US pension funds sue News Corp over NOTW closure

US pension funds have filed an amended complaint alleging "rampant nepotism" and failed corporate governance" at News Corp. in light of the ongoing phone hacking scandal.

In addition to pre-existing allegations of abuse by News Corp chairman and CEO Rupert Murdoch, the amended complaint addresses revelations involving the News of the World (NOTW).

NOTW editors have admitted hacking the mobile phones of a raft of public officials, celebrities, members of the royal family and 13-year-old murder victim Milly Dowler.

The 168-year-old title caved to public presssure and closed on Sunday after mass outrage at the revelations.

US pension fund shareholders allege the closure of the largest-circulation English language newspaper in the world was the fault of the News Corp board for not intervening when it learned of these problems years ago.

The shareholder group accuses News Corp.'s board of failing to exercise proper oversight and take sufficient action since news of the hacking first surfaced at its subsidiary nearly six years ago.

As many as 4,000 individuals may have been the target of unlawful phone call intercepts, including British soldiers killed in Afghanistan and victims of terrorist attacks.

News Corp. executive James Murdoch - son of company chairman and chief executive Rupert Murdoch - has admitted the NOTW "failed to get to the bottom of repeated wrongdoings that occurred without conscience or legitimate purpose".

James Murdoch also acknowledged he personally approved the payment of nearly £2m ($3m) to silence two lawsuits against the company and admitted "I now know that I did not have a complete picture when I did so. This was wrong and is a matter of serious regret".

"These revelations should not have taken years to uncover and stop," the shareholders argue in their complaint.

"(They) show a culture run amuck within News Corp. and a board that provides no effective review or oversight."

Plaintiffs also note that editors implicated in the affair - including Rebekah Brooks - were consistently promoted even while the scandal was unfolding.

Brooks was formerly editor fo News of the World and is now chief executive of News Corp. subsidiary News International.

"Although the scandal first came to light in 2005...it is inconceivable that Murdoch and his fellow Board members would not have been aware of the illicit news gathering practices," the complaint said.

The latest allegations supplement a lawsuit originally filed in May 2011 in Delaware Court of Chancery.

Shareholders accuse Murdoch of treating News Corp. like a family candy jar, which he raids whenever his appetite strikes," after News Corp.'s $615m purchase earlier this year of TV company Shine Group.

Shine is majority-owned by Rupert Murdoch's daughter Elizabeth Murdoch, whose windfall share of the sale came to $250m.

"News Corp.'s behavior has become an egregious collection of nepotism and corporate governance failures, with a board completely unwilling to provide even the slightest level of adult supervision," said Jay Eisenhofer, co-managing director of Grant & Eisenhofer and co-lead counsel to shareholders."

News Corp was unavailable for immediate comment.

The complaint was filed in Delaware Chancery Court on the evening of 8 July.