This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

James Murdoch's Resignation Raises Leadership Question

With salacious details about the scandal continuing to emerge, and Murdoch now facing bribery charges under U.K.'s domestic anti-bribery laws, the days of quiet on the U.S. side of the pond could rapidly draw to a close.

Reports indicate that, in recent weeks, U.S. authorities, including the Federal Bureau of Investigation, have intensified their investigation into whether Murdoch employees may have violated the U.S. Foreign Corrupt Practices Act (FCPA), the law that prohibits companies and individuals from bribing officials to obtain or retain business abroad. Aker's testimony is sure to bolster that effort. The cost of a full-scale FCPA battle in terms of fines, legal fees, and associated shareholder derivative suits could be enormous, potentially doubling the nearly US $1 billion that commentators estimate Murdoch has already spent to fight his companies' legal battles. But the Murdochs have more than money to lose. Thus far, their U.S. holdings, including the Wall Street Journal and Fox News, have not been implicated in the hydra-like scandal. To date, there is no hard evidence that they will be, although one may wonder if the FCPA investigation might spawn a sweep of the entire news media industry, not unlike those we have seen in other industries such as pharmaceuticals, medical devices, and financial services.

Certainly, the tepid coverage of the scandal by Murdoch's stateside outlets has not burnished the corporation's U.S. image. Nor did Murdoch's $1 million donation to the U.S. Chamber of Commerce in the months leading up to its now high-profile campaign to reform the FCPA.

Meanwhile, a recent Wall Street Journal editorial entitled "Justice's Bribery Racket" legitimately questions whether FCPA enforcement may have gone too far. But the appearance of conflict, however unfair, can only stoke the simmering fire.

If Rupert Murdoch wants to safeguard his properties from the same fate that befell News of the World, and now the Sun, he must do what he would not do seven months ago. The challenge for Murdoch, and other foreign companies facing an FCPA prosecution, is to use the critical time before charges are filed to lead rather than to simply react.

Murdoch must designate a credible leader, probably from outside the organization, to determine if the corporate house needs further cleaning and, if it does, that anointed leader must spearhead the effort.

2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,915.07 -70.54 -0.42%
S&P 500 1,964.68 -8.15 -0.41%
NASDAQ 4,396.2040 -22.83 -0.52%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs