Nick Davies's Blog, page 14

News International 'fully admitted' liability for email hacking

NoW accepted liability over allegations from Sienna Miller which included that her private emails had been opened

James Murdoch was mistaken when he told MPs that he did not believe News International had, to date, admitted liability for any kind of computer or email hacking, the Guardian can reveal.

The executive chairman of News International told the committee he "didn't think" the company had engaged in computer – as well as voicemail – hacking.

But evidence exists to prove that not only has the News of the World previously been forced to admit liability for hacking computers and illegally accessing emails, but that it continued to engage in criminal behaviour long after promising that all illegal activity on the newspaper had ceased.

In a pre-trial hearing in the high court in April, the actor Sienna Miller made a number of allegations against the now defunct NoW, including the claim that her email account had been illegally accessed and her private emails opened. In a "reamended particulars of claims" document, seen by the Guardian, Miller said the email hacking had taken place in September 2008.

This was nearly two years after the private investigator Glenn Mulcaire was jailed for phone hacking and some considerable time after the NoW had pledged to have cleaned up its newsgathering practices. The newspaper settled with Miller over her phone-hacking allegations in May and paid £100,000 in a Part 36 offer, which prevented her making further claims.

But although it never explicitly commented on Miller's claims of email hacking, the NoW's barrister, Michael Silverleaf QC, admitted at a later hearing: "We admit that we are liable for all the wrongs that are alleged to have been acted."

He added that the newspaper "admits in terms that the acts were committed and they were committed on instructions from journalists employed by my client".

In a follow-up hearing on 27 May, Miller's barrister, David Sherborne, stated that the tabloid had "fully admitted Ms Miller's claim in relation to the entirety of her reamended particulars of claim".

In what may be another blow to attempts by the Murdochs to claim the NoW did not engage in computer hacking, the MP Tom Watson said yesterday that police have told Ian Hurst, a former British intelligence officer, that a hacker working for the NoW accessed his computer and picked up intelligence on 16 of his associates.

Hurst, who had served in Northern Ireland, is thought to have contributed to a book about "Stakeknife", the codename of an alleged spy who infiltrated the higher echelons of the Provisional IRA while working for British intelligence.

According to earlier confessions from the unnamed hacker to the BBC's Panorama, faxed copies of the stolen information were sent to the then editor of the NoW for Ireland, Alex Marunchak.

Murdoch's qualified denial to the parliamentary committee regarding computer hacking echoes his father's claim in October at News Corporation's AGM in Los Angeles that he had no knowledge of computer hacking. Rupert Murdoch reassured shareholders that board director Viet Dinh would look into the allegation. "I promise you absolutely that we will stop at nothing to get to the bottom of this and put it right," he said.

But both James and Rupert Murdoch are, according to Watson, guilty of "misleading parliament and their shareholders". He said: "Rupert failed to give the full picture to shareholders at the recent AGM in America – while James's denials today, whether deliberate or inadvertent, leaves him with yet more questions both to answer and hanging over his credibility as a business leader."

The Guardian has already revealed that News International is also facing accusations of computer hacking by Dennis Rice, former investigations editor at the Mail on Sunday. In May, the Guardian disclosed that Rice was accusing Mulcaire of hacking into his voicemails and obtaining a password that would have allowed him to gain access to the MoS internal computer system, potentially disclosing all its email traffic and every story awaiting publication. Rice claims the criminal acts took place between 2005 to 2006, when Mulcaire was at the peak of his activity.

Phone hackingNewspapers & magazinesNational newspapersNewspapersSienna MillerJames MurdochNews of the WorldAmelia HillNick Davies
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News of the World hired investigators to spy on hacking victims' lawyers

Exclusive: Investigators followed and filmed lawyers of hacking victims in apparent attempt to gather material on private lives

The News of the World hired a specialist private investigator to run covert surveillance on two of the lawyers representing phone-hacking victims as part of an operation to put pressure on them to stop their work.

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News of the World hired investigators to spy on hacking victims' lawyers

Exclusive: Investigators followed and filmed lawyers of hacking victims in apparent attempt to gather material on private lives

The News of the World hired a specialist private investigator to run covert surveillance on two of the lawyers representing phone-hacking victims as part of an operation to put pressure on them to stop their work.

The investigator secretly videoed Mark Lewis and Charlotte Harris as well as family members and associates. Evidence suggests it was part of an attempt to gather evidence for false smears about their private lives.

The News of the World also took specialist advice in an attempt to injunct Lewis to prevent him representing the victims of hacking and attempted to persuade one of his former clients to sue him.

The surveillance of Lewis and Harris occurred during the past 18 months, when Rupert Murdoch's son James was executive chairman of the paper's parent company, News International. He is due to give a second round of evidence to a House of Commons select committee on Thursday, and is likely to face intense questioning about the quality of his leadership.

Neither lawyer would comment but friends say they are furious at what they see as an attempt at "blackmail" and are considering suing the News of the World for breach of privacy. They have previously had to reassure clients that their private lives would not be exposed if they dared to sue the paper.

A News International spokesperson said : "News International's enquiries have led the company to believe that Mark Lewis and Charlotte Harris were subject to surveillance. While surveillance is not illegal, it was clearly deeply inappropriate in these circumstances. This action was not condoned by any current executive at the company."

Lewis and Harris have been part of a small group of lawyers who have mounted a series of devastating legal actions against NI. Separately, they represented Gordon Taylor and Max Clifford, the first two victims to sue the company for hacking their phones.

