James Murdoch retakes center stage in phone hacking scandal

Two ex-executives from Rupert Murdoch's News of the World tabloid, shut amid Britain's spiraling phone hacking scandal, testified Tuesday that Mr. Murdoch's son, James, knew more about voicemail tampering at the tabloid than he admitted at a July Parliament hearing.

Now, the younger Murdoch, who oversees European and Asian operations for his father's media empire News Corp., may be recalled to Parliament, adding yet another chapter to the scandal that erupted after it was revealed that NotW hacked into the voicemail of teenage murder victim Milly Dowler.

“It is crucially important that we find out when senior executives knew about the hacking and what was done or not done,” says Mark Lewis, the lawyer representing Ms. Dowler's family. "I think it’s inevitable that James Murdoch will have to reappear before the committee because his evidence contradicts what’s been said today."

As well as another uncomfortable and potentially embarrassing grilling at the hands of British lawmakers, Mr. Murdoch could technically face a fine or imprisonment if he is found to have lied to a select committee. The House of Commons views being misled as "contempt of the house," although no one has been fined since 1666 and the last person to be temporarily detained was in the 19th century.

Despite the damage to News Corp.'s reputation with the departure of senior executives such as Les Hinton, and the collapse of the firm's planned bid for the remainder of British broadcaster BSkyB, the phone hacking scandal still poses more danger for Rupert Murdoch and Co.

Today, Lord Justice Leveson, the man heading a judicial review into the issue, heard applications from people and organizations seeking answers to allegations that their phones were hacked. Petitioners include Formula 1 boss Max Mosley, former deputy prime minister Lord Prescott, and actors Jude Law and Hugh Grant.

Trouble for James Murdoch came today at a hearing in front of the House of Commons Culture, Media, and Sport Select Committee. It was there that Tom Crone, ex-legal manager from NotW, said he was "certain" he told Murdoch about an e-mail that suggested phone hacking was more widespread than first claimed. Colin Myler, the tabloid's last editor, supported Mr. Crone's testimony, saying that the e-mail's contents were discussed at a 15-minute meeting in June 2008.

The e-mail was related to the written transcripts from intercepted voicemail messages from the phone of Gordon Taylor, head of the UK’s Professional Footballers’ Association, who was suing the newspaper at the time. British police passed on the documents to Mr. Taylor.

The documents offered irrefutable evidence that the paper's hacking was not restricted to one "rogue reporter" as previously claimed by the newspaper – former NotW royal reporter Clive Goodman, who was jailed in 2007 alongside private investigator Glenn Mulcaire for hacking into the phones of royal aides. Since the Dowler affair has been revealed, NotW is thought to have hacked into the phones of as many as 4,000 people.

Mr. Crone told the committee that it was after discussing the contents of the e-mail during the 15-minute meeting that James Murdoch agreed to pay Mr. Taylor a settlement of £425,000 ($693,000) – and agree to a confidentiality clause.

During his appearance before the same committee in July, however, Murdoch denied any knowledge of the e-mail and claimed he only became aware of the scale of the hacking problem much later.

Crone told the committee: “It was clear evidence that phone hacking was taking place beyond Clive Goodman. It was the reason we had to settle the case and in order to settle the case, we had to explain the case to Mr. Murdoch and get his authority to settle, so clearly it was discussed.”

Mr. Myler added: “There was no ambiguity about the significance of that document and what options were there for the company to take.”

However, Murdoch rejected the claims in a statement issued Tuesday through News International, News Corp.'s arm that operates its British papers. He said: “I stand by my testimony, which is an accurate account of events.

“I was told by Mr. Crone and Mr. Myler when we met, in that short meeting, that the civil litigation related to the interception of Mr. Taylor’s voicemails to which Mulcaire had pleaded guilty the previous year. Neither Mr. Myler nor Mr. Crone told me that wrongdoing extended beyond Mr. Goodman or Mr. Mulcaire."

Media analyst Claire Enders at Enders Analysis said little new emerged from today’s hearing. She said: “It seems to me like it’s claim and counterclaim. Because there were no minutes from that meeting, we don’t know what was said, but I think now it’s inevitable that James Murdoch will be recalled by the committee.”