It’s been quite a field day for those of us engaged in the responsibility “business” or who are passionate about the paradigm shift in consciousness now underway.

As some consistency in a better direction takes hold regarding the economic recovery, the trickle has become an avalanche. The disturbing revelations out of Penn State’s “Happy Valley” and Syracuse University are part of a series of sorry stories in the ongoing saga of breached trust and confidence among peoples, institutions, and their leaders.

A quick recall brings to mind a few that only scratch the surface: Rupert Murdoch and the News Corp hacking episodes; municipal management and law enforcement of the “Occupy” squatting; the dubious personal behavior of presidential hopeful Herman Cain; the terminal nepotism of televangelist Robert Schuller in bankrupting his Crystal Cathedral Ministries; the “hijacking” of Congressional due process in the debt debate; and the pervasive credibility deficit of big banks while financially-stressed homeowners struggle to hold onto their mortgages.

It’s now looking like a bad B movie in which one implausible charade after another is woven together in a sub-text of absurdity that attempts to culminate in an “ah ha” moment to make singular sense of it all for a world of good. Any lasting revelation, however, will need to come from a long gaze in the mirror.

In his 2010 Rolling Stone investigation of the role Goldman Sachs and the investment banking industry played in the economic crisis (“The Great American Bubble Machine”), journalist Matt Taibbi made the enlightening, however troubling, point that certain powerful entities took advantage of “an extremely unfortunate loophole in the system of Western democratic capitalism” to seize advantage, knowing that in “a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.”

Alas, the underlying lesson is laid bare: It is possible that we have been, to a great degree, victims of our own self-assurance about our leaders and the integrity of our institutions? Is it reasonable to expect our leaders to conduct themselves ethically and uphold a standard of competency as a moral imperative?

This question is asked in jest as we should inquire: What can we realistically expect from those who step in to take on such expectations if they are destined to falter from a futile attempt to live up to ideals projected largely by the gap that has resulted from our own abdicated responsibilities?

While there is no excuse for the breaches in trust and confidence brought about by the individuals and institutions that have failed us so acutely, it is also irresponsible to dismiss outright our own role in engendering a culture of duplicity, incompetence, and corruption as if it all could manifest from unsupported solo acts. The now daily drone of news in the Penn State and Syracuse University scandals is particularly illustrative of such abdicated responsibility as more witnesses point to an institutional culture of benign neglect (at best) – or one that promoted an insidious cover up.

How could any of these recent headlining violations reach so far and wide without a system that conspired, however unintentionally, to enable and empower them?

I don’t suggest for a minute that we start blaming the victims for these gross violations of ethical and moral standards but if we are serious about preventing future inflictions, than perhaps we should take stock of the common themes that run through it all. And take back the power that we so readily relinquished.

How we got here

There are many explanations as to how we came to our current state. Here are a few to ponder:

For too long we bestowed blind deference to celebrity out of a need to project unrealistic ideals on others whose own flawed humanity rendered them incapable of consistently fulfilling them.

By engaging in the entertainment of trumped-up and exploitive ‘wedge’ politics, we rendered as old fashioned the substantive debate of critical public policies.  In avoiding responsibility for doing the heavy lifting of personal consciousness that leads to enlightenment about the valid truths of others, we encouraged a culture of easily digestible, sound bite depictions that served our own misconceptions and ignorance.

In accepting manufactured credentials and pandering to values “check lists” as qualifiers for leadership, we failed to establish real-world measures for competency and integrity that tested our leaders on the hard choices for the good of the whole - instead of those driven by self-preservation and political expediency.

Conversely, what common themes run through the behavior of the alleged offenders? More than a few come to mind:

• The pursuit of self-aggrandizement, through a ‘negotiated state’ of limited consciousness, that negated the consequences of their behavior upon the very stakeholders and system that made their success possible
• Delusional overconfidence that tripped into blinding arrogance, engendering fear among subordinates and discouraging the truth-telling that’s essential for responsible decision-making
• A fixated world view that did not accommodate contrarian perspectives and was defended by a distorted understanding of context (group think)
• A relentless drive for self-preservation and power perpetuation that was disguised as protecting the interests of the institution
• A misread of one’s success and its accompanying increase in stakeholder trust and confidence as ‘permission’ for invincibility, which led to unchecked risk-taking
• Complacency resulting from market or industry dominance in the former era of historically high barriers to entry and less access to information
• Playing all sides of the investment equation, in opposition to the interests of your primary client, to ensure your own success regardless of the outcome
• Shifting from the ethical practice of avoiding conflicts of interest to a policy of leveraging such conflict as ‘opportunities’ to manage

The road that must be traveled

How can things be made different going forward? Most polls indicate Americans are now convinced that indeed things will be different. Too many of these scandalous events will likely become game changers of yet-undetermined proportion.

