• by Erik Sass  @eriksass1, September 21, 2011

News Corp. is facing the threat of further legal action in the U.S. Federal prosecutors from the U.S. Department of Justice are seeking information about possible corrupt practices by the company in Britain.

Although the alleged corruption (including payments to police officials) took place in a foreign country, it may still be actionable under the Foreign Corrupt Practices Act, which forbids companies doing business in America to bribe foreign officials.

According to Bloomberg News, the USDOJ has sent a letter to News Corp. asking for information regarding alleged payments to police that have already been widely documented and discussed in the British press as part of the larger phone-hacking scandal that engulfed News Corp. in June. This led to press baron Rupert Murdoch closing the News of the World tabloid.

NOTW employees allegedly made payments to officers in London's Metropolitan police force, otherwise known as Scotland Yard -- perhaps in an effort to deter their original investigation into the phone-hacking scandal in 2003.

The Wall Street Journal also notes that News Corp. retained Mark Mendelsohn, a former head of USDOJ's FCPA enforcement, as an advisor on FCPA issues.

The FBI is investigating allegations that NOTW hacked into the voice mails of victims of the 9/11 terrorist attacks and their family members. The FBI's New York field office launched the criminal probe in response to letters from members of Congress, including U.S. Representative Peter T. King (R-NY) and Sen. Jay Rockefeller (D-WV).

While the political fallout has been limited to Britain, where most of the alleged hacking and corruption took place, in late August analysts from Needham & Co. issued a strongly worded warning that News Corp. is under attack by "powerful enemies" in both countries.

In an unusually opinionated note to investors, Laura Martina and Dan Medina downgraded News Corp. stock from "buy" to "hold" because of what they see as growing potential for political attacks against the global media giant, using the hacking scandal as ammunition, noting: "We believe Wall Street underestimates the resolve of powerful personal enemies of the Murdochs and political enemies of NWSA's conservative media outlets."