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Response to Octafish (Reply #14)

Wed Aug 5, 2015, 10:53 PM

76. News Corp, a rogues gallery.


Who controls Fox News? A peek at the higher-ups


Viet Dinh is a News Corp. director and attorney who came to the United States as a boy from Vietnam. In a 2002 interview with the LA Times, Dinh, who then served as an assistant attorney general at the U.S. Department of Justice, recalled an exchange he’d had with then-Attorney General John Ashcroft in the wake of the Sept. 11 attacks. “He told me: ‘The art of leadership is the redefinition of the possible,’” Dinh recounted. “‘I want you to be the think tank to help me redefine the possible for the Department of Justice.’”


A law professor at Georgetown, Dinh is also listed as the founder and chief of Bancroft Associates PLLC, a consulting firm that specializes in helping Fortune 500 companies “navigate the federal and state criminal or civil investigations, congressional investigations and complex litigation,” according to the firm’s Web site. It also specializes in public relations.


Thomas Perkins, a News Corp. director, is a Silicon Valley venture capitalist. He is a founding partner of Kleiner, Perkins, Caufield& Byers, an investment firm with stakes in Genentech, Google, Sun Microsystems, Netscape, Amazon, and others. He was previously an executive at Hewlett Packard. Perkins was the fifth husband of romance novelist Danielle Steel. He owned the 287-foot Maltese Falcon -- the largest and most expensive private sailboat ever built. A partner at Perkins’ firm, John Gage, also serves as a director of the Markle Foundation, a private nonprofit that provides recommendations for using technology to enhance the federal government’s intelligence-sharing abilities, according to a policy paper published by the foundation. Stanley Shuman, another News Corp. director, is listed as a managing director at the Markle Foundation.


Stanley Shuman, a News Corp. director, is listed on Forbes as a managing director of New York investment firm Allen & Co., which employs former CIA Director George Tenet, according to BusinessWeek. Allen & Co. is also known for hosting a lavish annual retreat that attracts the ranks of the superrich. Shuman is also listed as a director of the Markle Foundation, a group of big business leaders and intelligence experts from past administrations, which advocates more efficient intelligence sharing at the highest levels of federal government to fight terrorism. The Markle Foundation’s past recommendations influenced some of the legislation passed in the wake of 9/11, according to one of its policy papers, which greatly expanded government powers for information gathering. Shuman’s online bio also names him as a member of the Council on Foreign Relations, and notes that he served on the Foreign Intelligence Advisory Board under Clinton. He is also listed as the chair of an intellectual property-rights outfit called SESAC.

Viet Dihn, the primary author of the USA PATRIOT Act, is representing a former HP director.

Viet D. Dinh

During his time at the Department of Justice, Dinh played a key role in developing legal policy initiatives to combat terrorism—namely, the USA PATRIOT Act.

News Corp. Independent Directors Hire Debevoise Law Firm

Dinh, who runs a small law firm in Washington that specializes in damage control, and venture capital executive Tom Perkins are leading the efforts of independent directors, who hold nine of 16 board seats. Dinh, also a professor at Georgetown University and the chief architect of the USA Patriot Act, represented Perkins, a former Hewlett-Packard Co. (HPQ) director, during a scandal at that company.

And former Attorney General Michael Mukasey's law firm is advising Dinh in News Corp's phone hacking scandal.

News Corp. (NWSA)’s independent directors hired the law firm Debevoise & Plimpton LLP, according to Mary Jo White, a partner at the firm and the former U.S. attorney in New York.

Michael Mukasey, who served as U.S. attorney general under George W. Bush, will join White in representing directors, Suzanne Elio, a spokeswoman for the firm, said today.

“Debevoise & Plimpton has been retained to advise Viet Dinh in his supervision of the Management and Standards Committee on behalf of the independent members of the board,” Elio said in an e-mail.
She declined to comment further.

How Bad Is News Corp.?
Michael Wolff on the state of the Murdoch empire and its Mob-like structure

Among the areas that the FBI is said to be looking at in its investigation of News Corp. are charges that one of its subsidiaries, News America Marketing, illegally hacked the computer system of a competitor, Floorgraphics, and then, using the information it had gleaned, tried to extort it into selling out to News Corp.; allegations that relationships the New York Post has maintained with New York City police officers may have involved exchanges of favors and possibly money for information; and accusations that Fox chief Roger Ailes sought to have an executive in the company, the book publisher Judith Regan, lie to investigators about details of her relationship with New York police commissioner Bernie Kerik in order to protect the political interests of Rudy Giuliani, then a presidential prospect.


While News Corp. does most of its business in the U.S., prosecutors here have no jurisdiction over the phone hacking crimes that were committed in the U.K. And itʼs quite possible, because of differences in news gathering operations in the U.S., and in cell phone protocols, that no hacking was committed here. And while hacking may have taken place by British reporters against targets in the U.S.—as alleged in Jude Lawʼs suit—that remains to be proven.

And yet, what has happened in the U.K. is far from mere rogue behavior in a remote foreign division. Rather, News International is a division that has long been one of the core components of the company, both in terms of revenue and brand, and one that has reported to the highest echelons of the company: Rupert Murdoch himself, his closest confidants, and, more recently, his son, James.


Here is where the RICO logic comes in. The usual path of a criminal investigation follows the crimes back to the source—thatʼs what happened to News Corp. in the U.K. when the royal family discovered that its voice mail messages were appearing in the press. But in a RICO investigation, you are really following the ethos and methods of operation of a group or organization to the crime. In other words, criminal activity is not seen as an isolated or particular event—as News Corp. has desperately and unsuccessfully tried to portray the crimes that occurred in the U.K.—but as an established pattern of conduct.

