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Brooks Is Arrested as Murdoch Makes Fresh Apology Amid Phone-Hacking Probe

Former News of the World editor Rebekah Brooks was arrested today by police investigating phone hacking at News Corp. (NWSA)’s Sunday tabloid.

Brooks, 43, went to a London police station voluntarily by appointment, her spokesman David Wilson said in a phone interview. Brooks is the most senior former News Corp. employee detained in the probe, which two days ago resulted in her stepping down as chief executive officer of News International.

“Undoubtedly she should have been arrested,” said Mark Lewis, a lawyer for victims of phone-hacking including the parents of murdered schoolgirl Milly Dowler. “She was editor of the newspaper at the time that Milly Dowler was abducted and killed. The police undoubtedly have to ask her questions about what happened and what she knew or doesn’t know.”

The revelation that News of the World reporters in 2002 deleted messages from Dowler’s voice-mail turned phone-hacking into a national scandal that led to the closure of the tabloid and the end of News Corp. (NWS)’s bid for British Sky Broadcasting Group Plc. (BSY) Chairman and CEO Rupert Murdoch, his son James, News Corp.’s deputy chief operating officer, and Brooks are scheduled to testify at a U.K. Parliament hearing on July 19.

Stephenson Resignation

Hours after the arrest, Metropolitan Police Commissioner Paul Stephenson announced his resignation over speculation about his force’s links with another former journalist at the tabloid. Neil Wallis, a former editor at the paper who was arrested last week, had been a paid communications consultant for the police in 2009 and 2010.

A News Corp. spokeswoman reiterated that the company’s intention to fully cooperate with the police.

Brooks “has nothing to hide and she was very happy to give evidence, but today’s actions have changed the ballpark,” Wilson said. Brooks’s lawyers will be in discussions with the parliamentary committee whether it will still be appropriate for her to attend, he said.

News Corp.’s independent directors are holding frequent phone conversations among themselves to evaluate the situation, said a person with direct knowledge of the matter, asking not to be identified because the discussions are private. These directors include Rod Eddington, a former CEO of British Airways; Tom Perkins, partner in Menlo Park, California-based venture firm Kleiner Perkins Caufield & Byers; and Georgetown University law professor Viet Dinh, who is author of the Patriot Act.

News Corp. Committee

News Corp. will take over from News International the committee that has been set up to work with police over the scandal, people with knowledge of the matter said.

Simon Greenberg, corporate affairs director at News International, and General Manager Will Lewis will be employed full time by the management and standards committee, which will report to Joel Klein, Murdoch’s top adviser, and Viet Dinh on behalf of News Corp.’s independent directors, the people said.

Some people close to the Murdoch family and News Corp.’s directors think it would make sense for Rupert Murdoch to relinquish his job as chief executive officer and stay on as chairman. Although a leadership change hasn’t been formally discussed by the board, the situation is fluid and everything is possible, one of the people said last week, who wouldn’t be identified because the matter isn’t public.

“He has too much power over British public life,” Opposition Labour Party leader Ed Miliband told the Observer newspaper today, calling for a breakup of the 80-year-old’s media empire. “We’ve got to look at the situation whereby one person can own more than 20 percent of the newspaper market, the Sky platform and Sky News. I think it’s unhealthy.”

U.S. Probe

Under the headline “Putting right what’s gone wrong,” News International put out advertisements in U.K. national papers, saying it’s the company’s obligation to provide full cooperation with the police and compensation for those affected. The publisher is “committed to change” and said “apologising for our mistakes and fixing them are only the first steps.

In the U.S., Democratic Senator Dick Durbin of Illinois, the assistant majority leader, today called for a congressional probe into the affair.

‘‘There are questions about whether the Foreign Corrupt Practices Act has been violated by Rupert Murdoch and his news empire,’’ Durbin said on NBC’s ‘‘Meet the Press’’ program.

Hinton Resignation

Brooks edited the News of the World and then The Sun before being promoted in 2009 to CEO of News International, the publisher of News Corp.’s British titles. She stepped down on July 15, the same day as Les Hinton resigned as head of News Corp.’s Dow Jones unit.

About $4.4 billion in market value has been wiped off News Corp.’s Class A shares, and 2.5 billion pounds off BSkyB, since the Guardian newspaper reported on July 4 that the News of the World in 2002 hacked into Dowler’s voice mails and deleted messages.

U.K. politicians today questioned whether Brooks’s arrest might interfere with the Parliament’s Culture, Media and Sport committee hearing.

‘‘This makes me wonder whether this is some ruse to avoid answering questions on Tuesday,” Chris Bryant, an opposition Labour lawmaker, told Sky News. “I don’t want to over stress that argument, but it is unusual to be arrested on a Sunday by appointment.”

‘Level of Knowledge’

Niri Shan, a lawyer at Taylor Wessing LLP, said that she may not even attend the hearing.

“If she does appear, her lawyers will advise her not to answer questions that might damage her defense,” Shan said in an e-mail. “All the questions will be directed to her level of knowledge. That’s going to be a key part of any case against her, and a key part of any successful defense.”

Police said in an e-mailed statement the arrest was part of their probe into phone hacking and an investigation into whether officers were paid for information.

Brooks told lawmakers at a 2003 committee hearing that “we have paid the police for information in the past.” The committee wrote in its report that Hinton, then chairman of News International, later told them Brooks had since told him she had “not authorized payments to police.”

“Personally I think she should have been arrested in 2003 when she said she had paid police officers for information,” Bryant told Sky today.

Stephenson said in a televised statement today that he intended to resign because “of the ongoing speculation and accusations relating to the Met’s links with News International at a senior level and in particular in relation to Mr Neil Wallis,” a former editor at the News of the World.

Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.

To contact the reporters on this story: Alex Morales in London at amorales2@bloomberg.net; Jonathan Browning in London at jbrowning9@bloomberg.net; Robert Hutton in London at rhutton1@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net; Kenneth Wong at kwong11@bloomberg.net

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