Returning to the pre-recession manic state of leveraged, irresponsible consumption is not an option. Are we on the cusp of an era of prolonged, responsible materialism? If so, what will it look like and how will business leaders adjust their competitiveness in a reset marketplace framed by a greater priority on public interest values?

Beyond these concerns are others that I keep hearing more people expressing. Never mind the obvious – that we will have to be smarter about our money and where we put it, how we use it for personal wellbeing, or whether to heed a moral call and reach out to those less fortunate for the collective sustainability of the whole.

Many economists believe that we are now enduring a somewhat painful but necessary transition from consumer-driven growth – premised upon acquiring, consuming, and amassing material assets – to growth that is driven by a healthier proportion of actually making things (TBD), exports, and an improved trade balance.

The most perplexing question before us is: What will be so different in our thinking and behavior that will initiate authentic transformation to this new responsibility paradigm? Regardless of your view of the ‘Occupy’ movement for example, perhaps its one definitive success is in having changed the national conversation.

Concurrently, the breach in trust and confidence that continues to plague the financial sector shifts into fast-forward the call for formalizing measurement of the social, economic, and governance activities of certain industries and professions – certainly those which serve as critical hinges to the stability and functionality of the whole system. The ongoing struggle to fully implement Dodd-Frank is one snapshot of the terrain ahead of us.

No easy street to better ethics

Dismissing the necessity for consistent, ethical practices will blind companies to their implicit social contract with constituent communities. While shareholders want a good return with strong valuation and upside stock potential, they recognize the severe price to be paid when business strays from its alignment with public interest values in a now stakeholder-driven society.

Conscious leadership is the path to clarity. It is during the best of times that leaders need to build up the savings bank of reputation equity and credibility. Ethical lapses that remain unaddressed lead to imbalances and injustices. They accumulate and become self-perpetuating, often tempting corruption and other acts of acute destruction.

Ethical Corporation, an independent research and conference firm that provides competitive intelligence for business sustainability, regularly polls senior ethics and compliance executives from a cross-section of sectors as to what they perceive are their greatest current challenges. In one of its recent surveys, the top three answers came from 35% of responses received from such companies as Tata Steel, GE, DHL, Imperial Tobacco, Transparency International, Teco Energy, Weatherford, Novo Nordisk, and Marriott International.

The top ten challenges identified are:

• Getting employee buy-in and commitment for true ethical behavior
• Getting support from top management and changing the view of compliance as a cost center
• Fighting against the ‘turn-a-blind-eye’ culture, and the way ‘business has always been done’
• Managing an effective global program that complies with different, sometimes contradicting local laws
• Keeping abreast of legislation and ensuring that new requirements are met
• Managing compliance in a resource constrained environment
• Managing changing stakeholder expectations and avoiding negative publicity as a result
• Increased liability of individual prosecution under a tough legislative regime
• Educating, monitoring, and managing activities of third parties to ensure compliance
• Defining ‘adequate’ for your company’s compliance efforts and knowing you’re doing enough

Let us grow into a sustainable recovery having learned some hard lessons: Elections matter, as they bestow power not only upon the candidate but also their legacy relationships and personal connections. Hard choices require homework. Deference should be judicious. Leadership is a collective succession of everyday acts. Unchecked, concentrated power is a clue to ethics running amuck. Power should never fall far from the tree in your own back yard. Responsibility should be everyone’s business.

Art Stewart, MPM, is President/Chief Strategy Officer of Boston-based Stewart Strategies Group (www.stewartgrp.com). He teaches a custom course on corporate and social responsibility at Emerson College and is a Research Fellow at the Bentley University Center for Business Ethics.

Yet another scandal is bubbling up at Rupert Murdoch’s News Corp. On Tuesday, the Murdoch-owned Dow Jones announced that the publisher of The Wall Street Journal’s European edition was resigning, without mentioning why. The next day, The Wall Street Journal reported that the top European exec stepped down after an internal ethics investigation found he had pressured reporters to write two positive stories about a Dutch firm with which the paper had an agreement that helped boost circulation figures.

Circulation numbers matter because they’re used to set advertising rates, and American papers are no strangers to scandals over inflated circulation figures.

But that was just the beginning. Also on Wednesday, the Guardian came out with a story by Nick Davies — the same reporter who first drew attention to the breadth of the phone hacking scandal — asserting further transgressions. The Guardian suggested that The Journal funneled its own money to the Dutch firm, Executive Learning Partnership, through middleman companies. In other words, the Guardian reported, The Wall Street Journal Europe was buying its own papers by proxy. The Guardian also reported that Dow Jones and News Corp. executives had known since December that this was going on, and fired the employee who brought it to light.

