Special Daily Politics

It is 2pm here in Westminster and people across the world are on

Rupert Murdoch, his son, James, and Rebekah Brooks as they give

evidence to MPs on the great phone Good afternoon. Welcome to the

special edition of Daily Politics in an unprecedented day for the

British Parliament. In just half an hour, the most powerful media boss

on the planet, Rupert Murdoch, and his son, James, who was also at the

heart of the Empire, will begin answering questions to a select

committee of MPs about the phone hacking scandal which has rocked a

British public life and already seen 10 arrests, 6 designations and

the end of the News of the World. Also giving evidence this afternoon,

Rebekah Brooks, who has had to resign on Friday as chief executive

of News International, the British arm of the global operations. She

was released without charge on Sunday and will face questions

about what she knew of phone hacking when she edited the Sun

newspaper and the News of the World and then became boss of all of his

UK papers. This is a major unique and historic parliamentary occasion.

Members of the public and the press have been queuing for hours for a

place at the hearings. They had to be moved from the House of Commons

to a bigger committee room in a nearby portcullis House. Even that

can't cope with the numbers wanting to be there. We have room for

everybody with live and uninterrupted coverage of this

afternoon's session and we will be discussing the implications with

the press, politicians, and the All that to come over the next

couple of hours. Joining me Alastair Campbell, David Davies and

a Times columnist David Aaronovitch. Welcome to you all. It is a key day,

not just in a phone hacking saga but for Parliament. The leader of

the opposition Ed Miliband spelt out what he wanted to hear. What

members of the public will want to know is whether Rupert and James

Murdoch and Rebekah Brooks have some remorse for what happened and

are willing to apologise and say that they have let down the British

people and indeed all the victims of the phone hacking, and also to

account for what they knew about phone hacking and when they knew it.

I'm sure they are the kind of questions they will be asked.

Miliband. David Cameron is Bill in Africa. He has had to cut his

journey short and will fly back to the UK later today to address the

Commons tomorrow. The Deputy Prime Minister was out and about this

morning. He said today marked the beginning of a shift in relations

between the media and politicians. Why is it, for years and years and

years, and I can say this, of the other parties spend their time

constantly kowtowing to the press in what I think is an extremely

unhealthy way. I think that will change and I think it's a good

thing. The meeting today is a start of a process of change. Let's get

the latest from Laura Kuenssberg. She is outside the committee room.

I think it is called there will some room. -- will some room.

have spent a lot of time here in the last few years and I have never

seen portcullis House quite like this. You can probably see the

queue to get into the room to be there when the Murdochs are giving

evidence. A couple of other members of the committee had been preparing

furiously and have just passed me and one of them said to me, it is

certainly very exciting. A couple of minutes ago I saw James Murdoch

just over their asking officials for a glass of water, surrounded by

an entourage of five advisers with him. So, not very long to go now

and I have to say, this feels like it has been the hottest ticket in

town. Portcullis House is buzzing. Quite a lot of exciting things

happen here normally but I have to say, I've never seen anything quite

like this. Never seen anything like it. Let's start with the basics.

Why is there such a frenzy surrounding this? Partly because of

the scale of the scandal. It has engulfed the Murdoch empire,

getting close to government and has brought about crisis in the

Metropolitan Police and also I think the fact that Rupert Murdoch

himself appears so infrequently in public, I think a lot of your

regular viewers will be tuning in this afternoon and will be

intrigued to learn how he speaks. The voice. As you know, he is not a

very loud person. He mumbles a bit. I wouldn't be surprised if at some

point, John Whittingdale asks him to speak up. This is one of those

stories which has been bubbling away for years and years and years,

and the Milly Dowler things tip that in one direction. Part of this,

and I have been in these select committees when you do get a sense

of media frenzy, but I think this one has got through to the public

and people out there are talking about this. Rebekah Brooks, a month

ago could have walked down any street without anybody knowing who

she is, but now everybody is talking about her. People will be

interested to see the extent of MPs, who are beginning to reassert their

authority, to see whether they can do a frenzied job of examining

these guys who are not used to being questioned about this. What

are the stakes for Rupert Murdoch? Survival of his empire. Absolutely.

First off, you have the cases which will flow from this, criminal and

other. You have an inquiry and an outcome which may end up deciding

fit and proper or not. The Americans are now starting to take

an interest and his liberal opponents in America are gathering

impetus, sympathies, like the foreign corrupt practice, to see if

they can parlay that back into what is after all, the Crown Jewels.

James Murdoch's career on the line, too? There seems to be as are the

big questions about it. The question we are talking about today

is going to be whether or not there was a culture of ignoring what were

effectively corrupted journalistic practices. That is what people want

to know. That is what they will concentrate on. It's very dramatic

because it's one of the few opportunities the Christians get to

throw the Emperor to the lions, isn't it? I thought for a second, I

could see television commentators. What will we see today? You have

famously appeared in front of they commit that committee, you are the

paperclip stabbed into your hand when you're losing your rag, so

what will we see? It's a big day for MPs and the Empire. Will we see

a rigorous but calm inquiry? Or will it be the modern equivalent of

the stocks? I think one or two will probably have thought through their

questions. The ones who do it well, like TV presenters...

The ones who do it well tend to be forensic. I think David is

absolutely right but the question for James Murdoch about why he

authorised these massive pay-offs. Reminding David, when I first

appeared in the select committee, again, he phoned me on the morning

and gave me some very good advice about the committee. He said, show

respect, stay calm and don't lose your temper. Hence the club!

would be surprised at some point, James Andrew but don't get slightly

irritated because -- James and Rupert, because we don't have

respect for them but they will have to show it today. Bayern not

trained inquisitors, are they? -- this is not a trained inquisitors,

are they? No, they don't say, I have spotted a weakness here so I

will carry on. However, I have just been watching the other committee

talking to the police officers. And actually, that is a fairly

impressive performance by the MPs. It can be done. They learned a

lesson from last week. Lastly, that same committee was about

showboating for the No forensics at all. Everybody jumped on that. I

think this committee has we learnt from this. I think we will see a

lot of forensics. The we will find out if it is tag wrestling or mud-

wrestling in a moment. She is Adam with a reminder of the breathtaking

events of the past two weeks. -- here is Adam.

This long-running scandal reached a new level a fortnight ago when it

emerged the voice mails of the murdered schoolgirl Milly Dowler

may have been intercepted. As her family met the party because, it

was alleged that other victims may have included those caught up in 77

and service personnel killed in action. Rupert Murdoch flew in to

quell the crisis engulfing his empire. Asked what his crisis was

that proud to was, he said this one. In the coming days, the close to

the News of the World. 168 years after it first rolled off the

presses. He withdrew his bid for BSkyB. And he lost Rebekah Brooks,

who resigned as chief executive of News International. And then at

Number Ten became involved. David Cameron announced an inquiry led

into the affair and of the state of the media and had to justify why he

had hired the ex News of the World editor Andy Coulson as his PR

person. He said he didn't know what was happening at the News of the

World in terms of packing and resigned as a result of this and I

decided to give him a second chance. That's all I can do. A former Prime

Minister made a rare appearance in the Commons. Not the misconduct of

a few rogues and freelancers, but I have to say, law-breaking on an

industrial scale. Ed Miliband piled on the pressure. We need leadership

to get to the truth of what happened. But the Prime Minister is

hamstrung by the decisions he made and his refusal to face up to them.

Meanwhile, the police gathered evidence for two investigations,

Operation Weeting and Operation Elveden into allegations officers

were paid by the press for information. They have been a

number of arrests including Andy Coulson, Rebekah Brooks and the

former deputy editor of the News of the World, Neil Wallis. He was

hired by Scotland Yard to help to their media work with serious

consequences for senior officers. At the weekend, this led to the

resignation of the Metropolitan Commissioner, Sir Paul Stephenson,

and yesterday John Yates, left as well. Two weeks of revelations that

have rocked the media, the police and politics.

Adam planning reporting on a truly breathtaking events -- Adam

planning. It has dangers to take a sleeper. -- Adam Fleming. Let's

look at the politics of this with my guests. David Cameron is out of

the country but very much in the frame. Yes, the Labour Party, Ed

Miliband, his try and keep him in the frame, but I think, Alastair

said this engaging people, but I don't think politics does, frankly.

