Phone hacking scandal deepens

[Jan Klimkowski]

The Murdoch crime family is totally brazen:

Call for inquiry into News International payments to Andy Coulson

Labour MP Tom Watson wants Electoral Commission to investigate whether payments and benefits to former No 10 communications director amounted to political donations

Andrew Sparrow and Polly Curtis guardian.co.uk, Tuesday 23 August 2011 14.57 BST

The Electoral Commission is being asked to investigate whether News International payments to Andy Coulson after he started working for the Conservative party may have broken the law.

Tom Watson, a Labour MP and a member of the Commons culture committee, said he wanted the Electoral Commission to investigate whether the payments and benefits which reportedly included private health insurance and a company car should have been declared because they amounted to a political donation.

MPs on the committee are also angry because the reports appear to contradict evidence given to it by Coulson himself. The former News of the World editor, who worked as David Cameron's communications chief from July 2007 until January this year, is expected to face further questioning from the committee about the payments.

On Monday night, the BBC's Robert Peston said Coulson had received several hundred thousand pounds from News International after he started working for Tories.

Coulson was known to have received a payoff after he resigned from the News of the World in January 2007 following the conviction of the journalist Clive Goodman and the investigator Glenn Mulcaire for phone hacking.

But Peston said Coulson received his severance pay in instalments, and that he continued receiving money from News International until the end of 2007. Peston also said Coulson continued to receive his News International work benefits, such as healthcare, for three years and that he kept his company car.

The report casts doubt on the reliability of the evidence that Coulson gave to the culture committee in 2009. Coulson, who at the time was working for the Conservative party on a reported salary of £275,000 roughly half what he was thought to have been earning at the News of the World said he did not have any "secondary income".

Watson asked: "So your sole income was News International and then your sole income was the Conservative party?" Coulson replied: "Yes."

Rebekah Brooks, the former News International chief executive, appeared to confirm this when she gave evidence to the committee in July. Asked if the company had "subsidised" Coulson's salary after he left the News of the World, she said: "That's not true."

On Tuesday, John Whittingdale, the Conservative MP who chairs the culture committee, said Coulson and News International should have been more open with the committee about the nature of this arrangement.

"As I understand it, these were staggered payments from a severance package. So, arguably, that's just delayed pay," Whittingdale said.

"But if it is also true that Coulson was provided with a car and health insurance, then I would have expected him to have made that clear. And I would have expected News International to have made that clear when we asked them about it."

The committee is not meeting until September, but Whittingdale said it may decide to demand further clarification on these matters from Coulson and News International.

Watson said on Tuesday the committee would have to establish whether it had been "misled".

But he said that the Electoral Commission also had to establish whether the payments and benefits constituted donations to the Conservative party that should have been declared.

"If it transpires that these payments were made in a discretionary fashion, rather than honouring the commitments of Mr Coulson's contract, then I think they probably do form a donation and they should have been declared," he said.

"Every single day there seems to be a new revelation that contradicts what has previously been said. I want the Electoral Commission to try and get to the facts of this case. They have powers of investigation."

Watson also said that Cameron should have been embarrassed to learn that Rupert Murdoch was still paying for Coulson's car and for Coulson's health insurance several years after Coulson started working for the Tories.

"I just pose the question if Alastair Campbell when he was working for Tony Blair had had his car paid and his health insurance paid what would the reaction of the Murdoch papers be?" Watson asked.

The commission said it had not yet received a complaint about the individual allegations and refused to spell out whether such payments might have been considered undeclared donations, directing inquiries to their rules regulating donations.

According to the rules, staff of political parties are not considered regulated donees in their own right unless they are a member of the party and they receive money for use in their political work.

Payments to a member of staff could however be considered a donation in kind to a party if it saved the party paying for items itself. As such, if the payments were in anyway considered a co-payment or top-up to subsidise his party wage it could count as a donation.

Alternatively if the health insurance or company car he reportedly enjoyed for three years after leaving News International subsidised the party paying for such items itself, it could also be considered a donation.

In July, the Conservatives denied Coulson was paid by News International while he was working for the party or the government. A senior Conservative party official told the Guardian: "We can give categorical assurances that he wasn't paid by any other source. Andy Coulson's only salary, his only form of income, came from the party during the years he worked for the party and in government."

Labour's culture spokesman, Ivan Lewis, put out a statement on Tuesday demanding more "transparency" from Cameron and News International.

"David Cameron needs to say whether he knew about the payments to Andy Coulson. The details of Mr Coulson's termination agreements with News International must be published and we need to know whether these payments, in the form of honouring a two-year contract of employment after he had been forced to resign in disgrace, were declared to the parliamentary authorities," Lewis said.

"It must be explained why Mr Coulson was getting these payments when he resigned from the News of the World.

"The longer these questions are unanswered the more damage will be done to the prime minister's reputation."