Harris also acts for football agent Sky Andrew, whose case led in January to the resignation of the prime minister's media adviser, Andy Coulson. Lewis also represents the family of the murdered schoolgirl Milly Dowler, whose case led to the closure of the News of the World in July.

Emerging evidence suggests the lawyers were targeted on at least two occasions by Derek Webb, an investigator who specialises in physically following people and in making secret videos of their movements. Webb has worked for the News of the World since 2003, following hundreds of targets including members of the royal family and serving cabinet ministers. Emails recovered by Scotland Yard disclose the names of those working for News International who hatched the plans.

Webb was given the job as part of an attempt to prove a false claim that Harris was having an affair with a Manchester solicitor and other false claims about the private life of Harris and her children. It is not yet clear exactly how the News of the World would have used the information if any claim had proved to be true.

In spring 2010, following a hostile report by the Commons media select committee, the News of the World hired Webb to gather evidence on Lewis. For reasons that are not yet clear, he focused on Lewis's former wife and secretly filmed her home in Manchester, following her and making further video of her and her daughter as they visited local shops and a garden centre.

In January 2011, Webb was hired to spy on Harris. This was at a time when the case of her client, Andrew, had uncovered information that led to the sacking of the paper's news editor, Ian Edmondson.

Webb was asked to find evidence that she was having an affair with a Manchester solicitor. The allegation was false; Harris had never met the solicitor in question.

Other investigators also were hired to supply reports on the two lawyers, although it is not clear who commissioned them. One of the reports clearly suggests that somebody had been following Harris and her two young children.

In evidence to the media select committee in September, the News of the World's in-house lawyer, Tom Crone, was asked by the Labour MP Tom Watson if he had seen dossiers on the private lives of claimant lawyers. Crone said: "I saw one thing in relation to two of the lawyers, except I do not know whether it was a dossier. It involves their private lives."

He suggested he could not name those who had commissioned this work without interfering with current police inquiries.

Separately, according to internal emails recovered by Scotland Yard, the News of the World commissioned a senior barrister to advise on whether they could injunct Lewis to stop him working for any alleged victim of phone hacking on the grounds that he had confidential information from his work for Gordon Taylor. The newspaper's solicitors, Farrer and Co, wrote to Lewis threatening to injunct him if he took on any hacking clients but took no action when Lewis ignored the threat.

The internal emails also reveal that the newspaper's lawyers tried to approach solicitors acting for Lewis's former client Gordon Taylor to see if they could persuade him to sue Lewis. This also failed, and Lewis has gone on to represent several dozen clients who are suing the News of the World for their alleged role in hacking their phones.

Webb, a former police officer, is now in dispute with the aper and has sought the help of the National Union of Journalists to pursue a claim that it failed to honour an agreement to give him a loyalty payment after the paper closed in July.

Webb is known to have followed members of the royal family, often on instructions from the former royal correspondent Clive Goodman, who was jailed in January 2007 for intercepting the voicemail of three members of the royal household. Webb also followed John Prescott when he was deputy prime ministerand Charles Clarke, the former home secretary. The newspaper continued to hire himafter the phone-hacking scandal broke, and he is known to have been following a leading trade unionist shortly before the paper closed.

In November 2008, Webb was cleared of aiding and abetting misconduct in public office in a controversial case in which Thames Valley police arrested a local newspaper journalist, Sally Murrer, and tried to have her prosecuted for receiving information from a police officer.

Physical surveillance is not normally seen as a criminal offence but it is possible that Webb's targets might sue for breach of privacy.

Phone hackingNews of the WorldNewspapers & magazinesNational newspapersNewspapersNews InternationalNick Davies
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From the archive, 26 October 1983: Dennis Nilsen: 'I have no tears for these victims'

Originaly published in the Guardian on 26 October 1983

Dennis Nilsen wrote a series of notes and letters from his prison cell to police officers who were working on his case, outlining his feelings about his killings and about his life.

In the letters, read to the court yesterday, Nilsen wrote that he was unsure of his motives for killing. "There is no disputing the fact that I am a violent killer under certain circumstances. The victim is the dirty platter after the feast, and the washing up is a clinically ordinary task. It would be better if my reason for killing could be clearly defined, i.e. robbery, jealousy, hate, revenge, sex, blood lust or sadism. But it is none of these." He wrote of the remorse he had felt since his arrest and quoted lines from Oscar Wilde's Ballad of Reading Gaol: "Each man kills the thing he loves … the coward does it with a kiss; the brave man with a sword."

Nilsen has denied murdering Kenneth Ockenden, Martin Duffey, William Sutherland, Malcolm Barlow, John Howlett and Stephen Sinclair and attempting to murder Douglas Stewart and Paul Nobbs. He has pleaded guilty to manslaughter on the grounds of diminished responsibility.

Detective Chief Inspector Peter Jay told the court yesterday that he had arrested Nilsen on February 9 after four fingers and some flesh had been found in the drain outside his home in Cranley Gardens, Muswell Hill.

Mr Jay read to the court a series of notes and letters written in custody by Nilsen. The first, dated February 15, was headed: "Unscrupulous behaviour (sexual depression?)" and covered two pieces of foolscap. "I guess that I may be a creature, a psychopath," he wrote, "who, when in a loss of rationality situation lapses into temporarily a destructive psychopath, a condition induced by rapid and heavy ingestion of alcohol.

