BOB GARFIELD:

As the News of the World scandals sends ripples across British society, from journalism to law enforcement to politics, will it wash onto American shores? This week we heard reports that the FBI is looking into allegations that the phones of 9/11 victims were hacked by Murdoch's papers.

And U.S. politicians are getting involved. West Virginia Senator Jay Rockefeller and New York Congressman Peter King are calling for investigations of Murdoch's News Corp.

But that's not the only way the scandal could become an American story. Propublica business and financial reporter Jake Bernstein says News Corp. may have already violated a U.S. law.  

JAKE BERNSTEIN:

It's possible that News Corp. ran afoul of a 1970s era law called the Foreign Corrupt Practices Act. This was something that came out of the Watergate era, and it's to stop companies from participating in bribery overseas. These are U.S. traded companies.

BOB GARFIELD:

To keep American, let's say, defense contractors from bribing ministers of defense to buy its tanks or fighter planes. In the case of News of the World, the allegation is that reporters and private detectives were bribing police for information. Does that law really apply here?

JAKE BERNSTEIN:

The Department of Justice and the SEC have defined a public official fairly broadly, so it could very well apply here.

BOB GARFIELD:

Who has been prosecuted under this law?

JAKE BERNSTEIN:

This has become a very popular prosecution for the Department of Justice and the SEC recently. Just in 2005 they had only done 12 such cases. Last year they did 54. The SEC had about 530 million in corporate settlements last year.

BOB GARFIELD:

So let's just say the United States targets News Corp. for corrupt foreign practices. There’s – there’s two ways that could happen, right? The Justice Department, you mentioned. And you also mentioned the SEC. What – what, what's the difference?

JAKE BERNSTEIN:

The Justice Department would be criminal. And so that's a sort of higher bar of proof. You need to show intent. I would guess that they’d probably have to show that this was going on at higher levels, that people knew about it.

The SEC, it’s civil, so it's not quite as rigorous in what you need to prove. It's interesting because the SEC can go after a company, even if they don't charge them on the bribery stuff, they can charge them on what's called the Books and Records Provision. If you pay off the policemen and you don't write it down in your company ledger as “Bribe two policemen” –

[BOB LAUGHING]

- then this can be a problem because you haven’t accurately kept your – your books and records.

BOB GARFIELD:

Okay, let's just say News Corp. is prosecuted criminally and undergoes a civil litigation from the SEC and is found to have bribed foreign officials, what happens next?

JAKE BERNSTEIN:

The penalties can be quite severe. On the SEC's side, they can do a disgorgement, which means basically they have to give back all of their — the gains that they got from this kind of practice, which in this case would be very difficult to calculate [LAUGHS] because  how do you decide what the benefit was from a scoop.

On the criminal side, it's twice the amount of your ill-gotten gains and also fines up to 25 million per violation.

BOB GARFIELD:

Rupert Murdoch can shake a ten-million-dollar fine out of the sofa cushions. Financially, what is the risk here? Is the corpus of News Corp. in any kind of jeopardy?

JAKE BERNSTEIN:

No, I don't think so. I mean, there's – there’s a reputational risk. I mean, this certainly won't help the company to try to shake the scandal off.

But then there's another aspect of this. Frequently the SEC and the Department of Justice ask, as part of these settlements, that a monitor be put over the company to make sure that they don't do this kind of thing in the future.

They also ask for a company-wide review so that the, the Justice Department or the SEC is satisfied that this kind of behavior is not happening in the other subsidiaries of the company. Those things can take years.

BOB GARFIELD:

All right, Jake. Thank you so much.

JAKE BERNSTEIN:

Thank you, Bob.

BOB GARFIELD:

Jake Bernstein is a business and financial reporter at ProPublica.