NEW YORK: Shareholders in Rupert Murdoch’s News Corp are asking a US court for permission to sue the firm's board for failing to stop the phone hacking scandal.

The shareholders asked Delaware judge John Noble on Wednesday to proceed with their case against Murdoch, his sons Lachlan and James and the rest of the company's board. News Corp is attempting to have the case dismissed.

In all, 50 people have been arrested in connection with the scandal, News Corp has closed its most profitable newspaper, the News of the World newspaper, and lost a deal to take over the BSkyB satellite broadcast business.

The shareholders, including America’s Amalgamated Bank and Central Laborers’ Pension Funds, charge the company's executives put their own interests ahead shareholders and treated the firm as a “family candy jar”.

The lawsuit was originally filed in March 2011 over News Corp’s agreement to buy Shine, a TV production company owned by Elizabeth Murdoch, the News Corp chairman’s daughter, for $670m. It was amended after the phone hacking scandal emerged.

“All of this harm occurred because the board chose to protect those close to Murdoch rather than investigate the misconduct when it learned about it,” the shareholders said in June in their amended complaint.

“These revelations should not have taken years to uncover and stop. These revelations show a culture run amuck within News Corp and a board that provides no effective review or oversight,” the shareholders charged.

Charles Elson, chair in corporate governance at the University of Delaware, said lack of board oversight was a difficult case to bring but that News Corp’s dual class share structure could present the Murdochs with some challenges.  News Corp has two classes of shares, and the Murdochs’ shares give them 39 pc of the company votes although the family owns about 15pc of the equity.

“The chances of bringing these type of cases are usually pretty slim but here you have independence and conflict of interest issues vis a vis the board so there’s more of a shot,” said Elson.

Copyright: Guardian News & Media 2012