Forbes; April 22, 2013
News Corp NWSA +0.8%. has agreed to settle lawsuits over the phone-hacking scandal that forced it to close the News of the World by emptying out its insurance policies for directors and officers to the tune of $139 million — minus the fees it will pay a collection of plaintiff lawyers for negotiating the deal.
It’s the largest cash settlement ever of a derivative lawsuit, said Grant & Eisenhofer, co-lead counsel along with Bernstein Litowitz. But it leaves a big question: What about the executives and directors who caused all this carnage?
All of the money will flow back into News Corp. from the insurers that cover its directors and officers against claims of this sort, minus legal fees that have yet to be negotiated. While the plaintiff lawyers say they also negotiated “extensive corporate governance reform” at News Corp., which is about to split into separate newspaper and entertainment companies, there is no indication in the memorandum of understanding accompanying the deal that anyone from Rupert Murdoch on down will actually pay for the acts that supposedly caused shareholders so much pain. In fact, as a condition of the settlement, News Corp. will not be required to acknowledge the truth of any of the claims against it.
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