News Corp. Shareholder Lawsuit Alleges Hacking Scandal Shows “Culture Run Amuck”

A group of News Corp. shareholders are less than pleased with the company thanks to the News of the World hacking scandal, and they’ve taken legal action. Earlier this month, they amended a <"">News Corp. shareholder lawsuit to include the hacking scandal, claiming the debacle is evidence of a “culture run amuck within News Corp and a Board that provides no effective review or oversight.”

According to a report from Forbes, the group filing the News Corp. shareholder lawsuit includes Amalgamated Bank and several municipal and union pension funds. The group originally filed the lawsuit in March in Delaware Chancery Court because of News Corp.’s acquisition of a production company belonging to Rupert Murdoch’s daughter. At the time, the group charged the acquisition made no business sense, and was only intended to put money in the pocket of Murdoch’s daughter and place her on News Corp.’s Board.

The amended complaint charges that the News of the World hacking allegations should not have taken years to uncover, and alleges that the media conglomerate’s Board of Directors failed to provide effective review or oversight. It further alleges that “it is inconceivable that Murdoch and his fellow Board members would not have been aware of the illicit news gathering practices at the newspaper.”

The lawsuit seeks to force directors to pay damages to News Corp for having breached their fiduciary duties.

Reporters from News of the World are known to have hacked into phone voicemails belonging to thousands of people, including those of a teenage murder victim, British Prime Minister David Cameron, and scores of celebrities. It has also been alleged that News of the World may have hacked into phones belonging to victims of the 9/11 terrorist attacks.

The company faces investigations in the U.K. – where Rupert Murdoch and his son, James, were recently forced to testify before a committee of the British Parliament – and the U.S. In the U.S., the FBI is looking into the 9/11 victim hacking allegations, and is also trying to determine if alleged bribes paid to British police officials could constitute a violation of the Foreign Corrupt Practices Act, which makes the bribing of a foreign official by a U.S. company a crime.

The scandal has already led to the demise of the 168-year-old News of the World tabloid. So far, 10 former News of the World employees have been arrested in the U.K because of the hacking scandal. The include Rebekah Brooks, head of the tabloid when the hacking was taking place, who resigned her most recent position as head of News International – News Corp.’s U.K. newspaper publishing arm – last week. Also arrested was Andy Coulson, the former News of the World editor who became communications chief for British Prime Minister David Cameron.

According to a report from the Associated Press, as the hacking scandal has grown, so has speculation that the Murdoch family might have to hand over operational control of the company. The scandal has also taken a toll on News Corp. stock, which is down about 10 percent since the end of June.

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