Jeff Bezos blackmail allegation could bite Trump-linked tabloid publisher

American Media Inc was required to stay out of trouble for three years under deal with prosecutors

Jeff Bezos accused the National Enquirer of blackmail, reportedly sparking the interest of law authorities in the tabloid's owner. Reuters

Federal prosecutors are investigating whether the company that owns the National Enquirer violated a co-operation agreement amid allegations they threatened to publish revealing photographs of Jeff Bezos, the chief executive of Amazon, according to reports.

It marks the latest twist in a bad-tempered dispute between a traditional media giant and an internet behemoth, fuelled by a billionaire’s wealth and anger at the way the supermarket tabloid exposed his extramarital affair. And it is all playing out against the backdrop of Donald Trump’s hyper-partisan America.

The tussle spilled into public view on Thursday when Mr Bezos wrote a blog post accusing American Media Inc (AMI) of blackmail by threatening to publish intimate photos of him and Lauren Sanchez, the woman with whom he was having an affair.

“Of course I don't want personal photos published, but I also won't participate in their well-known practice of blackmail, political favours, political attacks, and corruption,” he wrote. “I prefer to stand up, roll this log over, and see what crawls out.”

The National Enquirer had already revealed details of the affair with Ms Sanchez last month after Mr Bezos announced that his marriage was over.

In his new claims, the world's richest man said the Enquirer made two demands: stop investigating how the tabloid obtained private messages between the two lovers and publicly declare that the Enquirer's coverage was not politically motivated.

That prompted several US media houses to report that prosecutors in the Southern District of New York had taken an interest, poring over the accounts to determine whether the Enquirer had breached the terms of an earlier agreement related to the Trump campaign.

AMI acknowledged helping election efforts with a $150,000 (Dh550,000) payment to Karen McDougal, a former Playboy centrefold, for the rights to her story about an affair with Mr Trump. It subsequently sat on the story until after the 2016 election.

Such a payment constituted an illegal contribution to the Trump campaign, according to prosecutors. However, in September, AMI reached an agreement that spared it from prosecution – so long as it stayed out of trouble for the next three years.

The company insists it has done nothing wrong.

“American Media believes fervently that it acted lawfully in the reporting of the story of Mr Bezos,” it said in a statement. “Nonetheless, in light of the nature of the allegations published by Mr Bezos, the board has convened and determined that it should promptly and thoroughly investigate the claims. Upon completion of that investigation, the board will take whatever appropriate action is necessary.”

The dispute has generated unexpected sympathy for the world’s richest man and praise for the way he has stood up to threats. Like other online giants, Amazon has found itself under scrutiny for its use of customer data and it is in a pitched battle with New York residents over plans for a major expansion.

And Mr Bezos has also found himself a target of Mr Trump for his stewardship of The Washington Post, a major source of irritation to the president.

"So sorry to hear the news about Jeff Bozo being taken down by a competitor whose reporting, I understand, is far more accurate than the reporting in his lobbyist newspaper, the Amazon Washington Post," wrote Mr Trump on Twitter when the National Enquirer first wrote about the impending divorce. "Hopefully the paper will soon be placed in better & more responsible hands!"

The result appears to be looming legal showdown between the tabloid and Mr Bezos, who is reported to have hired an all-star team of crisis management experts and heavyweight lawyers.

For its part, the Enquirer has attempted to show the extramarital affair casts doubt over whether Mr Bezos can effectively run his company.

“All of these [text] messages raise serious questions about Bezos' judgement as the CEO of the most valuable company in the world,” the tabloid said in an article last month.

But brand experts suggested investors would not lose sleep over the allegations.

“This is very much a matter of Jeff Bezos,” said Neil Saunders, managing director at GlobalData Retail, of Bezos' affair. “It's not really anything to do with running with the company.”

Meanwhile his company remains embroiled in a growing row over what it calls a second headquarters in New York City. A huge incentives package, worth up to $3 billion, has angered residents, who fear being priced out of their homes amid an influx of as many as 25,000 new jobs.

On Friday, Andrew Cuomo, the governor of New York and a key player in bringing the company to the city, warned political opponents they would face the wrath of voters if they drove the company away.

"I've never seen a more absurd situation," he said.
He was responding to reports that political wrangling had made the company think twice about forging ahead with its planned corporate campus in the borough of Queens.