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Hacking Inquiry Puts Heat Back on Murdoch

By the Financial Times ( Financial Times) -- James Murdoch was shown the explosive e-mail at the heart of the phone-hacking scandal, contrary to what he told parliament earlier this year, a committee of MPs has heard.

Testimony by four former News International employees on Tuesday throws the focus of the investigation into hacking at the News of the World back on to Les Hinton, who led News Corp's British newspaper business between 1995 and 2007, and Murdoch, News Corp's European chief and deputy chief operating officer.

Speaking before the culture, media and sport select committee, Colin Myler, the News of the World's former editor, and Tom Crone, who left as News Group Newspapers' legal manager in August, said it was "inconceivable" that Murdoch was unaware in 2008 of the significance of the e-mail which proved hacking went beyond a single rogue reporter at the Sunday newspaper.

The meeting at which the "For Neville" e-mail was discussed saw Murdoch authorize a payment of £425,000 plus legal costs to Gordon Taylor, a football executive.

"Since he gave us the authority we were asking for, I would take it that for the first time he realised News of the World was involved [in illegal voicemail interception] and that involvement involved people going beyond Clive Goodman," Crone said.

Until earlier this year, News International insisted that phone hacking had been limited to the work of Goodman, the News of the World's former royal reporter who was imprisoned with private investigator Glenn Mulcaire for illegal voicemail interception in 2007.

"What document I showed and what I relayed in the meeting was that a transcript of Gordon Taylor voicemails had passed through our office back by e-mail to Glenn Mulcaire," Crone said. "There was evidence that illegal activity had passed through our office and that the News of the World was implicated. I would have explained the background to the litigation and the stance we had taken up and would have explained what this document meant."

The testimony makes it more likely that Murdoch will be recalled by the committee for questioning, although MPs are yet to decide formally on whether or not to do so.

Crone also told MPs that News International had employed a freelance journalist to investigate the private lives of lawyers acting for people claiming they had been hacked by the News of the World.

He said that he had seen "one thing or two" in relation to the private lives of two of the lawyers defending claimants in the civil suits against NI.

But he denied a string of other allegations, including that The Sun, News International's flagship daily tabloid, also employed Mulcaire.

Earlier in the same hearing Jonathan Chapman, News International's former director of legal affairs, and Daniel Cloke, its former group human resources director, told MPs that Hinton had made the decision to keep paying Goodman and his legal fees after his imprisonment to avoid a public tribunal over claims of unfair dismissal.

"We didn't take the decision," said Chapman. "The decision was taken by Hinton. It was a stark choice: settle at a reasonable figure or end up in tribunal several months down the line, where Goodman would be able to make a number of allegations in a public forum. This is a pragmatic and commercial business decision. Many big companies pay out on employment claims of little or no merit because they don't want stuff to be raked up, even if allegations are unfounded."

Crone also said that Andy Coulson, the former News of the World editor at the time of the hacking who went on to work as the prime minister's communications chief, had originally wanted to ensure that Goodman was given a job at the paper after he had served his sentence.

The chairman of the select committee told the Financial Times that no further decision on recalls would be taken until next week. News International declined to comment.

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