Two polls yesterday, one went in one direction and one went the

other. What do you say to that? Mr Miliband is getting good press

reviews but they're not moving his way necessarily. No, but the terms

of the debate a changing and I think David Cameron is losing a lot

of respect for people at the moment because the one thing people want

from the Prime Minister is a sense of good judgment. Every time he

looks like he doesn't get this whole area of concern about his

relationship with Andy Coulson. Then, I think he just erodes his

own respect and authority. I think at some point is going have to say,

I made a mistake. I shouldn't have done it and I realise that. Here's

what I want to learn from it but he appears very reluctant to do it.

it time to admit that it was a mistake? That's one aspect of this

whole thing, Twenty20 hindsight apply to everybody. Let's take the

decision to hire Andy Coulson in the first place. He got

undertakings from him and he carried out a check on him. When he

came into government, he would have had a positive check. By the time

he moved into government, the Prime Minister as he had become, knew a

lot more about the accusations then when he appointed him. Yes, but

politics is full of accusations and most of them are wrong. He would

have had a cheque. This plays back into the police. He would have

consulted with the Metropolitan Police and said, is there anything

in this and I suspect, what came back was anything not. --

absolutely not. Given a choice to listening to Labour comments, on

the one hand, and what was a concrete review on the other, who

would you believe? I would believe the review. I doubt... So you don't

think he should admit it was a mistake? I think there's been a lot

of hindsight. He said last week, if it turns out that Andy Coulson lied

to him, it will involve prosecution. I think people think it doesn't

affect him. This isn't Tyneside because at the time, people were

saying this story is not going to go away. There are too many

unanswered questions. Why was he so desperate to get this guy and the

other guy? He wanted Alastair Campbell. He wanted a lookalike for

you, David. Journalistically, you know what this is. Even if somebody

like Andy Coulson were not guilty, we don't actually know what he was

guilty of, what we do know is he worked in the world of the tabloid

press. The tabloid press is famous for this kind of sharp practice,

and even if it hadn't done something like this, he would have

Worded to work before he joined Tony Blair? The tabloid press.

part of the problem as it has turned out, Alastair Campbell is

the Tories wanted their Alastair Campbell. I remember hearing it off

the record, Lee Mead and Alastair Campbell. Particularly in the

summer of 2007 when Mr Brown was doing well when he became leader.

That is when Andy Coulson was hired. They wanted someone who had good

relations with News International, as you had. It is lucky for Mr

Blair and Mr Brown, and for use this has happened on the Andy

Coulson, David Cameron watch. It could have happened on yours?

could have done. But I don't think we could have been as sucked into

it. I did all sorts of things as a journalist, but I am confident I

never broke the law. My point is, Mr Cameron is suffering because of

his very close relations he developed after 2007... You have

the same relations? He is suffering because of the judgment he showed

in hiring Andy Coulson. And second to that, he is suffering because he

allowed himself to be ensnared by the Murdoch empire, having first

decided he wouldn't do. It is true, we try to get a better relationship

with Murdoch, the Daily Mail and the Express and we exceeded. But we

did not do, and in Government what we should have done is take them on

in a way Tony did not want to do. It all happened on your watch.

should have taken action when the information report was published.

Until the last couple of weeks, it was still going on. On the

conservative side we know about. But Saturday, July 2nd just gone.

Leading Labour figures, James Purnell, Tessa Jowell, the mind you

back as leader of the Labour Party, David Miliband partied in the

Cotswold with James Murdoch. the director of the BBC if I

remember. It was wrong of you to leave out the director of the BBC

from that list all the presenter, Jon Snow from Channel Four News. It

is about the fear politicians have had, not so much the fear of the

press, but the fact they wanted something from the press. They have

wanted endorsements and these relationships. There is an issue to

this, it is about the fear of the press in the sense Rebekah Brooks

in particular, the paper she edited actually went out to damage people.

She told Tom Watson she was going to do that. That is like Tom Watson

has been so vigorous about this. What is that about? Today isn't

just about the Murdochs and Rebekah Brooks answering questions. The two

most important policeman in this country were forced to resign. The

Metropolitan Police Commissioner, Paul Stephenson and John Yates gave

evidence to another select committee about phone hacking. They

both came a cropper because they hired former deputy editor of the

News of the World, Neil Wallis to provide them with PR advice. Paul

Stephenson was asked if he tried to dissuade the Guardian from its

phone hacking campaign when he went to see them.

The Guardian carried a report a couple of days ago that you have

had a meeting with them to say you had tried to persuade them the

coverage of phone hacking was exaggerated and incorrect. And that

you had a meeting to that effect in December 2009, is that right?

Paul Stephenson was then asked why he should question the Guardian's

journalism and pointed the finger firmly at Assistant Commissioner

John Yates. Why would you go to a newspaper like the Guardian to

persuade them they were getting it wrong. I presume you looked at the

evidence and over the case to be in a position to give them that

assurance? I am the Commissioner of the Met and I have senior grade

Chief Constable's like John Yates. He gave me assurances there was

nothing new coming out of the Guardian article. I think I have a

right to rely on those assurances and I had no reason to doubt the

first operation. I went to the Guardian because they continued to

run the campaign and I acknowledged in my speech, we should be grateful

for them to do that. I went to them because I did not understand it.

The resigning head of the Metropolitan Police, probably his

last appearance before a select committee in that role, which is

still going on. It is a difference select committee to the one we are

going to live at 2:30pm. Excepted from John Yates, who had supposedly

looked at the inquiry that the Guardian was barking up the wrong

tree. You could not get it more wrong could you Alastair Campbell?

A feel a bit sorry for him, because I think the man at the top is

entitled to trust people one down. The more you hear about this first

inquiry and John Yates, you wonder how that man has been in charge

against a campaign against terrorism. It is probably a good

thing he has gone. The reason people are concerned, the police

have relations with all sorts of media, the BBC and other newspapers

as well. The reason why the police have entered the frame in the

centre, is there is a feeling centre, is there is a feeling

evidence is mounting a combination of News International and senior

policemen work together to close down the investigation. Do you

agree? What you have got his two things. You have incompetence.

Whether it is John Yates for Andy Hayman, neither of them have

impressed in terms of their handling of this. And second, you

have this great big, too difficult basket into which all of the News

International stuff was pushed because they knew it mainly to a

political problem, a certain amount of bad press in the News of the

World. It is not a conspiracy in the normal sense of the word, it is

a combination of competence and not wanting to take on that animal.

This isn't the finest aspect of policing. Let's not be crass,

terrorism is much more fun. It you want to be a policeman, what do you

want to spend your time on question of people wonder why this went to

the anti-terrorist squad in the first place. If they said they did

not have the time, why didn't they pass it on to a more mundane part

of the Met? Why after of the 2006 Information

Commissioner's report, why wasn't it taken seriously? When Rebekah

Brooks gave evidence in 2003, why didn't we jump up and say, it is a

criminal offence! Nobody did. me come back to the point then that

people wonder about Rupert Murdoch but they have never accused him of

being a terrorist. Why did it end up with the anti- terrorist group?

