News Corp. Begins Settlement Plan for Phone-Hacking Victims

News Corp.’s U.K. unit started a voluntary settlement program for thousands of potential victims of phone hacking by the company’s News of the World tabloid, which was shuttered in July as the scandal expanded.

Victims can apply online for what it called a “speedy, cost-effective alternative to litigation,” London-based News International said today in a statement. The applications will be assessed by former judge Charles Gray to ensure fairness, the company said. The settlement program was first announced in April and begins taking claims today.

“It should provide very significant benefits to applicants such as avoiding the enormous expense of court proceedings,” Gray, a Court of Appeal judge who retired in 2008, said in the statement. “I look forward to adjudicating awards under the scheme, at all times safeguarding the fairness of the process and the rights of applicants.”

The five-year-old scandal swelled in July when it was revealed the News of the World targeted the mobile phone of murdered school girl Millie Dowler in 2002, hampering a police search when she was missing. News Corp. closed the 168-year-old tabloid and dropped its 7.8 billion-pound ($12.5 billion) bid for full control of British Sky Broadcasting Group Plc. It was previously thought the tabloid targeted only celebrities.

The settlement plan, which doesn’t have a preset limit on how much it can pay out, starts as News Corp. Deputy Chief Operating Officer James Murdoch prepares to testify for a second time before Parliament about the scandal on Nov. 10. Former executives questioned his previous testimony.

5,795 Victims

London’s Metropolitan Police notified about 500 potential victims whose names appear in the notes of the News of the World’s former private investigator Glenn Mulcaire. Mulcaire was jailed for hacking in 2007 along with a reporter. The police said today the total number of victims could be as high as 5,795.

News Corp. last month agreed to pay 2 million pounds to Dowler’s family and another 1 million pounds to charity to settle their claims. The New York-based company has also previously agreed to pay about 100,000 pounds to actor Sienna Miller and another 20,000 pounds to sports commentator Andy Gray for hacking their voice mails.

Sixty victims have sued in London and a so-called test case of some of the claims involving celebrities, politicians and crime victims is scheduled to go to trial in January, so a judge can set a benchmark amount of damages.

While the plan may succeed in speeding up compensation for victims, one disadvantage is that applicants may be locked into the process “with no real way out,” said Steven Heffer, a defamation lawyer at Collyer Bristow LLP in London.

“There will be individual claimants who feel strongly enough to want their day in court, and ensure that the criminal behavior” of Mulcaire and the newspaper “is fully exposed,” Heffer said in a statement.

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