London Phone-hacking scandal heats up Rupert Murdoch spars with lawmakers in hearing before Parliament

By Jill Lawless and Paisley Dodds Associated Press LONDON (AP) -- Rupert Murdoch sparred Tuesday with a committee of lawmakers over the phone-hacking scandal that has rocked his global empire, reeling from tough questioning before recovering his composure and rebuffing his interrogators with flashes of his legendary toughness. The elder Murdoch banged his hands on the table and said the day was the most humble of his life, becoming flustered when committee members peppered him with questions and turning to his son James for some answers. He recovered later in a tense question-and-answer session with lawmakers, pushing back with firm denials of wrongdoing. Murdoch, 80, said he was "shocked, appalled and ashamed" at the hacking of the phone of a murdered schoolgirl by his now-shuttered News of the World tabloid. He said he had seen no evidence that victims of the Sept. 11, 2001, terror attack and their relatives were targeted by any of his papers. Murdoch said he was not responsible for the hacking scandal, and his company was not guilty of willful blindness. He repeatedly batted away questions about operations at the News of the World by saying he wasn't really in touch with the tabloid or didn't know what was going on there. Murdoch also told the committee that he didn't believe the FBI had uncovered any evidence of hacking Sept. 11 victims in a recently launched inquiry. He said he lost sight of News of the World because it is such a small part of his company and spoke to the editor of the paper only around once a month, talking more with the editor of the Sunday Times in Britain and the Wall Street Journal in the U.S. James Murdoch apologized for the scandal, telling British lawmakers that "these actions do not live up to the standards our company aspires to." He said he was surprised and shocked that his company paid the legal fees for royal reporter Clive Goodman, who was jailed in 2007 for eavesdropping on the voicemails of royal aides. Murdoch said he didn't realize the payments had been made to the News of the World reporter. He was not certain who signed off on the payments. The younger Murdoch said the company acted as swiftly and transparently as possible. Rupert Murdoch acknowledged, however, that he did not investigate after the Murdochs' former U.K. newspaper chief, Rebekah Brooks, told parliament years ago that the News of the World had paid police officers for information. Asked by lawmakers why there was no investigation, he said: "I didn't know of it." He says the News of the World "is less than 1 percent" of his News Corp., which employs 53,000 people. Murdoch also said he was not informed that his company had paid out big sums -- 700,000 pounds ($1.1 million) in one case -- to settle lawsuits by phone hacking victims. James Murdoch said his father became aware of the settlement "in 2009 after a newspaper report. It was a confidential settlement. " He said a civil case of that nature and size would be dealt with by the executives in the country involved -- in this case James Murdoch, the head of News Corp.'s European and Asian operations. James Murdoch says news organizations need to put a stronger emphasis on ethics in the wake of the phone-hacking scandal, telling lawmakers that "we do need to think in this country more forcefully and thoughtfully about our journalistic ethics." The value of the Murdochs' News Corp. added around $1.5 billion while they were being grilled, trading 3.8 percent higher at $15.54. The stock has taken a battering over the past couple of weeks, shedding around 17 percent of its value, or around $8 billion. Rupert Murdoch's wife Wendi Deng and News Corp. executive Joel Klein, who is overseeing an internal investigation into the wrongdoing, sat behind him as he spoke. The elder Murdoch denied that the closure of the News of the World was motivated by financial considerations, saying he shut it because of the criminal allegations. There has been speculation that Murdoch wanted to close the Sunday newspaper in order to merge its operations with the six-days-a-week Sun, which some have said will relaunch as a seven-day publication. Asked Tuesday whether there was a financial motive for closing the paper, Rupert Murdoch said: "Far from it." Politicians also pushed for details about the Murdochs' ties to Prime Minister David Cameron and other members of the British political establishment. In a separate hearing, lawmakers questioned London police about reports that officers took bribes from journalists to provide inside information for tabloid scoops and to ask why the force decided to shut down an earlier phone hacking probe after charging only two people. Detectives reopened the case earlier this year and are looking at a potential 3,700 victims. The scandal has prompted the resignation and subsequent arrest of Brooks and the resignation of Wall Street Journal publisher Les Hinton, sunk Murdoch's dream of taking full control of lucrative satellite broadcaster British Sky Broadcasting and raised questions about his ability to keep control of his global media empire. Rupert Murdoch is eager to stop the crisis from spreading to the United States, where many of his most lucrative assets -- including the Fox TV network, 20th Century Fox film studio, The Wall Street Journal and the New York Post -- are based. London's departing police chief revealed that 10 of the 45 press officers in his department used to work for News International, but he denied there are any improper links between the force and Murdoch's media empire. "I understand that there are 10 