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Hacking Cases Focus on Memo to a Murdoch

Sarah Lyall and Ravi Somaiya|The New York Times
Saturday, 11 Feb 2012 | 7:04 PM ET

As dozens of investigators and high-powered lawyers converge on Rupert Murdoch’s News International in the phone hacking scandal, attention has focused on the printout of an e-mail excavated three months ago from a sealed carton left behind in an empty company office.

James Murdoch, son of Rupert Murdoch and Chairman and Chief Executive of News Corporation, Europe and Asia.
Miguel Villagran | Getty Images
James Murdoch, son of Rupert Murdoch and Chairman and Chief Executive of News Corporation, Europe and Asia.

Addressed to Mr. Murdoch’s son James, it contained explosive information about the scale of phone hacking at The News of the World tabloid — information James Murdoch says he failed to take in because he did not read the whole e-mail chain.

The e-mail returned to cause trouble for News International, the British newspaper subsidiary of News Corporation, several weeks ago when the company said that it had been deleted from Mr. Murdoch’s computer. Even as people familiar with the investigations said the e-mail and its convoluted history will form a crucial part of the inquiry into allegations of a cover-up, the scandal appeared to be widening on Saturday, as senior journalists News Corporation’s Sun tabloid were arrested.

Tracing the story of the e-mail, which was found in November, also sheds light on the intrigue surrounding Mr. Murdoch, the company’s heir apparent, and on efforts to protect him from the scandal.

Embroiled in three separate police operations, a parliamentary investigation, a judicial inquiry and a flurry of civil suits with potentially hundreds more waiting in the wings, News Corporation has begun to provide information that suggests a broader sweep of hacking activity at News International than was suspected even recently and more widespread knowledge within the company of past efforts to cover it up.

This new level of cooperation includes the release of damaging material from an internal investigation that is being overseen by executives who, observers say, are using it to consolidate their power within the company, a move that could come at James Murdoch’s expense.

“There’s no good way out of it,” a former News International executive said, speaking on the condition of anonymity because of the continuing investigations. “If you put up your hand and say, ‘I’m going to investigate myself and here’s what I found’ and you’re not very open and full about it, then it looks like just another cover-up.”

A Stunning Find

When The News of the World was closedin disgrace last summer, its newsroom was locked down by security guards. In mid-November, News International says, investigators searching the seized materials found a storage crate that, judging from a sticker on top, had come from the office of Colin Myler, the paper’s last editor. It contained a hard copy of an e-mailsent from Mr. Myler to James Murdoch on June 7, 2008 — in reality a chain of e-mails that included correspondence with Tom Crone, then an in-house lawyer.

“Unfortunately, it is as bad as we feared,” Mr. Myler wrote, speaking of an impending lawsuit that threatened to reveal that voice-mail hacking at the paper was endemic.

Last summer senior News International officials said that in that crucial period in 2008, Mr. Murdoch had neither been told about nor shown documentation of the extent of the illegality at The News of the World. The discovery of the e-mail, said one former official with knowledge of the situation, was completely unexpected.

Why did it take so long to come to light? Linklaters, a law firm working for News International, said that a junior employee found it in November, but that senior officials at the firm did not know about it until December.

In addition, Linklaters told the Commons Committee on Culture, Media and Sport, Mr. Myler’s electronic copy had been lost “in a hardware failure” on March 18, 2010,” while Mr. Murdoch’s electronic copy had been deleted on Jan. 15, 2011 during an “e-mail stabilization and modernization program.”

Big corporations routinely delete old e-mails. Between April 2010 and July 2011, News International discussed e-mail deletion with HCL Technologies, which manages its e-mail system, on nine occasions, according to a letter HCL wrote to Parliament last summer.

Most of the reasons were mundane. But in January 2011, HCL said, News International asked whether HCL was capable of helping “truncate” — meaning delete — “a particular database” in the e-mail system. The question came shortly after disclosures in a civil suit brought by the actress Sienna Miller raised fears that material about widespread phone hacking at The News of the World might become public.

News International did not explain why it wanted the deletion. HCL said it could not help and told the company to look elsewhere.

It is not clear whether the “stabilization and modernization program” that deleted the Murdoch e-mail was linked to News International’s request to “truncate” data. But it is clear that on Jan. 15, when the deletion took place, the company knew it was facing civil and potentially criminal inquiries. A month earlier, reacting to new information from the Miller and other cases, it had suspended the News of the World’s news editor, Ian Edmondson, on suspicion of phone hacking, and handed some material to the police.

