News Corp. Editors Had Been Aware of Phone Hacking Since ’07, Goodman Says

News Corp. (NWSA)’s editors at the News of the World Sunday tabloid discussed phone hacking in daily meetings, a former reporter said, increasing pressure on executives to explain when they became aware of the practice.

Phone hacking was “widely discussed in the daily editorial conference” until “explicit reference to it was banned by the editor,” former royal reporter Clive Goodman said in a March 2007 letter to top News International executives that was published by U.K. lawmakers today. News Corp. deputy Chief Operating Officer James Murdoch will probably be recalled to parliament to answer more questions about the allegations at the now-defunct tabloid.

Murdoch told lawmakers last month that he hadn’t realized until late 2010 that phone hacking was widespread at the News of the World. That’s been contradicted by Tom Crone and Colin Myler, two former executives of the tabloid, who said they informed him in 2008 about an e-mail that suggested more reporters had been involved. The Culture, Media and Sport Committee today examined fresh responses from former employees to explain contradictions in Murdoch’s testimony.

“Once he answered questions, he would inevitably seek to blame underlings,” said David Corker of the London law firm Corker Binning, who acts for clients implicated in regulatory and criminal investigations. “Now he’s facing a welter of new evidence from those underlings.”

Deleted Messages

Goodman, who was sentenced for phone hacking in January 2007, said he was promised a job in return for staying quiet.

News Corp. shut the News of the World last month after a report that its journalists deleted messages from a murdered schoolgirl’s mobile phone. The tabloid was also accused of hacking into voicemails from terror victims, celebrities, sports athletes and politicians.

"We recognize the seriousness of materials disclosed to the police and parliament and are committed to working in a constructive and open way with all the relevant authorities," News International said today in an e-mailed statement. A management and standards committee set up in July is cooperating fully with the police investigation, the company reiterated.

Goodman once reported on the royal family for News of the World. Les Hinton, then the executive chairman of parent company News International, fired Goodman in February 2007 after he pleaded guilty to hacking for “very serious breach of your obligations as an employee,” according to the dismissal letter published today.

Private investigator Glenn Mulcaire, who helped Goodman carry out the voicemail interception, was also jailed.

Payments

Goodman disputed his dismissal, saying that his hacking was carried out in the knowledge of his superiors at the company and that tapped voicemails were the subject of discussions at editorial meetings.

He said he was promised “on many occasions” that “I could come back to a job at the newspaper if I did not implicate the paper or any of its staff in my mitigation plea” in a letter to News International’s former director of human resources Daniel Cloke.

Goodman was ultimately paid 243,503.08 pounds ($399,903.47), in connection with his dismissal and the unfair dismissal claim he filed. About 13,000 pounds went to legal fees, according to James Murdoch’s letter to parliament. Mulcaire’s lawyers were paid 246,000 pounds as part of an agreement to cover his legal fees, which was formally terminated last month.

Internal Probe

New York-based News Corp. rose 1.1 percent to $17.10 at 3:08 p.m. in Nasdaq Stock Market trading. The shares have fallen about 5 percent since news of the phone-hacking scandal broke July 4.

James Murdoch joined News International as chairman in December 2007, after the alleged hacking took place.

News Corp. hired law firm Harbottle & Lewis to look into Goodman’s accusations that hacking was widely known about within the company. The firm looked into six e-mail addresses and found no evidence that their owners participated in hacking, according to correspondence published by parliament.

News Corp. and Harbottle & Lewis, which filed copies of Goodman’s letter to parliament, said they were asked to redact some details by the police. Goodman made no submission to the parliamentary committee himself.

Goodman “made allegations that the whole editorial team at the tabloid were involved in discussions around phone hacking at the time that Andy Coulson was the editor of the paper,” Labour Party lawmaker Tom Watson said today. “If accurate, the whole foundation of the company’s defense for the past three years collapses.”

Political Ties

Coulson, who was Prime Minister David Cameron’s director of communications until he resigned in January over the hacking scandal, was editor of the News of the World from 2003 to 2007. Coulson was arrested this year.

Goodman’s March 2 letter to Cloke was also sent to Hinton. Four days later, when asked whether he thought that Goodman was the only one who knew what was going on, Hinton told lawmakers: “I believe he was the only person.”

Hinton, who resigned as chief executive officer of News Corp.’s Dow Jones & Co. unit in July, was chairman of News International for 12 years until 2007, giving him a leading role at the U.K. newspaper unit during the time when the alleged hacking took place.

The circumstances surrounding the 2008 payment to victim Gordon Taylor, chief executive of the Professional Footballers’ Association, were also the focus of many lawmakers’ questions to Murdoch.

‘For Neville’

Murdoch says he was not told about any further hacking at the company when he approved Taylor’s settlement in June 2008 and nothing was discussed that led him to believe that a further investigation was necessary.

Murdoch has said he agreed to the payment -- more than 10 times the record court award in a privacy case at the time -- on advice of outside counsel.

However, Crone, the former News International legal manager, said the company decided to settle after Taylor’s lawyer found an e-mail from a junior reporter toMulcaire, the private investigator at the center of the phone-hacking allegations. The e-mail contained a transcript of Taylor’s voicemail messages. The e-mail was marked “for Neville.” At the time of the message, the only Neville working at the tabloid was chief reporter Neville Thurlbeck.

Murdoch has said he doesn’t recall seeing this letter. Crone said he would have mentioned the letter and may not have shown Murdoch a copy.

Dropped Bid

“He could use what I characterize as the prime ministerial defense” Corker Binning’s Corker said. “He could say, ‘How can I know everything? I must rely on my advisers.’’

Crone and Myler, its one-time editor, are likely to be recalled in September to answer further questions, John Whittingdale, who chairs the committee, said today, adding that James Murdoch would appear after Crone and Myler. The committee won’t recall James’ father Rupert Murdoch, the chief executive officer of News Corp.

‘‘What is plain is we are receiving accounts that are completely different and contradict each other at various points in a number of areas,” Whittingdale said.

As a result of the phone-hacking scandal, News Corp. dropped its 7.8 billion-pound ($12.8 billion) takeover bid for the 61 percent in U.K. pay-TV broadcaster British Sky Broadcasting Group Plc (BSY) that it doesn’t already own. If Murdoch is found in contempt of parliament, his position as chairman of BSkyB might also be in jeopardy, Damian Collins, one of the lawmakers reviewing the statements today, said in an interview.

After his initial testimony, James Murdoch was supported by the board of BSkyB, which last month unanimously backed him to remain as chairman of the satellite television broadcaster.

To contact the reporters on this story: Tariq Panja in London at tpanja@bloomberg.net; Amy Thomson in London at athomson6@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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