Party -- partly an accident because the Royal protection is part of the

anti- terrorist group. There was a Royal hacking and that is why it

got dealt with. Second, because they trust the counter-terrorist

unit to be more secure than others. That is why when Damian Green was

arrested, the MP was arrested by the police it was the counter-

terrorism unit, who incidentally could not find his house in the

village of Kent. They went to the wrong house? It would have been

very scary for the man with the biggest house in the village!

are just learning John Yates who is giving testimony to the same

committee as Paul Stephenson, he said he spoke to her Llewellyn,

David Cameron's chief-of-staff, in 2010 and offered to give him a

briefing on the language around the phone hacking, but Eddie Llewellyn

decline that offer. This is the biggest crisis for the Metropolitan

Police in modern times. Agreed? seems most peculiar. When I look at

the resignation of Paul Stephenson, I wasn't sure why he resigned. He

went to Champney's for free. It was declared in his proper interest,

and as far as I know he did not break the code. So how has he got

in this business of Neil Wallis being employed, former deputy

editor of the News of the World by somebody who turns out to be his

friend. Somebody in the Home Affairs Committee said it was the

lack of diligence done on the employment of Neil Wallis. He was a

friend of the police he was brought in to do it friend of the police

job. It is the interlocking network. We have learned it between News

International and the politicians on the left and the right. But also

between News International and the police. In the Metropolitan Police

press department there are former News International employees, why

don't they just merge and form one press office? You will know from

the days of being an editor, crime correspondents have kept as close

as they can to the police. But this has surprised me. Again, I think

Paul Stevenson probably reached a judgment that his own judgment

would probably be called into question for the fact that with

this investigation still going on, it is just as extraordinary that

David Cameron could not see the dangers of Andy Coulson, neither

could they see the dangers. called for Ian Blair's resignation

after the shooting of Jean Paul Dominguez. But he hung on and his

reputation went down. It is about five minutes to go until we expect

the Murdochs to appear in front of the select committee and we will be

passing to the Wilson Room in Portcullis House. But let's remind

ourselves of the key players in today's performance. First up is

the man at the top, Rupert Murdoch. 80 years of age, he is chairman of

News Corporation which wanted full control of BSkyB. He has about 40%

at the moment. The committee will want to know what he knew about

phone hacking at the News of the World. What did he know and when

did he know it? Then there will be his son James, chairman of News

Corporation in Europe and Asia. The committee will want to know why he

authorised payments to victims of hacking. Then at around 3:30pm when

they have gone, I assume we will hear from Rebekah Brooks who was

until last week, chief executive of News International and was editor

of the News of the World when Milly Dowler's telephone was hacked into

us. She was arrested and questioned on Sunday but denies any knowledge

of what went on at her newspaper. There are two key political figures

about to take centre stage. The Conservative MP, John Whittingdale

who chairs the culture committee and last week took the step of

issuing a Parliamentary summons to compel the Murdochs to attend this

committee session. Also sitting on the committee is a Labour MP called

Tom Watson. He has been at the forefront of the campaign to expose

phone hacking. What are the key points you will be looking out for

this afternoon? What do you want to find out? For me it is the James

Murdoch authorisation of these huge payments out of court settlements.

He said in one of the few statements he has made, he was not

in full possession of the fact. Presumably now he is. So what were

the full facts? Rupert Murdoch will be questioned whether it it is his

culture that has permeated all levels of the organisation. And for

Rebekah Brooks, they will be quizzing her about what she said to

the committee in the past. During the Watergate scandal a senator

became famous for asking "what did Juno And When Did You Know It"?

They could take a leaf out of his book? It will be more specific than

that. And also at the point when you decide to close the News of the

World, a new mood there was a problem. He did not choose to sack

Rebekah Brooks, you just shut down been News of the World. Why didn't

you get to the bottom of its then and there. And for Rupert Murdoch,

this does go back to Les Hinton. has also had to resign. Also the

common denominator is Rupert Murdoch. What we your instructions

to Les Hinton at that time? David, what would you like to find out

this afternoon? I want to know if they decided to close their ears to

what is going on. We will shut this down, we won't let it happen. We

have some suspicions but we won't run with it. Or whether they

genuinely didn't have their eye on the ball until it was too late and

then they did not have the capacity to respond. A thing I am the only

person in this room who has not met Rupert Murdoch. I shall be very

interested to see how that question It's about the advice of not losing

your temper and being calm, I think if there is the slightest sign of

them getting irritated, it will backfire on them. People will be

interest the see whether they have worked better strategy. To get

themselves though it. I'm not sure 1 hour will be long enough. It

could overrun. And I hope it does because there's a lot of serious

questions. The demeanour is incredibly important. They should

take the emotion out of the questions and find the facts in the

questions put up and deal with the facts. Rupert Murdoch is not used

to this kind of public accountability. Hasn't he appeared

before the Senate in the USA. was pretty uncontroversial. It

wasn't like this. We are just watching pictures of people going

into the committee. It has gone at 2:30pm, so they are running late.

Would it be sensible if either of the Murdochs intentionally gave us

new information today? If I was them, I would. I would start with

an apology, up front, and a completely unlimited apology, not

try to be reticent about it. I'm sorry my employees let you down

kind of thing. I would try and say, what I have managed to find out in

the time since the crisis blew up, as it were, and at least Telegraph

to the committee that I intend to be straightforward with them.

People have said Murdoch will announce his resignation. I will

believe that when I see it. resignation in favour of who?

it is difficult for two men, particularly the older one, who is

used to be so powerful, being interviewed by people they employ,

and used to being treated with huge respect and deference by

politicians, some of them, I suspect, are now going to give them

a tough time. One big problem with people this powerful is they do

attract coteries and so on. They have people running around after

them. They tell them they are effectively immortal. I think that

happens. It happens everywhere. Power attracts it. This is a

wonderful experience if the committee do it right because what

it shows is that nobody is so powerful they are not answerable to

a committee. The committee has got to ask the questions correctly

force up my understanding is they had been training over the past

couple of days for this. The way the party leaders trained for the

debates. They have been having mock sessions and so on. The one thing

they have to avoid, I would suggest, is the, "You can't handle the

tricky" Moment. Because anger it could rebound on them. -- you can't

handle the truth. We can see, with police protection to help him get

through the people forming along the corridor, in this relatively

new building, portcullis House, James Murdoch and Rupert Murdoch,

his father, going into the committee room. You can see the

rather lovely atrium there. They will be nervous. I remember that

little walk and I was nervous on several occasions. These MPs, some

of them will have done their homework. I think most important

thing is they have bought through every possible question and answer.

They are taking their seats now in front of the committee. Mr Murdoch

senior on the left. And James Murdoch on the right. Get your

glass of water, I suspect. Mr Murdoch is not used to speaking

off-the-cuff. He is more used to We would like the opportunity to

make a statement. Would you allow us? The committee discussed that

earlier and we do feel be a lot of questions and we hope all you want

to say well, to question. If you feel that is not the case, please

make the statement at the end. Excuse me, can we not have that,

please? The in that case, we would like to submit the statement in

writing. That would be acceptable. Could we please remove the people

STUDIO: We are keeping the cameras on the chairman of the committee.

There was a bit of a protest just as we got out of the way as James

Murdoch asked for the committee's permission to make a statement. It

wasn't really granted. They have This is a special meeting of the

committee. A follow-up to the committee the committee held in the

2009 into press standards, privacy and libel during which we took

evidence on the extent of the phone hacking which are taking place in

the News of the World. In our report last year, we stated that we

thought it was inconceivable that only one reporter had been involved.

In the last few weeks, it has emerged that, not only evidence has

come out which I think has vindicated this conclusion, but

also abuses have been revealed which have shocked the entire

country. It's also clear parliament has been misled. We are very

conscious in the committee that there is an ongoing police

investigation. And possible criminal proceedings to follow.

This committee would not wish to jeopardise that. However, we are

encouraged by the statements which have been made by all the witnesses

this afternoon that they wish to co-operate with the committee and

help us to establish the truth. So, as our first witnesses this up in,

can I welcome Rupert Murdoch and the deputy chief operating officer

and chairman and chief executive of News Corp International, James

Murdoch. Can I thank you for making yourself available to the committee

this afternoon. Thank you, Mr Chairman. We are more than prepared

to. If I could start the James Murdoch. You made a statement on

7th July in which you stated the paper had made statements to

Parliament without being in possession of the facts and that

was wrong. You essentially admitted Parliament had been misled in what

we had been told. Can you tell us to what extent where we misled when

you became aware of it? Thank you very much and first of all I would

like to say just how sorry I am and how sorry we are two particularly

the victims of a legal voice mail interceptions and to their families.

It's a matter of great regret. Mind, my father's, and everyone at News

Corporation and these are standards, these actions do not live up to the

standards that our company aspires to. It is our determination to both

put things right, make sure these things don't happen again, and to

be the company that I know we have always aspired to be. As for my

statement, which I believe it was around the closure of the News of

the World newspaper,... This is the most humble day of my life.

statement around the closure of the News of the World newspaper, where

I stated that the company had not been in full possession of the fact

when certain statements were made to this committee, was referring to

the emergence of new facts, largely that came about at the end of 2010,

as the due process of a number of civil trials reached their point

Word document disclosure and evidence disclosure made it

apparent to the company and to myself at that time that, indeed,

there was reason to believe that, potentially, more people had been

involved in the News of the World illegal voice mail interceptions

from before. That was new evidence and information at the time that

post-dated the 2009 hearings. That is what I was referring to.

