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CNN Live Event/Special

Live Coverage of Rupert and James Murdoch Being Questioned About British Phone Hacking Scandal in Parliament

Aired July 19, 2011 - 09:33   ET


RICHARD QUEST, CNN INTERNATIONAL ANCHOR: Good afternoon to you. It is just after 2:30 in the afternoon, 9:30 on the Eastern seaboard of the United States. And this is CNN's live coverage of what will be one of the most important days in British history British parliamentary history, in the British parliamentary life, and, of course, for the media industry, not only in the United Kingdom but around the world.

It is the day when Rupert Murdoch and his son and his former editor go before a parliamentary select committee to give evidence on a phone-hacking scandal that has simply mushroomed into corruption, bribery, and questions over who knew what.

Moments from now, the three are scheduled to give testimony to the 10 members of Britain's Parliamentary Select Committee on culture, media and sport. And the question -- to what extent did those people know about or should have known about the cover-up in the widespread phone-hacking at News International and ""News of the World"."

We shall now go to the pictures from the committee room. It is rough and ready today, because these events are happening as we speak. We are going to show you what is happening. Rupert and James Murdoch are in the committee room. We need to hear every moment of this.

Let us listen to when the see when the committee chairman John Whittingdale begins.

JAMES MURDOCH, CHAIRMAN, CEO, NEWS CORPORATION INTERNATIONAL: Our understanding was that we would be afforded the opportunity to make an opening statement. We think -- and we prepared on that basis. And we would like the opportunity to make that statement.

Would you allow us?

UNIDENTIFIED MALE: The committee discussed that earlier. We feel we do have a lot of questions and we hope that all that you would wish to say will come out during the course of questioning. If you feel that is not the case, then you can make a statement at the end.

Excuse me. Could we not have that, please?

MURDOCH: In that case, we would also like to submit the statement in writing, if it pleases you.

UNIDENTIFIED MALE: That would be perfectly acceptable. MURDOCH: Thank you, Mr. Chairman.

UNIDENTIFIED MALE: Could we please remove the people holding up the (INAUDIBLE)?



JOHN WHITTINGDALE, CHAIRMAN, CULTURE, MEDIA & SPORTS COMMITTEE: All right. After that brief interruption, we will begin.

Good afternoon, everybody. This is a special meeting of the Culture, Media and Sports Select Committee. It is a follow-up to the inquiry which the committee held in 2009 into press standards, privacy and libel, during which we took evidence on the extent of phone- hacking which had taken place in the ""News of the World"."

In our report last year, we stated that we thought it was inconceivable that only one reporter had been involved. In the last few weeks it has emerged that not only has evidence come out which I think has vindicated the committee's conclusion, but also abuses have been revealed which have angered and shocked the entire country. It's also clear that parliament has been misled.

We are very conscious there is an ongoing police investigation and possible criminal proceedings to follow and this committee would not wish to jeopardize that. However, we are encouraged by the statements that have been made by all of the witnesses this afternoon that they wish to cooperate with the committee and help us to establish the truth.

So as our first witnesses this afternoon, can I welcome the chairman and chief executive officer of News Corp, Rupert Murdoch and the deputy chief operating officer and chairman and chief executive of News Corp International, James Murdoch. Can I also thank you for making yourselves available to the committee this afternoon.

RUPERT MURDOCH, CHAIRMAN, CEO, NEWS CORPORATION: Thank you, Mr. Chairman. We are more than prepared to.


Perhaps I might start with Mr. James Murdoch. You made a statement on the 7th of July, in which you stated that the paper had made statements to parliament without being in the full possession of the facts and that was wrong. You essentially admitted that parliament had been misled in what we had been told.

Can you tell us to what extent we were misled and when you became aware of that?

JAMES MURDOCH: Mr. Chairman, thank you very much.

And, first of all, I would like to say, as well, how sorry I am and how sorry we are to particularly the victims of illegal voicemail interceptions and to their families. It's a matter of great regret of mine, my father's, and everyone at News Corporation and these are standards -- These actions do not live up to the standards that our company aspires to everywhere around the world and it is our determination to both put things right, make sure these things don't happen again, and to be the company that I know we have always aspired to be.

As for my comments, Mr. Chairman, and my statement, which I believe was around the closure of the ""News of the World"" newspaper --

RUPERT MURDOCH: Before you get to that, I would just like to say one sentence. This is the most humble day of my life.


JAMES MURDOCH: The statement around the closure of the "News of the World" newspaper where I stated that we -- the company had not been in full possession of the facts when certain statements were made to this committee, was referring to the emergence of new facts.

Largely, that came about at the end of 2010, as the due process of a number of civil trials reached their point where document disclosure and evidence disclosure made it apparent to the company and to myself at that time, that, indeed, there were -- there was reason to believe that potentially more people had been involved in "News of the World" illegal voicemail interceptions from before. That was new evidence or new information at the time that post-dated the 2009 hearings and that is what I was referring to.

Subsequent to our discovery of that information in one of the civil trials at the end of 2010, which I believe was the Sienna Miller case, trial around illegal voicemail interceptions, the company immediately went to look at additional records around the individual involved. We alerted -- the company alerted the police who restarted on that basis, the investigation that is now under way. And since then, the company has admitted liability to victims of illegal voicemail interceptions, has apologized unreservedly, which I repeat today, to those victims. And the company also set up a compensation scheme independently managed by a former high court judge to be able to deal with legitimate claims coming from victims of those terrible incidents of voicemail interceptions. And those are the actions that were taken as soon as the new evidence emerged.

So when I made the statement about not being in the full possession of the facts, it was that those facts, at that point, were still in the future and it was in the due process of that civil trial or the civil litigation process that that evidence really emerged for us and we acted and the company acted as swiftly as an transparently as possible.

WHITTINGDALE: When this committee took evidence in 2009, we heard from the managing editor of "News of the World", Stuart Kuttner, the legal manager of News International Tom Crone, and "News of the World" editor Colin Myler, the former editor Andy Coulson, and Les Hinton, former chairman of News International. All of them told us that there had been a thorough investigation. No evidence had ever been found that anybody else was involved. But clearly it was not correct.

Were any of them lying to this committee?

JAMES MURDOCH: The -- Mr. Chairman, the company relied on three things throughout -- for a period of time up until the new evidence emerged. The company relied on a police investigation in 2007 and this is before -- I'll recount this to try to take us back to that area. This was before I was involved. I became back involved in News Corporation and News International matters at the end of 2007.

In the 2007 period, police investigation, successful prosecutions were brought against two individuals and the editor of "News of the World" resigned. And the company relied on both the police having closed the investigation and repeated assertions that there was no new evidence for them to reopen their investigation.

The company relied on the PCC, which had had a report and had said that there was nothing more to this at the time. And the company relied on the legal opinion of outside counsel that was brought in related to those matters who, with respect to their review, had issued a clear opinion that there was no additional illegality other than the two individuals involved before.

And the company relied on those facts and for the company in 2008 and 2009, it was not -- it was not clear that there was a reason to believe that those matters were anything other than settled matters and in the past.

WHITTINGDALE: So is it your testimony to this committee that the individuals who gave us evidence in 2009, none of them knew at that time what had been going on?

JAMES MURDOCH: I do not have direct knowledge of what they knew and what time but I can tell you that the critical new facts as I saw them and as the company saw them, really emerged in the production of documentary information or evidence in the civil trials at the end of 2010.

And the duration from 2008 until -- or 2007, I should say, to the end of 2010, and the length of time it took for that to come clear and for that real evidence to be there is a matter of deep frustration. Mine, I have to tell you, I know and I sympathize with the frustration of this committee and it's a matter of real regret that the facts could not emerge and could not be gotten to -- to my understanding faster.

WHITTINGDALE: Well, you have made clear that it is the case that the information, when given, was incorrect. Have you established who, as well as Clyde Goodman, was involved in phone hacking in the "News of the World"?