Dow Jones issued a statement calling the Guardian’s claims “inflammatory” and “replete with untruths and malign interpretations.” But a story in this morning’s Wall Street Journal confirmed much of the Guardian’s account, including that WSJ Europe’s circulation department had channeled “thousands of euros” to ELP through third-party companies.

It’s an embarrassing turn of events for News Corp., which has been embroiled in a few other high-profile scandals (see our previous guides for a refresher.) Here’s a rundown of the facts and allegations so far.

How it started

The Journal and the Guardian both report that over the past few years, The Wall Street Journal Europe arranged with companies to buy copies of the paper at a bulk rate — the Guardian reported for as little as a penny apiece — and hand them out to students at conferences they sponsored. In return, the companies would be named in a promotional segment that ran in WSJ Europe. According to the Guardian, 41 percent of WSJ Europe’s daily sales last year came from the program.

That may be surprising but not particularly unusual. The U.K. Audit Bureau of Circulations had approved the arrangement, and as the Columbia Journalism Review points out, “though advertisers dislike bulk sales like these, lots of papers do them.”

But then ELP, a strategy and learning consultancy, one of the initiative’s biggest participants, said it wanted to stop buying the papers, even at the reduced rate.

The plot thickens

According to the Guardian and The Journal, ELP bought 3.1 million copies of the paper last year, accounting for 16 percent of The Journal’s total European circulation. Fearing a sudden drop in its reported circulation, The Journal cut some new, sketchier deals, including free advertising and positive coverage, to keep ELP. The Dutch firm has stated that it wasn’t promised editorial coverage.

Soon after, The Journal published the two positive stories about ELP. (The stories appeared in special sections of the paper, which are often advertising-friendly.) CJR’s Ryan Chittum noted that ELP had gotten little or no previous newspaper coverage. The Journal didn’t disclose its relationship with the company at the time that the articles were published, though both articles now feature disclaimers online.

Incidentally, one of ELP’s partners, Rien van Lent, is a former publisher of The Wall Street Journal Europe. In one of the special reports The Journal produced about ELP, van Lent was quoted and described as ELP’s chief executive.

ELP complained months later that The Journal wasn’t giving the company enough publicity, and threatened to withhold payments. To avoid that, the Guardian reported, The Journal arranged to give ELP money with which to buy the papers by channeling it through other companies. The Journal reported that payments through third-party companies were arranged for services ELP provided at events.

In its response to the Guardian’s story, Dow Jones said that “the manner in which [ELP was] paid was admittedly complex but nevertheless legitimate.” The company said the WSJ Europe executive at the center of the brouhaha, Andrew Langhoff, stepped down over a “perceived breach of editorial integrity,” and not in relation to the details of the circulation deal itself.

Who knew, and what did they do about it?

The Guardian reported that complaints from a Journal staff member about the deal went up the chain of command but were ignored. An employee took concerns about the arrangement to top human-resources executives, a company lawyer and former Wall Street Journal publisher and Dow Jones CEO Les Hinton. The employee was let go shortly afterward. According to the Guardian, he was told to keep quiet.

Hinton stepped down last summer after he was accused of making misleading statements to Parliament about phone hacking at News International, News Corp.’s British subsidiary. Hinton maintains he didn’t know about phone hacking at the company.

Dow Jones disputed the Guardian’s characterization of the employee as a “whistleblower,”since he was under investigation by the company “because of concerns around his business dealings.” But The Wall Street Journal interviewed the employee, Gert van Mol, and got his side of the story. He was quoted as saying that he was involved in the deal at a lower level, and that Dow Jones put him under investigation after he raised concerns about the deal to his superiors. "I was not in a position to make payments or authorize contracts,” he told The Journal. “I was just an employee.”

ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest.   This article is republished with permission under a Creative Commons license.

(Disclosure: Michael Connor, Editor of Business Ethics, is a former employee of The Wall Street Journal and Dow Jones & Co.)

New documents published today cast doubt on News Corporation’s claims that top executives and editors at the now-defunct News of the World were unaware of widespread phone hacking at the paper. One of the documents had also been aggressively redacted by News Corp., which removed references that referred to top editors knowing about the hacking. We've posted the document, with News Corp.'s redaction revealed .