Subsequent to our discovery of that information, in one of the civil

trials at the end of 2010, which I believe was the CNN Mellor trial,

the company immediately went to look at additional record around

the individual involved -- CNN a laugh. We alerted the police who

restarted on that basis, the investigation that is now under way.

And, since then, the company has admitted liability to victims of a

legal voice mail interception, apologised unreservedly, which I

repeat today, to those victims, and the company has also set up a

compensation scheme independently managed by a former High Court

judge to be able to deal with legitimate claims coming from

victims of those terrible incidents. Voice mail interception. Those are

the actions which were taken as soon as new evidence emerged, so

when I made a statement about not being in possession of the fact, it

was those facts at that point, were in the future, and it was the due

process of the civil trial that that evidence really emerged for us.

And we acted as swiftly and transparently as possible. When

this committee took evidence in at 2009, we heard from the managing

editor of the News of the World, the legal manager of News

International and News of the World editor, the former editor Andy

Coulson and Les Hinton, the former chairman. All of them told us that

there had been a thorough investigation, no evidence had ever

been found that anybody else was involved for that clearly was not

correct. Were any of them lying to his committee? Mr Thurnham, the

company relied on three things -- Mr Chairman. Until the new evidence

emerged, the company relied on a police investigation in 2007,

before I was involved. I became involved in at News Corporation at

the end of 2007. In the 2007 period, there was a police investigation,

successful prosecutions against two individuals, and the editor of the

News of the World resigned. The company relied on both the police

having closed the investigation and repeated assertions that there was

no new evidence for them to reopen their investigation, the company

relied on be PCC, but said there was no more to this at the time.

The company relied on the legal opinion, outside counsel, that was

brought in a related to those matters with respect to their

review, and had issued a clear opinion that there was no

additional illegality than the two individuals involved before. The

company relied on those facts and for the company in at 2008-nine, it

was not clear that there was a reason to believe that those

matters were anything other than settled matters and in the past.

visit your test the need to this committee the individuals who gave

us evidence in 2009, none of them knew at that time what's been going

on? -- Is it your testimony? I do not have direct knowledge of what

they knew and what time, but I can tell you that the critical new

facts, as I saw them, and as the company saw them, really emerged in

the production of documents and evidence in the civil trial at the

end of 2010. And the duration from 2008 until the end of 2010, the

length of time it took for that to come Clear and for that real

evidence to be there, is a matter of deep frustration, because I know

and sympathise with the frustration of this committee. It is a matter

of real regret that the facts could not emerge and could not be got

into, to my understanding, Foster. -- faster. You are made it clear

the information we were giving was incorrect. Have you established, as

well as Clive Goodman, was involved I am sorry, can you repeat that?

Who as well as Clive Goodman was involved in phone hacking at the

News of the World? As I think you made it clear earlier Mr Chairman,

there have been a number of arrests of former News of the World

employees. These are matters for current criminal investigations,

and I think it is difficult for me to comment in particular around

some of those individuals. Have you carried out your own investigation

since the discovery of this information, to find out the extent

of involvement in phone hacking at the News of the World? We have

established a group in the company co-operating very closely with the

police on their investigations. Their investigation is brought with

respect to journalistic practices and in particular journalistic

practices at the News of the World. And the policy and direction the

company has given them is to co- operate with the police and provide

information and evidence that the company believes and they believe

is relevant to those investigations. Sometimes prayer -- pro actively

and sometimes in response to those requests. I think the provision of

the new information to the police in the first place when there was

no ongoing police investigation, led to, in part, the reopening of

this new investigation being established. I hope that can be

established as being proactive to getting to the right place in

finding out the facts, understanding all of the

allegations that are coming in and moving forward to help the police

in the successful completion of the important, serious work they are

doing. And a departure from your company in the recent few days of

Tom Crone, of Rebekah Brooks and of Les Hinton, is it because any of

them acknowledged phone hacking? have no knowledge, and there is no

evidence that I am aware of, that Rebekah Brooks, or Les Hinton or

any of those executives had knowledge of that. And their

assertions, certainly Rebekah Brooks and her assertions to meet

that her knowledge of those things has been clear. Nonetheless, those

resignations have been accepted but it is important on the basis there

is no evidence today that I have seen or I have any knowledge of,

but there was any impropriety by them. I am going to turn to Tom

Watson. Mr Murdoch's senior, Good

afternoon.. You have stated News Corp has a

zero tolerance to wrongdoing by employees, is that right? It is,

yes. In 20th October 10 Did you still it believed to be true when

you made your speech, when you said "let me be clear we will go in

search of the truth". Yes. That is what the police are investigating

and we are helping them with. acknowledge you were misled?

Clearly. Can I take you back to 2003? Are you aware in March of

that year Rebekah Brooks gave evidence to this committee

admitting paying the police? I am now aware of that. I was not aware

of it at the time. I'm also aware she amended that considerably very

quickly afterwards. I think she amended its seven or eight years

after it. Sorry! Did you or anyone else at your in this --

organisation investigate this at the time? No. Can you explain why?

I did not know of it. I am sorry, if I can just say something? This

is not an excuse. Maybe it is an explanation, the News of the World

is less than 1% of the company, I employ 53,000 people around the

world hoo-ha great and ethical and distinguished people. They are

professionals in their own right. And I am spread watching and

appointing people with whom I trust to run those divisions. I do accept

you have many distinguished people who work for your company. You what

ultimately responsible for the Government source of News Corp. So

I want to establish who knew about wrong doing at the time. If I can

take you to 2006, and when Clive Goodman was arrested and convicted

of intercepting voice mails, where you made aware of that? I was

certainly made aware of it when he was convicted. What did News

International do subsequent to the rest of Clive Goodman and Glenn

Mulcaire to get to the facts? worked with the police with a

further investigation and eventually we quickly appointed a

Bury leading firm of lawyers in the city to investigated further.

would like to finish my line of questioning. What did you

personally do to investigate that after Clive Goodman went to prison?

You were obviously concerned about it. I spoke to Les Hinton, who told

me about it. Can I ask in 2008, why did you not dismiss News of the

World chief reporter, Neville far back following the Moseley case?

had never heard of him. Despite a judge at making clear that he set

out he went out to set out to blackmail two of the women involved

in the case? That is the first I have heard of that. So none of your

UK staff draw your attention to this serious wrongdoing even though

the case received extensive media attention? Maybe my son can answer

that. I will come to your son in a minute. And despite blackmail

resulted in a 14 year sentence, nobody in your UK company brought

this to your attention? blackmail charges, no. Do you think

that is because they thought you might think nothing of it? No. I

cannot answer, I do not know. you agree with Mr Justice e d when

he said the lack of action discloses a remarkable state of

affairs at News International? Mr Murdoch, a judge found a chief

reporter guilty of blackmail. It was widely reported, he said it was

a remarkable state of affairs. didn't he put him in jail? It was a

civil case. Were you aware that News

International commissioned an investigation into News

International e-mails by the solicitors' firm, Harbottle &

Lewis? Yes, I did not appoint them but I was told of it happening.

claimed in the Wall Street Journal Harbottle & Lewis are made a major

mistake. What a mistake way you referring to? -- what mistake way

you referring to? I think again that is a question for James. But a

we re-examined that. We found things we admittedly went to

council with to get advice on how to present it to the police.

their written response to these questions, are you aware News

International stated that both John Chapman and Daniel cloak reviewed

these e-mails before RIF -- affording them to Harbottle &

Lewis? Know. So nobody in the company told you that two of your

executives had reviewed the e- mails? I thought then, everything

had been sent to them. You are a word Lord MacDonald QC has refute

the e-mails on behalf of News International are you not? Yes.

you aware he stated evidence... reported them to News International.

He found evidence of indirect hacking, breaches of national

security and evidence of serious crime in the Harbottle & Lewis

file? I did indeed. I can address these in some detail

if you will allow me. It is your father who is responsible for

corporate governance and I want to know what he knew but I will come

back to you. He was aware of how awful and there was findings at a

News International? It went to the senior officials of News Corp.

