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Murdochs Say They Relied on Law Firm’s Phone-Hacking Study

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Murdochs Say They Relied on Law Firm’s Findings
News Corp. chief executive officer Rupert Murdoch and his wife Wendi Murdoch are driven away from Portcullis House after giving testimony to Parliament's Culture, Media and Sports Committee, in London, U.K.. Photographer: Simon Dawson/Bloomberg

July 20 (Bloomberg) -- Rupert Murdoch and his son James told U.K. lawmakers that resolution of a phone-hacking scandal at News Corp.’s British unit was delayed because they relied on a clean bill of health from the law firm Harbottle & Lewis LLP.

The law firm, based in London, has clients including Diageo Plc, Vodafone Group Plc and model Kate Moss, according to its website. It was hired in 2007 to examine a file of News International internal e-mails and found no evidence of illegal activity beyond a private investigator and News of the World royal reporter who were jailed after intercepting voice mails for the tabloid, James Murdoch told lawmakers yesterday.

“We and the company rested on that opinion for a period of time,” James Murdoch said at the hearing. “It is a key bit of outside legal advice from senior counsel.” The company went to police four years later, after a new internal review of the same file uncovered evidence of additional wrongdoing, he said.

Ken Macdonald, the former U.K. director of public prosecutions, told a separate group of lawmakers yesterday that Harbottle & Lewis had evidence that indicated “serious criminal offenses” by News Corp. workers. Lawmakers described the file as “an enormous pile of documents” that sat at the law firm for years.

Paper Shut Down

The Murdochs cited the law firm’s report as they sought to explain why News International failed to understand or acknowledge the widespread use of phone hacking at the 168-year-old newspaper, which was shut in an effort to contain fallout from the scandal. James Murdoch said that previous denials of wrongdoing were based on the outside study, as well as police assertions there was no need to investigate further.

Harbottle & Lewis Managing Partner Glen Atchison said the 55-year-old firm asked News International to release it from “professional duties of confidentiality” so that it could respond to “inaccurate statements or contentions.”

The company refused, “so we are still unable to respond in any detail as to our advice or the scope of our instructions in 2007, which is a matter of great regret,” Atchison said in a phone interview yesterday.

In a May 29, 2007, letter to News International, Harbottle & Lewis’s Lawrence Abramson said a review of e-mails found no evidence that executives knew about hacking by Clive Goodman, the former royal reporter at News of the World.

Cover-Up Claims

“That opinion did satisfy the company at the time,” James Murdoch said at yesterday’s hearing. He declined to specify what was found in the e-mails, saying it could hamper criminal investigations.

“Professional duty of confidentiality prevents me from commenting on this,” Abramson, now at the law firm Fladgate LLP, said today in an e-mailed statement.

John Yates, the assistant Metropolitan Police commissioner who resigned this week because of his connections to a former News of the World editor, separately told Parliament’s Home Affairs Committee “the facts appear to be that News International have deliberately covered up” evidence.

Asked at the hearing if he would consider suing Harbottle & Lewis, James Murdoch said it was “really a matter for the future.”

Harbottle & Lewis, with about 75 lawyers, has advised the Ben Sherman Group Ltd. on its British property portfolio and the DreamWorks Animation SKG Inc. regarding the performance of the movie “Shrek” as a play at a London theater.

News Corp. Board

Macdonald was hired in May by another British law firm, Hickman & Rose, on behalf of News Corp.’s board, to review the file of e-mails held since 2007 by Harbottle & Lewis. Macdonald told lawmakers he recommended the company’s board give the file to the Metropolitan Police.

The file showed evidence of “serious criminal offenses,” Macdonald said. Police have since opened a probe into whether officers took bribes from the newspaper for information leading to stories.

“I can’t imagine anyone looking at that file and not seeing crime,” Macdonald said.

The file was put together in 2007 when Goodman was bringing an unfair dismissal claim against News International, he said.

Macdonald, who was head of the Crown Prosecution Service at the time Goodman was charged, said it took “maybe five minutes” to review the nine or 10 e-mails included in the file and conclude police needed to see them. “The material I saw was so blindingly obvious that anyone trying to argue that it wasn’t would’ve had a hard time,” he said.

Mulcaire Fees

Rupert and James Murdoch told U.K. lawmakers yesterday they didn’t know if News Corp. was still paying the legal fees for Glenn Mulcaire, the private investigator who was jailed for six months for intercepting voice mails left for supermodel Elle Macpherson and members of the British royal family.

News International said today it stopped paying Mulcaire’s legal fees. The company declined to say when it stopped the payments.

Mulcaire’s lawyer, Sarah Webb, didn’t return a call for comment.

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: Erik Larson in London at elarson4@bloomberg.net; Lindsay Fortado in London at lfortado@bloomberg.net

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

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