Phone hacking scandal deepens

[Magda Hassan]

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For more than five years Rupert Murdoch and his most trusted executives told the world that a rogue reporter and a rogue private detective were responsible for hacking phones for the News of the World. Reporter Sarah Ferguson investigates that claim and reveals the links between Murdoch's newspapers and the British criminal world going back two decades.

What do you do when you're a journalist with an editor demanding an exclusive story to put on the front page? At Britain's now defunct News of the World you employed a foul-mouthed private investigator with a criminal record to get you information that would provide you with a scoop.

Phone hacking was a speciality but there were other methods too, including corrupting police who would provide the kind of private information guaranteed to win the reporter a prime spot in the paper.

This week on Four Corners, Sarah Ferguson tells the story of a key private investigator at the heart of the scandals that have set Rupert Murdoch's empire rocking on its axis. Detailing records of police surveillance and interviews with people who had been targeted by the investigator Ferguson pieces together how he worked.

As the investigation unfolds it becomes clear that phone hacking and illegal information theft were not done on behalf of one "rogue" reporter or one newspaper. Instead, the evidence suggests these surveillance activities were being done on an industrial scale - sometimes by people with criminal backgrounds - for anyone who had the cash to pay for it. As Tony Blair's former press secretary, Alastair Campbell, told Four Corners:

"It seems they were in a sense replacing journalists... possibly to cut costs, but the other reason you assume is because it meant the private detectives could do things the journalists can't."

Campbell has good reason to make such a claim. Four Corners has been told by a News insider that the practice of phone hacking and the gathering of illegal information was so widely accepted that at the News of the World competing sections of the paper used different private investigators to do their dirty work.

Meanwhile, News executives stuck to the company line of one rogue reporter. As one British MP puts it:

"You know what they say about lies: if you say it loud enough and often enough people begin to believe it and they nearly got away with it."

One reason they were able to get away with it for so long was that the British police refused to investigate the extent of the potential criminal activity. Why were they reluctant? According to one person who found himself the victim of illicit surveillance, the answer is clear:

"What happened was that the News of the World or News International more generally managed to get its filthy, slimy tentacles in every nook and cranny of the Metropolitan police and to all intents and purpose that corrupted it."

As the British parliament prepares to reopen its hearings, one question resonates throughout the News empire: how far up the corporate ladder did the knowledge and approval to pay for these services go?

'Bad News', presented by Kerry O'Brien, goes to air on Monday 29th August at 8.30pm on ABC1. The program is replayed on Tuesday 30th August at 11.35pm. It can also be seen on ABC News 24 at 8.00pm on Saturdays, on ABC iview and at abc.net.au/4corners.

Transcript

KERRY O'BRIEN, PRESENTER: Welcome to Four Corners.

It may be premature to talk with any certainty of the fall of the House of Murdoch, but the powerful global media dynasty led by patriarch Rupert has never faced a crisis like it, with a yawning credibility gap his News Corporation may find impossible to close while ever the Murdochs remain associated with it.

Tonight we're going to chronicle the extent of the News Corporation nightmare in Britain relating to illegal phone and computer hacking, and bribery of police, for information including salacious gossip for stories on royals, politicians, celebrities and others, which has so far led to 12 arrests including former and current senior executives.

With an army of 120 police now investigating the Murdoch empire's activities in Britain, there is now open conjecture that James Murdoch, son of Rupert and chairman and CEO of News Corporation, may have a case to answer himself.

Revelations of the lengths to which News of the World, the biggest circulation newspaper in Newscorp's global stable, would go to get a story, using unscrupulous private investigators to crack the private data of banks police and government departments, had been building for a decade.

In piecing the picture together for tonight's program, Sarah Ferguson reveals just how ludicrous it was for News Corporation to claim, as it did for so long, that the illegal hacking within News of the World were the work of one rogue journalist and one rogue private investigator.

She also tells of another even more criminally unscrupulous private investigator, and of corrupt practices that had become endemic in Fleet Street culture. Here now is Sarah Ferguson's story.

NEWS REPORTER: Several years ago he was involved in several out of court settlements involving some phone hacking allegations to the fact...

MEDIA COMMENTATOR: Rupert Murdoch, you're a great Australian in the same sense that a killer was a great...

STREET VENDOR (handing out newspapers): Free Standard, free standard, thank you.

(protesters shouting)

SARAH FERGUSON: Throughout its millennial history London has been the stage for great events. It's no stranger to the rise and fall of empires nor to the rise and fall of powerful men.

Today the Houses of Parliament will be the courtroom to try a modern media giant and his teetering empire.

It is the 19 July 2011and Australia's most famous expatriate Rupert Murdoch has truly become the news of the world.

GEOFFREY ROBERTSON QC: There is a kind of twilight of the gods atmosphere at the moment. Scotland Yard is falling; News Limited may crack.

LORD PRESCOTT, DEPUTY PRIME MINISTER 1997-2007: Now he's thinking about how do I save the company…

MICHAEL WOOLFF, BIOGRAPHER OF RUPERT MURDOCH: It's actually well past the beginning of the end; what's happened here fundamentally is just a terrible loss of credibility.

ALASTAIR CAMPBELL, MEDIA ADVISER TO TONY BLAIR 1997-2003: I think that News International and the Murdoch brand has been hugely damaged and I think it'd be very, very hard for them to recover from it.

RUPERT MURDOCH, CHAIRMAN AND CEO OF NEWS CORPORATION: As the founder of the company I was appalled to find out what had happened.

TOM WATSON, LABOUR MP: Looking back on the last month it seems like the parable of the emperor's new clothes, everyone now looks at Rupert Murdoch and recognises his organisation got too powerful.

NEWS REPORTER 2: James is the one most in the spotlight in this because several years ago he was involved in several out of court settlements...

NEWS REPORTER 3: Mr Murdoch, do you have anything you want to say to the victims of the phone hacking?

SARAH FERGUSON: In the twilight of ageing kings and potentates the focus is always on their successors.

Can they measure up to a father's brilliance and to his ruthlessness?

JOHN WHITTINGDALE, CHAIR OF INQUIRY: Could we please remove the people holding up notices?

SARAH FERGUSON: Today is a trial not only of the great man but his anointed successor the Americanised James.

(excerpt from the House of Commons media committee 19 July 2011)

JAMES MURDOCH, CHAIRMAN AND CHIEF EXECUTIVE OF NEWS CORPORATION EUROPE AND ASIA: Mr Chairman, thank you and first of all I would like to say as well just how sorry I am and how sorry we are, to particularly the victims of illegal voicemail interceptions and to their families. 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.

(end of excerpt)

MICHAEL WOOLFF: The parliamentary hearing was very clear what was going on there. This was being run by lawyers, by litigators and they were told you know this is not, this is not about clearing your name, this is not about making people feel better about you, this is not about arguing your case, this is about keeping you out of jail.

(excerpt from the House of Commons media committee 19 July 2011)

PHILIP DAVIES, BRITISH MP: Clive Goodman was pleading guilty to phone hacking, a criminal offence. 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, I do not have first-hand knowledge of those times.

PHILIP DAVIES: Who at News International agreed to make those payments? Who signed the cheques? Who agreed to make those payments?

JAMES MURDOCH: I do not know who signed off those payments.

PHILIP DAVIES: Who what? You know…

(end of excerpt)

LORD PRESCOTT: Oh they just said they didn't know! I mean it's absolutely amazing. What we're saying here is, "they didn't know".

SARAH FERGUSON: The tactic of avoiding questions, denying knowledge of criminal acts and distancing management from the decisions that led to criminality had worked for a very long time.

For more than four years the Murdochs and their executives claimed that a rogue reporter Clive Goodman and a rogue private detective Glenn Mulcaire were responsible for the entire scandal.

(excerpt from the House of Commons media committee 21 July 2011)

ANDY COULSON, EDITOR NEWS OF THE WORLD 2003-2007: But if a rogue reporter decides to behave in that fashion I am not sure that there is an awful lot more I could have done.

(end of excerpt)

TOM WATSON: The single rogue reporter defence was one bit fat corporate lie and we need to find the executives who prosecuted that argument.

SARAH FERGUSON: They may well have continued to get away with it were it not for this man, Guardian journalist Nick Davies.

Davies revealed in July this year that as well as celebrities and politicians, the News of the World had also hacked into the phone of a murdered school girl, Milly Dowler, in the frantic days after the teenager went missing.

SALLY DOWLER, MILLY DOWLER'S MOTHER (March 2002): Milly, darling, if you are watching or listening to this, mum, dad, Gemma, Granny and all the family want you to know that we all love you and we really miss you and we can't wait to have you back home with us.

NICK DAVIES, JOURNALIST FOR THE GUARDIAN: I sent an email to the editor saying I think this is the most powerful hacking story so far. But neither he nor I foresaw the scale of that impact. And it produced this kind of emotional tidal wave in the country that just knocked everybody over. And when they stood up again nobody was willing to be on the News of the World's side, but nobody.

DAVID CAMERON, PRIME MINISTER (6 July 2011): Murder victims, terrorist victims who've had their phones hacked is quite disgraceful...

NICK DAVIES: The big corporations who were advertising in the News of the World started pulling out their advertising. MPs, I mean in flocks, crossed the floor so to speak of the House of Commons, deserting the previous alliance to the Murdoch organisation and standing up and denouncing it.

GORDON BROWN, PRIME MINISTER 2007-2010 (13 July 2011): Many, many wholly innocent men, women and children who at their darkest hour found their private, innermost feelings and their private tears bought and sold by News International for commercial gain.

SARAH FERGUSON: Former News of the World journalist Paul McMullan was one of the few reporters prepared to speak out publicly against the Murdochs and their executives.

PAUL MCMULLAN, FORMER NEWS OF THE WORLD REPORTER: Rebekah Brooks, James Murdoch and Andy Coulson are saying, "I have clean hands. It was the reporters. I didn't know what they were doing. I'm innocent. It was them. Send them to jail not me." Why don't you stand up and tell the truth and say "Sometimes you know if you want to catch a politician with his trousers round his ankles you've got to hack his phone. We did it. It's justified."

(excerpt from the House of Commons media committee 19 July 2011)

JIM SHERIDAN, MP: Mr Murdoch, do you accept that ultimately you are responsible for this whole fiasco?

RUPERT MURDOCH: No.

JIM SHERIDAN: You are not responsible. Who is responsible?

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

JIM SHERIDAN: Are you satisfied by the cash payments…

(end of excerpt)

SARAH FERGUSON: But now the question for the Murdochs is how they could have remained so blind for so long to the scale of the criminal enterprise being run on their behalf.

GORDON BROWN (13 July 2011): New crimes with new names. Blagging, hacking, trojans to break into computers and not just phones. Not the misconduct of a few rogues or a few freelancers but, I have to say, lawbreaking often on an industrial scale, at its worst dependent on links with the British criminal underworld.

SARAH FERGUSON: Those links between the Murdoch press and Britain's criminal underworld are now the subject of a widening police investigation.

Here in the seedy streets of South London, police are trying to pin down where it all began. One of their key targets is Southern Investigations, a private detective agency started in the early 1980s by Jonathan Rees.

TOM WATSON: Jonathan Rees is a career criminal. He was a private investigator who went to jail and was hired to work again for News International having served that jail sentence.

GRAEME McCLAGAN, AUTHOR OF 'BENT COPPERS': He mixed with detectives, liked the company of detectives and he also acted as a bailiff. When you're a bailiff you can have access to some records and data that aren't allowed to normal people.

SARAH FERGUSON: Rees started the agency in 1984. Three years later he was the chief suspect in the brutal murder of his business partner, Daniel Morgan.

ALASTAIR MORGAN, BROTHER OF DANIEL MORGAN: He'd been murdered with an axe, five blows to his head, the last of which I think must've been delivered when he was lying on the ground, because the axe was embedded to the hilt in his face.

SARAH FERGUSON: Daniel Morgan's brother Alistair came to the scene of the crime the day after the murder.

ALASTAIR MORGAN: Well it was a, it was a, it was a sort of a picture like this you know, with a, I can tell that the cameraman was low down like that. And they took a picture of him, I couldn't see his face or his head, It's just, it's just a man in a suit lying on the floor with a axe sticking up.

SARAH FERGUSON: Because the murder was committed in the Catford area, one of Jonathan Rees' closest police associates was part of the investigation.

GRAEME McCLAGAN: Rees in particular had ah contacts within Catford police, particularly a sergeant there called Sid Fillery.

REPORTER (November 1998): Fillery was first on the scene at Southern Investigations. He initially failed to declare his relationship with Rees and when he interviewed Alistair Morgan he took no notes. Three weeks later Rees, Fillery and four other police officers were arrested in connection with inquiries into the murder but they were never charged.

SARAH FERGUSON: Detective Sergeant Fillery quit the police force and took the murdered man's position at Southern Investigations as Jonathan Rees's partner. Together they worked on an increasingly lucrative business, selling people's private information to the press.

Author Graeme McClagan has written about corruption in the Metropolitan Police for 20 years.

GRAEME McCLAGAN: This was during the Scotland Yard's anti-corruption campaign, there were police who were suspended, awaiting trial who start, hitched up with Rees.

PAUL CONDON, THEN METROPOLITAN POLICE COMMISSIONER (November 1998): I do have a minority of officers who are corrupt dishonest unethical…

SARAH FERGUSON: Police commissioner Paul Condon reopened the Morgan murder investigation in 1998, targeting Jonathan Rees again.

REPORTER (November 1998): Sir Paul, who has made anti corruption a personal crusade has now singled out the murder for reinvestigation by CIB3 his anti corruption unit.

SARAH FERGUSON: In a police operation called "Nigeria". The offices of Southern Investigations were bugged.

GRAEME MCCLAGAN: First of all it was to get information about the murder. But the second reason was that the agency with its connections with corrupt cops and the fact that there were stories appearing that were embarrassing to the Metropolitan Police.

SARAH FERGUSON: The transcripts of police recordings reveal a foul-mouthed, racist Jonathan Rees selling information and stolen data to the newspapers.

VOICEOVER OF POLICE TRANSCRIPTS: Alex Marunchak says can he have that story about the helmets 'cause it's a fucking brilliant story? It's a good story, fucking niggers stabbing niggers.

SARAH FERGUSON: By now Rees was working with a range of newspapers but Alex Marunchak, the News of the World's senior executive editor, was one of Rees' key contacts and highest payers.

VOICEOVER OF POLICE TRANSCRIPTS: There's no one pays like the News of the World does.

SARAH FERGUSON: Ukrainian born Marunchak has so far been able to distance himself from the scandal; he's one of the few senior editors of the time not on charges.

PAUL MCMULLAN: He was great. He should have been made editor. I don't think we'd be in this mess if he had a been.

SARAH FERGUSON: Why great?

PAUL MCMULLAN: Oh smooth operator, knew the job backwards.

SARAH FERGUSON: Four Corners has uncovered new evidence linking Marunchak more closely to Rees' operation.

Company documents show that Marunchak established an import-export business operating out of Rees' premises in 1996 in partnership with another News of the World reporter, Greg Miskiw. The police surveillance reveals frequent contact between Rees and Marunchak.

GRAEME MCLAGAN: At one stage Rees is telling someone that he's owed 7000 pounds by Marunchak and ah once that's paid it'll be close to the monthly limit. So there was quite a lot of money coming from News of the World.

SARAH FERGUSON: In April 1999 BBC TV presenter Jill Dando was murdered on her doorstep. Rees' invoices show that Marunchak paid him for information on the murdered celebrity. A series of exclusive articles soon appeared with Marunchak's by-line. Rees is usually careful about what he puts into the invoices.

VOICEOVER OF POLICE TRANSCRIPTS: This is tiresome, fucking tiresome. We are not going to put the number in there because what we are doing is illegal.

SARAH FERGUSON: Illegal and profitable. Rees was earning up to 150,000 pounds a year from the News of the World. His targets were varied: celebrities, footballers, politicians. Tony Blair's press secretary Alastair Campbell was one of them.

ALASTAIR CAMPBELL: Insofar as it related to me, it wasn't the News of the World, it wasn't even the Daily Mail it was the Mirror, which is my old paper.

SARAH FERGUSON: Ex -News of the World Reporter Gary Jones, who'd moved to the Mirror, paid Rees for information on Campbell.

ALASTAIR CAMPBELL: It seems to be that they were in a sense replacing journalists. Now presumably that would be for two reasons: possibly to cut costs, but the other reason you assume is because it meant the private detectives could do things that journalists can't.

GRAEME MCCLAGAN: Rees had been dealing with at least three different newspapers, the News of the World foremost probably, the Sunday Mirror a close second and the Daily Mirror.

PAUL MCMULLAN: It was exceptionally competitive becaus you know we were the biggest selling paper in the world apart from the Chinese Times and we wanted to define the week's news and it was a Sunday paper so you had to get exclusives that would hold until Sunday and that's difficult.

SARAH FERGUSON: Paul McMullan worked on the features desk during this period in competition also with his own news desk. They didn't use Rees; they had their own private investigators.

