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Shareholders add corporate espionage charges to News Corp. suit

September 13, 2011 |  3:14 pm

Photo: Rupert Murdoch. Credit: Louis Lanzano / AP Contending that corruption is rampant throughout media giant News Corp., a group of shareholders have added allegations of corporate spying to a complaint against the company's chairman and chief executive Rupert Murdoch and other board members.

Tuesday's action amended a lawsuit filed in March in a Delaware court by the New York-based Amalgamated Bank, which manages several investment funds that have stock in News Corp. 

The suit maintains that News Corp. board members have failed shareholders by allegedly shirking their responsibility to oversee the media company's practices and business decisions.

News Corp. declined to comment on the litigation.

"For years, highly improper (and at times illegal) conduct has been carried out throughout News Corp. subsidiaries around the world without any board oversight or restraint," the amended complaint said.

The latest allegations center on suspected corporate espionage that occurred more than a decade ago at two of the company's U.S. business units, News America Marketing, which distributes coupon inserts for newspapers, and News Digital Systems Group, which provided TV set-top software to deter the theft of satellite signals.  

"Two subsidiaries, News America Marketing and NDS Group, were accused by multiple parties of stealing computer technology, hacking into business plans and computers and violating the law through a wide range of anti-competitive behavior," the lawsuit said.

The suit went on to say that News America "attempted to drive its competition out of business, by among other things, illegally hacking a competitor’s password-protected website" nearly a dozen times over a several month period. 

Eventually, News Corp. paid more than $650 million in settlements to three of News America's competitors. It also bought one of those rivals, a New Jersey marketing company called Floorgraphics Inc.

The Amalgamated lawsuit initially centered on issues of nepotism after News Corp. paid $675 million for Elisabeth Murdoch's London-based television production company. The complaint has since grown to include charges related to the British phone hacking scandal and, now, the corporate espionage.

Also included in the suit is a reference to a deal Murdoch made to buy News Corp. shares from mogul John Malone as part of a deal to sell satellite broadcaster DirecTV to Malone's Liberty Media.

That deal, the suit alleges, "protected Murdoch but gave up what could have been a multibillion-dollar profit on News Corp.'s investment in DirecTV."

RELATED:

Elisabeth Murdoch Makes $214 million on sale of Shine to News Corp.

Old Accusations of Spying Could Haunt News Corp. in the U.S. 

Bank Sues News Corp. Over Purchase of Shine Group

 -- Meg James

 Photo: Rupert Murdoch. Credit: Louis Lanzano / AP

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