Rupert Murdoch Outlines News Corp. Ethics, Compliance Initiatives in Staff Memo
In a memo to staff, News Corp. chairman Rupert Murdoch announced structural changes meant to address compliance and ethics in the wake of a hacking scandal that has roiled the company.
Last year, Murdoch gave testimony to the Leveson Inquiry, a UK parliament led investigation into allegations of phone hacking at the News of the World, illicit payments to police, and in general, the relationship between the press and politicians.
Murdoch told staff on Wednesday that News Corp has "made progress" on assurances he gave to the Leveson Inquiry "to redress wrong-doing, cooperate with law enforcement officials and strengthen our compliance and ethics program company-wide."
Gerson Zweifach, senior executive VP and group GC at News Corporation, has been appointed the company's chief compliance officer, tasked with managing global efforts on this front. The deputy of this new ethics oversight division will be Lisa Fleischman, formerly an associate GC at the company. Both will be reporting to the Board of Directors and the Audit Committee regarding the content and operation of the compliance and ethics program.
In addition, News Corp., which has proposed splitting its entertainment business from its publishing business, will also be organizing its compliance program in five groups. In Murdoch's staff memo, he says the five groups will be the L.A. Cable and Broadcast Group; the L.A. Film and TV Production Group; the Europe and Asia Group; the Australia Group; and the New York News and Information Group. Each group will have someone who oversees compliance for that unit.
Murdoch says that the company has "strengthened and expanded" its anti-bribery training programs and that News Corp. "recently initiated a review of anti-corruption controls in selected locations around the globe."
The fall-out from the hacking scandal is credited with helping nix a bid by News Corp. to gain full control over British Sky Broadcasting Group, launching investigations into whether News Corp. leaders were fit to hold broadcast licenses, caused the shutdown of News of the World, led to resignations, and more. News Corp. has also reported having to face more than 500 civil claims and making more than 100 settlements to victims of the hacking.
Murdoch says the review of anti-corruption controls wasn't based on suspicion on wrongdoing at any particular business unit but rather a commitment to improve controls at the company.
"Strengthening our compliance programs will take time and resources, but the costs of non-compliance--in terms of reputational harm, investigations, lawsuits, and distraction from our mission to deliver on our promise to consumers--are far more serious," writes Murdoch.
Murdoch's staff memo comes a few months after a committee of the U.K. Parliament released a report in May criticizing Murdoch because he "exhibited willful blindness to what was going on in his companies and publications," and added that he was "not a fit person to exercise the stewardship of a major international company."