QUESTIONS OF TIMING

Questions of Timing

“They were aware that it was highly likely the police were going to reopen the investigation,” said a person with knowledge of the police operation. Indeed, the police formally began Operation Weeting, their new phone hacking investigation, 11 days later.

At every step of the inquiry, the company has said it is cooperating fully and producing relevant documents. A News International spokeswoman declined to comment for this article.

A lawmaker involved in the investigations of News International said the company’s primary objective from the beginning was to protect James Murdoch, and everything else was secondary to that.

News International has given a variety of explanations for where its e-mails are and whether the ones it says it cannot find were deleted, lost in computer malfunctions or simply mislaid. In December 2010, a News of the World editor told a court in Scotland that “many e-mails had been lost when they were being moved to an archive in India.” That same month, a company lawyer said that News International could not retrieve e-mails written more than six months earlier. Neither of those statements was true, the company admitted later.

Last month, the High Court judge presiding over the civil lawsuits brought by hacking victims castigated News International for what he called its “startling approach” to e-mail. Even after the company received a formal request for documents, said the judge, Geoffrey Vos, “a previously conceived plan to delete e-mails was put in place by senior management.”

Speaking of News Group Newspapers, a division of News International, Justice Vos said that “they are to be treated as deliberate destroyers of evidence.”

At every step of the way, News International has declared that it is doing its utmost to investigate wrongdoing. In 2007, for example, the company told Parliament that it had conducted an investigation by asking an outside law firm, Harbottle & Lewis, to examine 2,500 e-mails, and that the investigation had cleared senior editors of wrongdoing.

Many of those supposedly cleared were later arrested on suspicion of phone hacking and other charges. And Harbottle & Lewis said later that the investigation had, in fact, been requested by News International to answer allegations in an unfair dismissal claim brought by a former employee involved in phone hacking — not to look for more phone hacking at the paper.

News International has pledged to police itself better. Under the aegis of its four-person Management and Standards Committee, it says it will comb through and make available every piece of potentially pertinent material.

Dozens of people — lawyers, forensic accountants, forensic computer technicians and, sometimes, police officers — gather daily at a site in Thomas More Square here, where News International is based, searching through 300 million e-mails and other documents stretching back a decade.

“Pooling data together is a complex matter,” said a person with knowledge of the standards committee. “What is recoverable is a very technical operation.”

Mr. Murdoch, who is News Corporation’s deputy chief operating officer and chairman and chief executive of its international division, relocated to New York recently as part of a long-planned move meant to help ease him into place to eventually take over News Corporation from his father. But the younger Mr. Murdoch’s position seems much more precarious than it did a year ago. Last month, he resignedfrom the board of GlaxoSmithKline , Britain’s biggest drug company, and last summer his dream of helping News Corporation take over all of British Sky Broadcasting shattered to pieces in the wake of the hacking scandal.

People in New York say that Mr. Murdoch is confident he will survive the storm back in London. But questions still abound about what he knew, and when.

When he got the 2008 e-mail, News International was facing a major potential disaster: a lawsuit brought by Gordon Taylor, chief executive of the Professional Footballers’ Association, who said that his phone had been hacked and that he had proof.

That is what the e-mail told Mr. Murdoch. Farther down in a short message chain, there was mention of a “nightmare scenario” of legal repercussions, and an acknowledgment that The News of the World “knew of and made use of the voice mail information” it illegally acquired from Mr. Taylor’s cellphone.

Mr. Myler’s e-mail was sent on a Saturday afternoon. Mr. Murdoch replied minutes later, agreeing to a meeting that Tuesday and telling Mr. Myler he would be home “if you want to talk before.”

Soon afterward, Mr. Murdoch approved a settlement of more than $1.4 million to Mr. Taylor, an unprecedented amount for such a case.

In December, he said he had not read the whole e-mail. “I am confident that I did not review the full e-mail chain at this time or afterwards,” he said in a letter to the Commons culture committee. “I would also like to take this opportunity to reaffirm my past testimony that I was not aware of evidence that either pointed to widespread wrongdoing or indicated that further investigation was necessary.”

Contradicting Mr. Murdoch’s testimony, Mr. Myler and Mr. Crone told Parliament they had informed him about the damaging aspects of the Taylor lawsuit. Mr. Murdoch has consistently denied this, declaring that he approved the settlement because of his lawyers’ advice, not because he knew the underlying details.

Jo Becker contributed reporting from New York.

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