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British Panel Says Murdochs Are Blocking Inquiries

The New York Times


July 20, 2011

LONDON — A parliamentary panel investigating Britain’s spreading phone hacking scandal accused the Murdoch empire on Wednesday of “deliberate attempts” to thwart its investigations.

The House of Commons home affairs select committee was one of two panels that questioned some of the main players in the scandal on Tuesday, interviewing senior police officers and releasing a scathing report on Wednesday that pointed to “a catalog of failures” in handling the hacking investigations.

The report was issued on Wednesday just hours before Prime Minister David Cameron went before a rowdy session of Parliament on Wednesday to defend his relationships with former senior figures at News International, the British subsidiary of Rupert Murdoch’s global News Corporation.

A second panel, the select committee on culture, media and sport, on Tuesday questioned Mr. Murdoch, his son James and Rebekah Brooks, the former chief of News International. Ms. Brooks resigned from the company last week and was arrested on Sunday to face nine hours of questioning by police conducting a separate criminal inquiry into allegations of phone hacking and making illicit payments to corrupt police officers — charges she again denied on Tuesday.

The separate home affairs select committee interviewed senior officers including Sir Paul Stephenson, the outgoing commissioner of London’s Metropolitan Police Service, and John Yates, the assistant commissioner who also is leaving.

Both men resigned this week amid questions about their ties to Neil Wallis, a former deputy editor of The News of the World — the now defunct Sunday tabloid at the core of the scandal — and the failure to reopen an earlier inquiry into phone hacking after a brief review in 2009.

The report said there had been “deliberate attempts by News International to thwart the various investigations” into the illicit hacking of voice mail. At the hearings on Tuesday, both Rupert and James Murdoch denied that they knew of the hacking at the time it happened, as did Ms. Brooks.

But, the panel said, Scotland Yard had shown no “real will” to penetrate those attempts. It said Mr. Yates’s review of evidence in 2009 had been “very poor” and he had shown a “serious misjudgment” in failing to order the hacking inquiry reopened.

“There has been a catalog of failures by the Metropolitan Police, and deliberate attempts by News International to thwart the various investigations,” the home affairs committee chairman, Keith Vaz, said.

He was referring to new attempts by both the police and a separate inquiry, set up by Mr. Cameron, to be led by a judge investigating what happened.

“The new inquiry requires additional resources and if these are not forthcoming, it will take years to inform all the potential victims,” he said.

The questioning of the Murdochs was suspended briefly on Tuesday after a man attacked Rupert Murdoch with a foil plate of shaving cream. The police said the man, identified as Jonathan May-Bowles, 26, from Windsor, west of London, was charged on Wednesday with “causing harassment, alarm or distress in a public place” under the Public Order Act.

He was released on bail and ordered to appear in court again on July 29.

While the hacking scandal has been simmering for years, it exploded into a full-blown scandal earlier this month with reports that the voice mail of 13-year-old abducted girl, Milly Dowler, had been hacked on the orders of The News of the World in 2002 when Ms. Brooks was its editor.

News Corporation said Wednesday, news agencies reported, that the company had stopped paying legal fees for Glenn Mulcaire, a private investigator for The News of the World who pleaded guilty to phone hacking charges and went to jail in January 2007. Both Mr. Murdoch and his son James told members of Parliament on Tuesday that they were surprised to learn that the company had been paying his legal fees, as well as those of Clive Goodman, the tabloid’s royal reporter, who has also pleaded guilty to phone hacking.

The announcement followed a promise by Rupert Murdoch at Tuesday’s hearing to end the financial support for the former employees.The scandal has spread to encompass Mr. Cameron’s decision to hire another former editor of The News of the World, Andy Coulson, as his media director both before and after the elections that brought him to power at the head of a coalition government in May 2010.

Mr. Coulson, who resigned from the prime minster’s office in January, and Ms. Brooks are among 10 people arrested since January in connection with police investigations of phone hacking.

But, as the report on Wednesday by the home affairs committee showed, lawmakers sense they have an initiative to pursue the issue much further. Additionally, the Labour opposition seems to sense a new vulnerability after disclosures that Mr. Coulson consulted with another former News of the World executive, Neil Wallis, while Mr. Coulson worked for the prime minister.

Mr. Wallis is also among those arrested in recent days.

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Hacking inquiry team named

The Independent


Wednesday, 20 July 2011

David Cameron today named the panel of independent experts who will help Lord Justice Leveson examine media practices in the wake of the phone hacking scandal.

They include Shami Chakrabarti, the director of human rights group Liberty, who said: "It was a daunting privilege to be invited to join Lord Justice Leveson's panel for such an important public inquiry under the Inquiries Act 2005.

"My acceptance is a vote of confidence in the vital role of independent judicial process in times of national difficulty.

"It comes from an optimism in the ability of a great democracy to look itself in the mirror in the spirit of re-building public trust.

"It reflects Liberty's belief in an appropriate balance between personal privacy and media freedom and above all in the Rule of Law."

Other panel members are former Daily Telegraph and Press Association journalist George Jones; former political editor for Channel 4 News Elinor Goodman; former chairman of the Financial Times Sir David Bell; Lord David Currie, former chairman of Ofcom; and former chief constable of West Midlands police Sir Paul Scott-Lee.

The inquiry will look at the phone hacking scandal specifically but also at broader issues involving politics, the media and the police.

It is expected to report within 12 months.

When he was appointed, Lord Justice Leveson said: "The press provides an essential check on all aspects of public life. That is why any failure within the media affects all of us.

"At the heart of this inquiry, therefore, may be one simple question: who guards the guardians?"

Ms Chakrabati has become a regular face on television since her appointment as director of Liberty in 2003.

She trained as a barrister before working as a lawyer in the Home Office from 1996 until 2001.

Ms Goodman now works as freelance journalist after 20 years as political editor of Channel Four News.

