News Corp. Buries a Whistleblower

A case study in Rupert Murdoch's corporate culture

What happens when a low-level Rupert Murdoch employee blows the whistle on criminal wrongdoing? He gets harassed and destroyed by News Corporation.

What happens when a Rupert Murdoch executive runs the company accused of said crimes, for which News Corporation eventually unloads a whopping $650 million in three settlements? He stays on as CEO and adds the title of New York Post publisher.

This is the corporate culture of News Corp.

The Guardian has an excellent story on a former News America employee named Robert Emmel who was critical in forcing those huge settlements, including one for hacking into a competitor’s computer system.

For a year before he was sacked in November 2006, Emmel began compiling documentary evidence that he suggested backed up the allegations, and posted it to public bodies and individuals including the US securities and exchange commission, two senators, two Senate committees and the New York attorney general…

News America learned of Emmel’s whistleblowing activities after it had sacked him in a dispute over his timekeeping. It then unleashed its legal armoury against him. In April 2007 it filed a lawsuit accusing him of six violations relating to his disclosure of confidential information, pressing its case with more than 300 pleadings to the Georgia courts. The company said Emmel refused to return “tens of thousands of stolen documents” and added: “Initiating legal action was News America Marketing’s only recourse to protect the company’s private information.”

To sum up: Emmel saw what he thought was criminal activity at News Corp. He put aside copies of the evidence so News wouldn’t be able to unilaterally destroy them. He sent them to government officials like Senator Chuck Grassley and the New York Bureau of Labor Standards to get them to investigate. News Corp. spends $2 million to squash Emmel for sending its trade secrets to government officials. Seriously (BNET’s Jim Edwards, who has followed the News America scandal for years, has some of the key documents posted here).

Rather than thank Emmel for trying to clean up its corrupt culture, News Corp. tried to keep the documents secret, unleashed “Rambo tactics” on him, and bankrupted him. The Guardian:

In 2009 the company made clear that it intended to go to trial to ask for $425,000 from Emmel to cover legal costs incurred in the breach of contract element of the lawsuit, as it was entitled to dothough the sum was way beyond his ability to pay. Emmel’s lawyers say the move forced him into bankruptcy. News America then insisted on a deposition to extract financial information out of Emmel, a move that is allowable under the law but that astonished Emmel’s bankruptcy lawyer, Danny Coleman, because he says there had been no suggestion from the authorities that anything about the bankruptcy was out of order. “In my view, that was an abuse of the legal system,” he said. “They took the law to its extreme and they used it to harass my client and prolong his agony.

After months of work on the deposition, nothing irregular was found. Hilder said he was struck by an irony in the Emmel case. “Here is a company, News Corp, that is in the business of disseminating information to the public, and yet its subsidiary does everything in its power to silence him.”

Meantime, Paul Carlucci, the CEO of News America during all of this, is still CEO and has been rewarded by being named publisher of the New York Post.

News Corp.’s competitors, the ones who it eventually paid the hundreds of millions of dollars, ended up paying Emmel’s huge legal fees (although his attorneys have now worked pro bono for two years). That’s clearly a conflict for a witness, but remember, he has documentary evidence to back him up and News Corp. surely wouldn’t have paid such massive settlements if it was clean. And the News Corp. lawsuits are so weak that they’ve all been thrown out (one was overturned by an appeals court).

The Emmel episode shows News Corp. acting like News Corp. acts: Rewarding awful corporate governance. Covering up its crimes rather than rooting them out. Disregarding the truth. Using its might to retaliate against critics.

This organization, the most powerful news company in the world, is rotten to the core.

Regarding that, the last word goes to The Guardian and Emmel’s attorney:

Hilder said he was struck by an irony in the Emmel case. “Here is a company, News Corp, that is in the business of disseminating information to the public, and yet its subsidiary does everything in its power to silence him.”

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,