Political Correction

Gov. Christie And News Corp.'s Hacking Past

August 09, 2011 9:37 am ET - by Eric Boehlert

The story of News Corp.'s computer hacking in the U.S. continues to intrigue.

While the much larger phone hacking scandals persist in generating headlines in Britain, the recent story of how state-side News Corp. officials were charged with similar types of illegal practices raises questions about the business culture that Rupert Murdoch has encouraged at his company.

What's also raising questions is the role Gov. Chris Christie (R-NJ) played in the computer hacking saga, and why as the then-United States attorney for New Jersey, Christie's office failed to pursue allegations against a News Corp. subsidiary — allegations that turned out be undeniably true. And yes, this is the same Chris Christie who as New Jersey's Republican governor today counts News Corp.'s Fox News as one of his most loyal, and vocal, bases of political support. 

Background: A New Jersey start-up company, Floorgraphics (FGI), was created to sell large advertising decals placed on the floors of grocery stores. In 1999, FGI's founders, Richard and George Rebh, met with Paul Carlucci who at the time was CEO of News America Marketing, an in-store advertising division of News Corp. (In 2005, Carlucci added the title of New York Post publisher to his resume.) At the lunch, after the Rebhs rebuffed Carlucci's offer to buy the company, he allegedly threatened to destroy FGI. (Rebh testified that Carlucci, referring to Murdoch, said: "I work for a man who wants it all, and doesn't understand anybody telling him he can't have it all.")

Years later company executives discovered FGI's secure website had been broken into nearly a dozen times and confidential information had been obtained. They alleged Murdoch's company was spreading lies about FGI and using its proprietary information to steal away clients. The FGI founders then tried to persuade law enforcement to investigate their charges.

As David Carr wrote in Monday's New York Times (emphasis added):

According to correspondence that has been forwarded to members of the New Jersey Congressional delegation, Mr. Rebh also got in touch with the F.B.I., which sent two special agents to the Floorgraphics offices in 2004. One of the agents, Susan Secco, followed up with an e-mail in which she commented on the evidence Floorgraphics had compiled.

"I believe I have all I need to conduct interviews, as there is an excellent paper trail," she wrote.

She then got in touch with the United States attorney in New Jersey and, after an initial burst of interest, the case died a slow death.

As Carr also noted:

The United States attorney at the time in New Jersey was Chris Christie, now governor of New Jersey and a rising star in the Republican Party.

True. But that's not all. Christie has become a rising Republican star, in part, because of the incessant cheerleading he's received from News Corp.'s Fox News:

Six years ago Jonathan Weil, then a reporter for the Wall Street Journal, looked into FGI's allegations. He told company executives he'd cover their case if he could confirm federal investigators were actively working on the charges leveled against News Corp., otherwise their battle wasn't newsworthy enough. (This was before Murdoch purchased the Journal.) But he could never find any evidence investigators cared about the computer hacking case.

Looking back on the story late last month, in the wake of the News Corp. hacking scandal in Britain, Weil wrote:

Maybe federal investigators had dropped the ball. Perhaps there hadn't been enough evidence. Or maybe they didn't want to take on a sister company of Rupert Murdoch's Fox News.

What's interesting is that when FGI finally received its turn in court in 2009, via a civil suit, the trial went very badly for News Corp., with early testimony featuring a former Murdoch employee-turned-whistleblower. It went so badly that proceedings were abruptly halted, with Murdoch's company agreeing to settle with FGI. Hours after the settlement announcement came news that News Corp. was purchasing FGI for roughly $30 million.

Although note: By 2009, FGI barely seemed to function as a  company any more, leaving the impression News Corp. paid $30 million to make the hacking case go away. Indeed, News Corp. had conceded at the trial its computers were used to hack FGI's website. (The company insisted it didn't know who was responsible.)

Yet years four earlier, Christie's office could find no reason to pursue the case against News Corp.

And those are the two curious sets of facts in play. First, despite an FBI investigator concluding the case had promise and included a strong paper trail, Christie's office in 2005 turned a blind eye to allegations that Rupert Murdoch's News Corp. had hacked into the computers of a competitor. The charges were not pursued. Yet just four years later, News Corp. settled the embarrassing case for $30 million, admitting hacking had occurred.

Second, as the Republican governor of New Jersey, Chris Christie has received untold millions in free publicity and promotion in the form of endless and worshipful coverage from News Corp.'s cable subsidiary.

And here's the key point about soft power that Carr raises in his piece:

In America, where the News Corporation does most of its business and also has a long reach into film, TV, cable and politics, the company's size and might give it a soft, less obvious power that it has been able to project to remarkable effect.

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