She also serves on the Commission on Rural Communities which acts as an independent adviser to the Government on rural issues.

Sir David was chairman of the Financial Times from 1996 until his retirement at the end of 2009 and also served on the board of Pearson plc for 13 years.

Educated at Cambridge University and the University of Pennsylvania, he is also chairman of the Media Standards Trust.

Crossbencher Lord Currie stepped down as head of communications regulator Ofcom in 2009.

Before that he worked as an economics professor, government adviser and a non-executive director of the Abbey National.

Sir Paul Scott-Lee joined the police in his home town of Coventry after leaving school and rose through the ranks to become chief constable.

He also spent time on the forces in Northamptonshire, Kent and Suffolk.

Mr Jones served as political editor of the Daily Telegraph before joining the Press Association as a special correspondent.

He retired in 2010 having reported on 11 general elections and eight prime ministers since 1969.

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News Corp investor urges reform to weaken Rupert Murdoch's influence

US public pension fund says company must end its unusual dual share structure

By Jill Treanor


Wednesday 20 July 2011 16.30

The largest public pension fund in the US, and one of the country's most influential investors, is stepping up the pressure for a drastic overhaul of the way News Corporation is run as the fallout from Rupert Murdoch's appearance before MPs begins.

The California Public Employees' Retirement System, which manages $237bn (£147bn) of assets and prides itself on its tough corporate governance stance, wants the unusual dual share structure of News Corp to end so it will be able to influence the media company more effectively.

Anne Simpson, the Briton who is in charge of corporate governance at Calpers, told the BBC that it was time for change at the company, which gives special voting powers to shares held by the Murdoch family.

"News Corp does not have one share one vote. This is a corruption of the governance system. Power should reflect capital at risk. Calpers sees the voting structure in a company as critical. The situation is very serious and we're considering our options. We don't intend to be spectators – we're owners," she said.

While the Murdochs own 12% of the company, their special B shares give them voting rights over 40% of the company. Calpers holds 6.4m shares.

Other investors have also raised this share structure – which is very unusual in the UK – as a concern while this is not the first time that Calpers has had concerns about the Murdoch family.

In 2003, Calpers had attempted to oppose the appointment of James Murdoch as chief executive of BSkyB. "This is a very unsatisfactory situation with a father and son chairman and chief executive at the head of a major FTSE company," Daniel Somerfield of US investors USS and Calpers said at the time.

Calpers is also known for its successes in the US. In 2004 it led the shareholder revolt that forced Michael Eisner to give up the chairman's role at Walt Disney and when the head of the New York Stock Exchange, Dick Grasso, was handed a $188m pay deal, it was Calpers that was involved in the charge that led to his departure.

Public sector pension funds are well known in the US as the protagonists for change at major companies, and regarded as more influential that more typical institutional investors.

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David Cameron spoke to Rupert Murdoch's executives about BSkyB bid

David Cameron insists conversations were 'appropriate' and comes close to apologising over decision to hire Andy Coulson

By Patrick Wintour, political editor


Wednesday 20 July 2011 21.30 BST

David Cameron's hopes of putting a lid on the phone-hacking scandal were floundering on Wednesday after he was forced to concede he had talked to Rupert Murdoch's executives about their bid to take control of BSkyB.

It is the first time he has made the admission, but he insisted the conversations had been "appropriate" because he did not convey any of those discussions to the politician in sole charge of handling the bid, the culture secretary, Jeremy Hunt.

Cameron also came close to an apology over his decision to appoint Andy Coulson, as No 10's director of communications, admitting with hindsight he should not have offered him the job.

Making an exhaustive 139-minute emergency statement to MPs, he edged towards the much-demanded apology about Coulson: "Of course I regret, and I am extremely sorry, about the furore it has caused. With 20/20 hindsight, and all that has followed, I would not have offered him the job, and I expect he would not have taken it."

He added: "I have an old-fashioned view about innocent until proven guilty, but if it turns out that I have been lied to, that would be the moment for a profound apology. In that event, I can tell you that I will not fall short."

The Labour leader, Ed Miliband, said it was not about hindsight. Cameron had ignored five warnings of Coulson's activities, he said, including a damning article by the New York Times in September 2010 that prompted major changes at the Metropolitan police, but not in Downing Street. Cameron repeatedly tried to avoid admitting he had discussed the BSkyB deal at one or other of the 26 meetings he has held with Murdoch's executives since the election.

Faced by repeated Labour questioning, he said he had not had any inappropriate conversations about BSkyB with Murdoch's executives.

He said there was not a single conversation that could not have taken place in front of a select committee, a phrase first used by the former News International chief executive Rebekah Brooks on Tuesday.

Later, Cameron's aides said he could not prevent company executives lobbying him in meetings. They added that the cabinet secretary, Sir Gus O'Donnell, had said the discussions did not breach the ministerial code.

But Cameron's admission that he held such discussions arguably gave BSkyB a commercial advantage in that it would help inform the company's representations to the culture secretary.

The shadow culture secretary, Ivan Lewis, said: "Despite claiming he was prepared to answer 'any and all' questions, he still hasn't given full details on these meetings, including when they took place and what exactly was discussed. Cameron needs to come clean and provide complete transparency. Until he does so, there will continue to be serious questions about his judgment."

Cameron implicitly admitted there was a problem about any ministerial involvement in the BSkyB takeover bid. "I think that there might be a case, when it comes to media mergers, for trying further to remove politicians." He added: "We should be frank: sometimes in this country, the left overestimates the power of Murdoch, and the right overdoes the left-leanings of the BBC. But both have got a point, and never again should we let a media group get too powerful."

Nick Clegg, the deputy prime minister who has struck a defiantly independent tone during the crisis, will hold his first solo press conference on Thursday in a sign of his determination not to be dragged into the mire with Cameron.