The court has heard that Nilsen told police he had picked up 15 or 16 young men in pubs, taken them home for more drinks, and strangled them. "God only knows what thoughts go through my mind when it is captive within a destructive binge," he wrote. He suggested drink might destroy his feelings of morality and listed other possible motives. "It may be the perverted overkill of my need to help people – victims who I decide to release quickly from the slings and arrows of their outrageous fortune, pain and suffering.

"Or could it be the subconscious outpouring of all the primitive instincts of primeval man? Could it be a case of the individual exaltation in beating the system and a need to beat and confound it time and time again? It amazes me that I have no tears for these victims. I have no tears for myself or those bereaved by my action."

CrimeLondonNick Davies
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Wall Street Journal circulation scam claims senior Murdoch executive

Andrew Langhoff resigns as European publishing chief after exposure of secret channels of cash to help boost sales figures

One of Rupert Murdoch's most senior European executives has resigned following Guardian inquiries about a circulation scam at News Corporation's flagship newspaper, the Wall Street Journal.

The Guardian found evidence that the Journal had been channelling money through European companies in order to secretly buy thousands of copies of its own paper at a knock-down rate, misleading readers and advertisers about the Journal's true circulation.

The bizarre scheme included a formal, written contract in which the Journal persuaded one company to co-operate by agreeing to publish articles that promoted its activities, a move which led some staff to accuse the paper's management of violating journalistic ethics and jeopardising its treasured reputation for editorial quality.

Internal emails and documents suggest the scam was promoted by Andrew Langhoff, the European managing director of the Journal's parent company, Dow Jones and Co, which was bought by Rupert Murdoch's News Corporation in July 2007. Langhoff resigned on Tuesday.

The highly controversial activities were organised in London and focused on the Journal's European edition, which circulates in the EU, Russia, and Africa. Senior executives in New York, including Murdoch's right-hand man, Les Hinton, were alerted to the problems last year by an internal whistleblower and apparently chose to take no action. The whistleblower was then made redundant.

In what appears to have been a damage limitation exercise following the Guardian's inquiries, Langhoff resigned on Tuesday, citing only the complaints of unethical interference in editorial coverage. Neither he nor an article published last night in the Wall Street Journal made any reference to the circulation scam nor to the fact that the senior management of Dow Jones in New York failed to act when they were alerted last year.

The affair will add weight to the fears of shareholders in Murdoch's parent company, NewsCorp, that the business has become a 'rogue corporation', operating outside normal rules. Some shareholders have launched a legal action in the US, attacking the Murdoch family after the phone-hacking scandal at the News of the World and following lawsuits in which NewsCorp subsidiaries have been accused of hacking into competitors' computers and stealing their customers.

The Journal's decision to secretly purchase its own papers began with an unusual scheme to boost circulation, known as the Future Leadership Institute. Starting in January 2008, the Journal linked up with European companies who sponsored seminars for university students who were likely to be future leaders. The Journal rewarded the sponsors by publishing their names in a special panel published in the paper. The sponsors paid for that publicity by buying copies of the Journal at a knock-down rate of no more than 5¢ each. Those papers were then distributed to university students. At the bottom line, the sponsors enjoyed a prestigious link to the Journal, and the Journal boosted its circulation figures.

The scheme was controversial. The sponsoring companies were not reading the papers they were paying for; they were never even seeing them; and they were buying at highly reduced rates. The students to whom they were distributed may or may not have read them; none of the students paid for the papers they were being offered. But the Audit Bureau of Circulation ruled that the scheme was legitimate and by 2010, it was responsible for 41% of the European edition's daily sales – 31,000 copies out of a total of 75,000.

In early 2010 the scheme began to run into trouble when the biggest single sponsor, a Dutch company called Executive Learning Partnership, ELP, threatened to back out. ELP alone were responsible for 16% of the Journal's European circulation, sponsoring 12,000 copies a day for which they were paying only 1¢ per copy. For the 259 publishing days in a year, they were sponsoring 3.1m copies at a cost to them of €31,080 (£27,200). They complained that the publicity they were receiving was not enough return on their investment.

On 9 April 2010, Andrew Langhoff emailed ELP to table a new deal, explaining that "our clear goal is to add a new component to our partnership" and offering to "provide a well-branded showcase for ELP's valuable services". On 30 April, ELP agreed to continue to sponsor 12,000 copies at the same rate. But that deal included a new eight-page addendum, which the Guardian has seen.

The addendum included a collection of side deals: the Journal would give ELP free advertising and, in exchange, the ELP would produce "leadership videos" for them; they would jointly organise more seminars and workshops on themes connected to ELP's work; but, crucially, Langhoff agreed that the Journal would publish "a minimum of three special reports" that would be based on surveys of the European market which ELP would run with the Journal's help.

It is this agreement that is now being cited as the reason for Langhoff's resignation on Tuesday. It led to the Journal publishing a full-page feature on 14 October 2010 that reported a survey conducted by ELP about the use of social media in business, quoting ELP's chief executive at length. The story carried no warning for readers that it was the result of a deal between the Journal and ELP, nor that ELP were sponsoring 16% of the paper's European circulation. Similarly, there were no warnings attached to a second story, published on 14 March 2011, which consisted of an interview with one of ELP's senior partners, Ann de Jaeger, about the role of women in company boardrooms.

