* Kuttner, as managing editor, ran News of the World's
* Arrested on suspicion of graft, plot to intercept
* Spreading scandal shaking Britain's elite
(Updates with Kuttner bailed)
By Michael Holden and Georgina Prodhan
LONDON, Aug 2 Stuart Kuttner, managing editor of
the News of the World for 22 years, was arrested and later freed
on bail on Tuesday over a phone-hacking scandal at the
now-defunct tabloid that has rattled Britain's establishment, a
source close to the case said.
Police said a 71-year-old man had been released on bail to
an unspecified date later this month after being arrested on
suspicion of corruption and conspiring to intercept
communications. The source said the man was Kuttner.
News International, the British newspaper arm of News Corp,
declined to comment.
A flood of revelations in the last month has generated a
furore that has shaken Rupert Murdoch's media empire as well as
Britain's press, police and political leaders.
Kuttner was responsible for authorising payments from the
paper, which was part of Murdoch's News Corp . Lawmakers
have been told that his office would have been responsible for
any payments to private detectives.
He stepped down unexpectedly in 2009 just before the
Guardian newspaper began to publish a series of stories that
phone-hacking activity at the News of the World was far more
widespread than had so far been investigated.
Tuesday's arrest was made by detectives conducting an
inquiry into whether journalists and private investigators,
seeking gossip for stories, illegally intercepted voicemail
messages on mobile phones of people ranging from celebrities and
politicians to murder victims and the families of dead soldiers.
ELEVEN ARRESTED OVER SCANDAL
Eleven people have now been arrested this year in connection
with the escalating scandal, which has forced the resignations
of ex-News of the World editor and Murdoch favourite Rebekah
Brooks, and Britain's top two policemen.
Kuttner's arrest may increase pressure on Rupert Murdoch's
son James, News International's chairman and until recently
considered the heir apparent to the ageing mogul's media realm,
who has pleaded ignorance of the hacking at the time.
Lawmakers have already indicated they want to recall James
Murdoch to clarify evidence he provided to a parliamentary
committee, after two ex-senior News International executives
called it into question.
Murdoch told the committee he did not know the extent of
phone-hacking at the tabloid when he approved a large payoff to
one of the victims, but the former executives say they showed
him evidence it was not limited to one "rogue" reporter.
In 2007, the tabloid's royal reporter Clive Goodman and a
private detective, whose notebooks have since yielded thousands
more names to be investigated, were jailed for hacking the
phones of aides to Britain's royal family.
Police are also looking into claims some reporters paid
bribes to police officers in return for information.
The 168-year-old News of the World was closed last month
after allegations that 4,000 phones, including that of a
murdered schoolgirl, had been hacked. News Corp was forced to
drop a $12 billion bid for satellite broadcaster BSkyB .
The uproar has also caused severe embarrassment to Prime
Minister David Cameron, who was championed by Murdoch's British
newspapers in the 2010 national election campaign, since the
arrest of his former media chief Andy Coulson.
Coulson was editor of the News of the World until he quit
in 2007 when Goodman was jailed.
On Tuesday, a protester who disrupted the parliamentary
hearing at which the Murdochs gave evidence by throwing a paper
plate of foam at Rupert Murdoch was jailed for six weeks.
(Additional reporting by Kate Holton and Stefano Ambrogi;
Editing by Mark Heinrich)