Rebel shareholders: News Corp is Murdoch 'fiefdom'

News Corp chairman Rupert Murdoch was accused by rebel shareholders yesterday of treating News Corp as “his personal fiefdom” in a new lawsuit as yet more damaging developments emerged in the UK phone-hacking scandal.

The shareholders stated yesterday that the “still unfolding hacking scandal is just a continuation of the board’s malfeasance”.

As the US pension funds filed their new lawsuit in Delaware, it was revealed that Shelia Henry is to sue the News of the World after police told told her the mobile phone of her son, Christian Small, may have been targeted by the paper’s investigator Glenn Mulcaire following his death in the 7/7 terrorist attacks on London in 2005.

Hers will be one of six test cases heard by Mr Justice Vos next year involving a range of phone-hack litigants. The others are: football agent Sky Andrew, Labour MP Chris Bryant, former footballer Paul Gascoigne, actor Jude Law and interior designer Kelly Hoppen.

It also emerged yesterday that News Corp Europe and Asia CEO James Murdoch is to face a second grilling from MPs to explain his differing account to them of a meeting in 2008 with then News of the World editor Colin Myler and legal head Tom Crone. During the meeting Crone and Myler say an email was discussed which appeared to prove knowledge of phone-hacking at the News of the World was more widespread than previously admitted.

Yesterday’s amended legal claim against News Corp was brought by a group of US shareholders including the Amalgamated Bank, the Central Labourer’s Pension Fund and the City of New Orleans Employees’ Retirement System.

The 116-page legal claim was prompted by News Corp’s decision to pay £615m for Elisabeth Murdoch’s TV production company Shine in March – but it also makes wide-ranging allegations of wrongdoing by Rupert Murdoch and the News Corp board culminating with the current phone-hacking scandal in the UK.

The action states that the News Corp board “has not lifted a finger to engage in any oversight of Murdoch’s role…even when it was presented with clear and unmistakable warnings that News Corp’s business practices were not only unethical but also illegal…”

The claim states that Rupert Murdoch has been allowed to “siphon value away from News Corp and its shareholders for the benefit of Murdoch, his family and his friends”.

The shareholders allege that two News Corp 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 behaviour”.

On the hacking scandal, the rebel shareholders question whether – even now – the News Corp board is committed to getting to the bottom of the matter and they have questioned the independence of the Management and Standards Comittee formed by News Corp to look into the matter.

They note that the committee will report directly to News Corp executive vice president Joel Klein, one of Murdoch’s “closest and most visible advisers during the scandal”. And it notes that fellow board member Viet Dinh, who the MSC also reports to, is “a close Murdoch family friend” who is a Godfather to Lachlan Murdoch’s second child.

The legal claim states: “In addition to larding the executive ranks of the company with his offspring, Murdoch engages in transactions designed to benefit family members”.

It notes that News Corp’s 2007 acquisition of Dow Jones for $5bn was a 70 per cent premium on the share price and that “Murdoch’s true and stated purpose was to acquire the Wall Street Journal which was much coveted because he could use it to further his conservative political agenda on a national scale”.

The claim document notes that 18 months after the deal, the value of Dow Jones had to be written down by $2.8bn.

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