The ELP deal continued to cause more serious problems. Some Journal staff complained the agreement to run stories promoting ELP was unethical. On 12 July 2010, one London executive emailed that "some elements of the deal do not fit easily within best practice, brand guidelines and company policy". Others warned about the quality of the surveys on which the stories were to be based.

By the autumn of 2010, ELP were complaining that the Journal was failing to deliver its end of the agreement. They threatened not to make a payment of €15,000 that was due at the end of December, for the copies of the Journal which they had sponsored since April 30. Without the payment, the Journal could not officially record the sales and their circulation figures would suddenly dive by 16%, undermining the confidence of advertisers and readers.

So Langhoff set up a complex scheme to channel money to ELP to pay for the papers it had agreed to buy – effectively buying the papers with the Journal's own cash. This involved the use of other companies although it is not suggested that they were aware they were taking part in a scam.

The best-documented example involves an Indian technology company, HCL, who had separately agreed to pay the Journal €16,000 to organise a special event at the Grosvenor House hotel in London on 30 September 2010. Langhoff proposed that instead of paying the Journal, HCL should pass some of this money to a middleman – a Belgian publishing company – who would then pass it on to ELP.

Invoices and emails seen by the Guardian show that in November 2010, ELP sent two invoices, for €2,000 and €6,000, to the Belgian publishers of a magazine called Banking and Finance. The Belgians duly paid €8,000 to ELP, even though ELP had not provided any goods or services for which they owed this money. According to the invoices, however, the magazine were paying ELP sponsorship money for an event run by the Journal in the Belgian towns of Bree and Schilde in November 2010.

The Belgian magazine was sent €2,000 by HCL. A second payment of €6,000 was never made because HCL fell into dispute with the Journal. In December 2010, as part of an attempt to persuade the Journal to pay them the missing €6,000, the Belgian publishers' managing director, Michel Klompmaker, signed a formal letter that "hereby states that there has never been a contract between us and ELP regarding the sponsorship of a Wall Street Journal Bree/Schilde summit for €6,000. We agreed to be a facilitator in a payment process between the Journal, HCL and ELP per request of the Journal".

An email from Andrew Langhoff on 26 November 2010 includes a diagram that indicates money was channelled to ELP through two other middlemen. This suggests that Langhoff wanted €15,000 sent to ELP via a Belgian company called Think Media, which sells space on billboards. An invoice dated 2 December 2010, shows that ELP invoiced Think Media for €15,000. An email from 20 December shows that Think Media had paid the €15,000 to ELP. In a series of phone calls and emails to Think Media, the Guardian put it to the company that ELP had provided no goods or services in exchange for this payment, and that the payment was made at the request of the Journal. Think Media declined to respond.

The same diagram suggests Langhoff wanted a further €2,000 channelled to ELP through a Belgian technology company, Nayan, which had occasionally sponsored Journal events. Nayan confirmed to the Guardian that they had paid ELP €2,000 in December 2010. They say they understood that ELP were owed this money by the Journal because they had put in some work on a Journal event, and that Nayan paid it as part of their agreement to sponsor the event. A Journal source with direct knowledge of the event says that Nayan were misled by the paper, and that ELP provided no services at the event for which they were due to be paid.

While these payments were being made, a whistleblower from the Journal in Europe contacted the management of Dow Jones in New York and alerted them to the circulation scam and to the controversial agreement to publish articles promoting ELP. Emails seen by the Guardian indicate that the whistleblower's complaint was seen by New York executives, including Les Hinton – then the chief executive of Dow Jones and a close confidant of Rupert Murdoch. Hinton resigned in July in the wake of the phone-hacking scandal at the News of the World.

The emails show that the chief human resources officer for Dow Jones, Gregory Giangrande, organised a meeting in London on 14 December at which the whistleblower detailed his allegations to a Dow Jones lawyer from New York, Tom Maher, and Dow Jones' European human resources executive Carol Bosack.

After the meeting, Bosack emailed the whistleblower: "You are expected to keep details and your reaction or beliefs about the recent events confidential and not shared with anyone external or internal to the business. This matter is to be kept between us, Andrew [Langhoff], Internal Audit and Corporate Legal." No action was apparently taken at that time on the whistleblower's allegations. The whistleblower, who had worked for Dow Jones for 9 years, was made redundant in January.

According to one source, recent Guardian inquiries among former Journal staff and companies who were involved in the payments to ELP "caused a panic" at Dow Jones, resulting in Andrew Langhoff's resignation on Tuesday.

The Wall Street Journal last night reported that Langhoff's resignation "following an internal investigation into two articles published in the Wall Street Journal Europe that featured a company with a contractual link to the paper's circulation department."

It quoted an email sent to staff yesterday by Langhoff about the agreement to publish the ELP stories: "Because the agreement could leave the impression that news coverage can be influenced by commercial relationships, as publisher with executive oversight, I believe that my resignation is now the most honorable course." Disclaimers have now been added to the two stories, warning readers that the "impetus" for the stories was an agreement between the Journal's circulation department and ELP.

Asked about the payments from the Journal to ELP via the various middlemen, the chairman of ELP, Nick van Heck, said it was the company's policy not to make public comment on their contracts. He added: "I am confident that every member of our staff is fully aware of the European norms, which are very rigid when it comes to accounting. I'm pretty confident that what we did was in line with the law."