Clegg advised against the appointment of Coulson last year, and Chris Huhne, his home affairs spokesman in opposition, was approached by the Met to lay off criticisms of the way they had conducted their inquiries.

But Conservatives are hoping the start of the long parliamentary recess and the finalisation of the judicial inquiry into the hacking will see the feverish energy surrounding the scandal finally dissipate as the public focuses on the economy and the euro crisis. Conservative strategists sense scandal exhaustion has crept in, even if Labour claimed Cameron was heading for the beaches with a cloud over him.

An Ipsos MORI poll showed the recent furore had left Cameron's personal satisfaction ratings at their lowest point since he became prime minister, and lower than any of his ratings as leader of the opposition since September 2007.

As Rupert Murdoch left the UK on a private jet, his executives were still moving slowly to end any remaining signs of a cover-up over the wrongdoing.

News Corporation terminated arrangements to pay legal fees of private investigator Glenn Mulcaire "with immediate effect". It also instructed solicitors Harbottle & Lewis that it was released from a confidentiality agreement that prevented it from telling the police how it had come to write a wholly inaccurate letter to the culture select committee in 2007 insisting the phone hacking and illegal activities had been confined to a sole reporter.

In hindsight

John Yates: "I should have cogitated and reflected, but it's so bloody obvious there was nothing there [that we didn't already know]. I didn't do a review. Had I known then what I know now – all bets are off. In hindsight there is a shed load of stuff in there I wish I'd known."

James Murdoch: "So if I knew then what we know now and with the benefit of hindsight we can look at all these things, but if I knew then what we know now we would have taken more action around that and moved faster to get to the bottom of these allegations."

David Cameron: "Of course I regret, and I am extremely sorry about the furore it has caused. With 20/20 hindsight and all that has followed I would not have offered him [Coulson] the job and I expect that he wouldn't have taken it. But you don't make decisions in hindsight, you make them in the present. You live and you learn and believe you me, I have learned."

Sir Paul Stephenson: "As commissioner I carry ultimate responsibility for the position we find ourselves in. With hindsight, I wish we had judged some matters involved in this affair differently. I didn't and that's it."

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James Murdoch: hack victim's payout sparks queries over hush-money denial

Despite telling parliamentary committee that astronomical sums were not paid, total cost of Gordon Taylor payout was £1m

By David Leigh and Nick Davies


Wednesday 20 July 2011 21.32 BST

James Murdoch appears to have given misleading parliamentary testimony about a key phone-hacking cover-up, according to evidence obtained by the Guardian.

Rupert Murdoch's son sought to deny that "astronomic sums" had been secretly paid out to a hacking victim as hush-money. He told MPs the company's legal advice was that the likely award of damages was £250,000, and that this explained the size of a confidential payout he agreed could be paid in 2008 to hacking victim Gordon Taylor, chief executive of the footballers' union the PFA.

But full details of the legal negotiations obtained by the Guardian show that in fact Murdoch's company executives paid far more than that to buy Taylor's silence. After consulting James Murdoch, they eventually agreed to pay £425,000 damages, almost twice as much as the alleged likely award.

With Taylor's legal costs at £220,000, and their own solicitors' fees of some £300,000, the total cost to the News of the World to keep the case out of court amounted to almost £1m.

This huge confidential settlement succeeded in concealing the fact, detailed in the lawsuit papers, that Neville Thurlbeck, the paper's chief reporter, was implicated by an email referring to "Neville". Police had been forced to hand over a copy of this email to the other side's lawyers.

James Murdoch further claimed to the MPs that this email had been concealed from him by two company executives, the lawyer Tom Crone and the editor Colin Myler, when he was persuaded to sign off the secret deal.

Had the email come to light at the time, it would have destroyed the News of the World's public stance that phone hacking was the work of a single "rogue reporter" who had already been jailed.

The details of the negotiations between Taylor and the News of the World also show that James Murdoch was incorrect in assuring MPs that the confidentiality deal was normal.

Sources familiar with the negotiations say that not only was the size of the settlement to be kept confidential, but that News International also got an agreement that the very fact of a confidential settlement was also to be kept confidential.

This was so unusual that a special court hearing by a judicial figure, Deputy Master Mark, had to be held in September 2008, before it was agreed that the court file could be sealed, because it possibly contained evidence of criminal behaviour.

James Murdoch was accompanied by his father, Rupert, at the culture, media and sport committee hearing. Rupert told the MPs his son had only been in charge of the News of the World for a few weeks when he was persuaded to agree to the secret payoff. Crone and Myler have since lost their jobs. Neither responded last night to requests for comment.

James Murdoch told MPs that Myler and Crone told him "outside legal advice had been taken on the expected quantum of damages … the amount paid rested on advice from outside counsel on the amount we would be expected to pay in damages, plus expenses and litigation costs … we had senior distinguished outside counsel to whom we had gone to ask, 'If this case were litigated, and if the company were to lose the case, what sort of damages would we expect to pay?' The company received an answer that was substantial … Their advice was that the damages could be £250,000 plus expenses and litigation costs, which were expected to be between £500,000 and £1m."

James did not explain to the MPs why he was willing to pay far more than the going rate in damages to keep the case out of the public courtroom. On his version of events, the company ended up paying just as much to stop the case as if they had gone on to make a fight of it and lost. In commercial terms, the deal apparently made no sense.

The history of the negotiations was as follows, according to the Guardian's evidence. It appears to show the News of the World was willing to pay almost any price to hush up the case.

• In early 2008, Taylor's lawyers obtained evidence of the "Neville" email. NoW, which had been refusing to pay up, immediately offered to settle. By 9 May 2008, NoW raised its £50,000 offer to £150,000. This contrasted with the previous highest comparable award of £14,600 to Catherine Zeta Jones.

• By 9 June, the offer was increased to £350,000. Taylor refused. By now Crone and Myler had approached James Murdoch and orally asked permission to offer more, saying counsel had advised the case could be worth £250,000. Murdoch says they never told him of the "Neville" email.

