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Under the U.S. Supreme Court: Murdoch scandal's shadow reaching the United States?

Sunday, July 24, 2011 4:13 AM


Jul. 24, 2011 (UPI NewsTrack) --

WASHINGTON, July 24 (UPI) -- Eyes are riveted on Britain where Rupert Murdoch is up to his neck in the phone-hacking and police bribery scandal, but on this side of the Atlantic the question is whether the media mogul or any of his crew violated U.S. law.

The law getting the most attention is the Foreign Corrupt Practices Act, with its broad scope and ferocious penalties that can reach all the way into the most sacred of corporate inner sanctums.

Even if the alleged telephone hacking and bribery by newspaper employees didn't take place in the United States -- officials are still looking at that -- the act would still apply. The U.S. law covers any employee of U.S. corporations who may have gotten caught up in the British scandal, even covering executives in this country managing employees who may be based overseas.

Murdoch, an Australian native, is a naturalized U.S. citizen. News International Ltd. is his British publishing company, but his News Corp. (NASDAQ:NWS) is a U.S. company, as is his Fox Broadcasting Co.

U.S. Attorney General Eric Holder says he's put the FBI on the case -- though his main thrust may be to discover whether anyone hacked into the e-mails of Sept. 11 terror victims and families.

Congress passed the Foreign Corrupt Practices Act in 1977, and President Jimmy Carter signed it. The U.S. Justice Department says in its official description of the law that the anti-bribery provisions "prohibit the willful use of the mails or any means of instrumentality of interstate commerce corruptly" in offering payment or anything of value while knowing that the exchange is to "influence [a] foreign official in his or her official capacity, induce the foreign official to do or omit to do an act in violation of his or her lawful duty, or to secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person."

In other words, coming up with money or anything else for a government official -- like a police officer -- quid pro quo.

The act had teeth, but Congress sharpened those teeth in 1998 when it joined the United States to 33 other countries, including Britain, in amendments to the law to combat bribery of foreign officials and money laundering through the global financial system.

The U.S. Securities and Exchange Commission enforces those elements of the act involving record keeping -- corporate executives are made extraordinarily responsible for the actions of their subordinates -- but the Justice Department enforces most of its criminal provisions.

The international law firm, Foley Lardner LLP, headquartered in Milwaukee, alerted its clients to the "myths" clinging to the modern version of the FCPA.

The firm said one of the myths is that the "FCPA doesn't apply to conduct that takes place entirely outside of the United States without U.S. parent company involvement. False. The harsh reality is that turning a 'blind eye' to business operations in the far corners of the globe is a sure-fire way to invite FCPA non-compliance and regulatory scrutiny."

In other words, Murdoch executives in the United States might be held accountable if underlings in Britain do awful things.

The 1998 amendments expanded the reach of the act, the firm said, "to include an alternative nationality test. Whereas, prior to the amendments, 'use of the mails or any means of instrumentality of interstate commerce in furtherance of' an improper payment was needed for the FCPA to apply, under the alternative nationality test, the FCPA applies to improper payments made by U.S. companies and citizens that take place wholly outside of the United States without regard to whether 'the mails or any of other means of instrumentality of interstate commerce' were used in furtherance of the improper payment."

The firm warns business leaders "must be knowledgeable about all business activity, including activity that takes place thousands of miles away from U.S.



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