AP sources: FBI's News Corp. probe heads to Russia

March 5, 2012 - 3:55 PM

NEW YORK (AP) — The FBI is investigating whether a Russian billboard company once owned by media giant News Corp. bribed local officials to get sign placements approved, part of a growing probe of Rupert Murdoch's company that stems from a scandal in the U.K.

The expanding investigation of News Corp. properties — besides the British tabloids accused of phone hacking and bribery of public officials — is typical of a U.S. probe of the Foreign Corrupt Practices Act.

The 1977 act allows the Justice Department to levy hefty fines on U.S.-based companies for ill-gotten profits that come from bribing foreign officials.

Two people familiar with the investigation told The Associated Press that the FBI will examine operations at former News Corp. subsidiary News Outdoor Russia. The two people spoke on condition of anonymity because they were not authorized to discuss the investigation.

Investigators are trying to establish whether there is a pattern of bribery and corruption at News Corp. outlets abroad, they said.

A spokesman for News Corp. in New York declined to comment. An FBI spokesman also declined to comment.

The Wall Street Journal, a News Corp. newspaper, earlier reported on the FBI probe.

Michael Koehler, a law professor at Butler University, and former legal adviser to businesses on the FCPA, said such a probe could take years and cover many News Corp. properties around the world.

In past cases where it has found wrongdoing, the Justice Department has imposed fines of up to double the amount of illicitly gained revenue, he said.

"The breadth and scope of conduct is going to be one factor for the enforcement agencies in deciding how to resolve a case like this," he said.

The investigation grew out of Britain's phone hacking scandal, which revealed that journalists at News Corp.'s News of the World tabloid illegally eavesdropped on politicians, celebrities, sports stars and even crime victims — all in the service of scoring scoops that sell newspapers.

That led to separate investigations in Britain covering the bribery of public officials and computer hacking. More than 20 people have since been arrested in the bribery probe, including journalists from News Corp.'s The Sun and now-shuttered News of the World.

None have been charged for bribery.

News Corp. sold its 79 percent stake in News Outdoor Russia along with a similar business in Romania for a combined $360 million in July.

The sale does not prevent U.S. agencies from fining the company for profits reaped in the past through bribes, however.

Authorities can bring a civil complaint against the company and criminal charges against executives up to five years after alleged wrongdoing, according to Barry Slotnick, a lawyer who advised Wynn Resorts Ltd. in its recent tussle with a former shareholder accused of bribing Philippines officials over a casino license.

Most large companies with operations in other countries, and certainly News Corp., would have been aware of the dangers of running afoul of the act, he said. "With regard to the Foreign Corrupt Practices Act, they're aware of it, they know about it and they certainly shy away from it," Slotnick said.

Shortly after the British phone hacking scandal broke last July, News Corp.'s independent directors hired the firm of prominent lawyer Michael Mukasey, a lawyer who has lobbied Washington to change the foreign bribery act, to advise them.

Murdoch himself had grown leery of News Corp.'s business in Russia as early as 2008. In August that year, he expressed his reservation to analysts on a quarterly conference call.

"The more I read about investments in Russia, the less I like the feel of it," he said. "And the more successful we'd be, the more vulnerable we'd be to have it stolen from us, so better we sell now."

___

Nakashima reported from Los Angeles. Associated Press writer Raphael Satter in London contributed to this report.