The corporate governance suit against News Corp that several labor-backed pension funds have filed in Delaware is becoming more interesting — and potentially important. The group led by Amalgamated Bank, the New Orleans Employees’ Retirement System, and the Central Laborers Pension Fund today filed an amended complaint that says News Corp directors rubber-stamped decisions that led to nearly $1B in settlements and verdicts from privacy breaches and other problems at News America Marketing and NDS. These problems plus other incidents including the News of the World hacking scandals “were part of a much broader, historic pattern of corruption at News Corp, under the acquiescence of a board that was fully aware of the wrongdoing, if not directly complicit in the actions,” says the group’s lawyer Jay Eisenhofer of Grant & Eisenhofer. They have already told Delaware’s Chancery Court that News Corp’s execs and board violated their legal duty to protect shareholder interests when they agreed to pay $615M for Elisabeth Murdoch’s Shine Group TV production company — which the group calls “a sweetheart deal.” They also amended the complaint to include the NOTW scandal.
The new filing says that the board’s negligence was evident in developments that led to recent cases where News America Marketing, an in-store marketer, was found to have engaged in espionage and anti-competitive behavior. Among the allegations in five lawsuits: NAM hacked competitors’ computers and “issued false press releases impugning a rival it was trying to purchase,” the labor group says. NAM’s CEO was quoted as having told rivals that “If you ever get into any of our businesses I will destroy you. … I work for a man (Rupert Murdoch) who wants it all and doesn’t understand anybody telling him he can’t have it all.” NAM ended up paying $300M in damages, and $650M to settle three of the suits. Separately, the amended complaint says that Charlie Ergen’s EchoStar charged NDS with helping consumers to illegally access Dish Network programming for free. A federal jury sided with Ergen and issued an injunction that prevented NDS from intercepting EchoStar’s satellite signals.
News Corp isn’t commenting about the new charges. The company told the Delaware court in July that directors have broad latitude to make business judgments — and the complaint failed to prove that they had abused their authority.