Facing a tougher round of questioning and even accusations of "mafia"-like behaviour, News Corp. scion James Murdoch went before a British parliamentary committee Thursday morning to say he had no knowledge of widespread phone hacking at the company's U.K. newspaper publishing unit.
Mr. Murdoch, 38, the deputy chief operating officer of News Corp. and long considered his father Rupert Murdoch's heir apparent at the company, faced the committee of MPs for a second time on Thursday morning. He was being questioned about the phone-hacking scandal that erupted this summer and led to the closure of its 168-year-old U.K. daily tabloid, News of the World. It was revealed that the paper had broken into the private voice mail services on mobile phones of a number of people - including murdered schoolgirl Milly Dowler.
In response to questions, Mr. Murdoch insisted that he was not well enough informed by other senior executives of the extent of the phone hacking at News International, the British subsidiary of News Corp. that published News of the World and which James Murdoch oversaw.
In September, News International Legal Manager Tom Crone and former News of the World editor Colin Myler accused James Murdoch of misleading the parliamentary committee in his testimony in July.
The two men said that in 2008, they showed Mr. Murdoch an e-mail with detailed transcripts of hacked phone messages. Mr. Murdoch shot back on Thursday, saying he did not mislead the committee and was not shown the e-mail.
"I believe their testimony was misleading, and I dispute it," Mr. Murdoch said.
He testified that he met with Mr. Crone and Mr. Myler in 2008, but only to approve giving a settlement of between £500,000 and £1-million, to soccer boss Gordon Taylor, whose phone was hacked.
"They did not discuss wider-spread phone hacking allegations or criminality or the like," he told the Commons Culture, Media and Sport Committee, which is investigating the company's practices.
Accusations have grown worse that phone hacking at News International went beyond just one "rogue reporter" behaving badly with the aid of a private investigator -- and that top executives were aware of the practice.
In August, a letter written by News of the World's former royal editor, Clive Goodman -- who was jailed along with private investigator Glenn Mulcaire in 2007 for phone hacking -- was released by the parliamentary committee, claiming that phone hacking was "widely discussed" at the paper. Last week, a reporter for another News International paper, The Sun, was arrested under suspicion of having bribed police.
Mr. Murdoch said on Thursday he would not rule out closing The Sun as well, if it is proven that phone hacking occurred there. If that decision were made, it would amount to another stunning loss for the company. Before it was shuttered, News of the World was the largest-circulation Sunday paper in Britain, with circulation of 2.66-million as of May. The weekday Sun newspaper was the sister publication, matching the tabloid format and in many ways the tone of News of the World. There have been reports that News International is considering expanding The Sun's coverage to include a Sunday paper and to regain access to the audience -- and attendant advertising dollars -- it lost with the closing of News of the World.
American authorities are now investigating whether there was further questionable behaviour at any of News Corp.'s U.S. news operations. On Monday, the company admitted that News International ordered the surveillance of lawyers representing hacking victims who were suing the newspaper company. On Tuesday, the BBC reported that a private investigator had been paid to spy on a number of people, including Prince William, on behalf of News of the World.
"You're possibly the only person in London who still thinks there's one rogue reporter and one private investigator," MP Paul Farrelly told Mr. Murdoch.
The infamous e-mail, known as the "for Neville" e-mail and believed to be addressed to former News of the World chief reporter Neville Thurlbeck, was at the centre of much of the questioning on Thursday, because - if it was shown to Mr. Murdoch - it proves he was aware of more phone hacking practices than he has admitted to in the past.
MP Tom Watson revealed at the hearing on Thursday that he had met with Mr. Thurlbeck -- a meeting that was supposed to be confidential, but that the member of parliament decided to disclose because of public interest.
Mr. Watson said the former reporter had told him he had seen the e-mail before the June, 2008, meeting and that Mr. Crone had said he intended to show it to Mr. Murdoch.
In fact, MPs repeatedly asked Mr. Murdoch why he would have paid such a large settlement without seeing further details on the case at the time. Mr. Thurlbeck also recalled Mr. Crone confirming to him the following week that he had shown James Murdoch the email, Mr. Watson said.
Mr. Murdoch countered that he had "only recently" seen the e-mail.
Mr. Watson at one point accused News International of operating like a mafia.
"It's offensive and it's not true," Mr. Murdoch said of the characterization.
"You must be the first mafia boss in history who didn't know he was running a criminal enterprise," Mr. Watson replied. Mr. Murdoch called his remarks "inappropriate."
A report this week citing family and company insiders suggested that James is now fighting to avoid taking the blame for the scandal, and to keep his position as next in line to succeed his father at the helm of the family business.
At the company's annual shareholders' meeting in Los Angeles last month, many investors sent a signal of no confidence in James Murdoch.
Not including the Murdoch family's voting stock, the majority of votes cast said that James and Lachlan Murdoch should not keep their positions on the board. The Murdoch family controls 40 per cent of the voting shares.
"We're all humbled by it, and trying to improve the business, improve the structures and leadership across all of the operating companies to make sure that these things do not happen again," Mr. Murdoch said.