Nick Davies's Blog, page 12

News Corporation directors could face charges for neglect of duties

Lawyers for Rupert Murdoch's company have protested against criminal charges amid fears over broadcasting contracts

Directors within Rupert Murdoch's News Corporation could face corporate charges and prosecution for neglect of their duties, in plans that are being examined by the Crown Prosecution Service.

Company lawyers, fearing a dramatic escalation of the hacking scandal by criminalising the boards on which Murdoch family members sit, are understood to have protested to the authorities.

A criminal prosecution could have a strong adverse impact on the deliberations by Ofcom as to whether News Corp representatives are "fit and proper" to hold UK broadcasting licences.

Asked about representations that have been made to the police or the CPS about the unfairness of possible corporate charges, a News International spokesman said yesterday that Deputy Assistant Commissioner Sue Akers, who is leading the police inquiries into phone hacking, conceded the company culture had now changed: "She agreed that the current senior management and corporate approach at News International has been to assist and come clean."

The company's protestations that it had turned over a new leaf appeared to receive some support from Lord Justice Leveson at his inquiry last week, when he brought up its past alleged obstruction of the police. Leveson said at the inquiry: "I received evidence of the response which the police received when they visited News International in 2006.

"Would it be right for me to conclude at this stage that whatever might have happened in the past at News International titles, the senior management and corporate approach now has been to assist and come clean, from which I might be able to draw the inference that there is a change in culture, practice and approach?" Akers responded: "Yes, sir. I don't disagree with any of that."

One problem for News International, however, is the wording of section 79 of the Regulation of Investigatory Powers Act, the hacking legislation under which eight senior News of the World journalists and executives have already been charged. It provides for the corporate prosecution of a company which commits such an offence, and also of any director whose neglect or connivance led to the crime.

The most senior executive so far charged with offences, and the only News International board member, is Rebekah Brooks, the former chief executive, who denies separate allegations of an attempted cover-up of the hacking scandal, as well as denying the charges of involvement in hacking. She only joined the board in 2009 and resigned last year.

Rupert Murdoch's son James joined the News International board in April 2008, and resigned last year. His father also recently resigned all his UK newspaper board positions. The only other senior Murdoch executive on the NI board throughout the period of the original hacking scandal was its previous chief executive, Les Hinton, who left the UK boards in 2007. He said later: "I was ignorant of what apparently happened."

Hinton rejected heavy criticisms of him by a Commons committee investigating the phone hacking, which accused him of "selective amnesia" in his dealings with them. The report, published earlier this year, claimed he misled parliament and was "complicit" in a cover-up of the true extent of the hacking.

The culture, media and sport committee also accused James Murdoch of willful blindness in failing to investigate the extent of phone hacking. Opposition MPs on the committee branded Rupert Murdoch as unfit to be in charge of a large media firm, although Tory members refused to support this.

The CPS is not making any public statements. But the disclosure that it was advising the police on possible corporate criminal charges was made by Akers during her Leveson testimony, when she said that advice was being obtained "in respect of both individual and corporate offences". Despite subsequent speculation that this was a reference to possible action against the company by the US justice department, it is understood that the CPS is only looking at potential UK offences. News International said: "We are aware of the reference made by DAC Sue Akers in her evidence to the Leveson inquiry."

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From the archive, 2 July 1980: The car for the thirties good life

Nick Davies reports on the passing of the MG, 'one of the most perfect products of free enterprise'

The death of the MG marks the end of one of the most perfect products of free enterprise, born out of the voracious will to succeed of one man and the burgeoning market for middle-class status symbols.

The car first appeared as a souped-up Morris Oxford in 1923 when it won the Land's End Rally. It went on to become an essential item for a carefree thirties chap, along with the blazer, the pipe, and the blonde popsy by his side.

Its creator, William Morris, later Lord Nuffield, began his career as an apprentice in a bicycle firm in Oxford. He developed a motorcycle, moved into his own premises, and was soon running sidelines in car repair, hire cars, a taxi service, and a driving school.

By 1910 he had produced his first car design and in 1913 he made his first Morris Oxford as a competitor for the new Ford. The war distracted him into the manufacture of hand grenades and mine sinkers but afterwards he returned to buy up competitors and suppliers alike and create Morris garages, the source of the famous MG initials.

Morris's Oxford agent, Cecil Kimber, developed successive new designs for the MG, taking the conventional 1929 Morris Minor, lowering the suspension, and hotting it up into a 70 mph two-seater, the Midget.

The Wolseley Hornet, bought by Morris in 1926, was revamped and turned into the MG Magna and Magnette. Later, the Midget became the T-type and took the MG model round the world.

The car was reborn in the fifties as the MGA and finally in the sixties as the MGB, fast, flash, and infuriating to feminists. They complained about its macho line in advertising, which had the car peeping out of woodland bushes under the slogan: "You can do it in an MG."

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Jeremy Hunt's BSkyB memo published

Leveson inquiry releases original draft from culture secretary to David Cameron regarding Murdoch's bid for broadcaster

Jeremy Hunt's position was further weakened when the Leveson inquiry published the original draft of the culture secretary's memo to David Cameron about the Murdochs' takeover bid for BSkyB.

The draft, sent on his private Gmail account to his aide Adam Smith on the afternoon of 19 November, goes much further in explicitly backing the bid than the final, more sanitised draft.

