Murdoch contagion may spread to US, Brooks in the frame over Brown

Rupert Murdoch’s News Corporation, an American company, could be investigated by Federal authorities if they decide paying Metropolitan Police officers in London counts as illegally trying to secure business under the US Foreign Corrupt Practices Act.

Germany’s Daimler AG and the UK’s BAE systems have both been prosecuted in the US using this act.

At the same time it has emerged in the UK that Rebekah Brooks, when editor of the Sun, approached Sarah Brown (pictured), Gordon Brown’s wife, in 2006 to say that her reporters knew their son Fraser had cystic fibrosis. This, it is alleged, could only have become known by illegally accessing his medical records.

This is the first time Brooks herself, currently the embattled CEO of News International, has been personally linked to illegality.

All of which may mean that News Corp is actually quite pleased to have its bid for BSkyB referred to the UK’s Competition Commission, something it tried hard to avoid for over a year.

News Corp triggered the referral yesterday by withdrawing its agreement to ring fence Sky News in the event of a successful bid, thereby forcing the UK government’s (extremely relieved) hand.

Had the bid not been referred News Corp would have come under huge pressure to voluntarily withdraw the bid which would have been a major additional cause of embarrassment and, worse, difficult to reverse.

As things stand, the company is free to come back if the CC reports in six months’ time or so that it can find no reasons to block it.

Whether or not the Murdochs (and indeed Rebekah Brooks) are still in senior positions when it does is open to debate.

Rupert Murdoch will presumably always be with the company in some role or other even if it’s as non-executive president. But deputy chief operating officer James Murdoch, Rupert’s son and heir apparent, is in the firing line, at least as far as US investors are concerned.

He has annoyed the British media establishment to no good effect (Rupert was always careful to stay onside with his peers), overpaid wildly for ITV shares to block ITV’s proposed merger with Virgin Media and bungled the investigation into phone hacking at the News of the World.

Deputy chairman and COO Chase Carey looks a much safer pair of hands, having been careful to steer clear of as much controversy as he can despite a long association with Murdoch at Fox and DirecTV.

In the meantime there are various offstage noises emerging about plans to revive the News of the World, one plot involving former Sunday Times and Conde Nast executive Sue Douglas.

These, of course, are wholly contingent on News International deciding not to launch a replacement paper, provisionally entitled The Sun on Sunday. That project has become a bit less likely as the scale of revulsion among the British public at the Murdoch antics has become more clear.

News International executives will be looking nervously at sales figures for the Sun to see if this particular contagion has spread there.

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