Metrommedia International Group MIG, whose largest outside shareholder was Rupert Murdoch’s Newscorp, is embroiled in controversy again with the release of confidential (now public) documents by an Iowa congressional hearing. These documents include an investigation firm’s report which shows evidence that Chairmen and CEO Mark Huaf was being bribed by Sistema, a group which later bought Metromedia assets extremely cheaply after MIG collapsed. In addition, deposition statements of top MIG executives were released, including the deposition of Matthew Mosner who stated regarding a private investigation firm’s report, "...that report was distributed pretty widely amongst the management of the company."
Why was Mark Hauf, who was being investigated for possible bribery, promoted to CEO and chairmen of the board of directors, but general counsel Matthew Mosner, who was working with the private investigators, suddenly resign?
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Letter to Matthew Mosner, general counsel to Metromedia International Group, from Control Risks Group (a private investigations firm).
Dear Matthew,
My colleague Mike Keenan and I met with Eugene Jaffe this afternoon. As a general comment, we should say that Jaffe’s allegations are a bit vague. Having said that, he feels quite strongly that Sistema is bribing Mark Hauf. Most importantly, he bases this conclusion on information from three separate sources that are completely independent from each other...Our discussion with Jaffe seemed to indicate that Mark may have entered into some sort of agreement with Sistema as early as a year ago. (I am a little concerned about this allegation. Wasn’t Mark rather new on the scene at that point?)
In his deposition, Matthew Mosner stated that, "I think there were investigative reports that were put together, very detailed ones about Sistema and who owned it and what its relationship was with various people in the government and that report was distributed pretty widely amongst the management of the company."
If management was aware that Mark Hauf was being investigated, why did they get rid of then chairmen Carl Brazell and Matthew Mosner? What were they afraid of? In another letter to Matthew Mosner, the investigations firm wrote, "I would like to remind you that you have a series of options available to you – depending on what you want to achieve. If you want to put a chilling effect on the office, the option remains open for you to conduct a very overt sweep and security audit of the premises."
Was management afraid of an investigation by their own general counsel? Did they have Matthew Mosner resign to put a stop to an investigation? This again begs the question, why did Rupert Murdoch’s News Corp. allow these deals to go through? They had the largest outside stake in the company, why would they allow the company to crash and then be sold to a questionable Russian company, which was suspected of bribing MIG’s CEO, for so little?? None of it seems to makes sense! Why has the SEC still not investigated the company or their leadership, despite a veritable plethora of information? MIG shareholders deserve some answers, yet bureaucrats and congressmen alike have failed them. What the heck is going on? Why is this happening in the United States?