July 9 (Bloomberg) -- David Cameron, leader of the U.K.’s opposition Conservative Party, faced calls to fire his communications chief, Andy Coulson, after a report that the newspaper once edited by Coulson may have used criminal methods to obtain stories.

Coulson resigned as editor of News of the World in 2007 after one of his reporters, Clive Goodman, was jailed along with a private investigator, Glenn Mulcaire, for intercepting phone messages left for members of Prince Charles’ staff. Coulson at the time denied any knowledge of Goodman’s activities.

The Guardian newspaper reported yesterday that News Corp.’s News Group Newspapers, which publishes the News of the World, paid out more than 1 million pounds ($1.6 million) to settle legal cases that may have revealed evidence of its journalists using private investigators to illegally obtain information on politicians, sports stars and entertainers while Coulson was deputy editor and then editor of the paper.

“I find it absolutely staggering that Andy Coulson can go to be the communication officer for the Tory party,” former Labour Party Deputy Prime Minister John Prescott, one of those named by the Guardian as a victim of the alleged activities, told Channel 4 News yesterday “I hope Mr. Cameron will clear him out.”

Coulson said in a statement yesterday he had no knowledge of an alleged settlement payment to Gordon Taylor, chief executive officer of the Professional Footballers Association, and repeated he knew nothing of the activities of the reporter and private investigator.

A telephone message left for Taylor at the association outside of business hours wasn’t immediately returned.

Murdoch Responds

News Corp. Chairman and CEO Rupert Murdoch said he wasn’t aware of any payments made to settle legal cases in which the company’s newspaper reporters may have been involved in criminal activity.

“If that had happened, I would know about it,” Murdoch said yesterday in an interview at the Allen & Co. media conference in Sun Valley, Idaho.

Alice Macandrew, a spokeswoman for News Corp.’s News International unit, declined to comment. A Guardian spokeswoman in London said the newspaper stands by its story.

According to the Guardian, the out-of-court settlements secured secrecy about three cases that may have shown evidence of journalists using private investigators who allegedly illegally hacked into the mobile-phone messages of public figures and gained access to confidential personal data, the newspaper said.

The Guardian cited an unnamed person with the London’s Metropolitan Police, who said there was evidence that News Group staff used private investigators who hacked into thousands of mobile phones.

‘Full Responsibility’

Coulson said the story refers to an alleged payment made after he left the newspaper. “The Mulcaire case was investigated thoroughly by the police and by the Press Complaints Commission,” Coulson said yesterday in a statement released by the Conservative Party. “I took full responsibility at the time for what happened on my watch but without my knowledge and resigned.”

Former Labour Party Cabinet minister Geoff Hoon said it was “hard to see how in these circumstances” Coulson could continue as Cameron’s communications chief.

Cameron wasn’t making any comment, the Conservative Party said.

In recent weeks, the Conservative leader has made personal integrity an election issue, arguing that Britain’s “broken politics” needs cleaning up after a scandal about the expenses claimed by British lawmakers of all parties.

In April, he attacked Gordon Brown after the prime minister was forced to fire a press adviser who was trying to spread rumors about the private lives of Conservative politicians.

The Metropolitan Police last night declined to comment on the Guardian story, beyond confirming it had investigated the unlawful interception of telephone calls, leading to two convictions.

To contact the reporter on this story: Robert Hutton in London at rhutton1@bloomberg.net.

Last Updated: July 8, 2009 22:19 EDT