News Corp. Can Relax About Corrupt-Practices Act: The Ticker

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By Jonathan Weil

News Corp. may have a lot of problems, but the U.S. Foreign Corrupt Practices Act probably should be way down on the list.

A few weeks ago, armchair prosecutors were foaming in the press over the prospect that News Corp. might have violated the FCPA, on account of bribes that News of the World allegedly paid to British cops in exchange for news tips.

On July 12, Slate published an op-ed by former New York Attorney General Eliot Spitzer, who said “the facts already pretty well established in Britain indicate violations of American law.” U.S. Senator Frank Lautenberg of New Jersey called for Attorney General Eric Holder to investigate the possibility that payments to U.K. police amounted to FCPA infractions.

So where might all this lead? Consider last week’s news that the Securities and Exchange Commission reached a settlement with the British liquor giant Diageo Plc over alleged FCPA violations stemming from six years of improper payments, estimated at $2.7 million, to government officials in India, Thailand and South Korea. The penalty? A whopping $3 million fine, plus $13.4 million in disgorgement and prejudgment interest. That's about 0.2 percent of Diageo's revenues.

In practice, FCPA violators usually get off with wrist slaps. In Justice Department cases, deferred-prosecution agreements and even non-prosecution agreements are the norm for corporations, as are penny-ante fines. Individuals rarely are charged, a point James Stewart of the New York Times made in a June column about federal prosecutors’ FCPA settlement this year with Tyson Foods. The Arkansas poultry company agreed to pay $5.2 million in criminal and civil penalties over illicit payments to veterinarians in Mexico. None of the people involved in paying the alleged bribes got pinched.

Bottom line: Even if News Corp. did violate American anti-bribery laws, it’s hard to imagine that Rupert Murdoch is all that worried about the legal repercussions. On July 29, Bloomberg News reported that the Federal Bureau of Investigation isn’t planning to mount an aggressive probe into the allegations, citing two law-enforcement officials familiar with the matter.

While the scandal at News Corp. has many angles, this one is looking like a dud.

-0- Aug/02/2011 19:51 GMT