New twist in hacking scandal threatens global media empire

Scotland Yard is investigating News International as a “corporate suspect” over hacking and bribing offences, it can be revealed.

The Independent has learnt the Metropolitan Police has opened an “active investigation” into the corporate liabilities of the UK newspaper group – recently rebranded News UK – which could have serious implications for the ability of its parent company News Corp to operate in the United States. One of Rupert Murdoch’s most senior lawyers has been interviewed under caution on behalf of the company and two other very senior figures have been officially cautioned for corporate offences. John Turnbull, who works on News Corp’s Management and Standards Committee (MSC) which co-ordinates the company’s interactions with the Metropolitan Police, answered formal questions from detectives earlier this year.

The development has caused pandemonium at the upper echelons of the Murdoch media empire. Shortly afterwards, executives in America ordered that the company dramatically scale back its co-operation with the Metropolitan Police.
A News Corp analysis of the effects of a corporate charge, produced in New York, said the consequences could “kill the corporation and 46,000 jobs would be in jeopardy”.
Lawyers for the media behemoth have pleaded with the Met and the Crown Prosecution Service not to prosecute the company as it would not be in the “public interest” to put thousands of jobs at risk. Gerson Zweifach, the group general counsel of News Corp, flew in to London for emergency talks with the Met last year. According to Scotland Yard, he told police: “Crappy governance is not a crime. The downstream effects of a prosecution would be apocalyptic. The US authorities’ reaction would put the whole business at risk, as licences would be at risk.”
The Independent can reveal that Scotland Yard warned News Corp that its UK subsidiary, which publishes The Sun and used to publish the now-defunct News of the World, was under formal investigation on 18 May last year.
A month later, Rupert Murdoch announced he was splitting the global empire he spent six decades building up into one of the most powerful companies in the world. The 82-year-old hived off the highly profitable television and film assets, including 21st Century Fox and Fox News, into a separate entity from the troubled newspaper group in what was widely perceived as an attempt to isolate any contagion from the phone-hacking scandal.
Tom Watson, the campaigning Labour MP, said: “This comes as no surprise. Parliament has already found Rupert Murdoch unfit to run an international company.
“He is responsible for the corporate culture that allowed this scandal to damage his global empire. I hope that other jurisdictions like Russia will begin to investigate the activities of News Corp around the world.
“The doom-laden internal analysis that the thousands of people who actually add value to the company may lose their jobs is bogus. If News Corp wants to clean up its act, it can easily do so by replacing the Murdochs with people who understand corporate social responsibility.”

Lawyers for the Metropolitan Police identified News International as “suspects” as long ago as October 2011.
But the company did not appear to become aware of its status as a potential “corporate defendant” until April 2012 when Met detectives asked the MSC for “minutes of board meetings”. The request triggered behind-the-scenes negotiations which eventually led to former Deputy Assistant Commissioner Sue Akers writing to the MSC a month later.

In a letter to the chairman Lord Grabiner, she said there was “an active investigation into the corporate liability of News International”. The company immediately changed the terms of its co-operation with the police.

In an unpublished statement submitted to the Leveson Inquiry a month later, seen by The Independent, Lord Grabiner outlined the position of the company. He indicated it would be a “dereliction of duty” to continue co-operating with Scotland Yard if the police were planning a “corporate charge” against News International.
“At no point prior to May 2012 did the Met inform News International or the MSC that any corporate entity was a suspect,” he said.
“It was only in early May 2012, following requests by the Metropolitan Police for information and documents that did not seem relevant to the matters understood to be under investigation in relation to individuals, that it appeared to the MSC the focus of the investigation had shifted to include the companies [News International and News Group Newspapers] without either company having been advised of this fact.
Later he added: “A suspect which is being asked to provide material for use in the investigation into its own liability is entitled to be advised that it is under suspicion in order that it can be advised of its rights and make informed decisions.”
Lord Grabiner said that, following the disclosure, the company was still “co-operating” but felt “obliged to proceed with some care”.

A senior Scotland Yard source said that after Ms Akers’ letter there was a “suspension in co-operation” whilst the UK lawyers “took advice” from the board directors in New York.
He added: “They subsequently resumed co-operation, but on a more challenging, legal-led basis resulting in delays.”
Lawyers for News Corp then continued to plead with the police not to pursue the company, raising the recent case involving Southwark Council, which avoided corporate manslaughter charges by providing full co-operation with an investigation into a fire that ripped through a dilapidated tower block, killing six people.
Since News Corp was informed of the development, a string of senior UK executives have left the company.

According to CPS guidelines, there appears to be no legal provision for dropping a corporate prosecution simply because a company under suspicion also happens to be a major employer.
However, the former Prime Minister Tony Blair ordered the cessation of a three-year Serious Fraud Office investigation into BAE Systems in 2006 as it would affect “thousands of British jobs”. Citing the “public interest”, Mr Blair said the defence giant should not be prosecuted for paying bribes worth hundreds of millions of pounds to the Saudi royal family in order to secure the multibillion-pound al-Yamamah arms contract.

When members of the Saudi government found out that the SFO was probing their personal Swiss bank accounts, they also threatened to cut off all intelligence to Britain.
Last night a spokesman for News UK said: “We have co-operated with all relevant authorities throughout the process and our history of assistance is a matter of record in Lord Justice Leveson’s report.”
A Scotland Yard spokesman said: “We are not prepared to discuss this.”