Hunt demands of the bid: "Why are we trying to stop it?" and claims that if ministers do not back the bid, they could end in the wrong place "politically". Both phrases were removed from the later draft, about which Smith emailed: "Much happier with this version!"

Hunt also goes into considerable detail in the original draft showing that he has already rejected the arguments of the bid's opponents. He writes: "Those poeple [sic] who are arguing that the Murd-ochs will have too much influence are in my view confusing the revenues which Sky gets (around £8bn) which are much higher than – say – the BBC's £4bn, with the influence Sky has editorially which is much less because a) mpst [sic] of the channels watched on Sky belong to other people over which it exerts no editorial control; and b) where it does (eg Sky News) it has less than 5% market share."

Hunt writes in terms that suggest he saw the legal process begun by the then business secretary, Vince Cable, as somewhat cosmetic. He says: "Much of what we do will be constrained by the absolute necessity to respect due process at every stage, but I think you, I Vince and the DPM should meet to discuss our response to potential different scenarios. May I arrange such a meeting?"

His observations about due process were changed in the final draft to sound more neutral. The final version read instead: "It would be totally wrong for the government to get involved in a competition issue which has to be decided at arms length." The final version also added a new sentence that sounded more statesmanlike: "We must be very careful that any attempt to block it is done on genuine plurality grounds and not as a result of lobbying by competitors."

Downing Street has sought to argue that Hunt was doing no more in his private memo to the prime minster than he had already said in public. But this evidence of his real thinking may make that position increasingly hard to sustain.

The latest email disclosure comes after news that No 10 tried to rewrite the resignation statement of Smith, Hunt's former special adviser, using language that would have implied that the 30-year-old official had strayed beyond his remit in communicating with News Corporation about its BSkyB takeover bid.

Smith told the Leveson inquiry that he had objected to a last-minute rewrite to his resignation letter, which had been proposed by the office of the cabinet secretary, Sir Jeremy Heywood. He successfully insisted that it be removed.

He also revealed that he had initially been told by Hunt that "it won't come" to his resignation on 24 April, immediately after it emerged in evidence to Leveson that he had been in regular contact with the News Corp lobbyist Frédéric Michel during the company's bid for BSkyB between June 2010 and July 2011.

The following day he arrived at work only to be told by the culture secretary that "everybody here thinks you need to go". Smith, who had previously been praised for his work, was handed a draft resignation letter to sign. Colleagues of the prime minister's most senior civil servant then requested that the first line in the proposed letter be amended to read: "While I believed it was my role to keep News Corporation informed … " The initial draft had adopted a more neutral tone, and read: "While it was part of my role to keep News Corporation informed … " Smith said that after he objected to the change – because "the department had known that that's what my role had been" – the original version was reinstated. He added that he had offered to resign because "I thought by this stage that the perception had been created that something untoward had gone on".

He told the inquiry the extent of his contact with Michel could not have come as a surprise to anyone in the DCMS. Smith, who sent 257 text messages to Michel during the BSkyB bid, said senior figures in the department, including Hunt, were all "generally aware" of his activities.

Asked by Robert Jay QC, counsel to the inquiry, if he had mentioned Michel's name in his discussions with Hunt, Smith said: "I believe so … I mean, I would have mentioned it … I suppose I would say they generally knew I was in touch. On some certain issues they certainly knew."

In his witness statement, Smith said: "I believe that Mr Hunt [and others] were all generally aware of my activities from a combination of … the discussions at our meetings and more informal contact." He added that he had "received no specific instructions as to whether or not there were any limits to the types of information which I could provide".

Questioned by Jay, Smith repeatedly disputed Michel's interpretation of comments he made in texts and emails to the lobbyist. In his witness statement he said: "I did not recognise a lot of what was being said about me as being accurate."

At one point Jay asked him whether he agreed with Michel's comment to the inquiry that he believed the special adviser was speaking for Hunt during their conversations. "Not on detailed issue points, no … more as a buffer," he replied.

Asked whether he and Michel had become inappropriately close, Smith said: "I think the tone of some of the language I may have used in some of the texts in hindsight was a bit too flippant and loose certainly but I don't think the substance of what we've been through was inappropriate."

However, Jonathan Stephens, the most senior civil servant at the DCMS, told the Leveson inquiry yesterday afternoon that he was shocked by the extent and tone of the communication between Smith and Michel. "The extent, the number, the nature of these contacts was in my judgment clearly inappropriate and not just in one or two disputed cases," the DCMS permanent secretary said.

On Thursday, when Michel appeared at the inquiry, it emerged that there was evidence of 191 telephone calls, 158 emails and 799 text messages between the News Corp lobbyist and the DCMS, of which 90% were with Smith.

Stephens added that Smith "was drawn into almost what seems to be a web of manipulation and exaggeration and was inadvertently drawn beyond what he intended to do or wanted to do".

Metropolitan police detectives investigating alleged inappropriate payments to public officials by journalists made their 30th arrest, a 37-year-old woman employed by News International.

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The Leveson inquiry memo that nailed Hunt's colours to the Murdoch mast

Pressue will grow on culture secretary to resign after former aide reveals private email to Leveson inquiry

If Jeremy Hunt hoped the resignation of his close aide Adam Smith would draw the sting of the scandal surrounding his handling of Rupert Murdoch's BSkyB bid, his hopes would have been dashed by Smith's brief appearance before the Leveson inquiry on Thursday .