Certainly the top legal officer. Tom crone or Les Hinton? No, they

were not the top legal officers. Who are the top legal officers?

John Chapman was the top legal officer at news International and

Mr John crone was head of legal affairs at News Group Newspapers.

Away you informed about the findings by your son, Mr Murdoch or

by Rebekah Brooks? I forget, but I suspect it was my son. I was in

daily contact with them both. we were informed about the payments

are made to Gordon Taylor and Max Clifford? Know. You were not

informed? Know. At no point you knew that Gordon Taylor and Max

Clifford were made payments? You never informed the chief executives

at News Corp that you made payments and authorise payments to Gordon

Taylor as a result of him being a victim of a crime? The settlement

with Mr Taylor, and I am happy to address the matter of Mr Taylor in

some detail if you would like. My father became a were after the

settlement was made in 2009, I believe after the confidential

settlement had become public. As a newspaper reported on the out of

court settlement afterwards. Please understand the settlement of an

out-of-court settlement of a civil claim of that nature and with that

quantum is something that normally in a company car size, the

responsible executives in the territory of the country would be

authorised to make. And that is the way the company is functioning and

it is below the approval threshold, if you will. There are other

questions I could ask, but there are other colleagues who have

specific questions on this Mr Murdoch. I will move back to your

father. Mr Murdoch when did you find out criminality was endemic at

the News of the World? Endemic is a very wide-ranging what. I also have

to be careful not to prejudice the course of justice taking place now.

That has been disclosed. I became aware as it became apparent. I was

absolutely shocked, appalled and ashamed when I heard about the

Milly Dowler case. That was only two weeks ago. I was graciously

received by the family. Did you read our last report into the

matter when we referred to the collective amnesia of your

executives who gave evidence to a committee? I have not heard that.

Nobody brought it to your attention? So a Parliamentary

inquiry found your senior executives in the UK guilty of

collective amnesia and nobody brought it to your attention? I

don't see why you think it is not very serious? You are not saying

Anisha, you would be saying they were lying? We found your

executives guilty of collective amnesia. I would have thought

somebody would have brought back to your attention and that it would

concern you? Did they forget? I don't think so. What has been

obvious to most of the observers from the summer of 2009 phone

hacking was widespread. You knew in January of this year the one road

report a line was false. Is that right? -- Road reporter. I forget

the days. Why was he the only person to leave the News of the

World last January? We have given all of our files and all of our

knowledge and everything to the police. They have not asked for

Glenn Mulcaire's diaries, so we do not know what was in that. There

was eight-page which appeared to be addressed... Again my son can

answer that. Perhaps it would be helpful to the committee if you

would like to go through that particular detail around why

decisions were made by the management team at News

International and the precise chronology, would be more helpful

if I could answer those questions as the chief executive of the

regional businesses across Europe. Your father is responsible. He is

revealing what he doesn't know and what executives chose not to tell

him so, with respect to you, I will pursue my line of questioning and

come back to you later. Why was no one fired in April when the News

International finally admitted that the News of the World have been

engaged in criminal interception of voice mails? It was not our job to

get in the course of justice. It was up to the police to bring those

charges and carry out their investigation which we were 100%

co-operating with. In April, the company admitted liability for

phone hacking and nobody took responsibility for it then. No one

was fired. The company admitted they had been involved in criminal

wrongdoing and nobody was fired. Why was that? There were people in

the company which apparently were guilty. And we have to find them

and deal with them appropriately. If I can clarify, is to the

individuals implicated in the allegations there, had long since

left the company. Some of that were still there, you mention one,

Exeter the business as soon as To he co-operate with the police to

aid them with the things they wanted to do. But many of the

individuals that were potentially implicated in those civil

litigation and a criminal matters had already left the building and

were not in the News of the World at this time. The executives and

journalists at the time, many of whom were not there, in a 2006-

seven, so some of them had already left. Thank you. Mr Murdoch, why

did you decide to risk the jobs of 200 people before pointing the

finger at those responsible for running the company at the time of

the illegality? Your son and Rebekah books? When a company

closes down, it's natural for people to lose their jobs. In this

case, we are continuing to make effort to see those people are

employed in other divisions of the company. If they are not part of

the small group of, whatever group was involved. Did you close it

because of the criminality? Yes, we felt ashamed of what had happened.

People lied to you and to their readers. We had broken our trust

with our readers. The important point was we had broken our trust

with our readers. Were you aware there was other forms of illicit

surveillance being used by private investigators used by News

International? Other forms of? Computer hacking, tracking cars?

All news organisations have used private detectives and do so in

their investigations from time to time. I don't think illegally.

it could be shown to you that private investigators working for

newspapers and News International used other forms of illicit so they

don't like computer hacking, would to immediately introduce another

investigation? That would be up to the police, but we would certainly

work with the police. If they wanted to do it, they would do it.

Can I ask you, when did you first meet Mr Alex Marincek? I don't know.

He worked for the company for 25 years. I may have shaken his hand

at one day in the office, but I have no memory. The bank you. Jim

Could I ask you a number of short questions? Why did you enter the

back door at Number Ten when you visit to the Prime Minister

following the last general election? Because I was asked to.

You were asked to come in the back door of Number Ten? Yes, to avoid

photographers in the front, I would imagine. I just did what I was told.

It's strange but heads of state managed to go in the front door.

Yes. But you had to go in the back door? Yes. That's up to the Prime

Minister or their staff. So it was under the Prime Minister's direct

instructions you come through the back door? I was asked to come

through the back door. I don't think my father had any direct

knowledge of arrangements to go into any building, respectively.

Have you ever imposed any preconditions... Which a visit to

Downing Street are you talking about? Following the general

election. I was invited for a cup of tea to be thanked for support by

Mr Cameron. No other conversation took place. And that's the one when

you came into the back door? Yes. I have also been asked by Mr Brown

many times. Through the back door? Yes.

My family went there many times. Have you ever imposed any

preconditions on a party leader in the UK before giving them the

support of your newspapers? I have never guaranteed any one support of

the newspapers. We had been supporting the Thatcher government,

the Conservative government, and we felt it was a good time and we

changed and are supported the Labour Party whenever it was, 13

years ago, with the direct loss of 200,000 circulation. Did you ever

impose any preconditions on the Labour Party? No. None whatsoever?

The only conversation I had with him, Tony Blair, we were arguing

about Europe. Mr Blair visited you are halfway around the world before

the 1997 election. It doesn't matter. It was something Mr

Campbell arranged. Yes. It is understood that the FBI are

investigating the 9/11 victims. Have you commissioned an

investigation into these allegations? We have seen no

evidence of that at all and as far as we know, the F B I haven't

either. If they do, we will treated exactly the same way as we treat it

here, and I cannot believe it happened. Anyone in America. The

News of the World, where the Glenn Mulcaire took it upon themselves to

do it, I don't know. I will come back to you in a moment for so I

just want to clarify, if these allegations are true whatsoever,

will you commission an investigation into them?

absolute it. -- absolutely. must be horrified by the scandal

and the fact it has cost to the BSkyB transaction and led to the

closure of the News of the World. Who do you blame for that? A lot of

people had different agendas, I think. Tried to build this hysteria.

All our competitors in this country formally announced a consortium to

try and stop us and they caught us with dirty hands and booked us.

was your competitors that stop you getting at? No, and mood developed

which made it impractical to go ahead. We have been very clear that

serious allegations of wrongdoing have been levelled to the News of

the World. We believed that the News of the World, the actions of

some reporters and people some years ago, have a fundamentally

tarnished the trust the News of the World had with its reserves --

readers, and this is a matter of huge and sincere regret, mind, my

father's, the companies. The company's priority very much so is

to restore that trust, to operate in the right way, to make sure that

the company can be the company it is always aspired to be. And the

removal of the offer to make, the proposal to make an offer to BSkyB

shareholders, is simply a reflection of that priority moving

forward. I have every sympathy with what you're saying, but do you

understand that people who have been the victims of the News of the

World, based on allegations, will find that a bit strange? It is our

absolute priority,... What happened at the News of the World was wrong.

I have apologised profusely and unreservedly for that. And my

father has, as well. These are very, very serious matters and we are

trying to establish the facts of any new allegations as they come up.