The document, a four-year-old letter from former News of the World correspondent Clive Goodman, asserted that other members of the staff were also using phone hacking and that the practice “was widely discussed in the daily editorial conference.” The letter also alleged that News of the World had promised Goodman, who was fired for phone hacking, that he could have his job back if he “did not implicate the paper or any of its staff.” Goodman, along with private investigator Glenn Mulcaire, both served jail time in 2007 for phone hacking, and the scandal died down after a limited investigation by Scotland Yard found no evidence of widespread hacking.

When News Corp. recently sent a copy of the letter to the parliamentary committee investigating the scandal, it removed or redacted the embarrassing allegations. But we know what the references said because Harbottle & Lewis, a law firm that conducted an internal review of News Corp., sent the committee another copy of the letter that left in those key details.

One committee member, Labor MP Tom Watson, told the Guardian that the letter from Goodman is "the most significant piece of evidence that has been revealed so far." In a statement, News International told the Guardian: "We recognize the seriousness of materials disclosed to the police and parliament and are committed to working in a constructive and open way with all the relevant authorities."

Check out the redactions that News Corp. tried to make. The Guardian also has an annotated version of the letter and a live blog tracking the latest on the scandal.

ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest.   This article is republished with permission under a Creative Commons license.

NewsCorp executive and scion James Murdoch, the man who oversaw the News of the World (NOTW), said the leadership of the now shuttered British tabloid "failed to get to the bottom of repeated wrongdoing that occurred without conscience or legitimate purpose." But many wonder, amid a parade of arrests and revelation, whether the phone hacking and bribery at NOTW are truly the actions of one NewsCorp enterprise or an example of the company's overall corporate culture.

Events to date demonstrate that even experienced messengers, like those at NewsCorp, can struggle when the spotlight turns on them. This is why a recent report by the Ethics Resource Center's Fellows program -- Accepting Responsibility Responsibly: Corporate Response in Times of Crisis -- advised Boards to put a crisis plan in place before disaster strikes.

But for the Murdochs and their executive team, the time for planning ahead has passed. Now investigators, elected officials, and the general public rightfully want to know why the families of murder victims and soldiers were targeted by hackers. However contrite or creative its explanations for past acts, this is the time for NewsCorp to build a new corporate conscience. NewsCorp is now literally fighting for its life. The best defense, as we have seen with companies that have survived such crises, is not to spin its story, but to start writing a new one.

But when asked by Members of Parliament if editors at other NewsCorp operations were reviewing their newsrooms to insure NOTW-type tactics were not being replicated, Rupert Murdoch answered "No, but I am more than prepared to do so." The future of NewsCorp depends on just how prepared Mr. Murdoch really is. That review is just as critical as any other measure to NewsCorp uses to restore its name.

To address the growing perception this problem reaches well beyond one paper, the company must revisit and reassert its corporate values. NewsCorp must spell out for every employee the core belief, from its very own standards of conduct that "Compliance with the law is crucial to the reputation of NewsCorp and its business units." The challenge is making clear those are not just words on a page.

NewsCorp must go beyond the newsroom, and into the boardroom, to create real reform.

Our research suggests that NewsCorp can restore its good standing by embracing some cornerstone measures:

• Publicly reaffirm the primacy of its "Standards of Business Conduct" as the foundation for employee conduct all the way to the Executive Suite and provide employees. Live up to them.
• Set a tone at the top that consistently reinforces these values through both words and deeds. Tell employees, shareholders, and customers how company standards are guiding your decisions during this crisis.
• Hold accountable individuals at every level of the organization who have violated standards of professional conduct. Employees need to see that your company will conduct a fair investigation to identify the individuals who have been involved in this scandal.
• Renew attention to organizational culture and root out mixed messages or subtle signals that might open the door to misconduct.

Not only can such measures restore public respect, but our 2009 National Business Ethics Survey® found that good conduct becomes self-reinforcing. In a strong ethical culture where employees are more committed to the company, workplace misconduct can be reduced by as much as 50%.

Full-page newspaper ads and even personal apologies to the victims of this scandal look impressive. But post-recession consumers, who are more aware of the character of a parent company than ever before, are unlikely to be persuaded by gestures. Real recovery for NewsCorp will take time, discipline, and a concrete, top down commitment to ethical business conduct.

Patricia J. Harned is President of ERC, which recently published Accepting Responsibility Responsibly, a report on how ethical values can guide an organization through crisis.   This article was originally published on the Huffington Post and is republished with permission.

The embattled media conglomerate News Corporation and its independent directors have not only hired top criminal defense lawyers, they’ve also hired former Justice Department prosecutors well-versed in U.S. bribery law.

The new hires are a sign that the company is taking the Justice Department’s preliminary investigation—and the potential that the inquiry may turn specifically to bribery—rather seriously. (Read our story on why News Corp. may have good reason to worry.)

