Murdoch hacking scandal piles pressure on UK government

LONDON Wed Apr 25, 2012 12:24am IST

News Corp Deputy Chief Operating Officer, James Murdoch, arrives to give evidence at the Leveson Inquiry into the culture, practices and ethics of the media at the High Court in London April 24, 2012. REUTERS/Luke MacGregor

News Corp Deputy Chief Operating Officer, James Murdoch, arrives to give evidence at the Leveson Inquiry into the culture, practices and ethics of the media at the High Court in London April 24, 2012.

Credit: Reuters/Luke MacGregor

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LONDON (Reuters) - A phone-hacking scandal that has rocked Rupert Murdoch's media empire piled more pressure on British Prime Minister David Cameron on Tuesday with the revelation that one of his ministers gave News Corp executives highly sensitive details to help a controversial merger.

As the Leveson Inquiry on press ethics began to delve into the relationships between politicians and the media, with James Murdoch as a witness, the court heard that Jeremy Hunt, the culture minister, had had numerous secret contacts with James and his top London lobbyist.

Within minutes of the Leveson Inquiry's closing for the day, opposition politicians were lining up to call for the resignation of Hunt, previously seen as a rising star in Conservative Prime Minister Cameron's government.

"Now we know he was providing advice, guidance and privileged access to News Corporation (NWSA.O), he was being a back channel for the Murdochs," Ed Miliband, leader of the opposition Labour party, told Sky News.

"If he refuses to resign, the prime minister must show some leadership and fire him," said Miliband, who boosted his credibility last year by galvanising opposition to Murdoch.

The inquiry was reluctantly ordered by Cameron last July as a phone-hacking scandal at Murdoch's News of the World tabloid spiralled out of control, forcing him to side against the media empire that had helped propel him into power a year earlier.

News Corp eventually dropped its $12 billion bid for the highly profitable BSkyB as public opposition to Murdoch made it untenable.

Hunt denied being a "cheerleader" for the Murdochs, as prosecutor Robert Jay suggested to James Murdoch at the inquiry on Tuesday and said he would not quit.

"Now is not a time for kneejerk reactions. We've heard one side of the story today but some of the evidence reported meetings and conversations that simply didn't happen," Hunt said in a statement.

He had written to the Leveson inquiry, asking if his planned appearance could be brought forward.

"I am very confident that when I present my evidence the public will see that I conducted this process with scrupulous fairness," he said.

Cameron's spokesman sent a text message to Reuters saying the prime minister still had "full confidence" in Hunt.

Tuesday's revelations are a blow for Cameron's Conservative government, which has been dropping in opinion polls due to a series of blunders including a so-called "granny tax" on pensioners and a failed attempt to extradite a terror suspect.

Hunt took over responsibility for deciding whether to approve the BSkyB bid after the minister previously in charge, Liberal Democrat Vince Cable, was secretly recorded saying he had "declared war" on Murdoch.

News Corp had already been lobbying Hunt, a Conservative, as it tried to build political support for its long-held ambition to buy BSkyB, Britain's dominant pay-TV operator, which Rupert Murdoch had helped build from the ground up.

"Hunt acted as a back channel for News Corp when Vince Cable had responsibility for the deal and then allowed extensive confidential and secret briefings to take place on what should have been a quasi judicial process," said Evan Harris, a former Liberal Democrat MP who had lobbied for a media inquiry.

CONFIDENTIAL STATEMENTS

Public opposition to the News Corp-BSkyB deal grew last year as the phone-hacking scandal escalated with the revelation that murdered schoolgirl Milly Dowler's phone had been hacked, raising concerns about the extent of Murdoch's media ownership.

Murdoch's News Corp (NWSA.O) owns the Times of London and Sunday Times national broadsheets, Britain's top-selling tabloid the Sun, and 39 percent of BSkyB, which has an influential 24-hour news channel.

The media conglomerate, which also owns Fox News, the 20th Century Fox movie studio and the Wall Street Journal, abruptly shut down the 168-year-old News of the World to try to contain the scandal last July and dropped its bid for BSkyB.

At Tuesday's Leveson Inquiry hearing at London's Royal Courts of Justice, email correspondence between James Murdoch and lobbyist Frederic Michel was read out, showing the level of privileged access that Murdoch's company had to Hunt and others.

Prosecutor Jay read out a series of emails, asking Murdoch to comment, including one that referred to a confidential statement that Hunt was due to read in parliament the following day.

"Mr Michel to you: 'Confidential: JH Statement. Managed to get some info on the plans for tomorrow. (Absolutely illegal),'" Jay read. "What do you make of that?" he asked Murdoch to an audible gasp in the packed courtroom.

Murdoch replied: "I thought it was a joke."

Veteran Scottish National Party leader Alex Salmond, whom Rupert Murdoch has praised on Twitter, also offered help with the BSkyB bid, the court heard.

Murdoch at first looked nervous, repeatedly clenching and flexing his fists and fiddling with his tie as he waited for Judge Brian Leveson to appear.

He appeared to get more confident as the hearing went on, however, and at times looked impatient with the line of questioning, even rolling his eyes on occasion.

Murdoch, who is deputy chief operating officer of News Corp based in New York, denied he had used the political influence wielded by his father's newspapers, which have destroyed numerous political careers, to steer through the takeover.

He acknowledged he had discussed plans for the takeover with Cameron at a private dinner, but said in general he left politics to his father and Rebekah Brooks, the powerful News of the World editor who resigned last year.

And he again blamed underlings - in particular then-editor Colin Myler who is now at the New York Daily News and lawyer Tom Crone - for failing to alert him to the extent of the wrongdoing when he was chairman of the newspaper's publishing company.

"Knowing what we know now about the culture at the News of the World ... then it must have been cavalier about risk and that is a matter of huge regret," he told the packed court room.

Murdoch said he had not been sufficiently in touch with the culture at the tabloids to question subordinates.

Asked if he even read the News of the World, he said: "I couldn't say I read all of it".

"I wasn't in the business of deciding what to put in the newspapers," he said.

Media consultant Steve Hewlett said: "His lack of engagement with the nuts and bolts of what the business was actually about - i.e. journalism and content - is quite remarkable. I'm not saying it's not genuine but it's quite remarkable."

James Murdoch's brother Lachlan and his wife Kathryn were in court to support James.

Lachlan told Reuters at the end of the day: "I'm no lawyer but I'm very proud of my brother."

(Additional reporting by Paul Sandle, Drazen Jorgic and Michael Holden; Editing by Giles Elgood)

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