A top investigator for the Senate Finance Committee, working under Sen. Chuck Grassley (R-IA), may have had smoking gun evidence of News Corp’s hacking activity. While News Corp’s British subsidiaries have received the most media attention for systematically hacking the cell phone and personal records of private citizens, the public still has heard little of allegations relating to similar conduct perpetrated by News Corp against its American competitors. ThinkProgress has learned that not only did a sensitive tip come to Grassley’s office about News Corp’s cyber attacks against other American companies, but authorities may have failed to look into the matter partially because a staffer named Nick Podsiadly allegedly never followed through on his promise to the whistleblower.
In December 2006, Robert Emmel, an account executive in News Corp’s profitable marketing division called News America Marketing, mailed Grassley’s office a 58-page document detailing News Corp’s unfair business practices. News America Marketing had won incredibly lucrative contracts away from a New Jersey-based firm called Floorgraphics not too long after Floorgraphics caught someone with a News Corp I.P. address illegally accessing password-protected information on the company’s computer system. As critics have pointed out, the alleged hacking attempts by News America Marketing seem to mirror information-stealing tactics used by News Corp’s British newspapers, including the now-defunct News of the World tabloid.
In 2006, Grassley was chairman of the Senate Finance Committee, and Emmel had gone to the committee looking for help. According to court filings, Grassley investigative staffer Nick Podsiadly had spoken with Emmel and told him that the committee would consider its own inquiry into the matter or he would refer the documents to the Justice Department. Podsiadly was Emmel’s best hope. After he submitted the sensitive information about his employer to the Senate Finance Committee, Emmel signed a non-disclosure agreement with News Corp, and was dismissed from the company the following month. News Corp unleashed a slew of lawyers against Emmel, which eventually forced the man into bankruptcy. As the New York Times has reported, News Corp more or less extinguished allegations of corporate espionage with $655 million in various settlements and buy-outs to competitors. (In-store marketing companies Valassis and Insignia claimed that News Corp had used similar tactics against them.)
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Podsiadly, as it turned out, may have never opened an inquiry or passed along Emmel’s tip to the Department of Justice. A spokeswoman for Grassley explained to the Guardian that ongoing litigation prevented the committee from action:
A spokeswoman for the finance committee said nothing would be done with any documents sent by Emmel until the litigation over them had ended. Emmel today remains under a court-imposed injunction that forbids him from disclosing anything from these documents. “I cannot comment,” he said.
Phil Hilder, Emmel’s attorney, is not buying the committee’s excuse for not investigating the matter. “What litigation? I’m not sure at the time there was any litigation that they were referring to.” Hilder explained that to his knowledge the tip was never referred to the Department of Justice either. “I have no idea what if anything Mr. Podsiadly did with the information,” said Hilder, a former federal prosecutor.
Perhaps Grassley’s spokeswoman was hoping that the Guardian, a London-based paper, would be unaware of standard congressional procedures. Ongoing litigation, or even the threat of litigation, never prohibits a congressional committee from opening an investigation.
Mort Rosenberg, the author of Investigative Oversight and a number of manuals for conducting congressional inquiries, dismissed the Grassley excuse in an interview with ThinkProgress. “Congress has huge powers over what it decides to investigate,” Rosenberg explained. In some cases, when the Department of Justice is already looking into a criminal matter, Congress will avoid engaging in an investigation. But overall, Rosenberg said outside litigation never prevents a committee from opening an inquiry.
ThinkProgress spoke to Beth Levine, a spokeswoman for Grassley, who said the documents are not currently under Grassley’s purview because he is no longer the chairman or ranking member of the Senate Finance Committee. Asked if Podsiadly ever referred the whistleblower documents to the Justice Department or began a congressional inquiry into the matter when he received them in 2006, Levine responded, “I don’t know the answer to that question.” Further requests to Podsiadly and Grassley staff for more information have gone unanswered.
In the United Kingdom, News Corp ducked prosecution for its systematic hacking for years by exploiting the company’s connections to prominent politicians and police authorities. In the United States, FBI agents, after reviewing the “excellent paper trail” left by News Corp while allegedly breaking into the computers of competitor Floorgraphics, contacted the the US Attorney’s Office in New Jersey to consider a criminal investigation. At the time, the US attorney was a Bush appointee named Chris Christie — a confidant of News Corporation executive and Fox News chief Roger Ailes and now the Republican governor of New Jersey. As reporter David Carr noted, the FBI case “died a slow death” in Christie’s office.
News Corp has quieted the alleged American victims of its corporate espionage by buying their silence with over half a billion worth of settlements. The public, however, deserves a fair hearing about the alleged criminal conduct. News Corp is no ordinary company; its vast newspaper and cable news holdings have a responsibility to serve the public interest, so a pattern of corrupt conduct across the company has wide implications. The question remains though why Grassley’s staffer, Podsiadly, may have dropped the ball and thrown News Corp’s whistleblower under the bus.