On Tuesday afternoon Dow Jones issued a statement saying said it initiated the original investigation into the deals in question and the employees involved in late 2010. "The circulation programs and the copies associated with ELP were legitimate and appropriate, and the agreement was shared with ABC UK before the deal was signed," the statement said. "All circulation periods during the ELP arrangement have been certified."

"We came to the conclusion that ELP was only compensated for valid services; however, we were uncomfortable with the appearance of these programs and the manner in which they were arranged. We subsequently eliminated the position of one of the employees responsible for those deals in January 2011.

"At this point, we no longer have relationships with the employees or third parties directly involved in these agreements, and we continue to believe that these deals were valid. They were however of poor appearance. We were not fully aware of the details of the editorial component of the relationship until last week, when we immediately took action."

Wall Street JournalNewspapers & magazinesUS press and publishingNewspapersNews CorporationMedia businessRupert MurdochNick Davies
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Phone hacking: News of the World reporter's letter reveals cover-up

Disgraced royal correspondent Clive Goodman's letter says phone hacking was 'widely discussed' at NoW meetings
• Read Clive Goodman's letter to News International

Rupert Murdoch, James Murdoch and their former editor Andy Coulson all face embarrassing new allegations of dishonesty and cover-up after the publication of an explosive letter written by the News of the World's disgraced royal correspondent, Clive Goodman.

In the letter, which was written four years ago but published only on Tuesday, Goodman claims that phone hacking was "widely discussed" at editorial meetings at the paper until Coulson himself banned further references to it; that Coulson offered to let him keep his job if he agreed not to implicate the paper in hacking when he came to court; and that his own hacking was carried out with "the full knowledge and support" of other senior journalists, whom he named.

The claims are acutely troubling for the prime minister, David Cameron, who hired Coulson as his media adviser on the basis that he knew nothing about phone hacking. And they confront Rupert and James Murdoch with the humiliating prospect of being recalled to parliament to justify the evidence which they gave last month on the aftermath of Goodman's allegations. In a separate letter, one of the Murdochs' own law firms claim that parts of that evidence were variously "hard to credit", "self-serving" and "inaccurate and misleading".

Goodman's claims also raise serious questions about Rupert Murdoch's close friend and adviser, Les Hinton, who was sent a copy of the letter but failed to pass it to police and who then led a cast of senior Murdoch personnel in telling parliament that they believed Coulson knew nothing about the interception of the voicemail of public figures and that Goodman was the only journalist involved.

The letters from Goodman and from the London law firm Harbottle & Lewis are among a cache of paperwork published by the Commons culture, media and sport select committee. One committee member, the Labour MP Tom Watson, said Goodman's letter was "absolutely devastating". He said: "Clive Goodman's letter is the most significant piece of evidence that has been revealed so far. It completely removes News International's defence. This is one of the largest cover-ups I have seen in my lifetime."

Goodman's letter is dated 2 March 2007, soon after he was released from a four-month prison sentence. It is addressed to News International's director of human resources, Daniel Cloke, and registers his appeal against the decision of Hinton, the company's then chairman, to sack him for gross misconduct after he admitted intercepting the voicemail of three members of the royal household. Goodman lists five grounds for his appeal.

He argues that the decision is perverse because he acted "with the full knowledge and support" of named senior journalists and that payments for the private investigator who assisted him, Glenn Mulcaire, were arranged by another senior journalist. The names of the journalists have been redacted from the published letter at the request of Scotland Yard, who are investigating the affair.

Goodman then claims that other members of staff at the News of the World were also hacking phones. Crucially, he adds: "This practice was widely discussed in the daily editorial conference, until explicit reference to it was banned by the editor." He reveals that the paper continued to consult him on stories even though they knew he was going to plead guilty to phone hacking and that the paper's then lawyer, Tom Crone, knew all the details of the case against him.

In a particularly embarrassing allegation, he adds: "Tom Crone and the editor promised on many occasions that I could come back to a job at the newspaper if I did not implicate the paper or any of its staff in my mitigation plea. I did not, and I expect the paper to honour its promise to me." In the event, Goodman lost his appeal. But the claim that the paper induced him to mislead the court is one that may cause further problems for News International.

Two versions of his letter were provided to the committee. One which was supplied by Harbottle & Lewis has been redacted to remove the names of journalists, at the request of police. The other, which was supplied by News International, has been redacted to remove not only the names but also all references to hacking being discussed in Coulson's editorial meetings and to Coulson's offer to keep Goodman on staff if he agreed not to implicate the paper.

The company also faces a new claim that it misled parliament. In earlier evidence to the select committee, in answer to questions about whether it had bought Goodman's silence, it had said he was paid off with a period of notice plus compensation of no more than £60,000. The new paperwork, however, reveals that Goodman was paid a full year's salary, worth £90,502.08, plus a further £140,000 in compensation as well as £13,000 to cover his lawyer's bill. Watson said: "It's hush money. I think they tried to buy his silence." Murdoch's executives have always denied this.

When Goodman's letter reached News International four years ago, it set off a chain reaction which now threatens embarrassment for Rupert and James Murdoch personally. The company resisted Goodman's appeal, and he requested disclosure of emails sent to and from six named senior journalists on the paper. The company collected 2,500 emails and sent them to Harbottle & Lewis and asked the law firm to examine them.