PAUL MCMULLAN: The paper was set up in two competing departments, features and news. There was no crossover between PI's, between the two departments because they wouldn't have wanted us to know what they were doing. That was the whole problem. It was just running out of control.

SARAH FERGUSON: Just how widespread those practices were across a range of newspapers was revealed in a 2003 investigation into another private detective.

Operation Motorman was carried out by the British Information Commissioner into a man called Steve Whittamore.

DAVID SMITH, DEPUTY INFORMATION COMMISSIONER: We knew the media were involved. It was the extent of the trade and the way in which Whittamore ran a full time business on this. It was round about 30 publications, round about 300 journalists.

SARAH FERGUSON: Former policeman Dave Clancy is the Information Commissioner's chief investigator; his team led the raid on Whittamore's house.

DAVE CLANCY, INFORMATION COMMISSIONER'S CHIEF INVESTIGATOR: They entered the premises, executed the search warrant and found a number of documents which clearly indicated that he was heavily involved in the unlawful trading of personal information.

SARAH FERGUSON: They seized four ledgers. The blue book was for Rupert Murdoch's News International. It contained 922 requests made by 28 journalists from its tabloid papers.

PAUL MCMULLAN: Steve Whittamore was getting two to four grand a week. He was earning more than the reporters.

SARAH FERGUSON: Investigators identified more than 17,000 requests to Steve Whittamore. The Daily Mail was top of the list with

NICK DAVIES: He had people who specialized in blagging into credit card companies. He had a couple of people who specialized into blagging into phone companies. So he could get all- into almost any confidential data base he wanted.

SARAH FERGUSON: Some of the requests to Whittamore were legal; most were not, including 29 examples of accessing the police national computer.

DAVE CLANCY: It's quite clear that from the information we have that lots of journalists were involved in criminal activity.

SARAH FERGUSON: Steve Whittamore and three of his accomplices were convicted of data offences and accessing the national police database. None of the four men went to jail.

The Information Commissioner published the lists of offending newspapers, but no journalists or proprietors were charged with anything.

NICK DAVIES: There would've been a dozen, 15 private investigators working regularly for Fleet Street newspapers and each of those private investigators was routinely breaking the law, that's why they were being hired. They are blagging into confidential databases, they are hacking voicemail. As time goes by they get into hacking emails and occasionally on the fringes they are organising burglaries.

SARAH FERGUSON: The South London private detective Jonathan Rees was possibly the most vicious of a bad bunch.

Weeks into the police covert surveillance of Rees, they heard him planning a hideous crime.

GRAEME MCCLAGAN: The police heard discussion about a conspiracy to plant cocaine on a woman who would, who was involved in a custody battle with her husband.

SARAH FERGUSON: Rees was planning to use his corrupt police contacts to plant a large quantity of cocaine on a young woman, Kim James, and have her arrested.

BRUCE HOULDER QC, PROSECUTOR, JONATHAN REES TRIAL: It was absolutely vile. Not only was it a suggestion seriously made, it was a suggestion carried out. The drugs were planted, the plan was made for her to be shopped to the Social Services as well as shopped to the police. That young woman would've certainly served a number of years in prison and would've lost her child.

SARAH FERGUSON: Instead Rees was caught in a police sting and sentenced to seven years in prison. Astonishingly on his release he would be immediately rehired by the News of the World.

TOM WATSON MP: It's absolutely extraordinary that a company after all, let's say a $50 billion global business, would hire someone who's just served a jail sentence for seven years for planting drugs on a defenceless woman to try and frame her and then they hire him to do investigation work. It's just beggars belief.

SARAH FERGUSON: Questioned in Parliament last month the former CEO of News International Rebekah Brooks claimed to know nothing about Rees.

(excerpt from the House of Commons media committee 19 July 2011)

TOM WATSON: Do you believe that he conducted illegal activities on behalf of News of the World?

REBEKAH BROOKS: I don't know what he did for the News of the World, I'm sorry.

TOM WATSON: Do you not think that people will just find it incredible that, as chief executive of the company, you don't know?

REBEKAH BROOKS: It may be incredible, but again, it is also the truth.

(end of excerot)

SARAH FERGUSON: But even during his time in jail Jonathan Rees's links with News International continued. In 2002 the police reopened the investigation into the murder of Rees's business partner Daniel Morgan.

