Justice Department Prepares Subpoenas in News Corp. Inquiry
By JESSICA E. VASCELLARO,DEVLIN BARRETT and DANA CIMILLUCA

The U.S. Justice Department is preparing subpoenas as part of preliminary investigations into News Corp. relating to alleged foreign bribery and alleged hacking of voicemail of Sept. 11 victims, according to a government official.

The issuance of such subpoenas, which would broadly seek relevant information from the company, requires approval by senior Justice Department leadership, which hasn't yet happened, the person said.
The issuance of subpoenas would represent an escalation of scrutiny on the New York-based media company. While the company has sought to isolate the legal problems in the U.K., it has been bracing for increased scrutiny from both the Justice Department and the Securities and Exchange Commission, according to people familiar with the company's strategy.
The Justice Department has said it is looking into allegations that News Corp.'s now-defunct News of the World weekly in the U.K. paid bribes to British police. It has been unclear whether the Justice Department or the SEC have begun formal probes.
The Federal Bureau of Investigation separately has begun an inquiry into whether News Corp. employees tried to hack into voice mails of Sept. 11 victims, people familiar with the early-stage probe have said.
A person close to News Corp. said the preparation of subpoenas is "a fishing expedition with no evidence to support it."

News Corp. owns The Wall Street Journal.

Commenting on the FBI inquiry, a News Corp. spokeswoman said: "We have not seen any evidence to suggest there was any hacking of 9/11 victim's phones, nor has anybody corroborated what are clearly very serious allegations. The story arose when an unidentified person speculated to the Daily Mirror about whether it happened. That paper printed the anonymous speculation, which has since mushroomed in the broader media with no substantiation."
The spokeswoman also said the company hasn't seen any "indication of a connection or similarity between the events, allegations and practices being investigated in the U.K. and News Corp's U.S. properties."
News Corp. and its recently bolstered legal team expect a possible broad investigation by the Justice Department into whether the alleged bribes paid to British police violated the Foreign Corrupt Practices Act, or FCPA, according to the people familiar with the company's strategy. The law is typically used to pursue charges against companies that bribe foreign officials to give them business contracts.
News Corp.'s team also is anticipating a possible FCPA-related investigation by the SEC, the people said. The SEC also could examine News Corp.'s prior disclosures, one of the people said. By law, companies must adequately alert investors to potential litigation or business pitfalls on the horizon.

A spokesman for the SEC declined to comment.

The company's U.K. newspaper unit, News International, has declined to comment on the alleged bribes, citing an ongoing police investigation. Former News International chief executive Rebekah Brooks said in testimony to Parliament Tuesday that she had "never knowingly sanctioned a payment to a police officer."
U.K. police are conducting two parallel investigations into News Corp.'s now-closed News of the World, which is at the heart of the British scandal. One is related to allegations of illegal voice-mail interception and was opened in January; the other stems from allegations of police bribery. In addition, the company is facing a raft of civil suits. The U.K. government, meanwhile, plans at least two public inquiries.
For the Justice Department and the SEC to pursue News Corp. in the U.S. for allegedly bribing British policemen, the agencies would have to rely on a broad interpretation of the FCPA, legal experts say.
Another possible infraction investigators could examine: whether any payments were improperly accounted for in the company's books and records.
In recent days, News Corp. has hired an expert in the FCPA, Mark Mendelsohn, to advise it, according to people familiar with the matter.
Mr. Mendelsohn, a partner in the Washington office of Paul, Weiss, Rifkind, Wharton & Garrison LLP, couldn't be reached for comment.

—Vanessa O'Connell, Thomas Catan and Russell Adams contributed to this article.