Harbottle & Lewis then produced a letter, which has previously been published by the select committee in a non-redacted form: "I can confirm that we did not find anything in those emails which appeared to us to be reasonable evidence that Clive Goodman's illegal actions were known about and supported by both or either of Andy Coulson, the editor, and Neil Wallis, the deputy editor, and/or that Ian Edmondson, the news editor, and others were carrying out similar illegal procedures."

In their evidence to the select committee last month, the Murdochs presented this letter as evidence that the company had been given a clean bill of health. However, the Metropolitan police have since said that the emails contained evidence of "alleged payments by corrupt journalists to corrupt police officers". And the former director of public prosecutions, Ken Macdonald, who examined a small sample of the emails, said they contained evidence of indirect hacking, breaches of national security and serious crime.

In a lengthy reply, Harbottle & Lewis say it was never asked to investigate whether crimes generally had been committed at the News of the World but had been instructed only to say whether the emails contained evidence that Goodman had hacked phones with "the full knowledge and support" of the named senior journalists. The law firm reveals that the letter was the result of a detailed negotiation with News International's senior lawyer, Jon Chapman, and it refused to include a line which he suggested, that, having seen a copy of Goodman's letter of 2 March: "We did not find anything that we consider to be directly relevant to the grounds of appeal put forward by him."

In a lengthy criticism of the Murdochs' evidence to the select committee last month, Harbottle & Lewis says it finds it "hard to credit" James Murdoch's repeated claim that News International "rested on" its letter as part of their grounds for believing that Goodman was a "rogue reporter". It says News International's view of the law firm's role is "self-serving" and that Rupert Murdoch's claim that it was hired "to find out what the hell was going on" was "inaccurate and misleading", although it adds that he may have been confused or misinformed about its role.

Harbottle & Lewis writes: "There was absolutely no question of the firm being asked to provide News International with a clean bill of health which it could deploy years later in wholly different contexts for wholly different purposes … The firm was not being asked to provide some sort of 'good conduct certificate' which News International could show to parliament … Nor was it being given a general retainer, as Mr Rupert Murdoch asserted it was, 'to find out what the hell was going on'."

The law firm's challenge to the Murdochs' evidence follows an earlier claim made jointly by the paper's former editor and former lawyer that a different element of James Murdoch's evidence to the committee was "mistaken". He had told the committee that he had paid more than £1m to settle a legal action brought by Gordon Taylor of the Professional Footballers Association without knowing that Taylor's lawyers had obtained an email from a junior reporter to the paper's chief reporter, Neville Thurlbeck, containing 35 transcripts of voicemail messages. Crone and the former editor, Colin Myler, last month challenged this.

In letters published by the committee, the former News of the World lawyer repeats his position. He says this email was "the sole reason" for settling Taylor's case. He says he took it with him to a meeting with James Murdoch in June 2008 when he explained the need to settle: "I have no doubt that I informed Mr Murdoch of its existence, of what it was and where it came from."

Myler, in a separate letter also published on Tuesday, endorses Crone's account. Their evidence raises questions about James Murdoch's failure to tell the police or his shareholders about the evidence of crime contained in the email.

Watson said that both Murdochs should be recalled to the committee to explain their evidence. Hinton, who resigned last month, may join them. Four days after Goodman sent his letter, Hinton gave evidence to the select committee in which he made no reference to any of the allegations contained in the letter, but told MPs: "I believe absolutely that Andy [Coulson] did not have knowledge of what was going on". He added that he had carried out a full, rigorous internal inquiry and that he believed Goodman was the only person involved.

Phone hackingClive GoodmanNews of the WorldRupert MurdochAndy CoulsonJames MurdochNewspapers & magazinesNational newspapersNewspapersNick Davies
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PCC chair expected to resign after NoW phone hacking scandal

Baroness Buscombe expected to announce formal resignation following criticism of PCC handling of News International affair

The chair of the Press Complaints Commission, Baroness Buscombe, appears about to be the next victim of the phone-hacking scandal. She is said to be preparing to make a formal announcement of her resignation on Friday.

A source familiar with the situation has confirmed that her departure is imminent.

Buscombe has faced criticism for the PCC's mishandling of the hacking saga since she took the post in 2009. In November that year she came under particular fire for a report in which the PCC appeared to clear the News of the World and admonished the Guardian and its reporter, Nick Davies, for revelations about hacking.

The PCC accepted the claim by News International that voicemail interceptions had been confined to a single reporter, Clive Goodman, and the investigator Glenn Mulcaire.

It concluded that there was "no new evidence" of hacking. Subsequent events proved otherwise, and MPs castigated the commission's report as a "whitewash". Buscombe rather lamely admitted later that the commission had not been "fully informed" and set up a hacking review committee in order to stave off further criticism.

But the unfolding of the revelations, with consistent sniping at her chairing of the regulator, left her exposed.

The prime minister, David Cameron, described the PCC as "ineffective" and lacking in public confidence, while the Labour leader, Ed Miliband, called it a "toothless poodle"

Buscombe pleaded that the commission should not become a "convenient scalp" of the hacking scandal, claiming its work had been "grossly undervalued" and called for "fundamental reform" and a "more independent PCC".

But her handling of the crisis in recent months has been viewed as ineffective, especially in parliament.

Within the newspaper industry there has been criticism too. One national newspaper editor said last week that the PCC's handling of the affair "was a disaster" and that "it was easy to run rings around Baroness Buscombe."