Though he spent little more than an hour in Court 73 of the Royal Courts of Justice, Smith dropped the bombshell of the day by handing to the inquiry an email from his private account which could yet sever the slim thread connecting Hunt to his cabinet job.

The email contained a draft of a remarkable memo Hunt sent to David Cameron on 19 November, after a little drafting help from Smith. The memo railed against the business secretary, Vince Cable, for moving against the BSkyB takeover bid being promoted by the Murdoch family, father and son. It nailed Hunt's own colours firmly to the mast, as a committed, even passionate supporter of the bid.

Hunt even summoned up the spirit of Margaret Thatcher and her historic Tory struggles against the unions in the 1980s, writing enthusiastically: "Essentially what James Murdoch wants to do is to repeat what his father did with the move to Wapping and create the world's first multiplatform media operator available from paper to web to TV to iPhone to iPad."

This was not quite the way News Corporation had publicly presented its bid at the time, assuring the world it had no intention of "bundling" advertising and subscriptions to create a dominant media behemoth.

More significantly for Hunt's personal political fortunes, the words of the memo are the exact opposite of the picture he has sought to present to the world, that he approached the BSkyB bid – which he became responsible for deciding from late December 2011 – in an impartial spirit.

Furthermore, Hunt had attempted to save himself by forcing the resignation of his own special adviser on the grounds that the "tone and content" of Smith's emails and texts to News Corp had gone too far, because they represented Hunt as supportive of the bid. It now seems, after the publication of the Hunt memo, that his special adviser was reflecting the contents of his master's mind with perfect accuracy. If anything, he was too mild in the way he put it.

Hunt had used strong terms in private: he told the prime minister James Murdoch was "furious" that Cable was interfering with his media plans, and that it would be "totally wrong" to "cave in" to the bid's opponents.

No one will call this language "quasi-judicial" – the term the government repeatedly used to characterise Hunt's handling of the bid after he took over responsibility for it. It is likely to appear to his critics just as biased in the other direction as was Cable when he lost his control of the bid for recklessly saying he had "declared war" on the Murdochs.

The history of events at the end of 2010, from the moment on 4 November when Cable called in the regulators, shows how relentlessly James Murdoch and his PR man Frédéric Michel lobbied and berated the politicians who were trying to stand in their way. Only three days later, Murdoch was lunching at Chequers with Cameron. The next day, Michel lunched an aide to George Osborne, the chancellor, who he hoped could be persuaded to intervene.

Cable's own advisers refused to meet any of the Murdoch camp, saying it would be improper. So did Treasury minister Danny Alexander.

Michel and James Murdoch therefore concentrated their fire on Hunt and his team at the Department for Culture, Media and Sport (DCMS), even though they had no official role in the legal process being carried out at Cable's business department. Murdoch phoned Hunt and also arranged to meet him.

Hunt caused growing dismay in his department by his apparent enthusiasm for intervening on behalf of the Murdochs. As Michel's published emails reveal, and as counsel to the Leveson inquiry confirmed on Thursday, the DCMS legal director gave him a stern warning not to meet James Murdoch or interfere in Cable's handling of the bid. While not strictly illegal, he said that it would be "unwise".

Hunt was apparently more concerned to appease Murdoch than bow to all his department's proprieties: he appears to have held a mobile phone conversation with Murdoch, although he cancelled his face-to-face meeting. Hunt was already well-briefed on Murdoch's plans: Michel had previously sent him, via his adviser Smith, a lobbying package, outlining Murdoch's ambitious plans for a multimedia breakthrough comparable in scale to his father's move to Wapping in the 1980s.

Within weeks of Hunt launching his anti-Cable campaign in Downing Street, the business secretary would fall victim to a newspaper sting in which he confided that he had "declared war" on Murdoch, and responsibility for the bid was turned over to Hunt.

Hunt's critics will now read the text of his memo to Cameron as the final nail in the coffin of his claims to have switched mentally to a "quasi-judicial" role. This will certainly increase the pressure on him to step down. But it will also raise the question of why Cameron, knowing what a committed supporter of the bid Hunt was, thought it appropriate to give him the job of deciding on it.

What is now known, thanks to the Leveson process, is that James Murdoch was considerably mollified at the time. In the runup to that Christmas, he and Cameron shared a now notorious Christmas lunch at the Oxfordshire home of News International chief executive Rebekah Brooks, in a less "furious" and presumably more festive spirit.

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Jeremy Hunt urged PM to allow BSkyB deal weeks before taking charge of bid

Culture secretary told David Cameron the 'media sector would suffer for years' if News Corp's bid for BSkyB was blocked

The culture secretary, Jeremy Hunt, wrote privately to the prime minister urging him in strong terms to back Rupert Murdoch's takeover bid for BSkyB just a month before David Cameron appointed him to take charge of the bid himself in a "quasi-judicial" capacity.

The intervention by Hunt, who is facing calls for his resignation, was revealed for the first time in a document shown to the Leveson inquiry on Thursday. Hunt urged Cameron not to allow the business secretary, Vince Cable, to block the BSkyB bid despite strong advice to the culture secretary from his own officials that he should not involve himself in the process.

The culture secretary claimed to the prime minister that if the Murdoch bid was blocked "our media sector will suffer for years". He asked for a meeting with Cable and Cameron to discuss the handling of the deal.