We are working closely with the police to find out where the wrong

doing was and hold people accountable. I think, importantly,

as well, to the victims of illegal voice mail interceptions, not just

if we apologise, but we have admitted liability, the company has

admitted liability, and we have set up the appropriate third party

compensation scheme to deal with that. These are all matters that we

are fully engaged in. Just turning to your father, I know it's a very

stressful time for yourself, but, Mr Murdoch, do you accept

responsibility for this whole fiasco? No. Who is responsible?

people that I trusted and then maybe the people they trusted. I

worked with Les Hinton for 22 years and I would trust him with my life.

Are you satisfied that the cash payments made by the News

Corporation companies to informants for stories were registered with

appropriate tax authorities? don't know anything about that, no.

If people were given money... In order to accomplish stories, was

that notified? All of our financial affairs and, as a public company, a

transparent, audited, the tax jurisdictions all around the world,

our work transparently and thoroughly. Tax compliance is an

important priority for any business and we comply with the laws. Does

that include people in a regular monthly retainers, registering

their affairs? I have no knowledge of separate people on a retainers

in the company, their own tax arrangements, but I can't speak for

the company's tax arrangements and, to the best of my knowledge, we are

a company which takes tax compliant, transparency, hugely seriously. It

is something we are very proud of. Can I just turn to James, you will

be aware of the situation with Tommy Sheridan, who is currently in

prison. The jury was misled in the Tommy Sheridan's perjury trial.

Your company has not disclosed the internal e-mails for that before

the wires that? I have no knowledge of that and I apologise for that. I

have additional questions on that and in future I will supply a

written answers but I don't have direct knowledge. I can't answer

James, could you please confirm or deny whether any News Corporation

company is the subject of an investigation by the Serious Fraud

Office? I have no knowledge of that at this point. Could you also

confirm or deny whether any News Corporation company is the subject

of an investigation by the financial services authority?

don't believe so, but not to my knowledge. Please confirm or deny

whether any News Corporation company is the subject of an

investigation by HMRC? Not to my knowledge, we have ongoing dialogue

with the HMRC and the various subsidiaries here. As far as

investigations are concerned, I have no knowledge of one.

Mr Murdoch, who made the recommendation to close down the

News of the World to the board of News Corp? I assume it was a board

decision made by News Corp? It was a discussion between my son, myself

and senior executives and Rebekah Brooks one morning. We called the

board of News Corporation, the whole board to seek their agreement.

You have already suggested he felt ashamed. It is not suggested it was

a commercial decision? Far from it. Moving on to the financial

governance arrangements within News Corp. James Murdoch, you suggested

the payments to Gordon Taylor were not notified at News Corp level

because of the finance thresholds? Could you tell us more about that?

I understand you had to agree for the payment to Mr Taylor, could you

tell us, was it financial or a managerial decision? It is a good

question, I am happy to discuss the matter of Mr Taylor. The out of

court settlement with Mr Taylor was related to a voice mail

interception that had occurred previously and was one of the

counts, as I understand of the 2007 trial of Glenn Mulcaire. It is

important to think back to 2008 to understand what we knew them and

what the Ince -- information was in the context. It was not a disputed

fact. It was the advice, and further to that it was the advice

and the clear view of the company that if litigated, the company

would lose that case, it was almost certain to lose the case because

the underlying fact was not in dispute. Third, the company sought

distinguish outside counsel to understand that if the case was

litigated and to be lost, which was the great likelihood, what it would

cost the company. It was advised that with expenses, legal expenses

and damages, it could be between �500,001 million, or they're about,

I don't recall the exact number of the advice, I think it was 250,000,

plus expenses. This was in a context in the first half of 2008

and this was my first real involvement with any of these

issues, where there was no reason at the time to believe the issue of

the voice mail interceptions was anything but a settled matter. And

that it was in the past after the successful prosecution of the two

individuals we discussed, as well as the resignation of the editor.

So the out-of-court settlement was made in that context. And it was

within the authorities, as I understood it, of News

International to be able to make those out of court settlements in

due course without going to the global level company. At the time,

I was the regional head for Europe and Asia of News Corporation. And I

directed it was all right to settle that, but did not get involved in

any of the Nicosia Asians directly about that settlements but I do

recall in 2008, those were the things that were done. Can I just

add, my son had only been with the company for a matter of a very few

weeks in this instance. It was a few months, but I had come back to

the company at the end of 2007 in the middle of December. This was

some time in the first half of 2008. Giving you renewed to the company,

what level of financial payments could news International executives

sanctioned, people like Rebekah Brooks without recourse to you as

the chairman? Generally speaking, the way the company will operate,

as any company will operate, is within certain financial parameters

and financial planning perspective. Much like a house will manage its

budget, and say how much money do we have to spend? As long as they

stay within those guidelines the belief is, they should be empowered

to make those judgments to spend the money and achieve the end as

they can. I don't have at the tip of my fingers, the precise

financial authorities in that. I can discuss after the committee

hearing with you, what exactly you would like to know and discuss

whether or not it is right to come back to you with that. What level

of financial payout would it have taken an authorisation from the

board of News Corp? A thing for the full board it is in the millions.

But her don't know the exact answer. Do you know how much has been paid

out to people, authorised by your executives? Paid out in what way?

Pay out in settlements? Illegal settlements? I do not know of the

total number. Around the world it is customary to reach out of court

settlements in civil litigation is an civil matters. It is something

that rather than go through the lengthy and expensive litigation

process and what the risk that often entails, sometimes at his

best to reach out of court settlements in many cases. We have

a very strong board committee at News Corporation which would know

about this. Neither of us are members of that, they are outside

directors and they will review all of these things. Building on that,

how is it possible to make payments to people if they do not invoice

you or they are not an employee of News Corp subsidiaries? How is it

possible to transfer cash or some other form of remuneration to

people who do not invoice you, or who are not employees of News Corp

subsidiaries? I don't know the exact arrangements of that. I don't

do that myself. Sometimes in certain instances, it is

appropriate for journalists or managers in a certain environment

to have the ability to use cash and in some instances, it is customary

for those to be recorded and all of the cash expenses, as well as

invoice expenses should be looked at and recorded. So things like the

use of petty cash could be big sums of money or small? At the moment

you just record the journalist gave it to somebody? I don't have direct

knowledge of all of those arrangements. I was going to ask if

payments could have been made to family members of those alleged to

have been hacked? But can other forms of renumeration be used in

your company other than cash, things like travellers' cheques,

things that can be redeemed for cash? And don't have any knowledge

of that. Looking at some of your own code, page two and page four

talking about directors and employees and if officers acting

for News Corporation including consultants, agents and suppliers

and business partners must adhere to the standards. We would never

ask any third party to perform any act to violate the standards. How

do you try and make that happen as an organisation? How we work is,

each newspaper has its own editor or manager. But, they have to

approve the expense claims up every reporter. The reporter has no

authority to pay money out. So the managing editor often manages a lot

of expenses and budgets. And should do so, and is directed to do so

with propriety. Do you require your executives to make annual

statements that they have abided by your code of conduct and ethics?

Every employee, every colleague around the world of News

Corporation receives the code of conduct, a set... It is a pamphlet

that has some detail in it. It is not too much so people read it,

with respect to what ethical conduct is required. It is about

ethical conduct, the law, breaking the rules and so on. Everyone he

becomes an employee is required to do that. Our legal internal council

conducts workshops around the world with staff, in Mumbai to Manchester

around those rules and that code of conduct and it is something we

tried to communicate as crisply as we can to everyone in the business.

