Pressure mounts on Murdoch family in hacking probe
LONDON (Reuters) - Parliament on Tuesday said it would recall Rupert Murdoch's son James to answer more questions in its probe into News Corp's hacking scandal and U.S. shareholders raised the stakes in a legal battle with the company.
The two moves reignited a long-running controversy that has already damaged the British establishment and threatened the media magnate's once untouchable political influence.
Politicians said they would call James Murdoch for further questioning, probably in November, after employees appeared to contradict his statements that he had only limited knowledge of the widespread hacking at a News Corp newspaper.
James Murdoch, chairman of News Corp's British newspaper arm, spent almost three, uncomfortable hours in front of a parliamentary committee with his father in July, answering questions over what they had done to unravel the scandal at the now-defunct News of the World.
His insistence that he did not know the problem stretched beyond a single "rogue reporter" until earlier this year has since been undermined by two senior employees who say they made him aware of a wider problem in 2008.
The spotlight on James Murdoch's handling of the scandal has damaged his reputation and raised questions over whether he can succeed his father at the top of the company.
It has also raised concerns about the level of corporate governance at News Corp.
In America, shareholders widened a legal complaint against the company, while Australia looked set to hold a wide-ranging inquiry into its media in the wake of the scandal.
A revised lawsuit alleged News Corp's board knew more than 10 years ago that the company's U.S. subsidiaries were illegally hacking competitors' computers
"The board has not lifted a finger to engage in any oversight of (Rupert) Murdoch's rule, even when it was provided with clear and unmistakable warnings that News Corp's business practices were not only unethical, but also illegal," said the complaint, filed in Delaware Chancery Court.
Tom Watson, the most dogged member of the parliamentary committee, told Reuters members wanted to speak to Les Hinton, the most senior News Corp executive to stand down over the scandal, and several lawyers as well as James Murdoch.
"We're inviting him back," he said. "We feel we should hear from Les Hinton and a couple of the lawyers before James Murdoch, so realistically we are talking about November."
The parliamentarians have interviewed a host of senior executives, lawyers and former editors. Members have appeared incredulous at times as witnesses denied all knowledge of the hacking and said they could not remember who said or did what when.
Former News Corp lawyer Tom Crone and editor Colin Myler repeatedly said the committee would "have to ask Les Hinton about that," when the committee asked them questions a week ago.
News Corp has been engulfed by the scandal since July when it was revealed that people employed by the paper had hacked into the phones of murder victims, including schoolgirl Milly Dowler, and British war dead, as well as celebrities and politicians.
The crisis has already wiped billions of dollars off News Corp's market value, cost it two senior executives, forced it to drop a prized $12 billion (7.6 billion pound) bid for BSkyB and shut down the 168-year-old News of the World tabloid.
It has humiliated the 80-year-old Rupert Murdoch, who has for years had a strong influence over British politicians, and also to a lesser degree, those in Australia and the United States.
It has also embarrassed Prime Minister David Cameron, who hired former News of the World editor Andy Coulson as his spokesman.
News Corp said James Murdoch would be happy to appear in front of the committee again to answer any further questions.
"When James Murdoch testifies before parliament, it will be good theatre," Richard Levick, the head of Levick Strategic Communications which advises on crisis management, told Reuters.
"It will create news interest yet again and re-emerge as a story. The legal moves and the inquiry in Australia are taking it global."
(Reporting by Kate Holton; Additional reporting by Tom Hals in Delaware; Editing by Mark Potter and Andrew Heavens)
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