Renowned Yale professor says Fox executives should be fired for “proven misconduct” exposed in Dominion lawsuit.


NY
CNN

The Fox Corporation board of directors is in a huge mess and needs to work fast to clean up the mess.

So says Jeffrey A. Sonnenfeld, renowned professor and senior associate dean for leadership studies at the Yale School of Management. Sonnenfeld told CNN on Tuesday that the dramatic revelations stemming from Dominion Voting Systems’ $1.6 billion libel lawsuit against Fox News showing that he knowingly spread election lies in front of his audience is a major concern that could threaten the parent company.

The documents, he said, showed Fox Corp board members took no action to prevent misconduct by Fox executives and warned that the disclosure would lead to “likely” shareholder lawsuits, a possible SEC investigation into “fraudulent actions by the board of directors to collusion.” to cover up known misconduct with material adverse consequences” and the potential loss of insurance protection for directors and officers of the company.

Sonnenfeld, who has advised hundreds of CEOs and recent US presidents, said the board of directors should take immediate action, including removing high-profile employees like Fox News chief executive Suzanne Scott from their positions.

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“The board has a duty to fire such officials for proven wrongdoing,” Sonnenfeld told CNN by email, explaining that the spread of well-known campaign lies – as “acknowledged in company affidavits” – had damaged the publication’s corporate reputation.

“If the board doesn’t act properly,” Sonnenfeld added, “it is indicative of a failure of management oversight and jeopardizes the insurance coverage of their own directors and officers because of such a grossly deliberate failure of careful management oversight.”

Inaction on the part of the board of directors could lead to additional legal consequences for Fox, Sonnenfeld warned. “Murdoch “only” controls 39% of the company, so any of the 61% shareholders can sue for misconduct, lack of management oversight and willful lack of discretion,” he explained.

The latest Dominion court document revealed that, behind the scenes, Fox Corp board member Paul Ryan pleaded with Rupert and Lachlan Murdoch to prevent Trump’s fake election announcements from being aired to Fox News’ audience of millions. The former speaker of the House of Representatives said that Fox News should “get away from Donald Trump” and “stop spreading campaign lies.”

But Sonnenfeld said Ryan’s actions weren’t enough. In fact, he said that Ryan’s “quiet dissent” was “cowardly, ineffective and immoral” and pointed out that board members have certain responsibilities under corporate governance law in Delaware, where Fox is registered.

“The duty of loyalty and diligence is NOT placed on management, but on owners,” Sonnenfeld said. “Quietly agreeing to wrongdoings they know about, all directors, including Paul Ryan, are guilty of complicity due to their self-righteousness.”

Sonnenfeld said that if he were advising members of the Fox board of directors, he would recommend an immediate investigation into “how far, wide, and deep the wrongdoing has gone — involving an outside independent law firm to review the affidavit that is now in the public domain, and follow-up activities.” “. Sonnenfeld said Viet Dinh, Fox’s chief legal and political officer, and Kevin Lord, chief human resources officer, “should share whistleblower complaints and get out of interviews with the board of directors.”

“The investigation must be completed with a report to shareholders by May 1, indicating what disciplinary action will be taken,” he said. Sonnenfeld also said insurance company directors and officials “should be contacted to see if board members are protected.”

Nell Minow, vice chairman of ValueEdge Advisors and corporate governance expert, told CNN she agreed with everything Sonnenfeld said. Minow said she would advise interested board members to “contact their largest shareholders to hear their proposals for new independent directors.”

Minow also recommended that Fox News immediately begin settling with Dominion, “even if it means changing the name from News to Not News and doing free ads 10 times a day in prime time for 10 years about Dominion’s integrity and reliability.”

Representatives from Fox Corp and Fox News, who said Dominion carefully selected quotes to use against them, did not respond to requests for comment. Fox News has previously said it is “proud” of its coverage of the 2020 election, and that statement is getting more remarkable every day.