LONDON News Corp agreed to pay hundreds of thousands of pounds to an early phone-hacking victim because it recognized that evidence from the case was 'fatal' to its claims of innocence, new details released on Tuesday showed.
Briefing notes and emails exchanged between News Corp lawyers and handed over to the British parliamentary committee investigating the scandal indicated senior figures were aware of the problem in 2008 and were working to keep the issue private.
"There is a powerful case that there is (or was) a culture of illegal information access used at NGN (News Group Newspapers) in order to produce stories for publication," News Corp's senior outside counsel Michael Silverleaf told his clients.
Rupert Murdoch's News Corp has been fighting mounting claims that its News of the World tabloid hacked the phones of thousands to secure exclusive stories, and then orchestrated a corporate cover-up when allegations started to emerge.
The slow drip of information has severely damaged Rupert Murdoch's son James, the presumed heir to the media group, over his handling of the fallout and the implication that he tried to prevent the true scale of the problem from emerging.
Analysts and critics of the firm have suggested Murdoch must have been aware of the scale of the problem when he approved the huge payoff and therefore was in some way culpable.
James Murdoch has been recalled to face further questions from the parliamentary committee next week.
On Tuesday, the newly released evidence suggested that lawyers for News Corp agreed to a huge pay-off to the victim, soccer players' union boss Gordon Taylor, in 2008 because they realized the position was now "perilous".
Taylor had got hold of a News of the World email which included transcripts of his voicemails and appeared to implicate other News of the World journalists. News Corp executives maintained until recently that only one reporter was responsible for the hacking and he had already gone to jail.
According to Julian Pike, a lawyer from the London firm Farrer & Co who was at the time acting for the tabloid, the briefing notes were made for the then editor Colin Myler ahead of a meeting between Myler and James Murdoch, who was at the time in charge of the UK newspaper division.
According to Pike, Myler and James Murdoch met on May 27 to discuss the issue, although this contradicts what James Murdoch told parliamentarians. He has said he held only one short meeting over the issue in June.
Pike also told parliament in October that he believed James Murdoch had been briefed at the May meeting on potentially illegal practices by Myler.
Myler and News Corp lawyer Tom Crone have told parliamentarians investigating the case that they made James Murdoch aware of the significance of the email and why they had to make such a large payout.
"Our position is very perilous," Crone, the inhouse lawyer, told editor Myler in the briefing notes. "The damning email is genuine and proves we actively made use of a large number of extremely private voicemails from Taylor's telephone."
The large payout to Taylor of around 750,000 pounds ($1.2 million) was agreed at a meeting between Crone, Myler and James Murdoch on June 10.
"So James Murdoch has mis-recalled the sequence of events in that regard?" Pike was asked by Damian Collins, a member of the Culture, Media and Sport parliamentary committee, when he appeared in October.
"I think so, yes," Pike replied.
After the documents were made public, a spokesperson for News International told Reuters: "James Murdoch has been clear and consistent in his testimony. He is appearing in front of the Select Committee on 10 November and will be happy to answer any further questions then." ($1 = 0.620 British Pounds)
(Created by Simon Robinson; Editing by Robert Woodward)