JAMES MURDOCH: I'm sorry, Mr. Chairman, could you repeat that?

WHITTINGDALE: Who, as well as Clyde Goodman, was involved in hacking in the "News of the World"?

JAMES MURDOCH: As you -- as I think you made it clear earlier, Mr. Chairman, that there are a number of -- there have been a number of arrests of former "News of the World" employees. These are matters for current criminal investigations and I think it's -- understandably it's difficult for me to comment in particular around some of those individuals.

WHITTINGDALE: Have you carried out your own investigation since the discovery of this information, to find out the extent of involvement in phone hacking in the "News of the World"?

JAMES MURDOCH: We have -- we -- we have established -- we have established a group in the -- in the company cooperating very closely with the police on their investigation. Their investigation is broad with respect to journalistic practices and in particular, journalistic practices at the "News of the World."

And the policy and the direction that the company is given then is cooperate fully and transparently with the police, to provide information and evidence, that the -- that the company believes and they believe is relevant to those investigations. Sometimes pro- actively, sometimes in response to those requests.

And again, I think the very fact that the provision of the new information to the police in the first place when there was no police investigation ongoing, that then led to, in part, the reopening of -- or this new investigation being established, I hope can be testament to some proactive action and transparency with respect to getting to the right place in terms of finding out the facts of what happened, understanding all of the allegations that are -- that are being -- that are coming in.

And moving forward to aid the police in a successful completion of the important and serious work that they are doing.

WHITTINGDALE: Ok. And the departure from your company in the recent few days of Tom Crone, of Rebekah Brooks and Les Hinton, is that because any of them acknowledge the phone hacking?

JAMES MURDOCH: The -- there is -- I -- I have -- I have no knowledge and there is no evidence that I -- that I'm aware of, that Mrs. Brooks or Mr. Hinton, or -- or -- or any of those executives had knowledge of that and their assertions, certainly Mrs. Brooks and assertions to me of her knowledge of those things has been -- has been clear.

Nonetheless, those resignations have been accepted. But it's important to know on the basis that there is no -- no evidence today that I have seen or that I have any knowledge of, that there was any impropriety by them.

WHITTINGDALE: Ok, we turn to Tom Watson.

TOM WATSON, BRITISH CULTURE, MEDIA AND SPORTS COMMITTEE: Mr. Murdoch Sr., good afternoon, sir. You have repeatedly stated that News Corp has a zero -- has a zero tolerance of wrongdoing by employees. Is that right?


WATSON: In October 2010, did you still believe it to be true when you made your speech and you said, let me be clear, we will be vigorous -- we will vigorously pursue the truth and we will not tolerate wrongdoing?


WATSON: So if you were not lying then, somebody lied to you, who was it?

RUPERT MURDOCH: I don't know. That is what the police are investigating and we are helping them with.

WATSON: But you acknowledge that you were misled?


WATSON: Can I take you back to 2003? Are you aware that in March of that year, Rebekah Brooks gave evidence to this committee admitting paying police?

RUPERT MURDOCH: I am now aware of that. I was not aware at the time. I'm also aware that she amended that considerably very quickly afterwards.

WATSON: I think she amended it seven or eight years afterwards. But did you or anyone else --


WATSON: -- did you or anyone else at your organization investigate this at the time?


WATSON: Can you explain why?

RUPERT MURDOCH: I didn't know of it. I'm sorry. I'm -- I -- I need to say something. And this is not as an excuse. Maybe it's an explanation of my laxity.

The "News of the World" is less than one percent of our company. I employ 53,000 people around the world who are proud and great and ethical and distinguished people, professionals. And perhaps I'm -- and I'm spread watching and appointing people in my trust to run the divisions.

WATSON: Mr. Murdoch, I do accept you have many distinguished people who work for your company. You're ultimately responsible for the corporate governance of News Corp, so what I'm trying to establish is who knew about wrongdoing and what was involved at the time. So if I can take you forward to 2006, when Clive Goodman was arrested and subsequently convicted of intercepting voice mails, were you made aware of that?

RUPERT MURDOCH: I think so. I was made aware of when that was convicted.

WATSON: And what did News International do subsequent to the arrest of Clive Goodman and Glenn Mulcaire (ph) to get to the facts?

RUPERT MURDOCH: We worked with the police on further investigation, and eventually we appointed, I think, very quickly appointed a very leading firm of lawyers in this city to investigate it further.

WATSON: Wait a second.

I'll come to you -- I come to you in a minute, sir. So I just -- I just -- let me finish my line of questioning, and I'll come to you.

What did you personally do to investigate that after Mr. Goodman went to prison? You were, obviously, concerned about it.

RUPERT MURDOCH: I expected him to tell everything and he told me about it.

WATSON: Ok. Can I ask you in 2008, another two years, why did you not dismiss "News of the World" chief reporter Neville Thurlbeck following the Mosley case.

RUPERT MURDOCH: I never heard of him.

WATSON: Ok. Despite the judge making clear that Thurlbeck set out to blame two of the women involved?

RUPERT MURDOCH: I didn't hear that.

WATSON: A judge made it clear that Thurlbeck set out to blackmail two of the women involved in the case.

RUPERT MURDOCH: That is the first I've heard of that.

WATSON: So none of your U.K. staff drew your attention to this serious wrongdoing, even though the case received widespread media attention?

RUPERT MURDOCH: I think my son can perhaps answer that in more details; he was a lot closer to it.

WATSON: I'll come to your son in a minute.

So despite the fact that blackmail can result in a 14-year prison sentence, nobody in your UK company brought this fact to your attention?

RUPERT MURDOCH: The blackmail charge, no. WATSON: Do you think that might be because they knew you would think nothing of it?

RUPERT MURDOCH: No. I can't answer. I don't know.

WATSON: Do you agree with (INAUDIBLE) when he said that the lack of action discloses a rot remarkable state of affairs at News International?


WATSON: Mr. Murdoch a judge finds a chief reporter guilty of blackmail, it was widely reported. He says it was a remarkable statement.

WATSON: Why didn't he (INAUDIBLE)

WATSON: Because it was -- it was a civil case.

Were you aware that News International commissioned an investigation to News International e-mails by Harbottle and Lewis?


WATSON: Aware that News International commissioned an investigation into News International e-mails by the solicitors' firm Harbottle and Lewis.

RUPERT MURDOCH: Yes, I didn't appoint them but I was told of it happening.

WATSON: You claimed in the "Wall Street Journal" that Harbottle & Lewis, made a major mistake. Can I ask what mistake you were referring to?

RUPERT MURDOCH: I think maybe that's a question, again, for James, but there was certainly -- well, we examined it, re-examined that. We found things which we immediately went to counsel with to get advice on how to present it to the police.

WATSON: In their written response to this committee's questions, are you aware that News International stated that both John Chapman and Daniel Cloak reviewed these e-mails before forwarding them to Harbottle & Lewis?


WATSON: So that nobody in the company told you that two of your executives had reviewed the e-mails?

RUPERT MURDOCH: I thought -- I was under the understanding that everything had been sent to them.

WATSON: Ok. You were aware that Lord McDonald QC has since reviewed the e-mails again on behalf of News International, are you not? RUPERT MURDOCH: Yes.

WATSON: You're aware that he stated he found evidence --

RUPERT MURDOCH: He's reported to the whole board of News Corp --

WATSON: He did.

RUPERT MURDOCH: At News Corporation.

WATSON: You were aware that he stated to the board that he found evidence of indirect hacking, breaches of national security and evidence of serious crime in the Harbottle and Lewis file?

RUPERT MURDOCH: We did, indeed.

JAMES MURDOCH: Mr. Watson, please, I can address these in some detail if you would allow me.

WATSON: I will come to you, Mr. Murdoch, but it's your father who is responsible for corporate governance. I would like to ask what he knew. But I will come back to you.