• By mid July, the offer was raised to £400,000, making £610,000 in total, including costs. NoW wanted a draconian confidentiality clause, however.

On 24 July 2008, the Max Mosley privacy case was won, with an award of only £60,000. On the same day, according to James Murdoch's office, Taylor's lawyers decided to accept the £400,000 offer in principle. It would have looked huge.

Nevertheless, sources familiar with the deal say the Taylor payout was eventually further slightly increased by the final settlement which came around 8 August 2008.

The company said last night: "News Corporation's management and standards committee has looked in detail at the Gordon Taylor settlement. In response to media inquiries, the MSC can confirm that News Group Newspapers and Mr Taylor agreed final financial terms on 10 July 2008, two weeks before the Max Mosley decision.

"In June 2008, James Murdoch had given verbal approval to settle the case, following legal advice. He did this without knowledge of the 'for Neville' email. All other details, including any confidentiality clauses, are bound by a confidentiality agreement."

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Andy Coulson was never given top security clearance in government

Andy Coulson was granted only mid-level clearance, so avoiding the most rigorous security checks into his background

By Richard Norton-Taylor, Robert Booth and James Ball


Wednesday 20 July 2011 20.48 BST

Andy Coulson did not face the rigorous government security checks into his background that most recent Downing Street press chiefs have undergone, it emerged on Wednesday.

The former News of the World editor was granted only mid-level security clearance when he was appointed by David Cameron as his director of communications, so avoiding "developed vetting" involving a detailed interview by government investigators looking for anything in his past that could compromise him.

The checks would have involved a review of his personal finances and cross-examination by investigators of referees, who could include friends and family. Coulson would have been asked by government vetters, some of whom are former police officers, such questions as: "Is there anything else in your life you think it appropriate for us to know?"

Alastair Campbell and Dave Hill, who ran communications for Tony Blair, and Michael Ellam, who did the same job for Gordon Brown when he was prime minister, were all subject to the more rigorous checks which are said to be in part targeted at uncovering potentially damaging secrets in an employee's background.

In the Commons, Cameron said Coulson had gone through the "basic level of vetting" and was not able to see the "most secret documents in government".

The prime minister added: "It was all done in the proper way, he was subject to the special advisers' code of conduct."

The disclosure will fuel suggestions that Cameron failed to take proper steps to check allegations that Coulson had been involved in illegal behaviour at the NoW.

The Cabinet Office denied that Coulson was spared high-level security vetting to avoid any potentially embarrassing information coming out which could have compromised his appointment.

A spokesman declined to comment in detail on Coulson's security status but said he would have been consulted by a senior official over which level of vetting he should undergo. "In normal circumstances at a senior level the postholder would be consulted. You get the standard level and you discuss whether to go higher."

Jonathan Powell, Blair's former chief of staff, said: "In our time in No 10, the press officers were all cleared at the highest level. It is essential if you are going to work on international matters to be able to read intelligence and other relevant material."

The Cabinet Office said that, unlike Campbell and Powell, Coulson's job did not require him to have high-level security clearance. He did not attend cabinet meetings, the bi-weekly national security council meetings, or Cobra, the government's emergency committee.

"He had 'security check' level of security clearance which most officials in No 10 and most special advisers would be subject to," a spokesman said. "The only people who will be subject to developed vetting are those who are working in security matters regularly and would need to have that sort of information. The only special advisers that would have developed vetting would be in the Foreign Office, Ministry of Defence and maybe the Home Office. Andy Coulson's role was different to Alastair Campbell's and Jonathan Powell. Alastair Campbell could instruct civil servants. This is why [Coulson] wasn't necessarily cleared. Given [the nature of] Andy Coulson's role as more strategic he wouldn't have neccesarily have been subject to developed vetting."

Coulson was also screened by a private company when he started working for the Conservatives in 2007. Asked in the Commons, Cameron refused to name the firm involved.

Electoral Commission returns show that the party last year used Control Risks Screening to vet several staff at a cost of £145.70 per check. If this is the level of vetting undergone by Coulson it is likely to have involved only the most cursory checks of online records.

The party said last night it would not comment on the company or the level of scrutiny involved in Coulson's clearance, which involves a check of health records, police files, financial history, MI5 records and possible interview if recommended by the security service

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Les Hinton faces US calls for Dow Jones inquiry over phone hacking

Senators press Dow Jones to investigate whether Les Hinton had any knowledge of or role in alleged illegal activities

By Ed Pilkington in New York


Wednesday 20 July 2011 21.03 BST

Two US senators have turned up the heat on Les Hinton, the former chief executive of Dow Jones who resigned last week, calling on the panel that oversees the company's editorial integrity to investigate his role in the scandal.

Barbara Boxer of California and John Rockefeller of West Virginia have written to the special committee of Dow Jones and company demanding that they set up an inquiry into whether senior Dow Jones executives, Hinton especially, had any knowledge or role of alleged criminal activity at News Corporation.

They wrote: "Allegations of illegal phone hacking and bribery in the UK at properties owned by News Corporation, a US-based company, have outraged people around the world. The American people need to be reassured that this kind of misconduct has not occurred in the US and that senior executives at News Corporation properties in our country were not aware of, or complicit in, any wrongdoing."

The special committee of Dow Jones was set up at the time of the company's sale to Rupert Murdoch in 2007 in order to assuage fears that the media tycoon would affect its journalistic integrity. The committee was tasked with ensuring the "continued journalistic and editorial integrity and independence of Dow Jones' publications and services."

Dow Jones is the publisher of the Wall Street Journal, the most prized possession within Murdoch's newspaper holdings.

Hinton resigned as head of Dow Jones last Friday, becoming the most senior member of Murdoch's inner circle to fall foul of the billowing phone-hacking scandal. He was chairman of News International, the UK newspaper arm, at a time that illegality took place, though he has denied any knowledge of it.

