Former News Corp. Staff Dispute James Murdoch’s Account of Phone-Hacking

News Corp. (NWSA) Deputy Chief Operating Officer James Murdoch’s version of events surrounding phone- hacking at the News of the World tabloid was disputed by former News Corp. executives testifying to the U.K. Parliament.

Tom Crone, the News of the World’s lawyer until July, and Colin Myler, the newspaper’s former editor, said they told Murdoch in 2008 about an e-mail that suggested other reporters were implicated in phone-hacking. Crone said it was “absolutely inconceivable” that the pair wouldn’t have explained this when they met Murdoch to discuss a lawsuit settlement.

“I think everybody perfectly understood the seriousness and significance of what we were discussing,” Myler told the House of Commons Culture Committee in London today in a session in which four witnesses were questioned for more than three hours. “As far as I’m concerned there was no ambiguity.”

In July, Murdoch told the committee that he hadn’t been told of evidence that illegality went beyond a single reporter, and that he had understood that an outside probe by a law firm had confirmed there was no wider wrongdoing.

Revelations in July that the News of the World intercepted the voicemail of a murdered schoolgirl in 2002 prompted the closure of Britain’s biggest-selling newspaper and forced News Corp. to withdraw a takeover bid for British Sky Broadcasting Group Plc. (BSY) Prime Minister David Cameron will be questioned by a separate panel about his 2007 decision to hire a former News of the World editor, Andy Coulson, as his communications chief.

‘For Neville’

Myler and Crone met with Murdoch for less than 15 minutes in 2008 to discuss the settlement of a privacy complaint filed by Gordon Taylor, chief executive of the Professional Footballers’ Association. They said today they told him the company had to settle because Taylor’s lawyers had produced a transcript of voice mails typed by a reporter at the newspaper and marked “for Neville.”

Asked if he had told Murdoch that this appeared to be a reference to Neville Thurlbeck, the paper’s chief reporter, Crone replied, “I’ve got a feeling I probably did.”

James Murdoch said that he stands by his testimony. Neither Myler nor Crone told him that wrongdoing extended beyond reporter Clive Goodman and private investigator Glenn Mulcaire, he said in a statement.

“As I said in my testimony, there was nothing discussed in the meeting that led me to believe that a further investigation was necessary,” Murdoch said.

Law Firm Probe

Earlier, Jon Chapman, the former head of legal affairs at News Corp.’s U.K. unit, said the company’s investigation into phone hacking after a reporter’s arrest was never intended to be a wide-ranging probe into wrongdoing.

A law-firm probe commissioned by the company was designed to deal with an employment lawsuit filed by Goodman, Chapman said. Chapman said his own review of e-mails didn’t find evidence of illegal activity.

The review “was in the context of an employment tribunal and not a criminal case,” Chapman said.

Murdoch told the committee on July 19 that the law firm’s investigation was one of the three “pillars” the company relied on during years of denials that wrongdoing went beyond a single reporter. In written evidence released by the committee today, News Corp. said an examination of e-mails represented the only external probe of phone hacking that had taken place.

Goodman Letter

Chapman and Daniel Cloke, former human-resources director for News Corp.’s U.K. unit, were questioned by the committee about what steps they took to uncover the extent of phone hacking after Goodman and Mulcaire were arrested in 2006. Both men were later convicted and served jail sentences.

In a letter to Cloke appealing his dismissal, Goodman claimed that hacking had been widespread and regularly discussed at editorial meetings until Coulson banned references to it. He also said Coulson and another News Corp. lawyer promised he would keep his job if he kept quiet about others’ activities.

Cloke and Chapman were asked about their 2007 examination of e-mails between News of the World executives and Goodman. Chapman said he couldn’t recall specific e-mails that contained evidence of other illegality.

“We were looking for voice-mail interception,” he said. “We didn’t find anything that amounted to reasonable evidence of illegal interception. No other illegal activity stood out at the time.”

Dozen E-Mails

In written evidence released by the committee today, Lawrence Abramson, the former partner at Harbottle & Lewis LLP, the law firm commissioned by Chapman to review the e-mails, said he had spoke to Chapman about questions regarding approximately “a dozen e-mails.”

“Chapman explained and I accepted why those e-mails fell outside the scope of what News International Ltd. had instructed Harbottle & Lewis to consider,” Abramson said.

News Corp. Chairman Rupert Murdoch blamed Harbottle & Lewis at a July committee hearing for failing to uncover evidence of widespread phone-hacking. Chapman today said Murdoch “didn’t have his facts right.”

“I don’t think he had been briefed properly,” Chapman said.

Chapman was asked about the difference between his written evidence to the committee in 2009, when he said Goodman had been paid “some way below the then 60,600 pound limit” to settle Goodman’s unfair dismissal claim, and the company’s evidence last month that he received 243,500 pounds ($388,000).

Chapman said that only 40,000 pounds had been compensation, with the remainder made up of a year’s notice, worth 90,500 pounds, on top of a previous payment of a year’s salary authorized by Les Hinton, then the head of News International.

If the case had gone to court, “Goodman would have been able to make a series of allegations in a public forum,’ Chapman told lawmakers. “This was a pragmatic and commercial business decision. Many companies pay out in employment claims of little or no merit for pragmatic reasons.”

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To contact the reporters on this story: Robert Hutton in London at rhutton1@bloomberg.net; Thomas Penny in London at tpenny@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net.

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