The document appears to corroborate the picture that emerges from earlier email exchanges between Hunt's aide Adam Smith and the News Corp lobbyist Frédéric Michel. Those emails document an apparently collusive relationship with the Murdoch empire and have already put Hunt's cabinet position in peril.

Hunt drafted his memo to Cameron on 19 November 2010, initially using his and his aide's private Gmail accounts instead of the government email system, according to counsel to the inquiry. Hunt protested in strong terms about Cable's decision to move against the bid earlier that month by calling in the regulator, Ofcom, to investigate.

Warning that "James Murdoch is pretty furious", Hunt went on to say "I think it would be totally wrong to cave in to the Mark Thompson/Channel 4/Guardian line".

The BBC director general, Mark Thompson, and other media firms were opposing the bid, saying it would make the Murdoch empire too powerful.

Hunt, who by then had already been extensively lobbied by News Corp and received angry phone calls from Rupert Murdoch's son James, said: "I am concerned because essentially what James Murdoch wants to do is to repeat what his father did with the move to Wapping … The UK has the chance to lead the way on this as we did in 80s with the Wapping move."

In evoking the spirit of Wapping, Hunt was reminding David Cameron of the way Rupert Murdoch was allowed to buy the Times and the Sunday Times after vociferously supporting the Conservatives in his tabloids and holding a secret meeting with Margaret Thatcher at Chequers. Murdoch then famously broke the power of the print unions by moving his operations to Wapping, where police helped staff brave picket-lines.

The phrasing of Hunt's 19 November draft memo appears to have been sanitised before being sent to No 10, with the help of Smith. The inquiry was told there was also in existence an earlier version of Hunt's thinking. The final version said: "It would [be] totally wrong for the government to get involved in a competition issue which has to be decided at arms length."

Hunt's activities on Murdoch's behalf had been the subject of stern legal warnings from his own department, according to the inquiry's counsel, Robert Jay. He said the Department for Culture, Media and Sport's legal director had advised that although it was not directly illegal for him to attempt to intervene, to do so would be "unwise". One arrangement to meet James Murdoch had to be cancelled, but Hunt instead spoke to him privately on the phone. Michel, James Murdoch's lobbyist, told his boss in one of the previously disclosed emails: "Jeremy … has received very strong legal advice not to meet us today as the current process is treated as a judicial one (not a policy one) and any meeting could be referred to and jeopardise the entire process. Jeremy is very frustrated about it but the permanent secretary has now also been involved … You could have a chat with him on his mobile … and I will liaise with his team privately as well."

Four days after receiving this warning, it now appears that Hunt drafted his plea to the prime minister to step in. It is not known what Cameron did as an immediate result. Shortly afterwards, the Conservative-supporting Telegraph newspaper embarked on an elaborate "sting" operation against Vince Cable. On 3 December, two reporters pretended to be his constituents and by what seems to have been an extraordinary coincidence, he confided in them that he had "declared war" against Murdoch.

This was greeted with outrage both by the Murdoch camp and by the prime minister, who declared it was "unacceptable" for Cable to have such bias. Cameron promptly turned the decision over to Hunt. The disclosed documents appear to reveal that Cameron knew perfectly well at the time that Hunt, too, was biased – but biased the other way.

The cabinet secretary, Gus O'Donnell, stated publicly, however, that he himself had taken legal advice and had decided that, although Hunt had made previous public statements sympathetic to the bid: "I am satisfied that those statements do not amount to a pre-judgment of the case."

Hunt's former aide, Adam Smith, was initially reluctant to concede that the culture secretary had backed the Murdoch bid from the outset. Under persistent questioning from Jay, he eventually admitted, however, that Hunt's "personal view" was in fact favourable to the bid.

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News of the World's 'fake sheikh' had Tom Watson followed, emails show

Mazher Mahmood, who now works for Sunday Times, appears to have commissioned surveillance of phone-hacking critic

The News of the World journalist Mazher Mahmood commissioned surveillance on its chief phone-hacking critic, the Labour politician Tom Watson, in the hope of finding him having an affair, according to email evidence Watson has obtained.

News International's internal investigating group, the management and standards committee, belatedly turned over the emails to a parliamentary committee of which Watson was a member. They implicate Mahmood and two former NoW executives, the assistant editor Ian Edmondson and news editor James Mellor.

This latest revelation of methods at the now-closed NoW will present difficulties for John Witherow, the editor of the Sunday Times. Mahmood, the so-called "fake sheikh" who specialised in controversial undercover investigations, was rehired by the Sunday Times after its sister paper was closed down by Rupert Murdoch, and is still working there.

Witherow has not so far commented on the disclosures.

The attempt by NoW journalists to gain evidence of sexual indiscretions by its arch-critic was launched on the morning of Saturday 26 September 2009, at the start of the Labour party conference. Mahmood claimed in an email to Mellor, copied to Edmondson, that he had received a tip that married Watson was "shagging" a fellow activist, and that he was "creeping into her hotel" at Brighton. The information, from a so-far unknown purported informant, appears to have been completely false.

Mahmood described the MP as a "close lackey" of the then prime minister, Gordon Brown, and noted he was "anti-Blair". It was agreed that a private detective, the former police officer Derek Webb, known as "Silent Shadow", would be hired to stalk Watson through the conference, from 28 September to 2 October, in what proved to be a vain hope of getting confirmation. Had the story been substantiated and published, it would have destroyed his reputation.

