Lawyer tells MPs: James Murdoch lied to you

Former News International executives insist that chairman was told of incriminating hacking email

Former legal manager at News International, Tom Crone

James Murdoch's status as heir apparent to his father's News Corp empire was in the hands of 11 MPs last night after two of his most senior executives suggested he was lying over his knowledge of phone hacking at the News of the World.

The newspaper's former editor Colin Myler and its legal manager Tom Crone yesterday contradicted evidence given by Mr Murdoch to Parliament that he had been unaware that voicemail interception at the paper had gone beyond one rogue reporter.

Mr Murdoch said afterwards that he stood by his version of events and that he had been "absolutely clear and consistent".

It will now fall to MPs on the House of Commons Culture, Media and Sport Committee to decide which version of events to believe. If their eventual report concludes Mr Murdoch misled them, it would almost certainly make his position as successor to his father untenable in the light of US investigations into the scandal which has already cost News Corp one of its newspapers, two of its top executives and full ownership of BSkyB.

Last night, sources on the committee suggested they were likely to recall Mr Murdoch when they meet next Tuesday to respond to the allegations made by Mr Myler and Mr Crone before writing their report.

Among other revelations in another day of drama in Westminster, it emerged that:

* Mr Crone saw a dossier commissioned by a senior News International executive into the private lives of lawyers acting for the victims of phone hacking. The existence of the dossier was first revealed by The Independent last week.

* Andy Coulson, the former editor of the News of the World, tried to persuade executives to re-employ his paper's disgraced royal editor Clive Goodman after he had been jailed for phone hacking.

* News International failed to examine any internal emails related to phone hacking written before the arrest of Mr Goodman. This would also appear to contradict evidence given by Mr Murdoch to the committee.

But it is Mr Myler and Mr Crone's evidence to MPs about a crucial 15-minute meeting they held with Mr Murdoch in 2008 that will be central to the committee's deliberations.

Mr Crone told the committee that he had been passed details of an email which – for the first time – showed staff at the News of the World had been aware that the phone of the Professional Footballers' Association boss Gordon Taylor had been hacked. The email, later referred to as the "for Neville" email, was a transcript of an intercepted voicemail which had been written out by a junior reporter at the paper and later sent back to the private investigator Glenn Mulcaire who had hacked it.

It was passed to Mr Crone by Mr Taylor's lawyers as part of his civil action against the paper for phone hacking. Mr Crone yesterday told the committee he informed Mr Murdoch about the document at a meeting also attended by Mr Myler. At the meeting, he added, Mr Murdoch authorised him to reach a settlement with Mr Taylor, who was eventually paid £425,000 in damages.

Mr Crone said the email was documentary evidence that at least one other reporter was aware of phone hacking and that this was why they needed to settle out of court. "Up to then there was no evidence that News of the World were implicated. The first I saw of that was the 'for Neville' email which reached us in spring 2008. We went to see Mr Murdoch and it was explained to him what this document was and what it meant," said Mr Crone. "It was clear evidence that phone hacking was taking place beyond Clive Goodman. It was the reason we had to settle the case and in order to settle the case, we had to explain the case to Mr Murdoch and get his authority to settle, so clearly it was discussed."

Mr Myler agreed with Mr Crone's version of events. He said: "Mr Murdoch is the chief executive of the company. He is experienced. I am experienced. Mr Crone is experienced. I think everyone perfectly understood the seriousness and significance of what we were discussing. There was no ambiguity about the significance of that document."

But Mr Murdoch last night continued to insist that he was not informed that the email suggested phone hacking was more widespread than thought at the News of the World and that his previous evidence to the committee had been accurate. He said: "My recollection of the meeting regarding the Gordon Taylor settlement is absolutely clear and consistent. I stand by my testimony, which is an accurate account of events.

"I was told by Mr Crone and Mr Myler when we met, in that short meeting, that the civil litigation related to the interception of Mr Taylor's voicemails to which Mulcaire had pleaded guilty the previous year. I was informed, for the first time, that there was evidence that Mulcaire had carried out this interception on behalf of the News of the World. It was for this reason alone that Mr Crone and Mr Myler recommended settlement. It was in this context that the evidence was discussed. Neither Mr Myler nor Mr Crone told me that wrongdoing extended beyond Mr Goodman or Mr Mulcaire.