The company has hired Mark Mendelsohn, who until last year was the Justice Department’s top enforcer of the Foreign Corrupt Practices Act—and an aggressive one, at that.

Here’s FCPA expert Richard Cassin, writing on the FCPA Blog about Mendelsohn’s enforcement record:

Mendelsohn's view of the FCPA and American anti-corruption policy wasn't complicated. He pushed enforcement against corporations of any size and from any country. … He also led the government's charge against individual FCPA defendants—among them KBR's Jack Stanley, entrepreneur Frederic Bourke, and the 22 shot-show defendants.

As the UK’s Guardian notes, a full investigation of possible FCPA violations would likely drag other News Corp. subsidiaries into the mess—a costly and time-consuming process, but one that Mendelsohn will be able to help the company navigate.

The company’s independent directors, meanwhile, have hired former federal prosecutor Mary Jo White, who in 2007 conducted a major internal investigation of Siemens when it faced bribery allegations. News Corp. has also hired former U.S. Attorney General Michael Mukasey, who in addition to having experience with internal investigations also has an unusual connection to the FCPA.

As we've noted, Mukasey was hired in March as a lobbyist for the Institute for Legal Reform, an affiliate of the U.S. Chamber of Commerce. His lobbying registration shows he’s working specifically to roll back aggressive enforcement of the Foreign Corrupt Practices Act.

The inquiry into News Corp. is still very early. So far the Justice Department has said that the FBI, in response to media reports and a request from lawmakers, is investigating whether News Corp. tried to hack into the voicemails of 9/11 victims and whether its payments to U.K. law enforcement violated the FCPA.

ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest.   This article is republished with permission under a Creative Commons license.

Though News of the World shut its doors on Sunday, the UK's hacking scandal is deepening. Allegations of illegal activity have spread beyond News of the World to other Murdoch papers, and far beyond hacking into people's voice mails. With all the new details emerging, it's getting hard to keep track. Here's a brief rundown of the latest revelations. (For an explanation of the early days of the phone hacking scandal, see the chronology that follows this article.)

The News of the World drew fresh outrage last week as news broke that the family members of dead soldiers , murdered children, and 7/7 terrorist attack victims may have had their phones hacked by the paper. There have also been allegations that the paper hacked the email account of a soldier who died in Iraq.

Scotland Yard has been combing through 11,000 pages of documents seized from the home of Glenn Mulcaire, the private investigator who hacked phones for News of the World. The papers include around 4,000 names of potential phone hacking victims. Investigators are working through the list and contacting the victims -- as of yesterday, they'd only gotten in touch with 170 of them. Meanwhile, a News International senior executive is suspected of deleting "massive quantities" of phone hacking-related emails.

The Guardian reported yesterday that private investigators hired by News International papers targeted former Prime Minister Gordon Brown over the past decade, attempting to access his bank account, legal files, tax forms, and his son's medical records. News International today denied that they had "commissioned" anyone to access the son's medical records. Though it's still unknown exactly how this information was accessed, these revelations could implicate other News International papers, particularly The Sun and The Sunday Times.

Since late June, investigators have been trying to identify which Scotland Yard officers reportedly received a total of £100,000 in bribes from News of the World between 2003 and 2007. Yesterday, reports came out alleging that the News of the World bribed police officers in order to obtain contact information for members of the royal family. Scotland Yard accused News International in a press release of intentionally leaking this information to the press to undermine their investigation. (As we've reported, if they did in fact make these bribes, Murdoch employees have violated U.S. law.)

Today's New York Times also reports that top Scotland Yard investigators' phones had been hacked during the initial police inquiry in 2006, raising questions about whether police limited the scope of their now-famously flawed investigation for fear that News of The World might start airing their dirty laundry. According to the New York Times, some investigators' secrets did indeed make it into the media:

The lead police investigator on the phone-hacking case, Andy Hayman, left the Metropolitan Police in December 2007 after questions were raised in the news media about business expenses he had filed and the nature of his relationship with a woman who worked for the Independent Police Complaints Commission.

At the time, Channel 4 News [not owned by Murdoch] reported details of 400 text messages and phone calls that Mr. Hayman had sent to her.

John Yates, the assistant commissioner who has become a lightning rod for the police's handling of the phone-hacking case, had reportedly used frequent flier miles earned in the line of duty to pay for flights for his relatives.

Through all this, News Corporation has been gearing up to take over British Sky Broadcasting Group, also known as BSkyB. News Corp currently owns over a third of the company. The New York Times breaks down the details of the BSkyB deal and the actions Murdoch took this week to help its chances for survival. Parliament is expected to pass a resolution tomorrow opposing the takeover, but it would have no legal effect.