Who was aware of Harbottle & Lewis findings at News International?

RUPERT MURDOCH: It went to the senior officials of News Corp. Certainly their top legal officer.

WATSON: So Tom Crone or Les Hinton?


RUPERT MURDOCH: No, they were not the top legal officers.

WATSON: Who were the top legal officers?

JAMES MURDOCH: Mr. John Chapman was the top legal officer at News International and Mr. Crone was the head of legal affairs at News Group Newspapers.

WATSON: And were you informed about the findings by your son, Mr. Murdoch, or by Rebekah Brooks?

RUPERT MURDOCH: I forget, but I expect it was my son. I was in daily contact with them both.

WATSON: Ok. When were you informed about the payments made to Gordon Taylor and Max Clifford?


WATSON: You were not informed?


WATSON: At no point you knew that Taylor and Clifford were made payments?

RUPERT MURDOCH: I never heard -- no.


You never informed the chief executives at News Corp that you authorized payment of half a million dollars.

JAMES MURDOCH: Can I answer the questions now, Mr. Watson?

WATSON: I'd like you to tell me whether you informed your father that you had authorized payments to Gordon Taylor as a result of him being a victim of a crime?

JAMES MURDOCH: The settlement with Mr. Taylor -- I'm happy to address the matter of Mr. Taylor in some detail, if you would like --

WATSON: First just let me know --


JAMES MURDOCH: My father became aware after the settlement was made in 2009, I believe, after the confidential settlement had become public as a newspaper reported on the out of court settlement afterwards. But please understand that the settlement of an out of court settlement of a civil claim of that nature and of that quantum is something that normally in a company our size the responsible executives in the territory in the country would be authorized to make.

And that's the way the company has functioned, and it's below the approval thresholds, if you will, that would have to go to my father as chairman and chief executive of the global company.

WATSON: There were other questions I can ask on this, but there are other colleagues that have specific questions of you, Mr. Murdoch, about this issue. I'll move back to your father.

Mr. Murdoch, at what point did you find out that criminality was endemic at "News of the World"?

RUPERT MURDOCH: "Endemic" is a very hard -- a very wide-ranging word, and I also had to be extremely careful not to prejudice the course of justice, which is taking place now. That has been disclosed. I became aware of those two, and then I was absolutely shocked, appalled, and ashamed when I heard about the Millie Dowler case only two weeks ago, eight days before I saw them and I was graciously received by the Dowlers.

WATSON: Did you read our last report into the matter where we referred to the collective amnesia of your executives who gave evidence to our committee?

RUPERT MURDOCH: I haven't heard that.

WATSON: Nobody brought it to your attention? (CROSSTALK)

WATSON: So a parliamentary inquiry found your senior executives in the U.K. guilty of collective amnesia, and nobody brought it to your attention? I don't see why you think that's not very serious.

RUPERT MURDOCH: No. Yes, but you're really not saying amnesia, you're really saying lying.

WATSON: Well, we found your executives guilty of collective amnesia. I would have thought that someone would like to bring that to your attention, that it would concern you. Did they forget?


WATSON: OK. Well, it's been obvious to most of the observers from the summer of 2009 that phone hacking was widespread. You knew for sure in January of this year that the one rouge reporter line was false, is that right?

RUPERT MURDOCH: I forget the date.

WATSON: Why was Edmondson the only person to leave "News of the World" last January?

RUPERT MURDOCH: Mr. Watson, we have given all our files and all our knowledge and everything to the police. They have not given us the diaries, so we do not know what was in that. There was a page, which appeared to be addressed to him. Again, this is my son's --

JAMES MURDOCH: Mr. Chairman, perhaps it would be helpful to the committee if you would like to go too through any of the particular detail about why decisions were made by the team at News International.

It would be more helpful perhaps if I could answer those questions as the chief executive of the regional businesses across Europe. I have somewhat more proximity to it.

WATSON: I understand the detail points.

JAMES: I'm simply offering to help to clarify the matters.

WATSON: Your father is responsible, and serious wrongdoing has been brought about in the company and it's revealing in itself what he doesn't know and what executives chose not to tell him. So with respect to you, I would resume my line of questioning and come back to you later.

Mr. Murdoch, why was no one fired in April when news international finally admitted that "News of the World" had been engaged in criminal interception of voice mails?

RUPERT MURDOCH: It was not our job to get in the course of justice. It was up to the police to bring those charges and to carry out their investigation, which we were 100 percent cooperating with. WATSON: But in April the company admitted liability for phone hacking, and nobody took responsibility for it then. No one was fired. The company admitted that they've been involved in criminal wrongdoing, and no one was fired. Why was that?

RUPERT MURDOCH: There were people in the company, which apparently were guilty and we have to find them and we have to deal with them appropriately.

JAMES MURDOCH: Mr. Watson, if I can clarify, most of the individuals involved or implicated in the allegations there had long since left the company. Some that were still there, you mentioned one exited the business as soon as evidence of wrongdoing was found and a process was set up in cooperation with the police to aid them with any of those things that they wanted to do.

But many of the individuals that were potentially implicated in those civil litigations and potentially in these criminal matters had already left the building and were not in the "News of the World" at this time and the current "News of the World" executives and journalists at the time, many of whom were not there in 2006 and '07, so it was -- some of them had already left.

WATSON: Thank you.

JAMES MURDOCH: You're welcome.

WATSON: Mr. Murdoch, why did you decide to risk the jobs of 200 people before pointing the approximate finger at those responsible for running the company at the time of the illegality, your son and Rebekah Brooks?

RUPERT MURDOCH: When a company closes down, it's natural for people to lose their jobs. We have in this case and I'll make this continuing every effort to see those people are employed in other divisions of the company, if they're not part of the small group. I don't know how big the group is. Whatever group was there involved in the criminality.

WATSON: Did you close it because of the criminality? Did you close the paper down because of the criminality?

RUPERTMURDOCH: Yes, we felt ashamed of what had happened, and we brought it to a close.

WATSON: People lied to you and lied to their readers.

RUPERT MURDOCH: We had broken our trust with our readers certainly with me, but it was the important point was we broke our trust with the readers.

WATSON: Are you aware there are other forms of illicit surveillance being used by private investigators that were used by News International?

RUPERT MURDOCH: Other forms of? WATSON: Illicit surveillance, computer hacking, tracking your cars. If the evidence is produced --

RUPERT MURDOCH: I think all news organizations have used private detectives and do so in their investigations from time to time. I don't think illegally.

WATSON: If it can be shown to you the private investigators working for newspapers and News International used other forms of illicit surveillance like computer hacking, would you immediately introduce another investigation?

RUPERT MURDOCH: That would be up to the police, but we would certainly work with the police. It if they wanted us to do it, we would do it. If they wanted to do it, they would do it.

WATSON: Finally, can I first ask you? When did you first meet Mr. Alex Marincheck? He worked for the company for 25 years.

RUPERT MURDOCH: I don't remember meeting him. I might have shaken hands with me walking into the office, but I don't have any memory.

WATSON: OK. Thank you.

UNIDENTIFIED MALE: Thank you. Jim Sheridan.

JIM SHERIDAN, BRITISH CULTURE, MEDIA AND SPORT COMMITTEE: Again, Mr. Murdoch Sr., can I ask you. I have a number of short questions for you. Why did you enter the back door at number 10 when you visited the prime minister following the last general election?

RUPERT MURDOCH: Because I was asked to.

SHERIDAN: You were asked to go in the back door of number 10?


SHERIDAN: Why would that be?

RUPERT MURDOCH: To avoid photographers in the front, I imagine. I don't know. I just did what I was told.

SHERIDAN: All right. It's strange that government heads of state managed to go in the front door.


SHERIDAN: Yet, you have to go in the back door?

RUPERT MURDOCH: Yes. That's the choice of the prime minister or their staff or whoever do these things.