And finally, I appreciate Mr murder's statements at the

beginning. Giving you have been in the media spotlight and not

appreciated the attention you have had, will this make you think again

on how you approach your headlines, your targets in future? That could

the people from the Hillsborough 96, celebrities or others. We you think

again about what your headlines will say in future? I think all of

our editors certainly will. I am not aware of any transgressions as

a matter of taste. It is a difficult issue we have in this

country. We have a wonderful variety of voices and naturally

very competitive. I am sure headlines, can occasionally give

offence. But it is not intentional. Mr James Murdoch? It is important

to say one of the lessons from all of this for us is we do need to

think, as a business as well as an industry, in this country more

forcefully and more thoughtfully about journalistic ethics. About

what exactly the codes of conduct should be, not just for News

International, are UK publishing subsidiary, but for the industry as

a whole. And what sort of Government should be around this

whole sort of area and we welcomed last week the Prime Minister's

announcements for a judicial inquiry into journalistic ethics,

and relationships between the police and politicians. It is a

good thing for the country and for all of the interested parties to

engage with. One of the specific actions we have taken to try to be

as proactive as we can around us, is we have set up what we call a

management and Standards Committee, that is outside the actual

management of our publishing company and reports to the

independent directors through the independent directors of our global

public board. They will be looking at this issue around, first the

specific issues, how we co-operate with the investigations, how we

deal with allegations of wrongdoing and get to the bottom of it. Also,

it is important how we co-ordinate and productively engaged with the

judicial enquiries and how we set a code of conduct and a code of

ethics that we think, and that it thinks is something that can both

be apparent on top of all of our newspapers, and all of the industry

and also something that has teeth and can hold the company to account.

It is independently chaired, this management and Standards Committee

and we think it is going to be a much better way to go in the future.

We would like, over the next six months and years to be judged on

the actions the company takes to put that right and to put it in

place. I would like to say it does not take the weight off what we

have been saying, our apologies. But this country does greatly

benefit from having a competitive press and therefore have a very

transparent society. That is sometimes very inconvenient to

people. But I think we are better Is it your intention to launch a

new Sunday tabloid newspaper? have made no decision on that.

There is no decision on that. the moment there's no plans to

other News International title coming out on Sunday? No immediate

plans for that. We had talked in the past two moving to seven-day

news rooms, speculation about the sun on Sunday. I think we will

leave those options open. It's not the company's priority now. In the

last week, it has come up. But, you know, our direction is that this is

not the time to be worrying about that. The company has to move

forward on all of these other actions and really get to grips

with the facts of these allegations and understand them as fully as we

can. Can I appeal both to the witnesses and indeed to members to

try to keep brief because we have a lot to get through?

In your statement on 7th July 2011, to James Murdoch, you said the

company paid out court settlement approved by me, and I did not have

a complete picture when I did so. What do you know now that you did

not know then? I think, essentially, the new information that image to

that is critical here, is the information that came out of the

ongoing process of civil litigation in 2010 -- emerged. At the end of

2010, the presentation of the evidence would not be in opposition

previously from this civil litigation, that widen the circle

definitively, at least made it very apparent, the circle was wider than

the two individuals, Glenn McKerr. But information was critical. --

Glenn Mulcaire. If I go back to my earlier comment, the commercial and

legal rationality around that was very clear. The underlying fact was

not in dispute for the it was known from previous trials. The a device

was very, very clear as to what sort of damages could be expected

to be paid and it was quite clear and likely that if litigated, the

company would lose that case. In the context of none of this other

information, and full before some of the new allegations in the press

a rose, from afar, and there was no reason to believe at the time it

was anything other than in the past. Knowing them what I know now, would

I still have directed to negotiate to settle that case? I would,

actually, but I would have coupled it with the other actions we have

taken since the new evidence emerged at the end of September

2010, and that is to immediately go and look at whatever we could find

internally around the individuals involved, to immediately contact

the police about information which may be of information -- interest

to them. To put in place the process, which I think we did in

the early part of 2011, editing liability to the civil litigants,

putting a process in place to get to the bottom of what legitimate

allegations their work, apologising unreservedly to the victims of the

voice mail intercepts which were inexcusable, and having a system of

compensation there. If I knew then what I know now, with the benefit

of hindsight, we can look at all these things. But if I knew then

what I know now, we would have taken more action around that and

moved faster to get to the bottom of these allegations. Were the

settlement paid by News International, News Corp or News

Group Newspapers? I don't recall. I would imagine it's News Corp or

News International. I'm sure we can provide you with that information

of this up what advice did Colin Myler give you in relation to

That the underlying factor in the case was a previous fact which came

up in the trial of Glenn Mulcaire. Were you aware the case included a

criminal act of phone hacking? Pardon me? Were you aware the case

involved the criminal act of a phone hacking? That was my

understanding that that was what the litigation was four, damages

for the illegal voice mail interception. When did you get this

advice? In the first half of 2008. In 2009, and they said they would

settle this claim based on external legal advisers. Was this received

from Farrer and Co solicitors? have done work for us. I don't know

precisely which external council they engaged on that, but I can

clarify it. Did you see the advice? No, the advice I had was oral from

Tom Crone and Colin Myler. What was that advice? As I described it.

Outside legal advice have been taken with respect to quantum of

damages and the advice was the cases would be lost and the advice

was in the absence of any new evidence, certainly no new evidence

was made aware to me, this was simply a matter to do with events

which had come to light in 2007 and the criminal trials before I was

there, and that this was in the past. And the police, as well, and

closed their case and said there was no new evidence there, so the

context was that it was about events which were a year or more

world, underlying staff previous to that. Was part of the advice given

that the High pavement was that the matter would be kept confidential?

Not at fault. The confidential nature of an out-of-court

settlement is a normal thing. -- not at all. I don't know many which

are not kept confidential files I'm sure there are some, but there was

nothing about confidentiality. I think I understand were you are

going with this, but no, the amount paid and the advice there was on

advice from outside counsel, with respect to the amount we would be

expected to pay in damages plus expenses in litigation costs.

you question why such high payments were made to Mr Taylor and Mr

Clifford? It's so just have to be �700,000 and �1 million

respectively for privacy when the record amount opera was the damages

awarded by a court remains �60,000, ironically against the News of the

World. I did question the amount but not in relation to the 60,000.

If you recall, as I'm sure you do, the chronology here, the settlement

made with respect to �60,000 against the News of the World what

I believe was the Moseley case, was after the authorisation the advice

that we sought from senior distinguished outside counsel with

respect to the quantum of damages expected to pay which, in damages

terms, was a quarter of a million pounds plus expenses and litigation

costs expected to be between �500,000 and �1 million. I think

that chronology is important and afterwards you would obviously have

different information but it wasn't afterwards, it was before. You have

since said when you approved the settlement you did not actually

have all the facts. What do you know now that you didn't then?

have testified, the key facts and evidence, that came to light as the

lengthy due process of the civil litigation involving these matters

to their cause, it was of that process which unearthed the key

evidence there, and it was really only after that, that any one said

they should start the investigation is in as we had that new

information. It indicated to us that there was a wider involvement.

We acted on it immediately. Crone said he did not know why he

left News Group Newspapers. Why was he asked to leave after 26 years of

service? Well, last week, the News of the World, two weeks ago, I

guess, Tom Crone was very involved over the years, but the company

believed and the management of the company believed that it was time

to part ways. I was not involved in those direct discussions with Tom

Crone and I can't comment on their nature and content. I don't have

information. The New Statesman it carries a story last week that News

International subsidised Andy Coulson's wages after he left your

employee. Can you shed any light on that? I have no knowledge of Andy

Coulson's wages after he left the company. Finally, are you familiar

with the term will fall blindness? -- wilful. It came up in the ENRON

scandal, a legal term which states that if there is information you

choose not to have, you are still responsible. Do you have a

question? The question was, are you aware of that? I'm not aware of

that phrase. I have heard of that phrase before and we were not ever

guilty of that. When we had our inquiry in a 2009,

the evidence given by News International executives was at

rather hopeless, really. They came with a game-plan, to tell us that

they didn't know anything, they couldn't remember anything, and

they didn't know anybody who would know anything. I just wonder, so we

can get off on a reasonable footing, what coaching you have had to date

and who has advised you on how to handle this session and what their

advice was? With respect to today, after scheduling this appearance,

we took some advice around what the context of this sort of setting

would be. This is our first time in a committee meeting like this.