He twice told parliament that the hacking was limited to one News of the World reporter, a claim that is now known to be a gross underestimate.

The two senators, who have already pressed the US justice department to launch an investigation into News Corporation activities within America, asked the special committee whether they raised any concerns about Hinton's appointment as head of Dow Jones in 2007, and whether or not they investigated the extent of his knowledge of illegality at News International.

The senators' intervention is the latest move to increase pressure on News Corporation on the US side of the Atlantic. An FBI investigation is underway into allegations that NoW reporters tried to gain access to the phone records of 9/11 victims and the justice department has launched a preliminary investigation into whether Murdoch companies broke any other US laws.

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James Murdoch appears to have given misleading parliamentary testimony about a key phone-hacking cover-up, according to evidence obtained by the Guardian.

Rupert Murdoch's son sought to deny that "astronomic sums" had been secretly paid out to a hacking victim as hush-money. He told MPs the company's legal advice was that the likely award of damages was £250,000, and that this explained the size of a confidential payout he agreed could be paid in 2008 to hacking victim Gordon Taylor, chief executive of the footballers' union the PFA.

But full details of the legal negotiations obtained by the Guardian show that in fact Murdoch's company executives paid far more than that to buy Taylor's silence. After consulting James Murdoch, they eventually agreed to pay £425,000 damages, almost twice as much as the alleged likely award.

With Taylor's legal costs at £220,000, and their own solicitors' fees of some £300,000, the total cost to the News of the World to keep the case out of court amounted to almost £1m.

This huge confidential settlement succeeded in concealing the fact, detailed in the lawsuit papers, that Neville Thurlbeck, the paper's chief reporter, was implicated by an email referring to "Neville". Police had been forced to hand over a copy of this email to the other side's lawyers.

James Murdoch further claimed to the MPs that this email had been concealed from him by two company executives, the lawyer Tom Crone and the editor Colin Myler, when he was persuaded to sign off the secret deal.

Had the email come to light at the time, it would have destroyed the News of the World's public stance that phone hacking was the work of a single "rogue reporter" who had already been jailed.

The details of the negotiations between Taylor and the News of the World also show that James Murdoch was incorrect in assuring MPs that the confidentiality deal was normal.

Sources familiar with the negotiations say that not only was the size of the settlement to be kept confidential, but that News International also got an agreement that the very fact of a confidential settlement was also to be kept confidential.

This was so unusual that a special court hearing by a judicial figure, Deputy Master Mark, had to be held in September 2008, before it was agreed that the court file could be sealed, because it possibly contained evidence of criminal behaviour.


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Phone hacking: Met police to investigate mobile tracking claims

Whistleblower Sean Hoare claimed the News of the World would pay officers to illegally procure phone-tracking data

By Paul Lewis


Thursday 21 July 2011 12.52 BST

Scotland Yard has been asked to inspect thousands of files that could reveal whether its officers unlawfully procured mobile phone-tracking data for News of the World reporters.

There were half a million requests by public authorities for communications data in the UK last year – of which almost 144,000 were demands for "traffic" data, which includes location.

A Metropolitan Police Authority (MPA) member has asked the force to investigate allegations that News of the World reporters were able to purchase this data from police for £300 per request.

The claims were made by Sean Hoare, the News of the World whistleblower, days before he was found dead at his home on Monday. His disclosure about the purchase of illicit location data was first made to the New York Times, which said the practice was confirmed by a second source at the tabloid. Police have said Hoare's death was not suspicious.

Mobile phone location data, which is highly regulated, would give tabloid reporters access to a method of almost total surveillance, arguably even more intrusive than hacking into phone messages.

Jenny Jones, a Green party member of the MPA, has written to the commissioner requesting an audit of all cases where the Met obtained tracking data from mobile phone companies.

She has also asked the commissioner to guarantee that anyone with reason to suspect a tabloid may have gleaned their whereabouts from their mobile phone signal will have their case looked into.

Two police surveillance sources with knowledge of the system said location data was routinely used by police. Both said any corrupt purchase of information would require a fabricated request under the Regulation of Investigatory Powers Act (Ripa) and therefore the knowledge of a senior officer.

The Met and other forces have central databases where they record Ripa authorisations for audits by the interception of communications commissioner. Police are also compelled to keep Ripa authorisations files under the same rules that compel them to keep evidence connected to criminal investigations, which in some cases can mean paperwork is stored for decades.

Records are also kept by mobile phone providers, with at least one company maintaining an "indefinite" database of Ripa requests since 2009.

This detailed audit trail contrasts with the paucity of evidence in cases of phone hacking, due to the fact that records of phone activity are generally destroyed after 12 months.

The New York Times first reported that the News of the World may have had access to phone-tracking data last week, days before Hoare's death.

It said Hoare, a reporter who was sacked from the News International title in 2005, alleged that his editor Greg Miskiw could locate information about a person's precise whereabouts via their mobile phone number.

Hoare claimed that Miskiw had once helped him locate a person in Scotland, and said the information came from "the Old Bill".

The following day he told the Guardian that reporters would ask a news desk executive to obtain the location of a target: "Within 15 to 30 minutes someone on the news desk would come back and say: 'Right, that's where they are.'"

He added: "You would just go to the news desk and they would come back to you. You don't ask any questions. You would consider it a job done."

Hoare made no reference to which police force may have sold the data, although the Metropolitan police are currently investigating evidence that corrupt officers from within its ranks were selling information to the News of the World.

Mobile phone companies can provide police with real-time location information about the whereabouts of suspects or missing people at 15-minute intervals. More commonly, police request a "cell site dump", which gives a complete historical record of the whereabouts of person's mobile phone.

There are two ways the data is obtained. When a phone is used for a call or SMS message, details of its location are logged. Alternatively so-called "pinging" can be used when a phone is not in use, by sending the device signals and triangulating the results from cellphone masts. The level of accuracy ranges from a few hundred metres to around two kilometres, depending on proximity to the masts.