SHERIDAN: So it was under the prime minister's direct instructions that you come in the back door?

RUPERT MURDOCH: I was asked would I please come in through the back door.

JAMES MURDOCH: I don't think my father would have any direct knowledge of the arrangements being made for his entry or exit from a particular building, respectfully.

SHERIDAN: Have you ever imposed any preconditions --

RUPERT MURDOCH: Which visit to Downing Street are you talking about?

SHERIDAN: It was just following the last general election.

RUPERT MURDOCH: I was invited within days to have a cup of tea to be thanked for the support by Mr. Cameron. No other conversation took place. It lasted minutes.

SHERIDAN: And that's the one where you went in through the back door?

RUPERT MURDOCH: Yes. I had been out also by Mr. Brown many times.

SHERIDAN: Through the back door?


SHERIDAN: Can I also ask you, Mr. Murdoch --

RUPERT MURDOCH: And my family who went there many times.

SHERIDAN: Have you ever imposed any preconditions upon a party leader in the U.K. before giving them the support of your newspapers?

RUPERT MURDOCH: I've never guaranteed anyone the support of my newspapers. We changed -- we had been supporting the Thatcher government and the conservative government that followed.

We thought it got tired, and we changed and supported the Labor Party whenever it was, 18 years ago, with the direct loss of 200,000 circulations.

SHERIDAN: Did you ever impose any preconditions on either the Labor Party?


SHERIDAN: No preconditions whatsoever?

RUPERT MURDOCH: No. The only conversation I had with them, with Mr. Blair that I can remember arguing about the euro.

SHERIDAN: Mr. Blair visited you halfway around the world?


SHERIDAN: Mr. Blair visited you halfway around the world before the 1997 election. Anyway, that doesn't matter.

RUPERT MURDOCH: That was what Mr. Campbell arranged.

SHERIDAN: I'll also ask you it's understood that the FBI are investigating 9/11 victims. Have you commissioned an investigation into these allegations?

RUPERT MURDOCH: We have seen no evidence of that at all, and as far as we know, the FBI hasn't either. If they do, we will treat it exactly the same way as we treated it here, and I cannot believe it happened from anyone in America, whether it's someone at "News of the World," I don't know. It's certainly unnecessary.

SHERIDAN: If I can go -- I'll come back to you, James, in a moment. I just wanted to clarify. If these allegations are any way true whatsoever, will you commission an investigation into them?


SHERIDAN: OK. Also, you must be horrified by the scandal and the fact that it's cost you the transaction and led to the closure of the "News of the World." Who do you blame for that?

RUPERT MURDOCH: Well, a lot of people had different agendas, I think, in trying to build this hysteria. All our competitors in this country formally announced a consortium to try and stop us. They caught us with dirty hands, and they built hysteria around it.

SHERIDAN: Was it competitors that stopped you getting --

RUPERT MURDOCH: No. I think a mood developed, which made it really impractical to go ahead.

JAMES MURDOCH: Mr. Sheridan, we've been very clear that serious allegations of wrongdoing have been leveled about "News of the World," and we believed that the "News of the World," the actions of some reporters and people some years ago have fundamentally tarnished the trust of the "News of the World" had with its readers.

This is a matter of huge and sincere regret, mine, my father's, and the company's. The company's priority very much so is to restore that trust, is to operate in the right way. It's to make sure that the company can be the company that it's always aspired to be.

The removal of the offer to make -- the proposal to make an offer to the shareholders who are not News Corporation is simply a reflection of that priority of moving forward.

SHERIDAN: I have every sympathy with what you're saying, but do you understand that people that have been the victims of the "News of the World" based on allegations were found out by strangers?

JAMES MURDOCH: It is our absolute priority to -- with those -- what happened at the "News of the World" was wrong. We and I have apologized profusely and unreservedly for that, and my father has as well.

These are very, very serious matters, and we are trying to establish the facts of any new allegations as they come up. We are working closely with the police to find out where the wrongdoing was and to hold people accountable.

And I think importantly as well to the victims of illegal voice mail interceptions, not just if we apologize, but we have admitted liability.

The company has admitted liability, and we have set out the appropriate third-party compensation schemes to do that. These are all matters that we're fully engaged in.

SHERIDAN: I know it's very stressful for yourselves, but Mr. Murdoch, do you accept that ultimately you are responsible for this whole fiasco?


SHERIDAN: You're not responsible? Who is responsible?

RUPERT MURDOCH: The people that I trusted to run, and then maybe the people that they trusted.

SHERIDAN: Can you name --

RUPERT MURDOCH: I worked with Mr. Hinton for 52 years, and I would trust him with my life.

SHERIDAN: Are you satisfied that the cash payments that were made by the News Corporation companies to informants for stories were registered with the appropriate tax authorities?

RUPERT MURDOCH: I don't know anything about that.

SHERIDAN: If people were given money in order to accomplish stories --

RUPERT MURDOCH: If they were given money to --

SHERIDAN: In order to get stories, was that -- did you notify the appropriate tax authorities about this?

JAMES MURDOCH: All of our financial affairs are as a public company are transparent, are audited. The tax jurisdictions that the company works with all around the world are worked with transparently and thoroughly. Tax compliance is an important priority for any business, and the company complies with the laws.

SHERIDAN: Would that include people who are in regular monthly retainers registered in their affairs?

JAMES MURDOCH: I can't speak -- I have no knowledge of separate people on retainers in the company and their own tax affairs or their own tax arrangements. I can speak for the companies' tax arrangements, and to the best of my knowledge we are a company that takes tax compliance, regulatory compliance, financial and regulatory transparency hugely seriously, and it's something we're very proud of.

UNIDENTIFIED MALE: We'll talk about these in more details.

SHERIDAN: Can I just talk to James? You're aware of the (INAUDIBLE) with Tommy Sheridan, the former MSP who is currently in prison. Both misled the jury in the perjury trial. Your company has not disclosed international e-mails that may aid the appeal of Mr. Sheridan. Why is that?

JAMES MURDOCH: I don't have direct knowledge of that, Mr. Sheridan. I apologize. If you have additional questions on that in the future, I'm happy to supply written answers, but I don't have direct knowledge and I'm not in a position to answer those questions.

SHERIDAN: Just a couple more questions. James, could you please confirm or deny whether any News Corporation company is the subject of an investigation?

JAMES MURDOCH: I have no knowledge of that. I have no knowledge of that at this point.

SHERIDAN: Could you also confirm or deny whether or not any News Corporation company is the subject of an investigation by the Financial Services Authority?

JAMES MURDOCH: I don't believe so, but not to my knowledge.

SHERIDAN: Finally, please confirm or deny whether any News Corporation company is the subject of an investigation by NHMRC?

JAMES MURDOCH: Not to my knowledge. We have ongoing dialogue with the NHMRC and the various subsidiaries here. But as far as investigations are concerned, I have no knowledge of one.

SHERIDAN: Thank you.

THERESE COFFEY, BRITISH CULTURE, MEDIA AND SPORT COMMITTEE: Thank you. Mr. Murdoch, who made the recommendation to close down the "News of the World" to the board of News Corp?


COFFEY: Who made the recommendation to close down the "News of the World? I assume it was a board decision that was made by News Corp?

RUPERT MURDOCH: It was the result of a discussion between my son and I and senior executives and Miss Brooks one morning. We called the board of News Corporation, the whole board to seek their agreement.

COFFEY: You've already suggested it's because you felt ashamed. There's not a suggestion that it was a commercial decision to decide to close the "News of the World"? RUPERT MURDOCH: Far from it.

COFFEY: OK. Moving on to that. Moving on to the financial government arrangements with the News Corporation, Mr. James Murdoch, you suggested earlier that the payments to Mr. Taylor were not notified at News Corp level because of the finance threshold.

