stock had already claimed that the company’s directors had disregarded their fiduciary duty to shareholders and allowed Rupert Murdoch to “use News Corp as his own personal fiefdom” and spend company money to pursue his own agenda. “The Board has not lifted a finger to engage in any oversight of Murdoch’s rule, even when it was provided with clear and unmistakable warnings that News Corp’s business practices were not only unethical, cut also illegal,” the amended complaint charges.

In the latest amendment the plaintiffs claim that reporters of News Corp.’s now-shuttered News of the World tabloid in the UK “engaged in the unlawful interception of voicemail and cell phone traffic from literally thousands of people in the UK” – and that investigators working for the British newspaper division engaged in other “illegal conduct” in their pursuit of tabloid stories, including hacking email and bribing police officers.

“The Board was on notice of the improper conduct at the News of the World at least as early as 2002, based upon news reports about hacking, yet it refused to investigate the issues,” the lawsuit charges.

The lawsuit purports to represent all public shareholders of News Corp. in suing Murdoch and all other members of the board of directors. That includes director Joel Klein, former head of the US Department of Justice Antitrust Division, who is heading the company’s internal investigation of the hacking scandal.

Murdoch has insisted that the illegal activities were done without the knowledge or approval of top company officials, but he has called the scandal “a major black eye” for News Corp.

His son and fellow director, James Murdoch, has been called back to the British Parliament to answer additional questions about his knowledge of the activities.