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Brooks Arrest Raises Risk of Action in US

Robin Harding, Financial Times

News Corp is facing heightened legal risks in its home US market over the phone hacking and police bribery scandal after the arrest of Rebekah Brooks, the former News International chief executive, but legal analysts believe US authorities are unlikely to take rapid action against the company.

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The debate on the chances of the largely British scandal affecting News Corp’s US directors or businesses remained split along party political lines on Sunday.

The “startling” UK allegations raised questions about whether News Corp had violated the US Foreign Corrupt Practices Act, Senate majority whip Dick Durbin, Democrat of Illinois, told NBC’s Meet the Press.

He called for congressional hearings and said the Federal Bureau of Investigation needed to “follow through” with an investigation it opened last week.

On the same program, however, Jim DeMint, the Republican senator from South Carolina, said Congress had more pressing tasks, as it wrestles with the question of whether to raise the national debt ceiling, an issue that has eclipsed phone hacking in the US media.

“We need to let law enforcement work here,” he said: “We need to handle our own business for a change.”

Concern about reputational damage spreading in the US had prompted News Corp to add a US public relations firm to its team of advisers, one person close to the group said.

The identity of that firm could not immediately be confirmed.

Rudy Giuliani, the Republican former New York mayor, told CNN’s State of the Union he had prosecuted people for the “serious felony” of intercepting communications, but added: “Give people the presumption of innocence. I think that just how high up it goes is a big question and it’s one we shouldn’t be jumping to conclusions about.”

He added that Rupert Murdoch, News Corp’s chairman, was “a very honourable, honest man,” saying: “This can’t be something that he would have anything to do with.”

The FBI is investigating an unverified UK report that News of the World representatives may have sought access to the voicemail messages of victims of the 9/11 attacks, but legal analysts said News Corp may be more exposed to allegations that the UK tabloid paid the police for information.

“A reporter in London who paid a few quid to a Bobby for some information about the royals would be surprised to learn he could end up in an American jail,” said Gary Stein, attorney at Schulte Roth & Zabel.

“But the [Foreign Corrupt Practices Act] has tremendous reach, and it’s certainly not impossible.” News Corp executives could also be found liable, Mr Stein said. “If they had knowledge of an illicit bribery scheme, I think there could be liability on the part of the corporation,” he said. “There could even be liability even if no one in the US was in on the scheme.”

John Dean, former White House counsel to Richard Nixon, and Carl Bernstein, one of the Washington Post reporters who led the investigation into the scandal and its cover-up, have both likened the crisis to the Watergate affair.

Watergate unfolded slowly, however. From the arrest of five men for breaking into the Democratic National Committee offices to the resignation of Richard Nixon, the US president, took more than two years.