Could you tell us a bit more about that? I understand it took your -- you had to agree for the payment to Mr. Taylor. Was that financial level a managerial decision?

JAMES MURDOCH: I'm very happy to discuss. Thank you. It's a good question. I'm very happy to discuss the matter of Mr. Taylor. The out of court settlement with Mr. Taylor was related to a voice mail interception that had occurred previously and was actually one of the counts as I understand it of the 2007 trial.

It's important to think back to 2008 to understand what we knew then, what I knew then, and what the information was in the context. It was the underlying interception was not a disputed fact.

Secondly, it was the advice and further to that I should say it was the advice and the clear view of the company that if litigated the company would lose that case. It was almost certain to lose that case because the underlying fact was not in dispute.

Thirdly, the company sought distinguished outside counsel to understand if the case were litigated and if it were to be lost, which was the great likelihood, what the financial quantum would be or what that would cost the company.

It was advised that with expenses, legal expenses and damages that that could be between 500,000 and a million pounds or thereabouts. I don't recall the exact number of the advice. I think it was 250,000 plus expenses and litigation costs, something like that.

Lastly, this was in a context in the first half of 2008, and this was my first real involvement with any of these issues where there was no reason at the time to believe that the issue of these voice mail interceptions was anything, but a settled matter and that it was in the past after the successful prosecution of the two individuals we discussed as well as the resignation of the editor.

So the settlement, the out of court settlement was made in that context. It was within the -- it was within the authorities as I understand it -- as I understood it of News International to be able to make those out of court settlements in due course without going to the global level company.

I at the time was the regional head for Europe and Asia of News Corporation. I directed that it was already to settle that, but did not get involved in any of the negotiations directly about that settlement. But I do recall in 2008 that those are the things that were done.

RUPERT MURDOCH: May I just add that my son had only been with the company for a matter of a very few weeks.

JAMES MURDOCH: It was a few months. I'd come back to the company at the end of 2007 in the middle of December, and this was sometime -- I don't recall the exact date, but sometime in the first half of 2008.

COFFEY: So given you were new to the company, six months, I don't want to have a father/son argument about that. What level of financial payments could other News International sanction people without recourse to you as the chairman?

JAMES MURDOCH: Generally speaking, the way the company -- the way the company will operate, as any company will operate is within certainly financial parameters from a financial planning perspective.

We will look at a budget for a year much like a house will manage its budget and say how much money we have to spend or how much money does a particular company or part of the company or department have to spend.

As long as they stay within those guidelines the belief is that they should be empowered to make those judgments to spend those monies and achieve the ends that they can.

COFFEY: I'm sorry.

JAMES MURDOCH: I don't have the tip of my fingers the precise financial authorities in that, but I can discuss after the committee hearing with you what exactly you'd like to know, and we can discuss whether or not it's right to, you know, come back to you with that.

COFFEY: What would it have taken -- what level of financial payout would it have taken to require an authorization if from the board of News Corp?

JAMES MURDOCH: I think that for the full board it's in the millions, but I don't know the exact answer there.

COFFEY: Do you know how much has been paid out to people authorized by your executives?

JAMES MURDOCH: Paid out in what way?

COFFEY: Paid out of settlements.

JAMES MURDOCH: Settlements -- legal settlements? I do not know the total number. I do not know the total number. But around the world, it's customary to reach out of court settlements in civil litigations and civil matters.

And it's something that rather than go through the lengthy and sometimes expensive litigation process with the risk that that often entails. It's customary to try to reach out of court settlements in many cases.

RUPERT MURDOCH: let me say we have a very strong committee at News Corporation, which would know about this, and they're members of the outside directors and they review all these things.

COFFEY: Thank you. Building on that, then, how is it possible to make payments to people if they don't invoice you or not an employee of News Corp's subsidiaries?


COFFEY: How is it possible to transfer cash or some other form of remuneration to people who don't invoice you or who are not employees of News Corp subsidiaries?

JAMES MURDOCH: I don't know the exact arrangement of that. I don't do that myself, but to tell you how that's done. But sometimes in certain instances, you know, it is appropriate for journalists or managers in a certain environment to have the ability to use cash in some instances. But it is customary for them to record those and all of the expenses, cash expenses as well as invoice expenses should be looked at and recorded.

COFFEY: So things like use of petty cash could be quite big sums of money or small? At the moment, you just record that the journalist gave it to somebody?

JAMES MURDOCH: And to be -- and I don't have direct knowledge of all of those arrangements.

COFFEY: Thank you. I was going to ask if payment is going to be made to family members to those who have been alleged to have been hacked. Is it possible other forms of remuneration can be used in your company talking about things like travel checks, vouchers things redeemed for cash?

JAMES MURDOCH: I don't have knowledge of that.

COFFEY: Just looking at some of your corporate governance at page 2 and page 4 of your own code, it talks about directors, employees, and officers of News Corporation acting to the principles set forth including consultants, agents, supplies and business partners to adhere to the standards. We'd never act the third-party to formally act, it would invite these standards. Can you tell me how as an organization you try to make that happen?

RUPERT MURDOCH: How that would work is each newspaper has an editorial manager, but they have to approve the expensive claims of every reporter. The reporter has no authority to pay money on his own.

JAMES MURDOCH: So the managing editor's office often manages a lot of the expenses and budgets and should do so when is directed to do so with proprietary.

COFFEY: Do you require your executives to make annual statements that they abided with the code of conduct and ethics? I used to work --

JAMES MURDOCH: Every employee, every colleague around the world of News Corporation receives the code of conduct, a set of -- it's a pamphlet that has some detail in it, but it's not too much so that people read it. With respect to what ethical conduct is required --

RUPERT MURDOCH: We can make it available to you.

JAMES MURDOCH: Very happy to make it available to you. It's about ethical conduct, the laws, breaking the rules and so on, and everyone who becomes an employee is required to do that. Our legal counsel internally also conducts workshops around the world with staff from Mumbai to Manchester around those rules and that code of conduct. It's something that we try very hard to communicate as crisply as we can to everyone in the business.

COFFEY: Finally, and I appreciate Mr. Murdoch's statements at the beginning, given you've been in the media spotlight and perhaps not appreciated the attention you've had, without wishing to suppress investigative journalism, will this make you think again about how you approach your headlines and targets an targets in the future? Will you think again about what your headlines will say in the future?

RUPERT MURDOCH: I think all our editors certainly will, and I'm not aware of any transgressions as a matter of taste. It's a very difficult issue we have in this country. A wonderful variety of voices and they're naturally very competitive. I'm sure there are headlines which occasionally give offense, but it's not intentional.

COFFEY: Mr. James Murdoch.

JAMES MURDOCH: I think it's important to say one of the lessons, if you will, from all of this for us is that we do need to think, I think, as a business as well as an industry in this country more forcefully and more thoughtfully about our journalistic ethics about what exactly the codes of conduct should be not just for News International, our U.K. publishing subsidiary, but also for the industry as a whole.

What sort of governance should be around this whole area, and we welcomed last week the prime minister's announcement of a judicial inquiry into both journalistic ethics but also relationships as I understand it with the police and with politicians and things like that.

I think that's a really good thing for the country and for all of the interested parties to engage with fully. One of the specific actions that we've taken to try to be as proactive as we can around this is we've actually set up something that we call a management.

And standards committee that is outside of the actual management of our publishing company and reports to the independent directors through the independent directors of our global public board precisely to look at this issue around.

First, the specific issues, how we cooperate with the investigations, how we deal with allegations of wrongdoing and get to the bottom of it. But also and I think importantly how we coordinate and cooperate and really proactively engage with those judicial inquiries.

And how we start to set a code of conduct and a code of ethics that we think and that it thinks is something that can both be a paragon for all of our newspapers and the industry but also something that really has teeth and can hold the company to account.

It's independently chaired, this management and standards committee, and we think it's going to be a much better way to go in the future. We'd like over the next six months and year and years to really be judged on the actions that the company takes to put that right and to put that in place.