DAVE COOK, DETECTIVE CHIEF SUPERINTENDENT (BBC Crimewatch June 2002): I'm here tonight to re-investigate it with the advantage of 15 years of knowledge and hopefully through this appeal a nugget of information which will solve this case.

SARAH FERGUSON: Dave Cook isn't not permitted to talk about what happened next but his wife, former Crimewatch host and detective, Jacqui Hames, agreed to talk to us.

JACQUI HAMES, FORMER CRIMEWATCH HOST: He was given information, which he later relayed to me, that as a result of him taking on that case and being the public face of it, that there were certain people who were going to target him, potentially myself and the family, with a view to discrediting us and in fact derailing that investigation.

SARAH FERGUSON: They were targeted with the help of senior News International reporter and associate of Rees, Alex Marunchak.

JACQUI HAMES: I saw a van at the end of my driveway parked up and what was I suspect a camera lens looking back, coming out taking photographs of the front of the house. However hardened you are as a police officer when it be, you become part of the case and your children are involved it's you know, it's hard to actually explain how frightening that is.

SARAH FERGUSON: Her husband Detective Cook also saw the white van.

JACQUI HAMES: David was conscious upon driving the children to school that he was being followed, that there was a van pulling up behind him.

SARAH FERGUSON: Cook was able to give the pursuing van the slip and call up his colleagues on the highway patrol.

JACQUI HAMES: He went on to the motorway and arranged via his phone for the vehicle to be stopped, and it was stopped and the uniformed officers spoke to the occupants and established that they were in fact News of the World reporters, employees, and the van was actually leased to the News of the World.

SARAH FERGUSON: They established that the van was leased to Alex Marunchak.

The editor of the News of the World at that time was Rebekah Brooks. She was called to a meeting at Scotland Yard with Detective Dave Cook and other senior police and confronted with the information.

Cook explained the surveillance in detail, organized by News of the World reporter Alex Marunchak. By all accounts Rebekah Brooks offered no explanation, all she had to say was that Marunchak was a great reporter doing great work for the paper.

MARK LEWIS, LAWYER FOR PHONE HACKING VICTIMS: Nothing happened and Marunchak carried on being employed by News of the World. No steps seem to have been taken.

JACQUI HAMES: My understanding was that it was people involved in Southern Investigations. To hear that somehow News of the World were caught up in this was completely out of the blue for me. I just didn't get it initially.

SARAH FERGUSON: To this day no full explanation has been given by News International about its involvement in the surveillance.

As the couple would later discover the intrusion into their lives went much further. Detective Cook and his wife were also targeted by infamous News of the World phone hacker and private eye Glenn Mulcaire.

JACQUI HAMES: A couple of months ago I was approached by officers from Operation Weeting who said that my mobile phone had been found, phone number had been found in the diaries of Glenn Mulcaire. I went along and was shown two or three pieces of paper, which yes, included my mobile phone number, also included my home address, home telephone number, but it also had a lot of information which could only have come from my personnel file from the Metropolitan Police. Clearly a lot of work had been done on us, as well as the surveillance, which is a huge amount of effort to go to by a national newspaper. For what reason?

SARAH FERGUSON: Dave Cook and Jacqui Hames knew nothing about Mulcaire's involvement until this year because back in 2006 when Glenn Mulcaire was arrested, the police chose not investigate.

MARK LEWIS: You would have thought that whoever was investigating at Scotland Yard would have gone downstairs to David Cook's office and said 'We've just found your name and number in our investigation'. No one told him.

SARAH FERGUSON: It wasn't until Glenn Mulcaire was caught hacking into the phones of the Royal Family for the News of the World Reporter Clive Goodman that phone hacking came to light.

In 2006, 11,000 pages of Mulcaire's notes were seized showing thousands of targets, the police decided to pursue only a handful of cases.

From the moment that scandal broke News International insisted hacking was the work of one rogue reporter beyond the control of even his editor Andy Coulson.

(excerpt from the House of Commons media committee 21 July 2009)

ANDY COULSON: I am absolutely sure that Clive's case was a very unfortunate rogue case. I never condoned the use of phone hacking nor do I have any recollection of incidences where phone hacking took place. My instructions to the staff were clear, we do not use subterfuge of any kind unless there was a clear public interest in doing so.

(end of excerpt)

SARAH FERGUSON: Liberal Democrat MP Simon Hughes, already the target of another News International paper, was one of the victims of phone hacking in the case against Mulcaire and Goodman.

