Murdoch lawyer accused BBC of phone hacking vendetta (Reuters)

LONDON (Reuters) – A lawyer for Rupert Murdoch's News Group Newspapers earlier this year accused the British Broadcasting Corporation of pursuing an investigation of alleged computer and phone hacking to "undermine" Murdoch's bid to acquire full ownership of satellite broadcaster BSkyB.

Julian Pike of the London law firm Farrer & Co, which also represents Britain's Queen Elizabeth, sent a series of letters last March to the BBC expressing concerns at the British arm of Murdoch's News Corporation that the BBC might have transgressed its commitment to impartiality for commercial or political reasons. The BBC denied this was the case.

The letters, whose full contents have not previously been reported, were sent in response to requests by journalists from the BBC newsmagazine Panorama to News Group for comment regarding alleged phone and computer hacking conducted by journalists for the Sunday tabloid News of the World.

Murdoch shut the paper last July amid a torrent of allegations about alleged ethical and legal lapses by its staff.

The Panorama program, headlined "Tabloid Hacks Exposed" focused on the alleged role of Murdoch journalists in employing "dark arts" - Fleet Street jargon for dubious and potentially illegal reporting tactics - and in particular allegations of "blagging" (jargon for pretending to be someone else) and computer and phone hacking at the News of the World.

Pike laid out News Group's complaints about the BBC's investigation in letters sent to Panorama in early March headed

"NOT FOR PUBLICATION & NOT FOR BROADCAST: STRICTLY PRIVATE & CONFIDENTIAL."

In two letters, dated March 10 and 11, Pike suggested that the BBC might be pursuing the hacking story for business or political reasons rather than for journalistic motives.

Pike said that BBC Director General Mark Thompson had been "required to apologize" in November 2010 for adding his signature to a letter from a group of companies who were critical of News Corp's bid to acquire the balance of shares in BSkyB which it did not already own.

In his March 10 letter, Pike noted that the BBC was planning to broadcast Panorama's investigation at a time when the British government was actively considering Murdoch's bid for BSkyB's remaining shares. He noted that the BBC had an "obligation to avoid embroiling itself in a political and commercial battle that it should have nothing to do with."

BSkyB is a principal competitor with the BBC in Britain.

In a lengthy letter sent to the BBC the following day, Pike said it had "not gone unnoticed" that the BBC, along with "certain other media organizations," had been in "the vanguard of running a campaign against" News Corp regarding alleged News of the World phone hacking. Pike asserted that the BBC had "obvious political and commercial reasons" to use the phone hacking allegations "to attack our clients and undermine New (sic) Corp's Sky bid."

Pike said it was "quite apparent" that the program the BBC was preparing was "yet another attempt to undermine New Corp's bid for Sky" (sic).

In the letter, Pike also accused the BBC of planning to take out of context an investigation by Britain's Information Commissioner's Office which alleged that publications other than the News of the World, including The Observer, a Sunday newspaper which is affiliated with the Guardian daily, had also engaged in questionable or illegal reporting practices.

In response to a request for comment, the BBC told Reuters: "Panorama investigations always come from a point of public interest and operate within the BBC editorial guidelines and Ofcom's code. This program was no different and...details of the phone hacking scandal has been widely reported by numerous media organizations. Any suggestion it was made to further the BBC's own interests is utterly without foundation."

A spokesperson for News International, Murdoch's principal newspaper publishing company in Britain, said the company had no comment on Pike's accusation that the BBC had pursued the phone hacking inquiry for ulterior motives.

However, the spokesperson noted that the company on October 14 had issued a statement acknowledging that its Management and Standards committee, supervising News International's response to the phone hacking controversy, had agreed with Farrer & Co. that the law firm would "stand down" from representing Murdoch's News Group properties in "current or future" lawsuits filed by alleged News of the World phone hacking victims.

At a hearing before a British parliamentary committee which has been investigating phone hacking, Pike acknowledged that in 2008 he became aware of documentary evidence contradicting public statements by Murdoch aides that phone hacking at the News of the World had been the work of a "single rogue reporter."

Pike told the committee he did not believe he had an obligation as a lawyer "to go and report something that I see within a case where there might have been some criminal activity."

In a report on his testimony and other aspects of his letters to the BBC, the Guardian last week reported that Pike had admitted to parliament that he knew public statements by News of the World executives about the rogue reporter were misleading when he sent a letter to the BBC threatening "successful" litigation for defamation if the BBC accused News International executives of knowingly making untrue or misleading public statements.

The Guardian also reported that the BBC had referred Farrer & Co to a disciplinary authority for British lawyers because of this aspect of Pike's letter.

The BBC confirmed that it had "written to the Solicitors Regulation Authority. seeking advice in relation to their rules governing the conduct of solicitors."

In Britain, solicitors are lawyers who handle most out of court and pre-trial litigation, while barristers are lawyers who handle trials and appeal proceedings in higher courts.

Pike did not respond to an e-mail requesting comment. But a representative of Farrer & Co. disputed the Guardian's interpretation of Pike's letter and what Pike had said to Parliament. The firm had no further comment on its accusation that the BBC had acted for commercial or political motives.