"There was nothing discussed in the meeting that led me to believe that a further investigation was necessary."

During his testimony Mr Crone also confirmed the fact, first reported by The Independent, that News International commissioned a dossier on the private lives of lawyers bringing civil damages claims for phone hacking against the News of the World.

At the very end of the evidence, Mr Crone said he knew the name of the NI employee who had commissioned the dossier but did not want to make it public because of the ongoing police investigation into illegal newsgathering at News of the World.

Selected evidence: What they said – and what it means for the investigation

Jonathan Chapman (former director of legal affairs at News International): "Clive Goodman specified in his letter [to News International] that he would like to see emails between certain individuals from about six months prior to his conviction [and after his arrest]. So they were the parameters of the search."

Significance The 2,500 emails examined by News International and the law firm Harbottle & Lewis were written after the period when phone hacking was rife at the News of the World. After Goodman's arrest it is highly unlikely that executives would have committed anything incriminating to writing. James Murdoch told the committee in July: "Outside counsel was brought in [Harbottle & Lewis]. From then, the opinion was clear that as to their review, there was no additional illegality in respect of phone hacking in that file." Mr Chapman's evidence shows that Mr Murdoch was relying on a report which only looked at very limited documentation, from a time when phone hacking had already been exposed. The committee may want to ask Mr Murdoch why the company took such solace from the Harbottle & Lewis report.

Daniel Cloke (former human resources director at News International): "What we appeared to have at the time was someone [Goodman] who was on a fishing expedition and requesting a huge amount of documentation. In actual fact the essential process that I was looking at was whether his conduct [constituted] gross misconduct and whether the company was within its rights to dismiss him. In terms of the other aspects we decided to look at those as well but it was not a forensic or wide-ranging investigation – it was in the context of an employment dispute."

Significance Again, if this was not a forensic or wide-ranging investigation, why did James Murdoch place such reliance on it? Either Mr Murdoch was very badly briefed on the extent of the Harbottle & Lewis investigation, or he was misled, or he himself intentionally misled the committee. MPs will want to try to establish which.

Tom Crone (former legal manager at News International): "Mr Coulson had conversations with me on at least three occasions where he said that if Clive was guilty and sentenced and served his sentence then he, Mr Coulson, was hoping to persuade the company that Mr Goodman could come back – not in a reporting capacity but perhaps as a sub-editor. When I spoke to Clive I relayed thatto him."

Significance At face value this is extraordinary: Goodman had reason to expect he would not lose his job despite being sent to prison for phone hacking. Why, if Mr Coulson was so shocked by phone hacking and had no idea it was happening under his watch, did he want to keep on the person who had been responsible for it?

Tom Crone "I conveyed to the meeting that a transcript of Gordon Taylor voicemails had passed through [the News of the World] office and back to Glenn Mulcaire. That is what was relayed to Mr Murdoch. The difference this document made was that it implicated the News of the World in Gordon Taylor without any doubt at all, because it passed through our office. It proved that it had gone through the computer system of a junior reporter. The obvious inference we could draw from that is that others knew about it, because the junior reporter didn't do it off his own bat."

Colin Myler (former editor of the News of the World): "Mr Murdoch is the chief executive of the company. He is experienced. I am experienced, Mr Crone is experienced. I think everyone perfectly understood the seriousness and significance of what we were discussing. There was no ambiguity about the significance of that document."

Significance This goes to the heart of what James Murdoch knew and when. In written evidence to the committee he said: "Neither Mr Myler not Mr Crone told me that wrong-doing extended beyond Mr Goodman or Mr Mulcaire. There was nothing discussed in the meeting that led me to believe that a further investigation was necessary." Yesterday Mr Murdoch stuck to that position. But Mr Myler and Mr Crone's evidence does appear to contradict it. At the end of the day it will be up to the committee and eventually Lord Justice Leveson to decide whom they believe.