According to the emails in Watson's possession, Edmondson described the prospect as a "great story" and added: "You might want to check his recent cutts [cuttings], v interesting!"

Watson at the time believed he was on News International's "enemies list". He was pursuing a libel suit against the Sun for falsely accusing him of involvement in organising online smears against the Conservatives. He was also vigorously pursuing News International on the culture, media and sport committee, where a series of Murdoch executives were mounting an ultimately unsuccessful cover-up of phone-hacking.

Peter Mandelson told the Leveson inquiry on Monday how Rebekah Brooks would "come on to me and complain" that Watson and his colleagues were "hounding" them, and demand: "Couldn't they be pulled away, pulled off?" Brooks, editor of the Sun at the time of the libel, had taken over as chief executive of NI at the beginning of September, in control of both Murdoch tabloids.

On the evening of 29 September, while Derek Webb was still shadowing Watson at his conference hotel, the Sun revealed it was switching political sides, and published a dramatic anti-Brown front page. From then on, it embarked on a ferocious campaign against Gordon Brown and his supporters.

Watson is due to give evidence to Leveson on Tuesday.

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Will Rupert Murdoch's reputation survive Leveson's verdict?

Man who made millions out of paying people to ask difficult questions finally faced questioners he could not cope with

Rupert Murdoch is in trouble. In two days as a witness at the Leveson inquiry he has blocked and blasted, smeared and smiled, and, at the end of it, this most powerful of men still has his ankle caught in the snare of scandal. He is vulnerable.

This is a man who is used to getting his way. He is not used to being confronted by people who have the power, the skill and the simple effrontery to challenge him – and to keep on challenging him. On Wednesday morning, he walked in with all the protection that his advisers could give him in the previous days of detailed briefings and endless rehearsals. By Thursday morning, there were times when he had lost the script, lost the plot and he simply sat there, with nobody to help him and no way out.

Just after 11.30am, there was one riveting and typical exchange, in which he tried all the manoeuvres which would normally have allowed him to create some diversion to avoid answering a question. And all of them failed.

Robert Jay QC, for the inquiry, wanted to know how Murdoch had reacted to a letter from Max Mosley, whose involvement with prostitutes was exposed by the News of the World, pointing out that a high court judge had found that one of his reporters had engaged in blackmail to try to persuade a prostitute to tell what she knew about him. Was that acceptable behaviour?

Murdoch went first for a standard manoeuvre. Ignorance. He hadn't read the letter. "I was out of town or something." Jay pushed on, suggesting he must have been aware of the judge's comment. Murdoch tried a different manoeuvre. He turned tough. So what if his reporter had threatened to reveal the prostitute's identity if she didn't co-operate? "I'm not as shocked as he is by that." Then, without pausing, he threw in a smear, oddly aimed at the former lawyer for the Sunday Times, Alastair Brett: "I'm more shocked by the behaviour of Mr Brett in not telling the truth of a lot of things."

On any other day with almost any other opponent, at least one of these diversions would have worked, but Jay was not deflected. "Don't worry about Mr Brett. Have you read Mr Justice Eady's judgement?" Murdoch tried ignorance again. "No." Jay started to summarise the judge's conclusion, that "your journalists, or at least one of them, had perpetrated blackmail of these two women". Murdoch tried a quibble. "Two women, or one?" Jay simply ignored him. Murdoch tried a bigger quibble: this wasn't blackmail, it was just a journalist doing a favour for the prostitute. Jay was just beginning to reply, when things got much worse. Lord Justice Leveson joined in, like the headmaster walking in on a rowdy classroom.

"I'd like to go into that for just a moment please, Mr Murdoch." Leveson bristles with intelligence and a courteous indifference to the status of his witnesses. Was Murdoch really saying that it was acceptable for one of his journalists to threaten to embarrass somebody by exposing their identity "even though there may not be a public interest" and then to offer them money if they agreed to co-operate?

"I don't know that she was offered money, but …"

"She certainly was offered money."

"Well, I accept that for the moment, if you say so, I just … "

"Look, Mr Murdoch, I wasn't there. I've only read the judgment. But I ought to make it very clear to you that I find that approach somewhat disturbing, because I don't think Mr Justice Eady is using too strong a word if he describes it as a form of blackmail. And, therefore, if it is the culture and practice of the press that this is acceptable, I would like to know that. I really would."

So it was that this most powerful man was compelled to agree that he would go off and read the judgment, which he claimed not to have read; and to submit in writing his view about whether or not it is acceptable for reporters to engage in blackmail.

This was the pattern of the day. The man who has made millions out of paying people to ask difficult questions, finally faced questioners he could not cope with. This is not just a matter of Murdoch losing various arguments in court. The potential danger to him goes wider in at least two ways.

First, as he found himself pushed into one corner after another, he fell back on aggression as the easiest form of defence and proceeded to create or, at least to confirm, the enmity of a string of people who may well now choose to join the attack on him. He went out of his way to smear the Daily Telegraph, took several swipes at the Daily Mail and gratuitously insulted Le Monde. He laid into former friends, including Gordon Brown and Paul Dacre; and former employees, including the former Sun editor David Yelland, his former in-house lawyers Alastair Brett and Tom Crone, and even his former housekeeper ("a very strange bird"). If any of them strikes back, he may live to regret that tactic.