The Solicitors Regulation Authority said that in July, it had launched a "formal investigation into the role of solicitors in events surrounding the News of the World phone hacking crisis," and that it could make no further comment while that inquiry was under way.

(Created by Simon Robinson)

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Ex-Citigroup VP accused of stealing $19 million (Reuters)

NEW YORK (Reuters) – A former vice president at Citigroup Inc was charged with bank fraud on Monday for allegedly embezzling more than $19 million from the company's accounts.

Gary Foster, 35, was arrested Sunday at John F. Kennedy International Airport on a flight arriving from Bangkok, prosecutors said. He is scheduled to make his initial appearance Monday afternoon in Brooklyn federal court, where he will plead not guilty to the charges, according to his attorney, Isabelle Kirshner.

Between May 2009 and December 2010, Foster allegedly transferred $19.2 million from Citigroup accounts to his own personal bank account at Chase.

Foster put fake contract and deal account numbers in the wire-transfer instructions to make them seem like they were supporting an existing contract, before diverting them to his own accounts, prosecutors alleged.

"The defendant allegedly used his knowledge of bank operations to commit the ultimate inside job," said U.S. Attorney Loretta Lynch.

A representative for Citigroup did not immediately return a request for comment.

(Reporting by Jessica Dye; editing by Gunna Dickson)

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Home Depot accused of violating Buy American Act (AP)

SAN FRANCISCO – The photograph on Home Depot's website shows a line of smiling soldiers unloading a truck stacked with power tools and other company wares.

The company says this shows "federal dollars go farther at The Home Depot." San Francisco Attorney Paul Scott says the photo also shows the company providing Chinese-made products in violation of the Buy American Act, and the U.S. Department of Justice is investigating.

A federal judge in April refused Home Depot Inc.'s bid to toss a whistle blower lawsuit Scott and other attorneys filed against the Atlanta-based company. Now the country's largest home improvement retailer is the latest company accused of running afoul of the Buy American Act, a 1933 law aimed at protecting U.S. jobs. The law requires that all materials used in construction of public projects originate in the United States or "designated countries."

Like most protectionist trade provisions, the Buy American Act has its supporters and detractors.

Proponents support the act as a way to boost the economy and preserve U.S. jobs. Critics complain the law limits the government's ability to make the best purchase on price and quality. Further, they argue that complying with the letter of the law is difficult, given the many exemptions and the reality that the component parts of many products originate in multiple countries. In addition, the law's critics say it's especially difficult for large companies such as Home Depot that carry thousands of products to ensure it follows the law with every government transaction.

The law has been through many revisions, and trade agreements with Canada, Israel and several other countries allow for use of material made in those countries. In the decades after its enactment, the law was little used. But with the explosion of international trade a number of companies have been accused of violating the Buy American Act over the last several years.

Earlier this year, the national hardware distributor Fastenal Co. agreed to pay $6.25 million to resolve DOJ claims made after a government audit found among other things that it violated its contract with the General Services Administration by providing Chinese-made goods.

Fastenal said in a statement that it settled because "we continue to believe that we complied with our obligation under the GSA contract in all material respects. However, we felt a continuation of our dispute with the DOJ and GSA was not the best use of our resources."

In the last six years, Staples Inc., Office Depot Inc. and OfficeMax Inc. have paid a combined $22 million to settle government claims they violated the act. In 2008, the Department of Justice announced that W.W. Grainger Inc. agreed to pay $6 million to settle claims the company overcharged the government and provided it with Chinese and Taiwanese products in violation of the Buy American Act.

At issue in the Home Depot case are GSA "schedule" contracts. Those contracts authorize any government agency to purchase tens of thousands of products from the company's website.

The lawsuit alleges that up to half of those products are made in China and other non-designated countries. The lawsuit was filed by two employees of another government contractor in 2008 that claimed their employer, the Actus Lend Lease Co., supplied noncompliant material in several military housing projects.

Before Actus was dropped from the case this year after paying an undisclosed amount of money to settle, lawyers discovered allegations that one of its corporate partners — Home Depot — was also violating the law.

The two Actus employees initially filed the so-called whistleblower lawsuit under seal, as all such claims on behalf of the government are filed. That gives the DOJ a chance to investigate the claims and decide if it wants to take over the lawsuit, which seeks to recover damages on behalf of the government.

All damages recovered are split between the government and the plaintiffs filing the lawsuit, with the government always receiving a larger amount.

Last year, the judge denied the government's request to keep the lawsuit under seal so it could continue its investigation.

After the lawsuit was made public, Home Depot asked the judge to dismiss the case, noting the government's non-intervention in the case. In March, federal prosecutors fired back at Home Depot with a court filing stating that it "would be erroneous to assume that the government's lack of intervention reflects its conclusion that the case lacks merit."

The DOJ continues to investigate the issue and still has not decided whether to join the case.

In court filings and a brief interview, Home Depot officials argue they have complied fully with the terms of the contract and the Buy American Act.

"We would never knowingly sell prohibited goods under any circumstances, and we have been cooperating with the government to provide requested information," said Home Depot spokesman Stephen Holmes. "We believe the plaintiffs have an inaccurate view of the facts, so we look forward to presenting our side of this case as the process moves forward."

A judge has scheduled a trial for early next year.

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