The parent company of Fox News Channel should have known about a payment as large as the $3.15 million in corporate funds reportedly paid to a former booker who claimed she was sexually harassed by Chairman Roger Ailes, the Financial Times quotes legal experts as saying.
"A settlement of that size that involved a complaint against Roger Ailes would hopefully have come to the attention of senior officials of 21st Century Fox," Charles Elson, director of Center for Corporate Governance at the University of Delaware told the FT’s Matthew Garrahan. "That it didn't from a controls standpoint raises concerns."
According to reporting by New York Magazine's Gabriel Sherman, former guest booker and event planner Laurie Luhn was paid the multi-million hush money in 2011 after reporting 20 years of “psychological torture” by Ailes.
Luhn claims Ailes required her to engage in regular sex sessions in New York hotel rooms, have sadomasochistic sex with other women as he watched and introduce him to other female Fox News employees.
Ailes denies Luhn's allegations as well as those of more than two dozen women, including former Fox News anchor Gretchen Carlson who has sued Ailes and Megyn Kelly, who claimed Ailes harassed her 10 years ago.
"This should have gone up to the audit committee very quickly. It should have been looked at," said John Coffee, director of the Center on Corporate Governance at Columbia University Law School.
Anyone reviewing the financial activities of the Fox News division should have caught the payment – unless it was somehow entered in a way that was difficult to make out, Elson said.
The willful misrepresentation of audited financial statements, or documents used in their preparation for a public company, is a federal crime.
Luhn's payout happened just before the parent company was split into two corporate entities, 21st Century Fox, which is over Fox News and the entertainment division, and News Corporation, which includes the company's print properties.
The split came as the result of a phone hacking scandal by British newspapers owned by the company.
A spokesman for 21st Century Fox denied to the FT any link between how the two scandals were handled.
"The fact is we have a robust compliance structure and strong controls embedded across our company," the spokesman said. "Within hours of the first public complaint raising an issue at Fox News, we commenced an investigation, and less than two weeks after that investigation began, the Chairman and CEO of Fox News departed."
Fox News brought in an outside law firm to investigate complaints after former anchor Gretchen Carlson sued Ailes after her contract was not renewed in June.
Carlson accuses Ailes of asking her for sexual favors in exchange for better treatment at the network. Ailes, through his attorneys, has denied the allegations.
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