Second, Murdoch may have finished his evidence, but Leveson has not yet finished with him. Later this year, Leveson will produce a report over which Murdoch will have no control at all. Murdoch has stood by his denials on a cluster of core questions – that he never knew about illegal activity at the News of the World, that he does not approve of unethical journalism, that he never sought favours from politicians and never received any. Over the last two days, the media mogul has done his best to enforce those denials on his troublesome inquisitors.

The great underlying question – whose answer will settle finally the reputation of Rupert Murdoch and perhaps the future of his business – is whether those denials are to be believed. It is Lord Justice Leveson and not Murdoch who will deliver the verdict. Even the head of News Corporation sometimes must have to stand naked.

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Rupert Murdoch gives away more than planned at Leveson inquiry

The denials never shifted but, under careful questioning from Robert Jay QC, the tycoon made some serious concessions

At one point in his evidence, when he was trying to explain how he dealt with politicians, Rupert Murdoch volunteered: "I'm not good at holding my tongue." It must drive his advisers crazy.

The plan clearly was for Castle Murdoch to be defended with well-constructed walls of obdurate denial, reinforced by occasional bouts of forgetfulness. Certainly, the denials never shifted – and these were big, tough denials: "I've never asked a prime minister for anything in my life … We have never pushed our commercial interests in our papers … I don't know many politicians."

However, in the event, Robert Jay QC kept piercing small gaps in Murdoch's defences. This was partly because Jay had gathered up a prodigious supply of facts, which he fired like slingshot at the castle walls – and partly because the old mogul likes to talk. Jay didn't break in and ransack the place, but he did some damage.

Sometimes the wounds were nothing more than dents in Murdoch's standing, as he acknowledged that it might well be true that he had once listened to Ken Livingstone on television denouncing the "lies and smears of the media" and that he had then declared drunkenly to a roomful of people, "That's me!" Or that he might well have qualified his early approval for Tony Blair by adding that they were not yet ready to take their pants down together.

But sometimes, in the detail behind the denial, he conceded substantial ground. His underlying problem was that he was not listening to Jay and failed to see the subtlety of the allegation that faced him.

Murdoch kept denying that he made deals with politicians, ie, that he simply offered them the support of his paper in return for favours to his business. But Jay suggested: "It operates at a far more sophisticated level, doesn't it?" and went on to quote the reported words of the former Australian prime minister Paul Keating: "You can do a deal with him without ever saying a deal is done."

In the case of Murdoch's relationship with Blair, Jay quoted Murdoch's former editor, Andrew Neil, that there had been "an implicit understanding – never openly talked about between the two men – but an understanding nevertheless".

Murdoch duly put up his well-rehearsed denial – "I never asked Mr Blair for anything, nor did I receive any favour" – and then proceeded to volunteer that he had been in the habit of seeing Blair two or three times a year, as though that were an annual average for most voters to see a national leader.

He described how he had once spent an afternoon at Chequers, telling Blair how much he opposed Britain joining the euro, as though the prime minister had nothing better to do.

To this extraordinary degree of access, he boldly added that he does indeed direct the editorial line of the Sun on major issues, including questions about Europe. And, once again failing to hold his tongue, he went right ahead and admitted what this would mean to a man like Blair: "If any politician wanted my views on major issues, they only had to read the Sun." The Sun relentlessly reinforced the anti-EU message.

Murdoch continued to deny that Blair had ever done anything for him, but then conceded that Blair had "gone the extra mile for him" over European policy, to the point where he had acceded to the Sun's demand that the government should agree to hold a referendum before accepting the new EU constitution.

And Blair had done something very similar by ensuring Britain maintained tough anti-union laws and then underlined the point with an article in the Sun, following which the two men had enjoyed dinner together. Murdoch agreed it was possible he had congratulated Blair on his position.

Similarly, Jay quoted Murdoch's former confidant, Woodrow Wyatt, who was close to Margaret Thatcher and who recorded in his diary that he had once told Murdoch: "Margaret is very keen on preserving your position. She knows how much she depends on your support. Likewise, you depend on her." Murdoch produced his standard denial – "I didn't expect any help from her, nor did I ask for any" – and then found himself accepting that, while the Sun supported her, she had delivered a series of decisions which looked really very helpful indeed, including allowing him to buy the Times and the Sunday Times without referring his bid to the Monopolies and Mergers Commission. She also exempted BSkyB from the regulations in the 1990 Broadcasting Act.

With Gordon Brown and David Cameron, he kept closer to the script but, even so, he caused unnecessary trouble.

He denied discussing the BBC licence fee with Cameron. Enough said. Talking to a prime minister about the licence fee might suggest he had some commercial motive. But then his tongue added: "I wasn't interested in the BBC licence fee. I had been through that with previous prime ministers, and it didn't matter. They all hated the BBC, and they all gave it whatever it wanted."

He set the record straight on Kelvin MacKenzie's claim that Brown had reacted to the Sun's endorsement of the Tories in September 2009 by phoning him and roaring down the phone for 20 minutes. That was "a very colourful exaggeration", he said. Enough? No. He went on to quote a version of the call which was highly likely to provoke a response from Brown, who duly issued a statement saying that Murdoch was wholly wrong and should have the good grace to correct his account.