members of the (Department of Public Affairs) staff who have worked in News International in the past, in some cases journalists, in some cases undertaking work experience with the organization," Paul Stephenson said. News International is the British newspaper division of Murdoch's global News Corp. Stephenson denied wrongdoing, or knowing the News of the World was engaged in phone hacking -- but acknowledged that in retrospect he was embarrassed the force had hired Neil Wallis, a former executive of the paper, as a PR consultant, After being asked about his relationship with Wallis, who was arrested last week, Stephenson said he had "no reason to connect Wallis with phone hacking" when he was hired for the part-time job in 2009. He said now that the scale of phone hacking at the paper has emerged, it's "embarrassing" that Wallis worked for the police. Stephenson announced his resignation Sunday, saying allegations about his contacts with Murdoch's News International were a distraction from his job. He was followed out the door by assistant commissioner John Yates, who gave evidence before the hotly anticipated appearance by the Murdochs and Brooks. Yates said that with the benefit of hindsight he would have re-opened an inquiry into electronic eavesdropping of voicemail messages. Yates said if he "knew now" how the phone hacking scandal would unfold, he would have done something different. He has denied wrongdoing in the scandal. London's Metropolitan Police force said Tuesday it had asked a watchdog to investigate its head of public affairs over the scandal -- the fifth senior police official being investigated. The Independent Police Complaints Commission will look at Dick Fedorcio's role in hiring a former News of the World executive as an adviser to the police. Fedorcio also was questioned by lawmakers Tuesday, along with Stephenson and Yates. But it was the appearance by the Murdochs and Brooks that was drawing huge public interest. Murdoch's car was mobbed by photographers as he arrived for the hearing about the scandal, which has swept from his media empire through the London police and even to the prime minister's office. The Range Rover quickly drove off, returning returned to Parliament about half an hour before the hearing was due to start. Members of the public and journalists lined up hours ahead of time in hope of a spot in the small committee room, which holds about 40 people. More will be able to watch in an overspill room, and Britain's TV news channels are anticipating high ratings for the appearance. Cameron cut short a visit to Africa and is expected to return to Britain for an emergency session Wednesday of Parliament on the scandal. A former News of the World reporter, Sean Hoare, who helped blow the whistle on the scandal, was found dead Monday in his home. Police said the death was "unexplained" but is not being treated as suspicious. A post-mortem was being conducted Tuesday. Hoare was in his late forties. Brooks' spokesman, David Wilson, said police had been handed a bag containing a laptop and papers that belong to her husband, former racehorse trainer Charlie Brooks. Wilson said the bag did not contain anything related to the phone hacking scandal and he expected police to return it soon. The bag was found dumped in an underground parking lot near the couple's home on Monday, but it was unclear how exactly it got there. Wilson said Tuesday that a friend of Charlie Brooks had meant to drop the bag off, but he would say only he left it in the "wrong place." In New York, News Corp. appointed commercial lawyer Anthony Grabiner to run its Management and Standards Committee, which will deal with the scandal. But News Corp. board member Thomas Perkins told The Associated Press that the 80-year-old Murdoch has the full support of the company's board of directors, and it was not considering elevating Chief Operating Officer Chase Carey to replace Murdoch as CEO of News Corp. News Corp.'s widely traded Class A shares fell 68 cents to $14.97 Monday -- down 17 percent since the scandal reignited on July 4. Britain's Independent Police Complaints Commission also is looking into the phone hacking and police bribery claims, including one that Yates inappropriately helped get a job for the daughter of Wallis. Wallis has been arrested on suspicion of conspiring to intercept communications. London police also confirmed that they once employed a second former News of the World employee besides Wallis. Alex Marunchak had been employed as a Ukrainian language interpreter with access to highly sensitive police information between 1980 and 2000, the Metropolitan Police said. The police force said it recognized "that this may cause concern and that some professions may be incompatible with the role of an interpreter," adding that the matter will be looked into. Meanwhile, Internet hackers took aim at Murdoch late Monday, defacing the sites of his other U.K. tabloid, The Sun, and shutting down website of The Times of London. Visitors to The Sun website were redirected to a page featuring a story saying Murdoch's dead body had been found in his garden. Internet hacking collective Lulz Security took responsibility for that hacking attack via Twitter, calling it a successful part of "Murdoch Meltdown Monday." Lulz Security, which has previously claimed hacks on major entertainment companies, FBI partner organizations and the CIA, hinted that more was yet to come, saying "This is only the beginning." It later took credit for shutting down News International's corporate website. Another hacking collective known as Anonymous claimed the cyberattack on The Times' website. Published: Wed, Jul 20, 2011