Mostly logistics and so on, what sort of questions we would be asked,

and we were advised fundamentally to tell the truth. And then come

and be as open and transparent as possible. And that is hour intent,

intention, and I hope we can show you that is what is happening.

answering questions from at Mr Watson, you seemed to indicate you

had a rather hands-off approach to your company, and the point you

made was that the News of the World was less than 1% of your entire

worldwide business and so you wouldn't really be expected to know

the ins and outs of what was going on. Could you just give us an

illustration of how many times, how often you would speak to the editor

of your newspapers? How often you speak to the editor of the Sun, for

Very seldom. Sometimes I would ring the editor on a Saturday night and

say, have we got any news tonight? Keeping in touch. I ring the editor

of the Sunday Times nearly every Saturday. Not to influence what he

has got to say, at all. I'm always careful not to promise any remark I

I'm not really in touch. I have got to tell you, the editor I have

spent most time with, it's the Wall Street Journal. To say that we are

hands-off is wrong. I work a 12 hour day and I cannot tell the

multitude of issues which come my way. The News of the World, I lost

sight of it, maybe because it was so small in the general frame of

our company. But we're doing a lot If I can help you out. It some of

the had told me you would speak to somebody like the editor of the Sun

newspaper daily and twice a day, wouldn't you recognise that

description? No. You wouldn't historically, traditionally spoke

to the editor of the Sun newspaper that a number of times? No. I would

like to, but no. When you said you speak to the editor of the News of

the World may be on a Saturday night before the publication, not

to influence what they say, I understand that. I am intrigued as

to how these conversations go? I would imagine it would go something

along the lines of to the editor of the News of the World, anything to

report? Anything interesting going on? And the editor of the News of

the World says, no, it's been a standard way, we have paid Gordon

Taylor �600,000! He never said that last sentence. In your weekly

conversations with the editor of the News of the World, something as

big as that, paying somebody �700,000, you would have expected

the editor of the News of the World to drop it into the conversation at

some point? No. I would have called him at least once a month I guess.

What we do discuss with him? What was on the agenda? I would say,

what is doing? What sort of response which are expect? He might

say we have a great story exposing this or that. Or he would say,

actually nothing special. James,... He might refer to the fact extra

pages have been added to the football that week. But he wouldn't

refer to a �1 million pay-off? James, we do acknowledge in your

view, you overpaid Max Clifford and Gordon Taylor? I cannot speak about

the arrangements of Max Clifford because I don't have direct

knowledge in terms I wasn't involved in those pieces. With

respect to Gordon Taylor, I made a judgment given the advice of

counsel, given the advice of the executives involved and going back

and looking at what we knew in 2000 inmates and looking at that advice

and remembering that advice. -- 2008. It we look back from now, it

was a decision, given that context, I would still stand by, I think.

Apparently there was a contract with Max Clifford. It was cancelled

by Andy Coulson. I don't know about that. I don't have knowledge about

that. It just seems strange to me... I don't know what was in the

contract. We might ask you to come back with details about that. But

it seems odd to me as a layman, 600,000, a million pounds, Andy

Gray had his phone hacked but he did not get 600,000, 500,000 or

even 50,000. He got 20,000. Somebody else gets their phone Act

and they get 600,000 or one million. And surely you can see the

difference most people draw is one was when it was all out in the open

and everybody knew about these things, Andy Gray. And the other

one was paid when it was all trying to be kept quiet, 600,000. Do you

not see, to most people looking at that it smells a bit? I understand

why you are coming from. These are big sums of money we are talking

about, 100,000, 200,000, 600,000. It is a lot of money. He would ask,

why would a company do that? I would go back to my answer to Mr

Sanders's question, be precise about the chronology. I'm not a

lawyer, but at my understanding is that the 60,000 settlements in the

Moseley judgment case, which was after the advice given around the

Gordon Taylor settlements, is an important chronology. And courts

and judges have set a different standard here. What we knew and

what I knew at the time was we had seen your distinguished outside

counsel who had said if this case is as -- if this case is litigated

and the company will lose the case, what sort of damages would we

expect to pay? And the company received an answer that was

substantial. The answer was 250,000, so you settle for 600? It is

important to be clear. The 600,000, 700,000, included damages, legal

fees and an estimation of what it would have cost otherwise. Because

the other side is negotiating. So it is damages plus costs that get

you to that number. It is important to be clear about that. I want to

concentrate on payments you make to your staff. Going back to the trial

of Glenn Mulcaire and Clive Goodman. Clive Goodman was pleading guilty

to phone hacking, criminal offence. Did News International pay Clive

Goodman's legal fees for his trial? I do want to be clear about the

chronology, I don't have first-hand knowledge of those times. Remember,

my involvement in these matters started in 2008. In 2007 in

December I was focused in my role of a public company and I was not

involved. Who would know? contrite to answer the first

question first. It is customary, certainly with employees and with

litigation to pay some set of legal expenses on behalf of those, to try

to bring all of the evidence to a court and so on. That has all been

done in accordance with, since any involvement I have had any

knowledge, in accordance with legal advice about the proper way to do

things. I can speed -- I cannot speak about the 2007 arrangements.

Clive Goodman employed the services of a QC called John Kelsey-Fry. I

don't know whether you ever came across him? We don't know him.

is probably one of the most expensive and eminent more is in

the country. He is the go to a lawyer celebrities. Steven Gerrard

used him recently. It seems odd to me a journalist on the News of the

World who is pleading guilty to a crime, uses in mitigation, probably

the most expensive lawyer in the country which obviously leads some

people to suspect his legal fees were not being paid for by himself.

But were being paid for by News International. Given he was

pleading guilty to a criminal act, phone hacking, which presumably

needs to summary dismissal, gross misconduct? Why would News

International even think about, even dream about playing -- paying

the legal fees of somebody engaged in criminal activity and committed

something which was clearly gross misconduct? I don't have any direct

knowledge of the specific legal arrangements of Clive Goodman in

2007. I cannot answer the specifics of that question. I have asked the

question as well more recently than that. With respect to who the

company pays legal fees, what contribution to legal fees do we

make, or does the company make? I think I can tell you that in asking

the question I have been surprised, and this is legal counsel telling

me this, it is customary in here it is sometimes made contributions to

the legal costs of either co- defendants or defendants in related

matters. But I have no direct knowledge of that particular

instance you mentioned. If you have any additional specific questions

about that, perhaps Mr chairman, we can follow up with you on that and

I am happy to do so. These are issues that go back some time, I am

surprised you have not followed upon them already. Where any

payments paid subsequently to Glenn Mulcaire and Clyde and following

their convictions? -- Clive Goodman. It is a good question and it is a

specific question. To my knowledge, and upon asking because allegations

had been made that legal fees had been paid after that time in 2007.

I asked the question myself and I was very surprised to find the

company had made certain contributions to legal settlements.

I don't have all are the details around each of those. Not legal

settlements sorry I mean legal fees. I was surprised, very surprised.

Who authorised them? They were done, as I understand it, in accordance

with legal counsel and strong advice. I'm not asking who advised,

who signed it off? Q-side the Czechs at News International and

agreed to make those of payments? have no idea. The talk about the

managing editor, would the managing editor have made them? It would

have been the management of the legal cases I would think. I am

happy to go back and look at that, but it was not something that came

to my attention. It wouldn't have anything to do with the managing

editors. Would it have been above the managing editor or below?

would have been above. It would have been on legal advice, had to

handle payments in legal litigation has. I don't have direct knowledge

of the current status of those. But I was surprised as you are to find

some of those arrangements had been made. Mr Murdoch senior, I seem to

be getting further with you. Would it have been Les Hinton? Would he

have agreed and signed those cheques? It could have been. Would

have been or could have been? have been. The who else could it

have been? The chief legal officer. They both had authority to sign

cheques. It would have been on the instructions of the chief legal

officer. James, you said you were not involved in the decision to get

rid of Tom Crone, whose decision was that? The management of the

company at the time, recently the chief executive, Rebekah Brooks.

it was her decision? She is the chief executive of the company and

senior personnel decisions are made by her. When Stuart left the

company, he left the day after all on the day allegations were made in

the Guardian, allegedly about her own -- phone hacking. What happened

to Stuart cut no, how did he leave the company? That I do not know.

And that would have been at the time, a News of the World matter

for them. It would be for you to ask him. Why did Les Hinton resign?

Les Hinton resigned sadly last Friday following Rebekah Brooks's

resignation saying I was in charge of the company during this period

we are getting criticism for. He said he felt he Muster down.

Rebekah Brooks, Les Hinton, were they asked to leave? They both

asked to leave. Why did you not accept Rebekah Brooks resignation

when she first offered to do it? Because I trust her. Why did you

accepted the second time round? was insistent. She was at a point