SIMON HUGHES, MP: They were hacking my phone to try to discover more details of my personal life.

SARAH FERGUSON: Police told Hughes this year it wasn't only Clive Goodman at the News of the World who was responsible.

SIMON HUGHES: On the relevant paperwork that the police now have and that has my phone number, my address, my details, the details of family and friends who they were pursuing, other names appear who were employees of News of the World.

SARAH FERGUSON: But the judge at Mulcaire's trial had already made that clear in 2007, stating that Mulcaire had worked for others at News International.

Goodman was sentenced to four months in prison. On his release he wrote to News International demanding his job back, as promised.

VOICEOVER (Goodman letter 2007): The Editor promised on many occasions that I could come back to a job at the newspaper if I did not implicate the paper or any of its staff.

SARAH FERGUSON: Goodman also claimed that editor Andy Coulson knew all about and condoned phone hacking.

VOICEOVER (Goodman letter 2007): This practice was widely discussed at conference until explicit reference to it was banned by the editor.

SARAH FERGUSON: After Goodman's letter was sent, News International Executive Chairman Les Hinton, Rupert Murdoch's closest ally went to the House of Commons and said the opposite was true.

(excerpt from the House of Commons media committee 11 July 2007)

JOHN WHITTINGDALE MP: You carried out a rigorous internal enquiry and you are absolutely convinced Clive Goodman was the only person who knew what was going on?

LES HINTON, EXECUTIVE CHAIRMAN, NEWS INTERNATIONAL: Yes we have and I believe he was the only person but that investigation with the new editor continues.

(end of excerpt)

SARAH FERGUSON: Former News of the World reporter Paul McMullen is adamant that the editors and chief lawyer Tom Crone scrutinized phone hacking material.

When a story was written using phone hacking are you saying Rebekah Brooks, Andy Coulson and Tom Crone always scrutinised the evidence on which your stories were based?

PAUL MCMULLAN: Yeah, Brooks, Coulson and Tom Crone and they wanted to know that they weren't going to get sued.

SARAH FERGUSON: Was it common practice at the News of the World to ask for transcripts of phone hacking?

PAUL MCMULLAN: Yes, it was, yeah. That's why Tom Crone will be a fantastic witness if he wants to speak.

SARAH FERGUSON: Why?

PAUL MCMULLAN: Because he had to sign things off. It was his job, his reputation if he was going to get sued.

SARAH FERGUSON: For five years in public and in Parliament News Group executives stuck to the company line.

(excerpt from the House of Commons media committee 21 July 2009)

PAUL FARRELLY MP: The question: was anyone else involved with Mulcaire? The answer was: no. Nothing else was found? Nothing came of it?

TOM CRONE, CHIEF LAWYER NEWS GROUP NEWSPAPERS: No evidence was found.

COLIN MYLER - NEWS OF THE WORLD EDITOR: No evidence or information had emerged to suggest to senior executives at News International that others at the News of the World knew of these activities or were complicit in them.

(end of excerpt)

TOM WATSON: You know what they say about lies: if you say it loud enough and often enough people begin to believe it and they nearly got away with it.

SARAH FERGUSON: One of the reasons they were able to get away with it for so long was that the police refused to re-open the case despite revelations in 2009 that there were potentially thousands of victims of Mulcaire.

You're actually having to force this out of the police. They're not volunteering?

LORD PRESCOTT: Oh yes, they were refusing to give it.

SARAH FERGUSON: Then Deputy Prime Minister John Prescott was convinced that he was a victim of phone hacking.

Do they look like the sorts of things you might have said to your chief of staff on the phone?

LORD PRESCOTT: Oh absolutely. I mean we're talking all the time.

Their technique you know is not necessarily to go for you in the tapping, they go for people you're leaving messages for and leaving news. So in my case it was my chief of staff.

SARAH FERGUSON: When The Guardian named Prescott as one of Mulcaire's victims he went to the assistant police commissioner to demand answers.

LORD PRESCOTT: I'm told by the Guardian, I now want you to tell me. And they said, nu-huh, came back a few hours later, we've done the enquiry, he said I'm making a press statement in a few minutes, this was Yates. And I said what, you've done an enquiry that quick? Yes, there is no evidence whatsoever. You better put it in writing to me then, sunshine. So it took a few weeks before I got the letter from him and he'd put it into writing. And then I realized I just didn't believe him.

