News Corp.’s board of directors failed to take action when news of the British hacking scandal blockbuster broke in 2005, a failure that ultimately led to the shutdown of the 168-year-old News of the World tabloid, according to an amended complaint filed today to the May suit that challenged the $615M acquisition of Elizabeth Murdoch’s Shine production company.
Plaintiffs led by Amalgamated Bank and Central Laborer Pension Fund charged that deal to acquire the company of Rupert Murdoch’s daughter smacked of nepotism and charged the board with failing to stop Murdoch from treating News Corp. like a “family candy jar, which he raids whenever he likes.”
In the amended complaint filed at Delaware Chancery Court, shareholders say the hacking revelations “should not have taken years to uncover and stop.”
They believe it is “inconceivable that Murdoch and his fellow board members would not have been aware of the illicit news gathering practices.” Plaintiffs allege a “culture run amuck within News Corp and a board that provides no effective r review or oversight.”
The shareholders believe the board’s lack of independence led to a “Murdoch discount” of News Corp. stock in the marketplace.
News Corp. has dismissed the Shine suit as one with no merit.