Mark Lewis, a solicitor who represents phone-hacking victims, said: "I have sources that I can't reveal who tell me they could do it [obtain the data]." He said he had clients who suspected they had been tracked: "One or two were very suspicious about how they had been found – simply because they were where they were not supposed to be."

If police want to monitor the contents of emails or calls to combat terrorism or serious crime they require a warrant from the home secretary.

Far more common however is the interception of communications data, which relates to the "who, where and when" of messages or calls. There is a complex framework through which the data is channelled from phone companies to police.

Phone companies provide data to "police liaison units" – funded by the Home Office – which contain a handful of people with maximum security clearance to deal with incoming requests.

Police in turn have special points of contact (Spocs), who liaise with the mobile phone companies and process the requests.

They are trained and accredited by the National Policing Improvement Agency and given unique pin numbers. There are almost 600 accredited Spocs in police forces on a nationwide register maintained by the Association of Chief Police Officers.

Under Ripa, these gatekeepers require detailed justifications from a senior officer to request phone information as part of an investigation, in a process that can take up to ten days. In emergencies, senior police can request the information orally, but paperwork is retrospectively filed centrally.

Anyone who suspects their phone was inappropriately tracked is able request details from police or their phone provider under the Data Protection Act.

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What did PM tell Murdoch about the BSkyB takeover?

Cameron admits he may have discussed controversial deal

The Independent

By Andrew Grice and Oliver Wright

Thursday, 21 July 2011

David Cameron admitted that he may have discussed the bid by News Corp for full control of BSkyB during his 27 meetings with Murdoch executives since last year's election. Downing Street had previously insisted that the £8bn takeover was not mentioned.

Mr Cameron also came under pressure to explain why he failed to review Andy Coulson's position as No 10's director of communications last September when The New York Times alleged that hacking was widespread while he was editor of the News of the World. The same report led to Scotland Yard ending the PR role of Neil Wallis, Mr Coulson's friend and deputy at the NOTW. Both Mr Coulson and Mr Wallis have recently been arrested by police investigating hacking.

Last night Cameron aides offered the surprise disclosure that Mr Wallis had "probably" visited Mr Coulson in Downing Street since last year's election, although they insisted that any informal advice to Mr Coulson took place before the election.

Senior Palace officials also believe Mr Cameron's office was "aware" of their misgivings about him ever hiring Mr Coulson in the first place, The Independent understands, following the jailing of a reporter and a private detective for hacking into the phones of royal aides.

During a Commons statement, the Prime Minister was asked on nine occasions whether he had discussed the now-aborted News Corp bid for BSkyB. He replied that he had not had any inappropriate conversations about the takeover. Later, aides suggested Mr Cameron may have been lobbied by Murdoch executives but would have merely told them the decision was a matter for Jeremy Hunt, the Culture Secretary.

Last night Mr Hunt appeared to confirm that the issue did arise during the Prime Minister's meetings. He told MPs the discussions were "irrelevant because the person making this decision was myself". Labour described Mr Cameron as "slippery" and urged him to publish full details of any talks with Murdoch executives about the bid. "Until he does so there will continue to be serious questions about his judgement," said Ivan Lewis, the shadow Culture Secretary.

However, Mr Cameron settled Tory nerves by taking a tougher line on Mr Coulson. He told the Commons he was "extremely sorry" for the furore and that "with hindsight" he would never have recruited him. "You live and you learn – and believe me, I have learnt." He said Mr Coulson should face "severe" criminal charges if it turned out that assurances he gave that he knew nothing about phone hacking were lies. "If it turns out I have been lied to, that would be a moment for a profound apology, and in that event I can tell you I will not fall short," he said. He insisted that Mr Coulson should be seen as "innocent until proven guilty".

The Prime Minister dismissed Labour's attacks over the scandal as "conspiracy theories" and "political point-scoring". Despite private fears among Tory MPs about his links to Mr Coulson, they rallied strongly behind him when he addressed their weekly meeting last night. He told the 1922 Committee his actions on hacking had been "decisive, frank and transparent" and the issue was not raised when backbenchers asked him questions.

Ed Miliband seized on Downing Street's plea to Scotland Yard not to brief Mr Cameron on hacking last September after The New York Times article appeared: "The Prime Minister was caught in a tragic conflict of loyalty between the standards of integrity that people should expect of him and his staff and his personal allegiance to Mr Coulson. He made the wrong choice."

The Labour leader suggested Mr Cameron's "conflict of interest" led to Sir Paul Stephenson's resignation as the Metropolitan Police Commissioner on Sunday after it emerged that the force had hired Mr Wallis as an adviser.

He said: "Sir Paul Stephenson was trapped between a Home Secretary angry about not being told about the hiring of Mr Wallis and Sir Paul's belief, in his own words, that doing so would have compromised the Prime Minister."

In the Commons, Mr Cameron agreed to examine allegations that an unnamed senior government official was subjected to "disgraceful and illegal" phone hacking and hostile media briefing while Mr Coulson worked in Downing Street. He said he would look "closely" at the claims by the former Labour minister Nick Raynsford and refer them to Sir Gus O'Donnell, the Cabinet Secretary.

Mr Raynsford had asked: "Will the Prime Minister confirm that, a year ago, during the period when Mr Coulson was director of communications, the Cabinet Secretary was alerted to evidence of illegal phone hacking, covert surveillance and hostile media briefing directed against a senior official in the government service? What action, if any, was taken to investigate what appears to have been disgraceful and illegal conduct close to the heart of government?"

The key exchanges

Ben Bradshaw In the Prime Minister's conversations with the Murdochs [and] Mrs Brooks, was there ever any mention of the BSkyB bid?

PM Perhaps [Mr Bradshaw] will now be transparent, as he was culture secretary, about all of the contacts he has had with News International over many years.