To make matters worse for Buscombe, she was embroiled in an embarrassing libel action brought by a lawyer who has represented several hacking victims, Mark Lewis. It ended with her paying damages and making a high court apology.

Buscombe, 57, a Conservative peer, was previously chief executive of the Advertising Association. She began her career as a barrister.

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Peta BuscombePress Complaints CommissionPhone hackingNews of the WorldNews InternationalGlenn MulcaireClive GoodmanNational newspapersThe GuardianNewspapers & magazinesNewspapersDavid CameronNick CleggEd MilibandNick DaviesJosh HallidayRoy Greenslade
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PCC chair reportedly to retire after NoW phone hacking scandal

Peta Buscombe expected to announce formal retirement following criticism of PCC handling of News International affair

The chair of the Press Complaints Commission, Peta Buscombe, appears about to be the next victim of the phone-hacking scandal. She is said to be preparing to make a formal announcement of her resignation on Friday.

A source familiar with the situation has confirmed that her departure is imminent.

Lady Buscombe has faced criticism for the PCC's mishandling of the hacking saga since she took the post in 2009. In November that year she came under particular fire for a report in which the PCC appeared to clear the News of the World and admonished the Guardian and its reporter, Nick Davies, for revelations about hacking.

The PCC accepted the claim by News International that voicemail interceptions had been confined to a single reporter, Clive Goodman, and the investigator Glenn Mulcaire.

It concluded that there was "no new evidence" of hacking. Subsequent events proved otherwise, and MPs castigated the commission's report as a "whitewash".Buscombe rather lamely admitted later that the commission had not been "fully informed" and set up a hacking review committee in order to stave off further criticism.

But the unfolding of the revelations, with consistent sniping at her chairing of the regulator, left her exposed.

The prime minister, David Cameron, described the PCC as "ineffective" and lacking in public confidence, while the Labour leader, Ed Miliband, called it a "toothless poodle"

Buscombe pleaded that the commission should not become a "convenient scalp" of the hacking scandal, claiming its work had been "grossly undervalued" and called for "fundamental reform" and a "more independent PCC".

But her handling of the crisis in recent months has been viewed as ineffective, especially in parliament.

Within the newspaper industry there has been criticism too. One national newspaper editor said last week that the PCC's handling of the affair "was a disaster" and that "it was easy to run rings around Baroness Buscombe."

To make matters worse for Buscombe, she was embroiled in an embarrassing libel action brought by a lawyer who has represented several hacking victims, Mark Lewis. It ended with her paying damages and making a high court apology.

Buscombe, 57, a Conservative peer, was previously chief executive of the Advertising Association. She began her career as a barrister..

Peta BuscombePress Complaints CommissionPhone hackingNews of the WorldNews InternationalGlenn MulcaireClive GoodmanNational newspapersThe GuardianNewspapers & magazinesNewspapersDavid CameronNick CleggEd MilibandNick DaviesJosh HallidayRoy Greenslade
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News of the World targeted phone of Sarah Payne's mother

Evidence found in private detective's notes believed to relate to phone Rebekah Brooks gave to Sara Payne

Sara Payne, whose eight-year-old daughter Sarah was abducted and murdered in July 2000, has been told by Scotland Yard that they have found evidence to suggest she was targeted by the News of the World's investigator Glenn Mulcaire, who specialised in hacking voicemail.

Police had earlier told her correctly that her name was not among those recorded in Mulcaire's notes, but on Tuesday officers from Operation Weeting told her they had found her personal details among the investigator's notes. These had previously been thought to refer to a different target.

Friends of Payne have told the Guardian that she is "absolutely devastated and deeply disappointed" at the disclosure. Her cause had been championed by the News of the World, and in particular by its former editor, Rebekah Brooks. Believing that she had not been a target for hacking, Payne wrote a farewell column for the paper's final edition on 10 July, referring to its staff as "my good and trusted friends".

The evidence that police have found in Mulcaire's notes is believed to relate to a phone given to Payne by Brooks to help her stay in touch with her supporters.

On Thursday night Brooks insisted the phone had not been a personal gift but had been provided to Payne by the News of the World "for the benefit of the campaign for Sarah's law".

In a statement, Brooks said the latest allegations were "abhorrent" and "particularly upsetting" because Sara Payne was a "dear friend".

Responding earlier to news that Payne's details had been found in Mulcaire's notes, one of Payne's close colleagues said: "We are all appalled and disgusted. Sara is in bits about it." It is not known whether any messages for Payne were successfully hacked by Mulcaire.

Coming after the disclosure that the News of the World hacked and deleted the voicemail of the murdered Surrey schoolgirl Milly Dowler, the news will raise further questions about whether News Corporation is "fit and proper" to own TV licences and its 39% share of BSkyB.

It will also revive speculation about any possible role in phone hacking of Brooks, who was personally very closely involved in covering the aftermath of Sarah Payne's murder and has always denied any knowledge of voicemail interception. On 15 July Brooks resigned as chief executive of News International and was arrested and interviewed by police.

The Labour MP Tom Watson, who has been an outspoken critic of News International, said of the Payne allegation: "This is a new low. The last edition of the News of the World made great play of the paper's relationship with the Payne family. Brooks talked about it at the committee inquiry. Now this. I have nothing but contempt for the people that did this."

Friends of Payne said she had accepted the News of the World as a friend and ally. Journalists from the paper attended the funerals of her mother and father and visited her sick bed after she suffered a severe stroke in December 2009.