Though the weekly News of the World has closed, Murdoch's Sun seems geared to expand their operations to Sundays, raising concerns that the closing is merely symbolic.

Prime Minister David Cameron and Labour leader Ed Miliband are meeting tonight to discuss the details of an inquiry into the way the original police investigation was conducted, and a review of the UK's current system of self-regulation of the press. Currently, an independent body called the Press Complaints Commission exists as an arbiter to help the press regulate itself, and to maintain national standards of journalistic ethics in the UK. (Our managing editor wrote last week that "press commissions have never worked well" in the U.S.)

For breaking developments on the scandal, one of the best places to turn is The Guardian's live blog -- they've been out in front of this story since 2009. We're also constantly adding stories about new developments to our MuckReads feature, which collects the best watchdog reporting. Here are all the phone hacking stories.

_____________________________________________________________________________________

A brief chronology of the story thus far:

July 7, 3:20 p.m.: Rupert Murdoch2019s News International just announced its decision to close News of the World, the paper that's been accused of hiring private investigators to hack into cell phones and staging a widespread cover-up to conceal it.

We've invited two esteemed journalists who've been covering the story to guest edit our #MuckReads feature for the day: Don Van Natta, Jr. (@dvnjr), investigative reporter at the New York Times, and Sarah Ellison (@sarahlellison), contributing editor at Vanity Fair. They've been sharing the most essential reporting about the scandal and their thoughts on why each piece is significant. It2019s a great resource for those just coming to the story to get oriented.

Here's a brief summary to get you started:

The scandal goes back to 2005 (The Guardian has a useful timeline of the whole affair; here's another from the Times), when Prince William and members of the royal staff suspected their voice mail was being tampered with and asked Scotland Yard to investigate. If you're wondering how that's even possible, the New York Times has an explanation of how phone hacking works.

In 2006, News of the World royal editor Clive Goodman and a private investigator named Glenn Mulcaire were arrested and charged with hacking the cell phones. The two men served some jail time, and the editor of News of the World resigned. Scotland Yard and the U.K. Press Complaints Commission, an independent body that oversees the self-regulation of the press, conducted inquiries that didn2019t result in any shocking new findings. The story died down.

In July 2009, an investigative report by the Guardian's Nick Davies drew fresh attention to the case. Davies found that, far from being a one-off event, the phone hacking had been more widespread2014and that the paper had made massive payoffs to keep the story quiet. Ellison notes in #MuckReads that the payoffs were the News of the World's first and fatal step into denial that has led them to their untenable position today.201D

In response, the Press Complaints Commission criticized the Guardian's story, saying that there was no evidence the hacking was more widespread than News of the World initially said.

As court cases began to reveal new details about the extent of the phone hacking, a September 2010 story in the New York Times raised questions about how much News of the World editors and reporters knew and why Scotland Yard hadn't been very aggressive in pursuing the case. Van Natta Jr., one of the three Times reporters on the story, recalls a top Scotland Yard investigator's defense of the weak police response: "We were not going to set off on a cleanup of the British media."

In April, Scotland Yard opened up a new investigation and arrested a former News of the World editor and two reporters. In a June Vanity Fair piece, Ellison took a broad look at the scandal, looking at what's at stake and how this kind of thing could have happened.

This week, the Guardian reported that the News of the World had hacked into the voice mail of a murdered school girl and deleted some messages, triggering calls for a public inquiry.

Here's a list of the reported phone hacking victims so far and a round-up of phone hacking-related denials.

ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest.   This article is republished with permission under a Creative Commons license.

Imagine you're a Fleet Street reporter at a British tabloid with a pocketful of cash. You meet a trusted source at a pub, a police officer who tells you about the royal family's confidential schedule in exchange for a small gratuity. You hand over a few quid and rush off with a photographer to stake out a health club where Camilla Parker-Bowles is toning her abs.

Guess what: If you work for Rupert Murdoch, you may have violated U.S. law. What the government nails you for could depend on how you and your bosses account for the sketchy deal with the cop.

If you're entirely honest in the company's internal books and enter the payment as a "bribe," you've just created an irrefutable piece of evidence that can be used against you and your company in a prosecution by the Justice Department for violating U.S. statutes against overseas bribery. If, as is more likely, you file an expense account which refers to the cash payment as "taxis" or "office supplies," you stand a chance of being pursued by the Securities and Exchange Commission for keeping fake records.

News International Limited, the British arm of the Murdoch empire, is a subsidiary of News Corp., a publicly traded American company which also owns The Wall Street Journal and Fox News (not to mention the Sunday Times of London, The Times of London, and the British tabloid The Sun.) Because of this, experts say, News Corp. and all of its subsidiaries come under the Foreign Corrupt Practices Act, a Watergate-era law which makes it a crime for U.S. companies to participate in bribery abroad.