John Cryer The Prime Minister said that he had commissioned a company to do a basic background check on Coulson. I am asking for the name of the company.

PM We did hire a company to do a basic background check.

Jack Straw When the Prime Minister read of the investigation in The New York Times last year, what did he do?

PM There was no information in that article that would lead me to change my mind, but if it turns out that [Coulson] knew about hacking, it will be subject to criminal prosecutions.

Nick Raynsford Will the Prime Minister confirm that, during the period when Mr Coulson was director of communications, the Cabinet Secretary was alerted to evidence of illegal phone hacking? What action was taken to investigate?

PM In the period that Andy Coulson worked at No 10 there was no complaint about the way he did his job.

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Hacking Case Linked to News Corp Referred to FBI

Published: Thursday, 21 Jul 2011 | 2:28 AM

By: Alan Rappeport, Financial Times

A legal battle over alleged computer hacking of a US marketing company by a News Corp subsidiary has been referred to US authorities by a senior lawmaker, exposing the company at the centre of the UK phone-hacking scandal to further questions about how it operated in the US.

Frank Lautenberg, a Democratic senator, asked the justice department and Federal Bureau of Investigations to examine the details of a case settled between News America Marketing and Floorgraphics Inc, an in-store marketing company. Floorgraphics alleged that its rival hacked its computer system as many as 11 times in 2003 and 2004 to gain business.

“I wanted to make sure that you were fully aware of the case of Floorgraphics and News America, as it may be relevant to your current investigation,” Mr Lautenberg of New Jersey wrote to Eric Holder, US attorney general, and Robert Mueller, head of the FBI, in a letter sent on Wednesday.

The FBI is looking into an unsubstantiated claim that representatives of the tabloid News of the World sought access to voicemails of US 9/11 victims, and the DoJ is examining whether alleged payments to UK police may have contravened the Foreign Corrupt Practices Act.

Senator Lautenberg’s letter came as two other Democratic senators, Barbara Boxer and Jay Rockefeller, moved to turn up the US heat on News Corp [NWS 17.06 0.64 (+3.9%) ] by asking an editorial oversight committee at Dow Jones, the News Corp-owned publisher, to investigate whether any misconduct had occurred in the US.

The committee, set up when News Corp bought the publisher of the Wall Street Journal in 2007, has powers to access “all books, records, facilities and personnel” across News Corp, the senators noted. They requested particular information on Les Hinton, who ran News Corp’s UK newspapers for 12 years before becoming Dow Jones chief executive.

After it lost several marketing contracts from consumer goods companies, Floorgraphics filed a lawsuit in 2004 against rival News America, a News Corp unit that sells newspaper inserts, coupons and in-store advertising. The complaint alleged that News America “attacked FGI directly by breaking into FGI’s computer system to acquire past and future contract information; improperly acquiring confidential FGI documents.”

The case was settled in 2009 for $29m and News Corp bought Floorgraphics soon after for an undisclosed price. In the last two years, News Corp has spent more than $500m to settle claims of anti-competitive behaviour.

The payments show the lengths to which News Corp has gone to quash legal problems beyond those related to the News of the World, which Rupert Murdoch, its chairman, told a UK parliamentary hearing on Tuesday represented less than 1 per cent of his company.

“Around the world it is customary to reach out-of-court settlements in civil litigations and civil matters,” James Murdoch, News Corp’s deputy chief operating officer, told the same hearing.

An attorney who represented FGI had no comment. George Rebh, an FGI founder, did not respond to an interview request.

During the trial in New Jersey in 2009, Mr Rebh’s allegations were explicit. He told the court that there was unauthorised access to FGI’s computer system by people using computers registered with an IP address linked to News America Marketing. He alleged that over four months, News America accessed its computer system through a password protected website 11 times.

The site contained information on FGI’s past advertising prices and Mr Rebh alleged that with such information a competitor could undercut its prices.

Mr Rebh said that a member of his company’s board, Bill Berkley, had faxed a letter to David DeVoe, News Corp’s chief financial officer. According to Mr Rebh, there was no response from Mr Devoe.

News Corp did not respond to a request for comment but previously denied the charges. Body

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Phone hacking investigation widens to sale of private details

Police handed files from Operation Motorman, which found 3,522 suspected cases of media having illegal access to records

By James Ball and Jamie Thunder


Thursday 21 July 2011 17.29 BST

The Information Commissioner's Office has confirmed it has passed to police the file of a 2006 investigation into the sale of private information to journalists.

The transfer of the Operation Motorman files, which documented the practices of private investigator Stephen Whittamore and associates, marks the widening of the inquiry into phone hacking to the broader issue of paying for access to confidential information.

The files were the basis for the 2006 information commissioner's report What price privacy now? [PDF], which identified 3,522 occasions in which 305 journalists requested information that the commission believed was likely to have been obtained illegally.

The Daily Mail topped its list, with 952 identified transactions, followed by the Sunday People on 802 and Daily Mirror on 681. The Observer, published by Guardian News & Media, appeared further down the list, with four journalists said to have accessed information on 103 occasions.

The ICO has not established each piece of information was illegally obtained but instead has focused on information such as car registrations or mobile phone numbers which are often all but impossible to obtain without resorting to "blagging" or similar practices.

The ICO acknowledged some of the data on the list could have been collected legally but said the "majority is highly likely to have been obtained in violation of the Data Protection Act". News organisations were not given a chance to see the list before its publication to establish whether there was a public interest defence to any breach of the act.

Christopher Graham, the information commissioner, warned this week that the "extensive illegal trade" of public information was a wider problem than phone hacking.

"Clearly the selling of confidential personal information is not a victimless crime," he wrote. "It can be extremely distressing and potentially damaging to those involved. You only have to look at the recent allegations of phone hacking, involving the mobile phone of Milly Dowler, to see the damage that can be caused by the theft of someone's personal information."