COFFEY: Thank you.

RUPERT MURDOCH: I would like to say, if I may, that it doesn't take away at from what we've been saying about our apologies or blame for anything. But this country does greatly benefit from having a competitive press, and therefore having a very transparent society. That is sometimes very inconvenient to people. But I think we're better and stronger for it.

UNIDENTIFIED MALE: Before I bring in my next colleague, can I just come back to something that was raised which was the closing of "The "News of the World." Can I ask you, is it your intention to launch a new Sunday tabloid newspaper?

J. MURDOCH: No, there's no - there are no -

R. MURDOCH: No decision on that.

JAMES MURDOCH: There's no decision on that.

UNIDENTIFIED MALE: So, for the moment, there are no plans to have a News International title coming out on Sunday at the tabloid end of the market?

JAMES MURDOCH: There are no immediate plans for that.

UNIDENTIFIED MALE: So speculation - I mean, we've talked in the past about moving to seven-day newsrooms or speculation for the title (INAUDIBLE) on Sunday being reserved.

JAMES MURDOCH: I think -- I think we leave all those options open. That is not the company's priority now. In the last week, it has come up in the company. But, you know, my father's direction and my direction is this is not the time to be worrying about that. The company has to move forward on all of these other actions and really get to grips with the facts of these allegations and understand them as fully as we can.

UNIDENTIFIED MALE: OK. Can I appeal both to the witnesses and indeed to members to try and keep brief because we still have quite a lot to get there. Adrian Sanders?

ADRIAN SANDERS, LIBERAL DEMOCRAT, MEMBER OF BRITISH PARLIAMENT: Good afternoon. In your statement the 7th of July 2011, this is to James Murdoch, you said that "The company paid out of court settlements approved by me. I did not have a complete picture when I did so." What do you know now that you did not know then?

JAMES MURDOCH: I think essentially the new information that emerged that is critical here is the information that came out of the ongoing process of civil litigations in 2010. And at the end of the 2010 the presentation of evidence, which had not been in our possession previously from this civil litigation, that widened the circle definitively or at least made it made it very apparent that it was very likely that the circle was wider than the two individuals, Mr. Goodman and Mr. Mulkare, from previously.

And it was that information that was really critical. And if I can go back to my previous testimony just earlier today around the settlement with Mr. Taylor, the commercial and legal rationality around that settlement was very, very clear, which was that this underlying fact was not in dispute and was a known fact from a previous trial. The advice was very, very clear as to what sort of damages could be expected to be paid, and it was quite clear and quite likely that if litigated, the company would lose that case. In the context of none of this other information -- this is a full year before some of the new allegations in the press arose from afar, so this is a -- there was no reason to believe at the time that it was anything other than in the past.

Now -- so knowing then what I know now, would I have still directed to negotiate to settle that case? I would, actually. But I would have coupled it with the other actions we've taken since the new evidence emerged at the end of September 2010. And that is to immediately go and look at -- whatever we could find internally around the individuals involved to immediately contact the police about what they -- about information that may be of great interest to them. To put in place the system -- the process, which took a little while and we did it, I think, in the early part of 2011 around admitting liability to the civil litigants, putting a process in place to get to the bottom of what legitimate allegations there were, apologizing unreservedly to the victims of those illegal voicemail intercepts which were absolutely inexcusable, and having a system of compensation there.

So, I think if I knew then what we know now and with the benefit of hindsight, we can look at all these things. But if I knew then what I know now, we would have taken more action around that and moved faster to get to the bottom of the allegations.

SANDERS: Were the settlements paid by News International, News Corp or News Group Newspapers?

JAMES MURDOCH: I don't - I don't -- I don't recall. I would imagine it was either News International or News Group Newspapers. I think News Group Newspapers, but we can - we can -- I'm sure we can provide you with that information.

SANDERS: What advice did Tom Crone and Colin Myler give you in relation to the payment to Gordon Taylor? JAMES MURDOCH: The advice from Mr. Myler and Mr. Crone was as I have described it, which was that the underlying fact in the case was known. It was a previous fact in the trial of Mr. Mulcare.

SANDERS: But were you aware it involved the criminal act of phone hacking?

JAMES MURDOCH: Pardon me, sir?

SANDERS: Were you aware the case involved the criminal act of phone hacking?

JAMES MURDOCH: That was my understanding, that that was what the litigation was for. Damages for the illegal voice mail interception.

SANDERS: So, when did you get this advice?

JAMES MURDOCH: This was in the first half of 2008.

SANDERS: In 2009, Mr. Crone and Mr. Myler informed us that they decided to settle Mr. Taylor's claim based upon the advice from the company's external legal advisers. Was this advice received from Feran & Co. solicitors?

JAMES MURDOCH: Feran & Co. has done work for us. I don't know precisely which external counsel they engaged on that, but I can --

SANDERS: Did you see the advice, whether it was from Feran & Co. or anybody else?

JAMES MURDOCH: No, the advice that I had was oral, but was oral from Mr. Myler and Crone.

SANDERS: And what was that advice?

JAMES MURDOCH: It was as I described it.

SANDERS: Simply to settle?

JAMES MURDOCH: And that outside legal advice had been taken with respect to the quantum of damages that were expected. That their advice was that the case would be lost, and that their advice was that the -- in the absence of any new evidence -- certainly no new evidence was made aware to me. In the absence of any new evidence from this, this was simply a matter that was to do with events that had come to the light in 2007 in the criminal trials before and before I was there, and that this was a matter in the past.

And the police as well had closed their case and said there was no new evidence here. So the context of it was it was about events that were a year or more old about underlying activities prior to that. That's where we were.

SANDERS: Was part of the advice given that the high payment would ensure the matter was kept confidential? JAMES MURDOCH: No, not at all. The confidential nature of an out-of-court settlement is a - is a -- normal thing. I don't know of any many out of court settlements that are not kept confidential.

There are some I'm sure -- so there was nothing about confidentiality. I think I understand where you're going with this, Mr. Sanders, but no. The amount paid and the advice there was on resting on advice from outside counsel with respect to the amount that we would be expected to pay in damages plus expenses in litigation costs.

SANDERS: Did you question why such high payments were made to Mr. Taylor and to Mr. Clifford? It's suggested to be 700,000 pounds and a million, respectively, for invasions of privacy when the record amount of privacy damages awarded by a court remains 60,000 pounds, ironically against """The "News of the World""""?

JAMES MURDOCH: Mr. Sanders, I did question the amount made, but not in relation to the 60,000. If you recall, as I'm sure you do, the chronology here. The settlement made with respect to the 60,000 pounds against ""The "News of the World""" which I believe was the Moseley case, was after the authorization of the settlement and after the advice we sought from senior distinguished outside counsel with respect to the quantum of damages we could be expected to pay. Which in damage materials was quarter of million pounds plus expenses and litigation costs was expected to be between 500,000 and a million pounds is my recollection of it.

And I think that chronology is important. I think afterwards you would obviously have had maybe different information, but it wasn't afterwards. It was before.

SANDERS: You have since said that when you approved the Taylor settlement, you did not actually have all the facts. What do you know then that you did not know then?

JAMES MURDOCH: As I've testified, Mr. Sanders, and respectfully Mr. Chairman, the key facts, the key evidence that came to light at the end of 2010 as the lengthy due process of civil litigations involving these matters took their course. It was that process that unearthed the key evidence there, and it was really only after that even that the police, that any said, you know, they should restart the investigation.

As soon as we had that new information at the end of 2010, which indicated to us that there was a wider involvement, we acted on it immediately.

SANDERS: Tom Crone said last week he did not know why he left News Group Newspapers. Can you clarify why he was asked to leave after 26 years after service?