As he left the inquiry for a break, his tongue was still rolling. Dan Sabbagh, the Guardian's head of media, heard him grumble to his advisers about Lord Justice Leveson: "Let's get him to get this fucking thing over with today." If only they could. Murdoch resumes his evidence on Thursday morning.

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The questions Rupert Murdoch must answer at the Leveson inquiry

The News Corp boss must address allegations over the BSkyB bid, his relationship with politicians and his papers' illegal activity

All of the questions are directed to testing key allegations. References to the activities of Rupert Murdoch should be taken to cover those acting on his behalf.

• Allegation that Rupert Murdoch attempted to influence the government's decision on whether to approve News Corp's bid to take over all of BSkyB.

Although your son was running the bid from London, he was reporting to your deputy chairman, Chase Carey, in New York on what would have been the biggest transaction in the history of your company. Was either your son or Carey providing you with updates? Specifically, were you made aware of occasions when Ofcom indicated opposition to the deal?

Did you ever mention the bid to anybody in the Conservative leadership before it was announced in June 2010? Were you ever given any kind of indication about a future Tory government's attitude to the bid?

During the period when the bid was active, between June 2010 and July 2011, you had a series of meetings with David Cameron. Did you ever mention the bid to him or express any opinion about the bid or about Ofcom's activity?

• Allegation that Murdoch has a history of receiving favours from British governments who have enjoyed the support of his newspapers.

In 1981 the Thatcher government allowed you to buy the Times and Sunday Times without referring the deal to the Monopolies and Mergers Commission on the grounds that both papers were on the verge of bankruptcy. Were you aware at the time that the Sunday Times had made a profit in 15 of the previous 17 years, and that it had made a loss only in the two years when an industrial dispute meant that for long periods the paper was not being produced?

How do you explain the recollection of your then close associate Woodrow Wyatt who said of you in his published diaries that "I had all the rules bent for him over the Sunday Times and the Times when he bought them."

In 2002, drafting the communications bill, the Blair government reversed its position and agreed to allow British TV channels to belong to foreign owners such as News Corp. What steps did you take to persuade the government to adopt that position?

Did you personally authorise the Sun's campaign in 2004 to persuade the Blair government to hold a referendum on the proposed new EU constitution? Did you or your associate, Irwin Seltzer, make the same point to Tony Blair in meetings or in phone calls? Do you accept that the government's announcement that they would hold a referendum was directly influenced by you and your newspapers?

• Allegation that Murdoch was aware of emerging evidence of illegal activity at the News of the World but failed to warn his shareholders or to ensure that the truth was told to parliament and the public.

Did you ask for information in August 2006, when the paper's royal reporter was arrested; or in January 2007, when he was jailed; or in July 2009, when the Guardian reported that other journalists from the paper had been involved; or in February 2010, when a select committee said it was "inconceivable" that others at the paper were not involved; or in September 2010 when the New York Times reported that other journalists from the paper had been involved? What were you told?

To the extent that you now realise that you were not told the truth, what steps have you taken to investigate that failure and/or to discipline those who were responsible? Specifically, did you complain to your son when you discovered that he had paid out more than £1m in the Gordon Taylor case, possibly the biggest payment of damages in the paper's history, and failed to tell you?

How do you justify the decision in July 2011 to put Rebekah Brooks in charge of your internal inquiry when her own alleged actions in part were the object of that inquiry?

Were you aware in 2007 that your UK chief executive, Les Hinton, lobbied Gordon Brown to block legislation which would have made it an imprisonable offence for journalists and others to "blag" information from confidential databases? Can you understand why your company would have been worried by the proposal if its journalists were not breaking the law?

• Allegation that Murdoch has intervened in his newspapers' editorial activity for political and commercial reasons

Has it been the choice of your journalists or of yourself that your newspapers around the world have consistently backed the "neoliberal" agenda, arguing for less public spending, lower taxes and less government regulation of business?

You are on the record as a supporter of the invasion of Iraq in March 2003. Is it a coincidence that 174 of the 175 titles which were then owned by your company also supported the invasion? What did you have in mind when you were asked at Davos in February 2007 whether your newspapers had shaped the agenda on Iraq and you replied: "No, I don't think so. We tried."

Were you personally involved in the Sun's decision to back the Tories in the 2010 election? If not, when did you become aware of the decision? Did you inform any of the party leaders before the decision was announced? Have you ever made any form of comment or complaint to any of your UK editors about their coverage of the phone-hacking affair?

• Allegation that News Corp deprived rival channels of significant income by organising the hacking of their smart card systems and the distribution of information which allowed rival channels to be accessed without charge.

News Corp recently has denied detailed allegations of this kind which focus on its former subsidiary, NDS. What inquiries did News Corp carry out before issuing those denials?

What steps have you taken to investigate recently published information NDS had a budget line which was described in internal email as "an amount set aside for payment to police/informants for assistance in our work" and "a contingency sum for police informants?" Are you aware that it would be illegal for your employees to pay police?

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Leveson inquiry: the dark heart of this strange affair

For the first time we have evidence of the Murdochs exploiting their position to apparently win favours from governments

Now we come to the dark heart of this strange affair.

Critics of the Murdochs have often suspected that they have exploited their position as newspaper owners to win secret favours from governments – and the Murdochs and the politicians alike have denied it. Now, for the first time, courtesy of the volatile chain-reaction of the phone-hacking scandal, we have compelling evidence.

