THE BBC was in turmoil as its TV program "Newsnight" faced being sued for linking a former politician to paedophile allegations.
Former Conservative treasurer Lord McAlpine vowed to issue libel proceedings over the "wholly false and seriously defamatory" suggestion, the Daily Mail reported.
ITV's "This Morning" is also in the firing line after host Philip Schofield ambushed the Prime Minister David Cameron with a list of so-called "Tory paedophiles" on live TV.
Lord McAlpine, 70, blames the two programs for informing "most of the country of something that is a complete lie".
Steve Messham, a former resident of the Bryn Estyn children's home in Wrexham, North Wales, told "Newsnight" he had been abused by a high-ranking Margaret Thatcher-era Tory in the 1970s.
He claimed he was sold to men and taken to a hotel where he was molested by men including the prominent politician more than a dozen times.
Last night the BBC's humiliation was complete as Mr Messham, 49, apologised and admitted Lord McAlpine was not the man involved. It could not have come at a worse time for the Corporation, still reeling from the Jimmy Savile scandal.
The British Government ordered two inquiries into care home abuse and Labour MPs spent days talking of a potential cover-up .
BBC director general George Entwistle yesterday asked audiences to keep faith as the Corporation worked to regain their trust.
But "Newsnight" whose decision to shelve its investigation into the "Jim'll Fix It" star heightened the Savile crisis, is now under fire again following its special report last Friday about a senior Tory .
"Newsnight" admitted it did not have enough evidence to name Lord McAlpine yet speculation spread like wildfire on the internet.
Among those stoking the rumours were the Commons Speaker's wife, Sally Bercow, and Guardian columnist George Monbiot. Mr Monbiot apologised for contributing to the febrile atmosphere .
Last night a furious Lord McAlpine issued a statement and instructed lawyers to issue libel proceedings. He did not specify which organisations would be sued but his solicitor Andrew Reid later suggested "Newsnight", "This Morning" and even Twitter.
" We have to look at 'Newsnight' and the way in which they behaved. They took what I think is the coward's way out. They ran the program, trailed it, and then told everyone where to go and look for the name. They have done a very, very good job in severely damaging Lord McAlpine's reputation. They made these statements recklessly, without any thought of the damage that has been done to him.
"He can cope with political criticism. He is broken-hearted over this. His family are very upset, and he feels that, bearing in mind his health isn't that good, that this is a total shock at this time in his life".
Schofield's stunt on "This Morning" made matters worse because he inadvertently allowed a camera to see his list of names which he had found on the internet as he passed it on a card to the PM.
Mr Messham has left "Newsnight" in a precarious position by backing Lord McAlpine. He said: "I want to offer my sincere and humble apologies to him and his family. After seeing a picture of the individual concerned, this is not the person I identified by a photograph presented to me by the police in the early 1990s, who told me the man in the photograph was Lord McAlpine."
"Newsnight" had commissioned the Bureau of Investigative Journalism for the story. Its trustees include Sir David Bell, former chairman of the Media Standards Trust, which formed the Hacked Off campaign following the phone hacking scandal. Sir David is now serving as one of the assessors for the Leveson inquiry into press standards.
Last night MP Rob Wilson wrote to the BBC Trust demanding to know what steps the BBC had taken to verify Mr Messham s allegations. It was suggested the BBC had failed even to give the peer a right of reply before the broadcast.
In his statement yesterday, Lord McAlpine said: " I did not sexually abuse Mr Messham or any other residents of the children's home in Wrexham."
A BBC spokesman said: "Newsnight broadcast an investigation into alleged failures in a child abuse inquiry. It worked with the Bureau of Investigative Journalism to give a voice to concerns raised by an abuse victim. It was in the public interest to air these. We did not name any public figure for legal reasons. It is now for the inquiries announced by the Home Secretary to dig deeper into Mr Messham's concerns."
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