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News Corp. accused of Australian piracy plot

News Corp. accused of Australian piracy plot

Rupert Murdoch's News Corp Wednesday faced a fresh barrage of allegations over its conduct, with an Australian newspaper claiming it had a secret unit that promoted pirating of pay-TV rivals.

Wednesday 28 March 2012, 07:16PM

Rupert Murdoch. Photo: Monika Flueckiger

Rupert Murdoch. Photo: Monika Flueckiger

The Australian Financial Review said the company sabotaged its competitors by promoting high-tech piracy that damaged Austar and Optus at a time when News Corp was moving to take control of the Australian pay-TV industry.

The newspaper, which belongs to News rival Fairfax, said the evidence was unearthed during a four-year investigation, as it began releasing 14,000 emails concerning one of the group's security subsidiaries.

It follows the BBC's flagship current affairs show Panorama on Monday making similar charges against the company in Britain, and piles the pressure on News Corp. which is already under siege over a phone-hacking scandal.

Australian Communications Minister Stephen Conroy said the allegations needed to be referred to police while Treasurer Wayne Sawn said the story was "concerning".

"These are serious allegations, and any allegations of criminal activity should be referred to the Australian Federal Police for investigation," Conroy's spokeswoman told AFP.

News Corp. has consistently denied any role in fostering piracy in pay television.

In a statement, its Australian arm News Limited said the report was "full of factual inaccuracies, flawed references, fanciful conclusions and baseless accusations".

"News Limited and Foxtel have spent considerable resources fighting piracy in Australia. It is ironic and deeply frustrating that we should be drawn into a story concerning the facilitation of piracy," it said.

The Australian Financial Review claimed a secret unit of former policemen and intelligence officers within News Corp known as "Operational Security" crippled the finances of competitors such as Austar and Optus.

They did so by cracking the codes of smart cards issued to customers of the services and then selling them on the black market, giving viewers free access and costing the broadcasters millions of dollars, it said.


Austar is currently the subject of a takeover bid by Foxtel, which is part-owned by News Corp.

News Limited said the notion that NDS tried to undermine Austar so that Foxtel could bid for it "are so far-fetched as to be laughable".

The unit was reportedly headed by Reuben Hasak, a former deputy director of the Israeli domestic secret service Shin Bet, and established in the mid-1990s within News Corp subsidiary News Datacom Systems, later known as NDS.

The emails, which the newspaper said News Corp had previously sought to suppress, reportedly came from the hard drive of a former security chief at NDS, which was originally set up to tackle internal fraud.

But they allegedly reveal that NDS began hunting the pirates targeting News Corp's own operations.

In doing so, they began encouraging and facilitating piracy by hackers not only of its competitors but also of companies for whom NDS provided pay-TV smart cards.

The documents reportedly show that NDS sabotaged business rivals, fabricated legal actions and obtained telephone records illegally which the newspaper said generated huge windfall profits for the Murdoch empire.

In the BBC programme, NDS was accused of leaking information from British broadcaster On Digital, a rival to News's BSkyB, which could be used to create counterfeit smart cards, giving people free access to cable television.

On Digital collapsed in 2002. NDS categorically rejected those claims.


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