Details obtained through the Freedom of Information Act reveal hundreds of workers in the public sector may have been found guilty of inappropriately accessing personal records without facing prosecution or dismissal.

Research by the lobby group Big Brother Watch reveals that between 2007 and 2010, 904 police officers and staff across the country were subject to internal disciplinary offences for breaches of the Data Protection Act, which governs access to personal information. Of these cases, only 98 resulted in the dismissal of the staff member involved.

"Our investigation shows that not only have police employees been found to have run background records checks on friends and possible partners, but some have been convicted for passing sensitive information to criminal gangs and drug dealers," said Daniel Hamilton, the director of Big Brother Watch.

"This is at best hugely intrusive and at worse downright dangerous. Police forces must adopt a zero-tolerance approach to this kind of behaviour. Those found guilty of abusing their position should be sacked on the spot."

Information obtained by the Guardian through the Freedom of Information Act suggests benefits records may have been subject to extensive trading – with more than 100 individuals disciplined for "gross" violations still in post.

A total of 512 Jobcentre Plus staff have been disciplined for improper access to the personal records of jobseekers and benefits claimants since 2009.

The disciplinary offence concerned includes incidents in which staff have accessed sensitive information with the intention of passing it to third parties, as well as browsing of material for personal interest and other charges.

The records include 137 gross violations – defined as "serious breach of contractual terms … which makes any further working relationship and trust impossible". Only 27 staff lost their jobs for their actions.

Data available to Jobcentre Plus staff includes names, dates of birth, addresses and national insurance information, and more sensitive details such as benefits claimed, career and qualification history, and in some cases certain health information.

The Department of Work and Pensions, which oversees Jobcentre Plus, was unable to break down how many of its 512 data breaches involved passing information to third parties, but said in a statement: "We take all such cases extremely seriously. With over 100,000 staff the relatively small number of those who misuse our computer systems are always disciplined, and those who commit serious breaches will be

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James Murdoch misled MPs, say former NoW editor and lawyer

Colin Myler and Tom Crone challenge News Corp executive's statement to MPs at phone-hacking hearing

By Lisa O'Carroll


Thursday 21 July 2011 20.02 BST

James Murdoch has been accused of misleading the parliamentary select committee this week in relation to phone hacking, igniting yet another fire for the embattled News International boss to extinguish.

In a highly damaging broadside, two former News of the World senior executives claimed the evidence Murdoch gave to the committee on Tuesday in relation to an out-of-court settlement to Gordon Taylor, chief executive of the Professional Footballers Association, was "mistaken".

The statement came as something of a bombshell to the culture, sport and media select committee, which immediately announced it would be asking Murdoch to explain the contradiction.

Colin Myler, editor of the paper until it was shut down two weeks ago, and Tom Crone, the paper's former head of legal affairs, said they had expressly told Murdoch of an email that would have blown a hole in its defence that only one "rogue reporter" was involved in the phone-hacking scandal.

This contradicts what Murdoch told the committee when questioned on Tuesday.

The existence of the email, known as the "for Neville" email because of its link to the paper's former chief reporter Neville Thurlbeck, is thought to have been critical in News International's decision to pay out around £700,000 to Taylor in an out-of-court settlement after he threatened to sue the paper.

James Murdoch is standing by his version of events. A statement issued by News Corporation said: "James Murdoch stands by his testimony to the select committee."

In their statement, Myler and Crone challenged this: "Just by way of clarification relating to Tuesday's Culture, Media Select Committee hearing, we would like to point out that James Murdoch's recollection of what he was told when agreeing to settle the Gordon Taylor litigation was mistaken.

"In fact, we did inform him of the 'for Neville' email which had been produced to us by Gordon Taylor's lawyers."

John Whittingdale, the chairman of the culture, sport and media select committee, said: "We as a committee regarded the 'for Neville' email as one of the most critical pieces of evidence in the whole inquiry. We will be asking James Murdoch to respond and ask him to clarify."

He added that "it was seen as one of the few available pieces of evidence showing that this activity was not confined just to Clive Goodman", the only journalist on the paper to have been prosecuted – and jailed – in relation to phone hacking so far.

The email is believed to have been critical in News International's decision to pay Taylor such a large sum of money.

If it had got out in a full-blown court case brought by the Profession Footballers' Association chief executive it would have blown a hole in News International's claim that only one reporter was involved in hacking.

James Murdoch claimed to the MPs that this email had been concealed from him by two company executives, Crone and Myler, when he was persuaded to sign off the secret deal with Taylor.

Earlier this month James Murdoch acknowledged he was wrong to settle the suit, saying he did not "have a complete picture of the case" at the time.

He repeated this on Tuesday at the select committee when he was asked by Labour MP Tom Watson: "When you signed off the Taylor payment, did you see or were you made aware of the full Neville email, the transcript of the hacked voicemail messages?"

To this James Murdoch answered: "No, I was not aware of that at the time."

Watson went on to ask him why then had he paid an "astronomical sum" to Taylor.

James Murdoch replied: "There was every reason to settle the case, given the likelihood of losing the case and given the damages – we had received counsel – that would be levied."

With parliament in recess, it is unlikely but not unprecedented for a select committee to hold a special evidence session to clarify the issue.

Witnesses in the case have been given very strict instructions before giving evidence to tell the truth, although witnesses do not give evidence under a specific oath.

James Murdoch told the committee that his advisers had urged him to adopt a strategy of telling the truth when he spoke to the committee.

In its 2010 report the culture, sport and media select committee, in discussing the Gordon Taylor settlement, wrote: "The settlements were authorised by James Murdoch, executive chairman of News International, following discussions with Colin Myler and Tom Crone".

It did not specifically state whether Murdoch had been shown the "for Neville" email before making the settlement, but does state Murdoch was authorised to make the payment without bringing the issue to the News International board.

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