News Corp. Hacked Computers in U.S. Ad Wars, Dial Soap Says

The Dial Corp. sued News Corporation, and its subsidiaries News America, News America Marketing FSI, and News America Marketing In-Store Services.

"Its unlawful purposes could not be more transparent. For example, in a sales meeting Paul Carlucci, then News America Inc.'s Chief Operating Officer, Paul Carlucci, illustrated News' desire for the ultimate in competitive suppression with a video from 'The Untouchables,' in which Al Capone serves as a sales role model as he cudgels a competitive enemy to death with a baseball bat. Mr. Carlucci has been equally blunt with the press as to News' exclusionary purposes, vowing to 'destroy' his competitors as a 'man who has to have it all.' "Mr. Carlucci threatened to fire any News employee ('concerned about doing the right thing') who did not support exclusive control by News of shelves in retail accounts.

"The exclusionary effectiveness and durability of these News contracts designed to defeat competitors' distribution of competitive services have been reinforced by seven additional exclusionary News actions, including: "Hacking into Floorgraphics' computers to obtain customer lists and other marketing materials to solicit its accounts and lock them into News long-term and exclusive contracts”


The complaint describes the alleged hacking campaign: "From 2000 to 2003 there was a concerted effort at News to develop its brand price messaging product (Price Pop) to compete with the Insignia product (POPSign), as well as to develop its Floortalk product competing with that of Floor graphics.

"In the early part of 2003, News implemented 'Operation Retailer Freedom' to take away all Floorgraphics contracts by soliciting accounts on its customer lists. This program went on for several years. Valassis Tr. (6/17/09) 176:2-177:14. "Floorgraphics has alleged that News hacked into its password protected accounts at least eleven times in 2003 and 2004 to obtain its customer lists (and other marketing materials), which, if true, would facilitate this attack."

Troubles That Money Can’t Dispel

News America was led by Paul V. Carlucci, who, according to Forbes, used to show the sales staff the scene in “The Untouchables” in which Al Capone beats a man to death with a baseball bat. Mr. Emmel testified that Mr. Carlucci was clear about the guiding corporate philosophy.

According to Mr. Emmel’s testimony, Mr. Carlucci said that if there were employees uncomfortable with the company’s philosophy — “bed-wetting liberals in particular was the description he used” Mr. Emmel testified — then he could arrange to have those employees “outplaced from the company.”

Clearly, given the size of the payouts, along with the evidence and testimony in the lawsuits, the News Corporation must have known it had another rogue on its hands, one who needed to be dealt with. After all, Mr. Carlucci, who became chairman and chief executive of News America in 1997, had overseen a division that had drawn the scrutiny of government investigators and set off lawsuits that chipped away at the bottom line.

And while Mr. Murdoch might reasonably maintain that he did not have knowledge of the culture of permission created by Mr. Hinton and Ms. Brooks, by now he has 655 million reasons to know that Mr. Carlucci colored outside the lines.

So what became of him? Mr. Carlucci, as it happens, became the publisher of The New York Post in 2005 and continues to serve as head of News America, which doesn’t exactly square with Mr. Murdoch’s recently stated desire to “absolutely establish our integrity in the eyes of the public.”

Daboub, A. J., Rasheed, A. M., Priem, R. L., & Gray, D. A. (1995). Top management team characteristics and corporate illegal activity. Academy of Management Review, 20(1), 138-170.

Homogeneity in Top Management Team (TMT) Characteristics

Social psychology research shows that similarity among group members is a major determinant of interpersonal attraction (Heider, 1958; Newcomb, 1956). This is true, not only of attitude similarity (Byrne, 1961; Newcomb, 1961) but also of similarity of personality (Griffitt, 1966) and economic similarity (Byrne, Clore, & Worchel, 1966).


{Differential association theory} This sociological theory of crime was developed by Sutherland (1939, 1947) and later modified slightly by Sutherland and Cressey (1978). According to this theory, "crime" is defined as such by society. Some individuals live in accordance with these definitions; others do not. Those who do not are seen as "criminal" in that their definitions of acceptable behavior are deviant. An example of differential association would be a group of executives who have defined a regulatory agency, e.g., the EPA, as antibusiness and a hindrance to U.S. industrial competitiveness. Violation of EPA rules could then be viewed by them as patriotic and supportive of free enterprise.


Members of age and/or tenure cohorts are likely to share experiences and have similar outlooks and values (Pfeffer, 1983; Wagner et al., 1984), facilitating groupthink and differential association. Useem and Karabel (1986) found that educational and social class backgrounds facilitate advancement to the top levels of management. They conjecture that this relationship results from the need for trust at the top levels of management: "one of the simplest ways for organizations to entrust decisions to the 'trustworthy' is for the already powerful to promote people most similar to themselves educationally and socially" (1986: 198).

If we assume that TMTs make decisions that have an impact on organizations, and that among those decisions is the decision to behave illegally, the processes through which decisions are made are important in understanding corporate illegal behaviors. For example, Kriesberg (1976) developed implications for effective corporate crime-reduction policies using Allison's (1971) models of decision making. Kriesberg argued that the rational actor model produces "corporate lawbreaking {that} results from purposeful, consistent acts of the corporate entity" (1976: 1106); the organizational process model produces criminal behavior "because existing SOPs mandate or allow illegal action" (1976: 1113); and the bureaucratic politics model produces illegality through "the interests and influences of individuals, not entities" (1976: 1121)

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