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News Corp. ‘Startling’ E-Mails Trigger Computer Search for Hacking Clues

News Corp. (NWSA)’s U.K. newspaper unit gave secret internal e-mails to a judge who called them “startling” and ordered the company to search a former senior employee’s laptops for evidence of a phone-hacking cover up.

The publisher’s recent “limited admission” that senior managers tried to conceal the voice-mail interception scandal from police by destroying e-mail archives isn’t enough to avoid new searches that could reveal more damaging evidence before a trial, Judge Geoffrey Vos said yesterday in London. The order applies to three laptops used by the unidentified ex-employee.

“They are to be treated as deliberate destroyers of evidence,” Vos said of London-based News International at the hearing. “I have been shown a number of e-mails which are confidential. Suffice it to say they show a rather startling approach to the e-mail” practices at the company.

The order was made after News International told Vos it settled 36 lawsuits filed by victims of phone hacking by its News of the World tabloid, including actor Jude Law and Labour lawmaker Chris Bryant. New York-based News Corp. closed the paper in July to help contain anger after the extent of the scandal was revealed and News International’s chief executive officer at the time, Rebekah Brooks, was arrested a week later.

“You seem a little over-sensitive about these laptops,” Vos told News International’s lawyers at the hearing. They may contain details about why so many e-mails were deleted by the company as victims’ lawsuits piled up, he said.

Sienna Miller

Vos described in his judgment some of the secret e-mails, saying that three days after lawyers for actress Sienna Miller wrote a letter in September 2010 asking News International to retain evidence about voice-mail interceptions, “a previously conceived plan to delete e-mails was put in place by senior managers.”

Miller settled her claim last year for 100,000 pounds ($155,000). Her suit is credited with bringing evidence to light debunking News Corp.’s claim that hacking was limited to one “rogue reporter” arrested for the offense in 2006.

The secret e-mails were disclosed in December by Paul Cheesbrough, News International’s chief information officer since 2010, victims’ lawyer Jeremy Reed said in court yesterday. The names of the people who sent and received the messages are secret because of the ongoing police probe.

Hypothetical Scenario

The company’s lawyers apologized in court to 18 of the victims yesterday and paid them more than $1 million in damages on the basis that senior employees were involved in a coverup. The company later said in a statement it didn’t admit anything and that the coverup was a hypothetical scenario used only for calculating so-called aggravated damages in the case.

Vos said yesterday News International was “shading their admissions” and asked the company’s lawyer, Dinah Rose, to consider applying the “admission of sorts” to other areas of the case, such as liability in future lawsuits and calculating the toughest exemplary damages that may be awarded.

News International’s lawyers “say the admissions are for the sake of convenience in this action, but one would expect the Murdoch millions to be freely spent fighting such serious allegations,” Tamsin Allen, Bryant’s lawyer, said in an e-mail.

The judge also ordered News International to search six other computers used by unnamed former employees, including three people who the company admits hacked phones. He rejected the publisher’s argument the devices probably didn’t contain anything useful for the victims.

The computers replaced others that were intentionally destroyed by the company in 2010, when it moved to a new office, Rose said. The devices probably wouldn’t contain older messages or documents about phone hacking if the company were involved in a coverup at the time, she said.

‘The Villains’

“We accept we are the villains,” Rose told Vos. “We have the horns and the tails.”

News International spokeswoman Daisy Dunlop declined to comment on the computer searches.

Vos said it was possible the searches and the settlements yesterday could delay a three-week trial scheduled to begin Feb. 13. The trial of the remaining cases is intended to give guidance on damages for future lawsuits and out-of-court settlements in a case of “national interest,” Vos said.

The unit of News Corp. faces three police investigations into phone hacking, computer hacking and bribery of police officers by journalists. A judge-led inquiry into press ethics has also begun at the request of Prime Minister David Cameron, who had hired ex-News of the World editor Andy Coulson as his press chief. Coulson was arrested in July of last year and questioned as part of the hacking investigation.

The Jude Law case is: Jude Law v. Newsgroup Newspapers, Case No. HC11C02065, High Court of Justice Chancery Division.

To contact the reporter on this story: Erik Larson in London at elarson4@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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