In the wake of the Guardian's disclosure on 4 July of the hacking of Milly Dowler's phone, there were rumours that Payne also might have been a victim. Police from Operation Weeting, which has been investigating the News of the World's phone hacking since January, checked the names of Payne and her closest associates against its database of all the information contained in the notebooks, computer records and audio tapes seized from Glenn Mulcaire in August 2006. They found nothing.

The News of the World's sister paper, the Sun, was quick to report on its website, on 8 July, that Payne had been told there was no evidence to support the rumours. The next day the Sun quoted her paying tribute to the News of the World, whose closure had been announced by News International. "It's like a friend died. I'm so shocked," she told them.

In the paper's final edition on Sunday 10 July, Payne registered her own anger at the hacking of Milly Dowler's phone: "We have all seen the news this week and the terrible things that have happened, and I have no wish to sweep it under the carpet. Indeed, there were rumours - which turned out to be untrue - that I and my fellow Phoenix charity chiefs had our phones hacked. But today is a day to reflect, to look back and remember the passing of an old friend, the News of the World."

Since then, detectives from Weeting have searched the Mulcaire database for any reference to mobile phone numbers used by Sara Payne or her closest associates or any other personal details. They are believed to have uncovered notes made by Mulcaire which include some of these details but which had previously been thought to refer to a different target of his hacking. Police have some 11,000 pages of notes which Mulcaire made in the course of intercepting the voicemail of targets chosen by the News of the World.

Friends of Sara Payne said that she had made no decision about whether to sue the paper and that she wanted the police to be able to finish their work before she decided.

Operation Weeting is reviewing all high-profile cases involving the murder, abduction or assault of any child since 2001 in an attempt to find out if any of those involved was the target of phone hacking.

In her statement, Brooks said: "The idea that anyone on the newspaper knew that Sara or the campaign team were targeted by Mr Mulcaire is unthinkable. The idea of her being targeted is beyond my comprehension.

"It is imperative for Sara and the other victims of crime that these allegations are investigated and those culpable brought to justice."

The revelations came as it was announced that James Murdoch had received a ringing endorsement from directors of satellite group BSkyB.

A lengthy board meeting on Thursday at BSkyB ended with unanimous support for Rupert Murdoch's youngest son to continue as chairman of the group following the collapse of his family firm's bid for the 61% of the satellite business it does not already own.

The Hacked Off campaign, which represents phone-hacking victims and is calling for a full public inquiry into the matter, said the Payne allegations indicated "breathtaking hypocrisy and a complete lack of moral sense" on the part of the News of the World.

The Phoenix Chief Advocates, co-run by Payne, said in a statement: "Whilst it was previously confirmed by Operation Weeting that Sara Payne's name was not on private investigator Glenn Mulcaire's list, it has now been confirmed by Operation Weeting that Sara's details are on his list.

"Sara is absolutely devastated by this news, we're all deeply disappointed and are just working to get her through it.

"Sara will continue to work with the proper authorities regarding this matter."

Phone hackingNews of the WorldRebekah BrooksNewspapers & magazinesNational newspapersNewspapersSarah PayneSara PayneNick DaviesAmelia Hill
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The Guardian's news values: a question of Trust

The phone-hacking scandal has exposed the rotten core of the British media – and we have been free to do so because of the Scott Trust

• Guardian special investigations: how the crowd changed everything

• WikiLeaks link-up – high-wire journalism with added future shocks

The phone-hacking story, involving the News of the World, is extraordinarily powerful. It opens a window on the behaviour of the UK's largest media organisation, its largest police force, the inner circle of the prime minister and, for good measure, the Press Complaints Commission. A great story. And yet for 15 months, the Guardian was the only news organisation that covered it. That tells you several things about the difference between the Guardian and the rest of the media.

The first is that the Guardian does not distort its coverage in order to comply with a political line. There is no doubt that some Fleet Street newspapers stayed away from the phone-hacking story because they were constrained by their political affiliation: they are tied to the Conservative party, and they didn't want to embarrass its leadership. At election times, the Guardian may come out in favour of one particular party, but that choice has no impact on its editorial decisions. Reporters who come here from some other papers take a while to realise that they really are allowed to write what they want.

The second big difference is that we don't have a history of hiring private investigators to do illegal things. A lot of other newspapers do. And that, too, diverted some titles who might otherwise have run with the story. They didn't want to expose the News of the World for fear that the scandal would end up exposing them, too.

The third and final big difference is that the Guardian will still support long, tricky investigations. Other newspapers are so preoccupied with making money that they insist on covering stories that are quick and safe, and therefore cheap. They don't want their journalists being tied up for months on research into some complicated saga.

All three of those points are connected to the same underlying fact:that the Guardian does not belong to a profit-seeking corporation. It belongs to a trust. So, there is no bully proprietor to wrap us up in a political straitjacket. We don't have a newsdesk that is under such pressure to improve sales that they create a regime of fear, demanding big stories with such ferocity that their reporters will go out and steal handbags off old ladies or hire private investigators to break the law. And we can investigate because the priority is not quick, cheap stories: it's to tell the truth about important things.

The outcome of all this is that we've uncovered a story which is so strong that, in spite of all their reservations, the rest of Fleet Street has ended up being compelled to follow us. And it's not over yet …

Assured by Two TomorrowsSustainabilityPhone hackingNick Davies
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