US senators call for probe on News Corp

Steve Dinneen
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AS NEWS Corp’s BSkyB bid lay in tatters, a potentially devastating storm gathered pace in the US yesterday.

Two senators called for the Justice Department and Securities and Exchange Commission (SEC) to investigate whether News Corp broke US laws banning payments to influence a foreign official, relating to the phone hacking scandal at News International.

Senators Barbara Boxer and John Rockefeller also called on authorities to investigate reports of phone hacking against victims of the 9/11 attacks.

News Corp boss Rupert Murdoch will now be desperate to ensure the toxic contagion of the phone hacking scandal does not spread to the rest of his empire.

Some in the City were yesterday predicting that Murdoch’s position as chairman and chief executive of News Corp itself could now come under pressure.

One senior banker told City A.M. he expects some of the News Corp non-executives, who include former BA chief Sir Ron Eddington, ex-Goldman Sachs partner John Thornton and the venture capitalist Thomas Perkins, to start taking stock of whether Rupert Murdoch was still the right leader of the company, despite his family holding the controlling share of the company’s voting rights, and therefore its seemingly impregnable grip on control.

He said: “In the end, the issue is this: does the board have confidence in the chairman and chief executive? And sometimes it’s a case of either him turfing the rebels off the board or they deal with you.”

News Corp is already the subject of a class action lawsuit alleging nepotism in his reliance on his children to fill key roles within the firm and failure to exert proper control over News International over the phone hacking affair.