Cameron Says James Murdoch Still Has Questions to Answer - San Francisco Chronicle

(Updates with Murdoch planning to write in eighth paragraph, shares in ninth. For more coverage of News Corp., see {EXT3 <GO>}.)

July 22 (Bloomberg) -- U.K. Prime Minister David Cameron said News Corp. Deputy Chief Operating Officer James Murdoch still has questions to answer over the hacking of phones by reporters at the News of the World newspaper.

Cameron made his comments after Murdoch's testimony to lawmakers this week was challenged by two former employees of News Corp.'s U.K. newspaper unit, prompting one opposition lawmaker to ask the police to investigate.

"Clearly James Murdoch has got questions to answer in Parliament and I'm sure he will do that," Cameron said in an interview with BBC television today in Warwickshire, central England. "News International has got some big issues to deal with and a mess to clear up. That has to be done by the management of that company."

The widening phone-hacking scandal and its political backlash has forced News Corp. to close the 168-year-old News of the World and drop its 7.8 billion-pound ($12.6 billion) bid for British Sky Broadcasting Group Plc. At least 10 people have been arrested, including former News International Chief Executive Officer Rebekah Brooks and ex-News of the World editor Andy Coulson, who was Cameron's press chief until January of this year.

Murdoch 'Mistaken'

Tom Crone, a former lawyer at News International, and Colin Myler, the editor of the tabloid until this month, said Murdoch was "mistaken" about information he received on a settlement he authorized for a phone-hacking victim.

"We're getting near to the core of this now, we're getting nearer to the truth," Tom Watson, an opposition Labour Party lawmaker, told the BBC in an interview in which he said he will refer the matter to the police. "If their statement is accurate it shows James Murdoch had knowledge that people were involved in hacking as early as 2008."

A spokesman for London's Metropolitan Police, which is investigating the hacking allegations, said by telephone it had received a letter from Watson.

Murdoch, 38, is planning to write to House of Commons Culture, Media and Sport Committee Chairman John Whittingdale to reassert he answered truthfully in his testimony to the panel on July 19, committee, according to a person familiar with the matter.

Shares Decline

News Corp. fell for the first time in four days and was 0.9 percent lower at $16.34 at 11:07 a.m. in New York.

Crone, Myler, the police and the Press Complaints Commission are casting doubt on James Murdoch's explanation as to why News Corp. failed to investigate allegations of phone hacking in more depth. The police, whose 2006 probe stopped at the prosecution of reporter Clive Goodman and private investigator Glenn Mulcaire, have said the company obstructed their probe. The Press Complaints Commission, whose inquiry James Murdoch also referred to, has said it was lied to.

Chairman Rupert Murdoch should strengthen corporate governance rules and tighten internal controls, Saudi Prince Alwaleed bin Talal al Saud said yesterday.

"All of this is in motion already," Alwaleed, whose Kingdom Holding Co. owns about 7 percent of News Corp.'s voting shares, said in a CNN interview on "Piers Morgan Tonight." He said he wasn't worried about the fallout from the hacking scandal at the now-defunct News of the World newspaper.

Statement of Support

The Saudi prince, 56, issued a statement of support for Murdoch and his son, James, on July 20, the day after they gave three hours of testimony in the U.K.'s Parliament.

In a statement, Myler and Crone said: "Just by way of clarification relating to Tuesday's CMS Select Committee hearing, we would like to point out that James Murdoch's recollection of what he was told when agreeing to settle the Gordon Taylor litigation was mistaken.

"In fact, we did inform him of the 'for Neville' e-mail which had been produced to us by Gordon Taylor's lawyers."