The scope and number of payments remains unclear. British press reports say more than $160,000 was paid by News of the World reporters to police officers. The issue came to light last week after News International turned over a trove of internal emails to authorities.

"A small number of officers may have taken illegal payments. That is fundamentally corrupt," Met Commissioner Sir Paul Stephenson told the BBC. "If true, I will be determined to root them out, find them and put them in front of the criminal court."

After years of relative quiet, the United States has substantially stepped up the resources to prosecute companies for violating the bribery law. There are 150 open investigations of American companies, according to the law firm Gibson Dunn & Crutcher. In 2005, the Securities and Exchange Commission and the Department of Justice combined for a total of just 12 FCPA enforcement actions. By 2010 that number had jumped to 54, the law firm reports. We've written previously on this subject when it involved payments by Albert Jack Stanley , a former executive at KBR.

Unless information emerges that News Corp. executives in the United States were aware and condoned illegal behavior, it is doubtful whether the company or individual executives would face criminal prosecution in the United States, several defense lawyers said.

A prominent academic, Michael Koehler, who tracks prosecutions on his blog the FCPA Professor , is not as sure the global news giant will escape criminal prosecution.

"Look at the 2011 enforcement actions on my blog," he says. "None of these involved high level officers or board members."

But lack of evidence of executive complicity in bribery doesn't protect the parent company from civil actions. Where News Corp. may be most vulnerable is under the "Books and Records" and "Internal Controls" provisions of the FCPA, according to lawyers who practice in this field.

Even if News Corp. subsidiaries recorded the bribes accurately in their books, it could land the company in difficulty with the SEC. Since the bribery was permitted in the first place, the charges would also open up the company to questions about its internal controls.

Fines for these violations can be steep. In 2009 and 2010 combined the Justice Department charged over 50 individuals and collected nearly $2 billion in criminal fines, said Assistant Attorney General Lanny Breuer in a recent speech. In 2010, the SEC brought in almost $530 million in corporate FCPA settlements, according to Koehler's blog. Part of what makes it so lucrative for the government is that the SEC often requires the companies "disgorge" the gains they made from illicit activities and pay interest on them.

How the SEC would calculate the value of a scoop or a racy headline that resulted from a police bribe is an open question. Does one include a bump in weekly circulation? The long-time loyalty of readers? Until it was abruptly closed last week, The News of the World, the Sunday paper most closely linked to phone hacking, had Britain's largest daily circulation, with 2.7 million readers.

"What was the increased revenue because of this sensational headline is more art than science," says Koehler. "You could come up with some ballpark number."

Another cost to News Corp. would be the company-wide review the SEC or DOJ would likely demand. The company would have to satisfy the Feds that similar payments weren't made to government officials in other countries. These company reviews are part of the reason why FCPA inquiries can last for years, according to Koehler.

The statute of limitations on civil FCPA charges is five years. Reports about the illegal bribes seem to date back to 2006 so regulators would likely be mindful of the calendar. Companies are often rewarded for cooperating with the inquiries. "Raising a statute of limitations defense is not exactly cooperation mode," says Koehler.

News Corp also depends on the government for its broadcast licenses. Fox Television Stations Inc. has 269 active licenses with the Federal Communications Commission, according to the agency's website. An agency spokesman would not comment on whether FCPA violations might put those licenses in jeopardy as well.

ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest.   This article is republished with permission under a Creative Commons license.

As Professor Barry Friedman and Dahlia Lithwick noted in a recent piece, the Roberts Supreme Court is usually pretty savvy about gauging public opinion and acting accordingly, but when they decided Citizens United, they grossly misread the mood of the American public. They must have thought that this would be a little-noticed change to campaign finance minutia. Instead headlines from all over the country howled about the invitation of corporate money into American elections. Unwittingly, Citizens United, roused a sleeping giant, the American investor.

Maybe it’s the backdrop of the Great Recession juxtaposed with another record year for Wall St., but for whatever reason, Citizens United hit a raw nerve. One of the reasons that this is such an objectionable decision is it allows corporate managers in publicly traded companies to spend what Justice Brandeis called “other people’s money.” And as the Brennan Center noted in Congressional testimony right after the decision was announced, this raises a host of corporate governance issues.

