Phone hacking: Rupert Murdoch's empire in crisis
Prime Minister bows to pressure for public inquiry
Rupert Murdoch's planned takeover of the UK's biggest commercial broadcaster was cast into doubt last night as his newspaper empire battled fresh allegations of hacking more phones of the families of murdered children and a dozen blue-chip companies withdrew advertising from its best-selling paper.
In another damaging day for Mr Murdoch in the deepening phone hacking scandal, the communications regulator Ofcom revealed that it was "closely monitoring" allegations of widespread criminality at News International and said it had a duty to be satisfied that Mr Murdoch and his top executives were "fit and proper persons" to control BSkyB. Business experts suggested his New York-based media conglomerate, News Corp, would postpone its bid for the remaining 61 per cent of BSkyB.
In an emergency debate in the House of Commons, the former Labour minister Tom Watson accused James Murdoch, the chairman's son and heir, of perverting the course of justice by engaging in a cover-up and called for him to be suspended from the News Corp board.
Hours after the Labour MP Chris Bryant accused the News of the World of hacking phones linked to the murdered Essex schoolgirl Danielle Jones, the 80-year-old proprietor gave his personal backing to the paper's former editor and News International's current chief executive, Rebekah Brooks.
In a statement, Mr Murdoch called claims of hacking and payments to police officers "deplorable and unacceptable". He said the company "must fully and proactively co-operate with the police in all investigations and that is exactly what News International has been doing and will continue to do under Rebekah Brooks' leadership".
As fallout from the dispute over the NOTW's hacking of the phone of the murdered schoolgirl Milly Dowler crossed the Atlantic, Mr Murdoch's News Corp shares tanked in New York, falling by nearly 5 per cent at one stage, wiping £180m from the tycoon's stake. By close of trading, he had lost £120m in the day.
MPs demanded the Coalition Government pause its approval for News Corp's bid for full control of BSkyB.
Mr Watson told the Commons: "James Murdoch and Rebekah Brooks now have to accept their culpability and they will have to face the full force of the law. Their behaviour to the most vulnerable, their knowledge of law-breaking and their failure to act, their links with the criminal underworld, their attempts to cover up law-breaking and pay for people's silence, tell the world all we need to know about their character. They are not fit and proper persons to control any part of the media in this country."
Although Jeremy Hunt, the Culture Secretary, is likely to shrug off the demands and give final approval to the deal tomorrow, the takeover may not go ahead. The BBC's business editor, Robert Peston, who has faced criticism that he is an unofficial messenger for News International, said BSkyB's independent directors would probably demand a higher price because of the risk of Ofcom intervening.
On his BBC blog, Peston wrote: "My conclusion from all this, which has been corroborated by talking to those close to the two companies, is that Rupert Murdoch and News Corporation will almost certainly have to delay their takeover of BSkyB – at least until it is apparent that the News of the World and News International have been cleaned up.
"And, in a worst case for Mr Murdoch and News Corporation, where the reputational damage to his organisation continues to magnify, the delay could become semi-permanent – if, for example, the perceived value of BSkyB rises beyond what News Corp would or could pay."
While News Corp's comments may have been intended to take the sting out of the Government's approval of the deal, they may also have been an attempt to take some of the pressure off Ms Brooks. Amid public outrage, 15 high-profile companies – including Lloyds, Virgin, Vauxhall and the Co-op – pulled their advertising from this Sunday's NOTW. The Co-op said the allegations the company had hacked the phones of crime victims had been "met with revulsion" by its members.
David Cameron, a close friend of Ms Brooks, suggested the Government would hold a public inquiry into the scandal. He said: "We do need to have an inquiry, possibly inquiries, into what has happened." Under pressure from Ed Miliband, the Prime Minister said inquiries must be "public, independent, and have public confidence".
Police are investigating new evidence that, under the editorship of Andy Coulson, Mr Cameron's former communications director, the NOTW bribed police officers for information.
MPs voice their anger
'Let us be clear. There will be an inquiry, perhaps inquiries, into events. It is no longer just celebrities and politicians, but murder victims. The whole country is appalled.'
'Editorial negligence is tantamount to complicity. If Brooks has a single shred of decency, she would resign ... My hope is that people who have committed criminality at the NOTW end up going to prison.'
'People are rightly angry. Why were these allegations not investigated sufficiently at an earlier stage?'
'News International has entered the criminal underworld... James Murdoch should be suspended from office while the police now investigate what I believe was his personal authorisation to plan a cover-up of this scandal.'
'Were News International, with their record of wrongdoing they have admitted so far, to apply to run a minicab firm they would not receive a licence.'
'The biggest press scandal in modern times, getting worse by the day ... This was not the actions of some rogue reporter: Rebekah Brooks should take responsibility and resign.'