In 163 pages of paperwork published by the Leveson inquiry, we can see the dialogue between James Murdoch's camp and the office of Jeremy Hunt, the secretary of state for media, who held in his hands the outcome of the biggest deal in the history of the Murdochs' News Corporation, the £8bn takeover of BSkyB.

According to Tuesday's evidence, Murdoch and his lobbyist, Fred Michel, worked their way through every crack in the walls of Whitehall in search of influence and, in Hunt's office, they found friends who would supply them with information, advice and support, even as Hunt claimed to the outside world that he was being impartial and even-handed.

The evidence is likely to be disputed. These are merely Michel's versions of what was said, so they are hearsay. Furthermore, Michel has told the inquiry that his messages that claimed to report conversations with Hunt were in fact based on talking to Hunt's officials, which would mean that they are also secondhand. But, if the evidence stands up, we are looking at a story of secret and improper collusion of precisely the kind that Murdoch's critics suspected.

At a time when Hunt was required to act in the legal role of a judge overseeing Ofcom's inquiry into the bid, this evidence suggests he was secretly supplying News Corp with information about his confidential dealings with Ofcom, advising them on how to pick holes in Ofcom's arguments, allowing their adviser to help him prepare a public statement, offering to "share the political heat" with them, and repeatedly pledging his support for their position.

If proved, this pushes Hunt's political career to the edge of destruction. It cannot help him that his website currently displays an interview describing him as a cheerleader for Rupert Murdoch. But the pressure may not stop there. The question now is whether Lord Justice Leveson will order the disclosure of more emails or other evidence that could conceivably see the prime minister and his government pushed out to the edge as well.

Cameron can become embroiled in two ways. First, he faces questions about whether he had any kind of involvement in handling the bid for BSkyB, particularly during the quasi-judicial process from June 2010 to July 2011. For the first time on Tuesday, it was disclosed that Murdoch had raised the bid with him when they met at Rebekah Brooks's house two days before Christmas 2010. Previously, Cameron had refused to answer direct questions about what was discussed on this occasion. His opponents will be interested to know whether he really did keep his distance even as last year the bid was swept up in the political tornado around the phone-hacking scandal.

Second, and potentially even more serious, the prime minister would be in jeopardy if the alleged support for the BSkyB bid proved to be part of a bigger deal between the Conservative leadership and News Corp. In its crudest form, the suggestion is that the Murdochs used the Sun to make sure that Gordon Brown was driven out of Downing Street so that the incoming Conservative government could deliver them a sequence of favours – a fair wind for them to take over BSkyB; the emasculation of the much resented Ofcom; and a severe funding cut to their primary broadcasting rival, the BBC.

This was the core of the toughest exchanges on Tuesday, as Robert Jay QC, for the inquiry, laid out fragments of evidence that suggest this big deal was made, and concluded: "It all falls together, doesn't it?" In reply, James Murdoch passionately denied that he would ever link his newspaper's endorsement of a political party to the commercial interests of his company. "I simply wouldn't do business that way."

Until Tuesday, all of the evidence for the big deal was circumstantial.

We knew that both Rupert and James Murdoch had complained publicly and bitterly that Ofcom was interfering in their business. This came to a head on 26 June 2009, when Ofcom announced it wanted to force BSkyB to sell its channels to rivals at far lower prices. Ten days later, on 6 July, Cameron announced that, if elected, he would abolish Ofcom.

Similarly, the Murdochs have launched a series of lacerating attacks on the BBC, arguing that its income should be cut and its commercial activity restricted. In March 2009, Cameron called for the BBC licence fee to be frozen. In May 2009, Hunt did the same. Days after James Murdoch delivered his famous MacTaggart lecture in August 2009 – in which he renewed his attack on Ofcom as well as the BBC – Hunt met News Corp officials in New York. He then wrote an article for the Sun attacking the BBC for accepting a rise in its licence fee that year and calling on it to cut back its commercial activities.

It was disclosed on Tuesday that days later, on 10 September, James Murdoch went to a private drinking club in Mayfair for an evening meeting with Cameron, during which he told him that the Sun would back the Tories in the next election.

Murdoch also disclosed on Tuesday that the BSkyB bid had been discussed at a formal News Corp meeting in Los Angeles a few weeks before this meeting. There is no evidence at this stage, however, that the bid was mentioned to Cameron.

The Sun then used its news columns to launch a sustained attack on Gordon Brown. Five months after the election, Cameron's government slashed Ofcom's budget by 28% and cut back its role; and slashed the BBC's income by 16% and cut back its commercial activity.

Tuesday's cache of emails about the BSkyB bid appears to fit into that sequence with a neatness that will alarm the government.

It will alarm them, too, that in the political heat of last July, Cameron gave Leveson terms of reference for this part of his inquiry, which are very broad: "To inquire into ... the relationships between national newspapers and politicians, and the conduct of each."

Leveson may decide that he does need to order the disclosure of more evidence. Hunt may find a defence for his position. The government may emerge with no loss beyond that of Cameron's media adviser, Andy Coulson, who quit last year over decisions he made when editing the News of the World, well before he joined the government.

Yet as things stand, it is clearly possible that this strange affair, which began so quietly with the minor crimes of a single journalist and which has already brought acute pain and senior resignations to the Metropolitan police, the Press Complaints Commission and Murdoch's ranks in London and New York, may yet reach deep into the heart of government and do its damage there, too.

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