Citizens United allows unlimited corporate and union spending in local, state and federal elections. Now that the 2010 election is in full swing, we can see the jump in outside money. And when they know about corporate political spending, shareholders are objecting. For example, Target’s institutional investors wanted to know how $150,000 got into the Governor’s race in Minnesota. Meanwhile, investors such as the Nathan Cummings Foundation are objecting to spending from News Corp. and the Investor Network on Climate Risk is focusing on spending by oil companies.

But frustratingly, much of the money being spent in the midterm election is secret– masked through the use of tax-exempt non-profits like trade associations. This secretive corporate political spending leaves voters and shareholders equally in the dark about the source of the funds. And this study from Investor Responsibility Research Center shows how far we need to go, finding 86% of the S&P 500 does not have stated policies on indirect political spending via contributions to trade associations and non-profit interest groups.

If American shareholders track likely voters who object to the holding in Citizens United by a margin of 4-1, then a goodly portion of shareholders are probably also displeased with the right of corporate managers to spend corporate money in this way. With roughly one out of every two American households invested, that is a lot of potential anger about the use of corporate funds in elections.

More than in any election since Watergate, in the 2010 midterm election obfuscation is winning over transparency. This was not inevitable and it needs to be fixed before the 2012 presidential election. We can address this by getting serious about changing state corporate law and federal securities law.

As Professor John Coates has noted, Citizens United has radically unsettled the expectations of corporate managers, shareholders and creditors alike. And as Professor John Coffee has argued corporate spending through trade associations thwarts accountability to shareholders. Both professors agree that at the very least, we need more transparency surrounding corporate political spending.

But is this where we should end the discussion of corporate governance after Citizens United? I think not. Here the problem is not just that shareholders are unwittingly funding corporate political expenditures, it is that there is no mechanism under corporate law for them to register their consent or objection, short of selling their shares. As I have argued here and here, we need something akin to the British approach which allows shareholders a vote on political spending. And Professors Lucian Bebchuk and Robert Jackson contend, states can adopt even more stringent controls like requiring approval of political expenditures by independent directors or requiring super-majority shareholder votes to protect the interests of minority shareholders.

Legislation to address this problem is waiting in the wings. Both disclosure and a shareholder vote could be addressed by the Shareholder Protection Act (H.R. 4790). This bill would require shareholder approval before publicly-traded corporation can spend money on politics. Furthermore, corporations are required by the Act to report where they have spent the money. Congress can adopt this bill in the lame duck session after the election.

It is not too late to act to protect shareholders. We still have time to fix this problem before the 2012 election. Because once a presidential race is at stake, even the corporate managers who sat on the sidelines this time around, may find the new Citizens United authority to spend other people’s money in politics too irresistible to pass up.

Ciara Torres-Spelliscy is Counsel at the Brennan Center for Justice at NYU School of Law and Adjunct Professor of Constitutional Law at Rutgers University.

Durbin’s initiative follows Google’s announcement that it had been the victim of cyber attacks aimed at gaining access to the email accounts of Chinese human rights activists. Google has said it is considering pulling out of China because of the attacks and what the company called “attempts over the past year to further limit free speech on the web.”

Only two weeks ago, U.S. Secretary of State Hilary Clinton called on American technology companies to make a “principled stand” against attempts at censorship.

Sen. Durbin, Chairman of the Judiciary Subcommittee on Human Rights and the Law, said his hearing next month will feature testimony from Google and other companies about their business practices “in internet-restricting countries,” as well as from high-ranking Obama Administration officials about the Administration’s efforts to promote internet freedom.

“I commend Google for coming to the conclusion that cooperating with the ‘Great Firewall’ of China is inconsistent with their human rights responsibilities,” Durbin said. “Google sets a strong example in standing up to the Chinese government’s continued failure to respect the fundamental human rights of free expression and privacy. I look forward to learning more about whether other American companies are willing to follow Google’s lead.”

Durbin’s letter asks each firm for details of its business in China, and what, if any, measures it will implement to ensure that its products and services do not facilitate human rights abuses by the Chinese government.

This week’s letter also follows up on a letter that Durbin sent last year, urging technology firms to join a voluntary code of conduct known as the Global Network Initiative (GNI). The code of conduct, which regulates the actions of technology firms operating in countries that restrict the internet, has been backed by Google, Microsoft, and Yahoo! and a number of leading socially responsible investment firms.

Durbin’s office said the list of companies that responded to his previous letter included Apple, AT&T, Cisco, Dell, eBay, Facebook, HP, McAfee, News Corp, Nokia, Nokia Siemens, Siemens, Skype, Sprint Nextel, Verizon, Vodafone, Websense.

According to Senator Durbin’s office, companies that did not respond to his previous letter were Acer, Juniper, Toshiba, Twitter; companies that “partially responded” to his previous letter were Fortinet, Lenovo, Motorola.