JAMES MURDOCH: Well, last week "The "News of the World"" -- two weeks ago, I guess, "The "News of the World"" published its last paper. Mr. Crone was very involved with the news matters over the years, but the company believed and the management of the company believed that it was time to part ways.

I was not involved in those direct discussions with Mr. Crone. And I can't comment on their nature or their content. I don't have knowledge of them.

SANDER: Final couple of questions. The "News Statesman" carries a story last week that News International subsidized Andy Coulson's wages after he left your employ. Can you shed any light on that?

JAMES MURDOCH: I have no knowledge of Andy Coulson's wages after he left the company's employment.

SANDERS: And finally, are you familiar with the term willful blindness?

JAMES MURDOCH: Mr. Sanders, would you care to elaborate?

SANDERS: It is a term that came up in the Enron scandal. Willful blindness is a legal term. It states that if there is knowledge that you could have had and should have had but chose not to have, you are still responsible.

JAMES MURDOCH: Mr. Sanders, do you have a question? I just don't know what you would like me to say --

SANDERS: The question was whether you're aware --

JAMES MURDOCH: I'm not aware of that particular phrase.

SANDERS: But now you are familiar with it, because I explained it to you. Thank you, Mr. Chairman.

JAMES MURDOCH: Thank you, Mr. Sanders.

RUPERT MURDOCH: I've heard the phrase before, and we were not ever guilty of that.

UNIDENTIFIED MALE: Thank you. Philip Davies.

PHILIP DAVIES, CONSERVATIVE MEMBER OF PARLIMENT: As you -- I'm not sure if you acknowledged it or not but certainly the chairman did that when we had our inquiry in 2009, the evidence given by News International executives was rather hopeless, really.

They came with a game plan. Their game plan was to tell us that they didn't know anything, they couldn't remember anything, and they didn't know anybody who would know anything. And I just wondered so we can get off on a reasonable footing what sort of coaching you've had today and whose advice you had to handle this session and what their advice was?

JAMES MURDOCH: With respect to today, after - after scheduling this - this -- this appearance, we took -- we took some advice around what the context of this sort of a setting is. It's my first time and my father's, I think, first time - in -- in a committee meeting like this. Mostly logistics and so on, what sort of questions to be asked. But we were advised fundamentally to tell the truth, and to come and be as open and transparent as possible. And that's mine and my father's intent and intention, and we hope that we can show you that that's what's happening.

DAVIES: Okay. Mr. Murdoch, Sr., you in answer to some questions Mr. Watson, seem to indicate that you had a rather hands-off approach to your company. But I think the point you made was that "News of the World" was less than one percent of your entire worldwide business, and so you wouldn't be expected to know the ins and outs of what was going on.

Could you just give us an illustration of how many times -- how often you would speak to the editor of your newspapers, how often you speak to the editor of "The Sun," for example? How often you speak to the editor of "News of the World"?

RUPERT MURDOCH: Very seldom. Sometimes I would talk to the editor of "News of the World" on a Saturday night and say (INAUDIBLE), but it was just to keep in touch. I read "The Sunday Times" nearly every Saturday. Not to influence what he has to say at all. I'm very careful to premise any remark I made to him saying I was just inquiring, and -- I'm not really in touch. I've got to tell you that I've -- if there's anything I've had the most trouble with is with the editor of "The Wall Street Journal," because I'm in the same building.

But to say that we're hands off is wrong. I work a 10 or 12-hour day, and I can't tell you the multitude of issues that I have to handle every day. "News of the World" perhaps I lost sight of, maybe because it was so small in the general frame of our company. We're doing a lot of other things, too.

DAVIES: I'm sorry (ph), if I can help you out here, if somebody had told me that you would speak to something like the editor of "The Sun" at least daily or maybe twice a day, would you recognize that description or would that be --


DAVIES: You wouldn't - he (INAUDIBLE) traditionally have spoken to the editor of "The Sun" that number of times?

RUPERT MURDOCH: No. I'd like to, but no.

DAVIES: So when you come in, you said you speak to the editor of "The "News of the World"" maybe on a Sunday night before publication, not to influence what they have to say. Absolutely understand that.

So, I just am intrigued as to how these conversations go. Because I would have imagined it would go something along the lines of to the editor of "The "News of the World" anything to report? You know, anything interesting going on? The editor of "The "News of the World" says no, no. We've had a standard week. We paid Gordon Taylor 600,000 pounds.

(LAUGHTER) DAVIES: Um, surely --

RUPERT MURDOCH: He never said that last sentence.

DAVIES: Surely in your weekly conversations with the editor of "The "News of the World," something as big as that, paying somebody a million pounds, paying somebody 700,000 pounds, surely you would have expected the editor of "The "News of the World" to drop this into the conversation at some point during your weekly chat?


DAVIES: You wouldn't have expected them to say that?

RUPERT MURDOCH: Because I didn't really call him weekly, but I would have called him at least once a month, I guess.

DAVIES: So, what would you discuss with them?


RUPERT MURDOCH: I'd say, what's doing?


RUPERT MURDOCH: I'd say, what's doing?

DAVIES: And what sort of response would you get?

RUPERT MURDOCH: He might say we have a great story exposing x or y. Or he'd say, well actually, nothing special.

DAVIES: Thank you. James, would you --

RUPERT MURDOCH: He might refer to the fact that there are -- how many extra pages because of the football that week.

DAVIES: But he wouldn't tell you about a million pound pay off?


DAVIES: It's just interesting to someone like me.

RUPERT MURDOCH: I think he would have expected (ph) other people to tell me that.

DAVIES: James, would you acknowledge then in your view that you overpaid Max Clifford and Gordon Taylor (ph)?

JAMES MURDOCH: Well, I can't speak to the arrangements with Mr. Clifford. I was not -- I don't have direct knowledge in terms of I wasn't involved in those pieces and that piece. With respect to the Taylor piece, I made a judgment given the advice of counsel, given the advice of the executives involved that -- and going back and looking at what we knew in 2008. And looking at that advice, remembering that advice, and looking at the context of the time if we step back those few years, three years now. You know, it was a decision that given that context was a decision that I would still stand by, I think.

DAVIES: It just seems a bit --

JAMES MURDOCH: Certainly I think the - sorry, Mr. Davies. You had a --

RUPERT MURDOCH: Apparently there was a contract with Mr. Clifford, which was canceled by Mr. Coulson.

JAMES MURDOCH: I don't know about that. I don't have knowledge of that. The -- Mr. Davis, sorry, you were going on.

DAVIES: Well, it just seems strange to me that --

RUPERT MURDOCH: I don't know what was in the contract.



DAVIES: No, we might -- we might ask you to come back to it. We might ask you to come back with details about that.

Well, it seems odd to me as a layman that 600,000 to a million pounds -- Andy Grey had his phone hacked and he hasn't got 600,000 or 500,00 or even 200,000 or even 50,000. He got 20,000. It seems bizarre that somebody can have their phone hacked and get 20,000, and somebody else gets their phone hacked and they get 600,000 or a million.

And surely you can see that the difference that most people draw is the one was when it was all out in the open and everybody knew about all of these things, Andy Grey, and the other one was paid when it was all trying to be kept rather quiet, 600,000. Do you not see that to most people looking at that? It sort of smells a bit?

JAMES MURDOCH: Mr. Davies, I understand. I understand where you're coming from. And I understand how - you know, these are big sums of money we're talking about. 100,000, 200,000, 600,000. That's a lot of money. And you look at that and say why would a company -- why would a company do that?

And I would go back to my answer to Mr. Sanders' question, which was just to be precise about the chronology here. Really - and I'm not a lawyer. I apologize -


JAMES MURDOCH: -- but my understanding -- Mr. Davies I'd like to answer this question. but my understanding is that the 60,000 settlement in the Moseley -- judgment in the Moseley case, which was after the advice given around the Gordon Taylor settlement, is an important chronology. That's set, and courts and judges have set a different - a different -- you know, a different standard here.

