News Corp.’s Klein Steps Down From Internal Hacking Probe

News Corp. (NWSA) executive Joel Klein stepped down as the head of the company’s internal committee investigating phone hacking and bribery, passing the role to General Counsel Gerson Zweifach.

The group, known as the Management and Standards Committee, will now report directly to Zweifach, who joined News Corp. in February. The change will let Klein return to his role as chief executive officer of News Corp.’s education unit, according to a statement yesterday. The former Justice Department lawyer, who joined News Corp. last year after serving as the chancellor of New York schools, had been running the committee since news of the hacking broke last July.

The management change was made at a board meeting last week in Milan, according to an executive familiar with the matter who asked not to be named because the decision was private. Klein had no longer been managing the committee on a day-to-day basis in recent months and wanted to return to running the education unit, according to the person. Klein had suggested hiring Zweifach earlier this year, with the expectation that he would eventually take over the internal committee, according to another person with direct knowledge of the matter.

The internal committee has worked closely with London police in its investigations of bribery and hacking by journalists at News Corp.’s U.K. unit. The committee’s findings have led to a number of arrests, including at least four people last week, who have been accused of making or accepting illegal payments for tabloid stories.

Government Ties

The scandal has increased scrutiny of News Corp. executives and their ties to members of the U.K. government. Culture Secretary Jeremy Hunt is facing calls from opposition Labour Party to resign after e-mails showed one of his aides offered inside information on Hunt’s views on News Corp.’s plans to buy out the remaining shares of British Sky Broadcasting Group Plc. The company has abandoned the $12.6 billion bid.

Police have detained and released on bail more than 50 people since January 2011 in related probes of intercepting voice-mail messages, computer hacking and bribery at News Corp. titles, including the now defunct News of the World tabloid.

Zweifach, who had already served on the standards committee since February, will now report the group’s findings to Viet Dinh, an independent director and chairman of the company’s Nominating and Corporate Governance Committee. The standards committee is currently chaired by Anthony Grabiner and includes William Lewis and Simon Greenberg as full-time members. U.K. law firm Linklaters LLP is legal adviser to the group.

Zweifach worked at Washington-based Williams & Connolly LLP for almost three decades managing antitrust and libel cases before joining the company in February. He succeeded Lawrence Jacobs, who left in June 2011 to pursue other opportunities.

Shares of News Corp., a global media company led by Rupert Murdoch, rose 1.1 percent to $20.30 at 10:28 a.m. in New York. The shares have climbed 14 percent this year.

Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.

To contact the reporter on this story: Edmund Lee in New York at elee310@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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