What we knew and what I knew at the time was that we had senior distinguished outside counsel who we had gone to to say if this case was litigated and if we were to lose the case, if the company were to lose the case, what sort of damages would we expect to pay? And the company received an answer that was substantial.

DAVIES: The answer was 250,000, so you settled for 600?

JAMES MURDOCH: Mr. Davis, it's important to be clear. Mr, Davies. I apologize. But it is important to be clear the 600,000 or 700,000 included damages, legal fees, and an estimation of what it would have cost otherwise, because the other side of the negotiation understands it. So, it's damages plus costs that gets you to that number. And it's important - respectfully, it's important to be clear about that. Because I agree. They're big numbers.

DAVIES: No, no, sir. I want to concentrate on payments you made to your staff as it counts (ph). Going back to the trail of Glen (INAUDIBLE) and Clive Goodman. Clive Goodman was pleading guilty to phone hacking, a criminal offense. Did News International pay Clive Goodman's legal fees for his trial?

JAMES MURDOCH: I was not -- I do want to be clear about the chronology, first of all. I did not have firsthand knowledge of those times. Remember that my involvement is matters -- it started in 2008. And in 2007 I think of December, I was wholly focused in my role as chief executive of a public company, and I wasn't involved in those things.

DAVIES: Who would know?

JAMES MURDOCH: But I can try to answer the first question first to say that it is - it is customary in certain instances with employees or with other -- with litigations to pay some set of legal expenses on behalf of those to try to bring all of the evidence to a court and so on. And that's all been done in accordance with -- since any involvement that I've had knowledge of this in accordance with legal advice about what the proper way to do things was.

But I can't speak to the 2007 arrangements. I don't have firsthand knowledge of those.

DAVIES: I know. I'll try to help out. Clive Goodman employed the services of a QC called John Kelsey Frye. Now, I don't know if you've come across John Kelsey Frye. I think he's a lawyer that News International used -


DAVIES: He's probably one of the most eminent lawyers in the country, certainly one of the most expensive lawyers in the country, and he's the sort of go-to lawyer for celebrities. I think Steven Jellad (ph) used him fairly recently.

It seems odd to me that a journalist on "The "News of the World" pleading guilty here to the crime using in litigation probably the most expensive lawyer in the country, which obviously leads most people to suspect that his legal fees were not paid for by himself but were being paid for by News International.

Now, given that he was pleading guilty to a criminal act, phone hacking, which presumably leads to some degree of dismissal, gross misconduct, why on earth would News International even think about, even dream about paying the legal fees of somebody engaged in criminal activity and committed something that was clearly gross misconduct?

JAMES MURDOCH: Mr. Davies, I don't have any direct knowledge of the specific legal arrangements with Mr. Goodman in 2007, so I cannot answer the specifics of that question.

What I can say is that -- because I've asked the question as well more recently than that with respect to who the company pays legal fees, what contributions to legal fees do we make, does the company make and so on and so forth. And I think I can tell you that in asking the question, I have been surprised that -- this is legal counsel telling me this -- that it is customary in here to sometimes make contributions to the legal costs of either co-defendants or defendants in related matters and so on and so forth.

I have no direct knowledge of that particular instance that you mentioned, and if you have any additional specific questions about that, perhaps Mr. Chairman we can follow up with you on that. And I'm -- I'm happy to do that.

DAVIES: Well, it's all overwhelming. These are issues that go back some time. I'm surprised you haven't followed upon them already.

Were any payments made subsequently to Clive Goodman and Glen Molepear (ph) after their conviction? Did News International make any payments at all to those two people following their convictions?

JAMES MURDOCH: I'd like to answer that question. I think it's a good question, and it's a specific question.

The -- to my knowledge, upon asking, because there were allegations made that legal fees had been paid after those, after that time in 2007 to those. I asked the question myself, and I was very surprised to find that the company had made certain contributions to legal settlements. I don't have all of the details around each of those -- not legal settlements, sorry, legal fees around there. And I just, you know -- I was surprised. I was very surprised to find out that that had occurred.

DAVIES: Who authorized them?

JAMES MURDOCH: They were done as I understand it in accordance with legal counsel and the strong advice --

DAVIES: No, I didn't say who advised it. Who signed it off? Who - who at News International agreed to make the - who signed the checks? Who agreed to make those payments?

JAMES MURDOCH: I do not know who signed off.

(CROSSTALK) DAVIES: You know -- you talked about the managing editor -

JAMES MURDOCH: The managing -

DAVIES: Would you expect the managing editor to make that decision?

JAMES MURDOCH: It would have been the management of the legal cases, I would think. But I think we have to, you know -- I'm happy to go back and look at that, but it was not something that came to my attention.

DAVIES: Who would have made that decision?

RUPERT MURDOCH: I would like to say (INAUDIBLE) that certainly would not come before or having anything to do with the managing editors.

DAVIES: He wouldn't? Would it have been above the managing editor or below the managing editor?

JAMES MURDOCH: It would have been above.

DAVIES: Above.

JAMES MURDOCH: This would have been on legal advice, payments made about how to handle litigations. And again, I don't have direct knowledge or details on the current status of those, but I can tell you I was as surprised as you are to find that some of those arrangements had been made.

DAVIES: Mr. Murdoch, Sr., I seem to be getting further with you, for which I'm grateful. Would it have been Les Hinton? Would he have agreed? Would he have --

RUPERT MURDOCH: It could have been.

DAVIES: It could have been. Would have been or could have been?

RUPERT MURDOCH: Could have been.

DAVIES: Who else could it have been?

RUPERT MURDOCH: The chief legal officer.

DAVIES: Right.

RUPERT MURDOCH: (INAUDIBLE) Signing checks for approval?


RUPERT MURDOCH: Signing checks could be assistant CLO or something, but it would be on the instructions of the chief legal officer.

DAVIES: James, you said that you weren't involved in the decision to get rid of Tom Crone. Whose decision was that?

JAMES MURDOCH: The management of the - of the - of the -- company at the time recently the chief executive, Mrs. Brooks.

DAVIES: It was her decision?

JAMES MURDOCH: She's the chief executive of the company, and senior-level personnel decisions are made by them.

DAVIES: When Stewart (ph) left the company, he left either the day of or the day after allegations were made in "The Guardian" originally about phone hacking.

Was that linked? Did he - did he resign? Was he sacked? What happened to Stewart? How did he leave the company?

JAMES MURDOCH: I -- that, I don't know. That would have been for -- that would have been at the time a "News of the World" matter for them.

RUPERT MURDOCH: Or for you. You're free to ask him.

DAVIES: Why did Les Hinton resign?

RUPERT MURCOCH: Les Hinton resigned sadly last Friday following the Rebekah Brooks resignation and saying, "I was in charge of the company during this period that we're under criticism for." And he said "I feel I must step down."

DAVIES: Were either Rebekah Brooks or Les Hinton asked to leave, or did they ask to leave?

RUPERT MURDOCH: They both asked to leave.

DAVIES: Why did you not accept Rebekah Brooks' resignation when she first offered it?

RUPERT MURDOCH: Because I believed her and trusted her, and I do trust her.

DAVIES: And so why did you anticipate it the second time, then?


DAVIES: Why did you accept it the --

RUPERT MURDOCH: In the event she just insisted. She was at a point of extreme anguish.

DAVIES: Can you tell us how much all of these characters have been paid off? How much have they been given as a financial settlement on their departure from News International?

RUPERT MURDOCH: No, I can't tell you. But in the case of Mr. Hinton, it will certainly be considerable because of the pensions for his 52 years of service. DAVIES: Could it be 10 million? Five million, 10 million? Those are pound --

RUPERT MURDOCH: Those are certainly confidential.

DAVIES: And is there anything -- any confidentiality in their payoff that they're not supposed to speak about what happened or what their time at your company and what they know? Any clauses like that?