SARAH FERGUSON: Mark Lewis thinks he knows why the police were reluctant to re-examine the thousands of pages of Mulcaire's files, stored in garbage bags at Scotland Yard and it comes back to corruption.

MARK LEWIS: Effectively tip offs between the police people running out corruption within the police, payment to individual police officers by journalists, not just journalists at the News of the World, for the provision of information.

SARAH FERGUSON: So that was their, one of their principal fears that this would be uncovered, the fact that it was a routine practice to pay police, to bribe police for information?

MARK LEWIS: Yeah I'm absolutely, I'm absolutely sure of that.

SARAH FERGUSON: Former editor and CEO of News International Rebekah Brooks had already admitted in Parliament to paying police.

(excerpt from the House of Commons media committee 11 March 2003)

CHRIS BRYANT MP: And on the element of whether you ever pay the police for information?

REBEKAH BROOKS: We have paid the police in the past.

CHRIS BRYANT: And will you do it in the future?

(end of excerpt)

SARAH FERGUSON: MP Chris Bryant asked the question.

CHRIS BRYANT: She looked as if her I don't know as if she wanted to strangle herself by her own hair. She knew she'd made a mistake.

(excerpt from the House of Commons media committee 11 March 2003)

ANDY COULSON: We operate within the code and within the law and if there is a clear public interest then we will. The same holds for private detectives, subterfuge, whatever you want to talk about.

CHRIS BRYANT: It is illegal for police officers to receive payment.

ANDY COULSON: No I just said within the law.

CHRIS BRYANT: It just can't be within the law.

(end of excerpt)

SARAH FERGUSON: Chris Bryant himself became a target of the News of the World, but again the police covered it up.

CHRIS BRYANT: What happened was that the News of the World or News International more generally managed to get its filthy, slimy tentacles in every nook and cranny of the Metropolitan Police and to all intents and purpose that corrupted it.

SARAH FERGUSON: Forced to re-open the investigation this year the police finally admitted that Bryant and Prescott were targeted by Mulcaire.

(excerpt from the House of Commons Home Affairs Committee 12 July 2011)

CHAIRMAN KEITH VAZ MP: Do you remember what you said? You said he was ranting. You said there is absolutely no evidence from that initial investigation of his phone being hacked. You don't believe a judicial review would reveal anything more. Do you regret saying that ?

ANDY HAYMAN, FORMER ASSISTANT COMMISSIONER, METROPOLITAN POLICE: Well the terms of it were pretty poor.

KEITH VAZ MP: So you owe Lord Prescott an apology?

ANDY HAYMAN: Yes of course I do.

(end of excerpt)

SARAH FERGUSON: Tom Watson is now one of the best known adversaries of the Murdochs. He was warned years ago of the dangers of going up against them and their lieutenants.

TOM WATSON: I resigned in 2006 ah as a defence minister under Tony Blair and at that point I was told that Rebekah Brooks would pursue me for the rest of my life. Boy, did that come out to be true.

TOM WATSON (9 September 2010): The truth is that, in this House we are all, in our own way, scared of the Rebekah Brookses of this world.

TOM WATSON: I was trying to say there was a collective fear that had gripped parliament and it was so powerful that people were almost not conscious of it.

SARAH FERGUSON: It was the persistence of lawyer Mark Lewis which finally broke the spell. In 2007 he was representing one of the victims, football players' association chief Gordon Taylor in the first civil case against the News of the World.

He forced the police to delve back into the garbage bags containing Mulcaire's evidence.

MARK LEWIS: They sent me a small file of papers which included what is now referred to as the "for Neville" email and also a recording of a journalist being told by Glenn Mulcaire how to hack a phone.

(reconstruction: number being dialled; coughs; phone rings)

RAOUL, JOURNALIST: Hello?

GLENN MULCAIRE: Good afternoon, is that Raoul?

RAOUL: Yeah

GLENN MULCAIRE: Hello, it's Glenn

RAOUL: Glenn, How are ya?

(end of reconstruction)

SARAH FERGUSON: In this recording Glenn Mulcaire instructs a reporter, called Raoul, how to hack Gordon Taylor's voicemail.

(reconstruction)

GLENN MULCAIRE: Hello mate, just a very quick one, ah, voicemail re-set on Gordon Taylor and it's got Tottenham related issues on there.

RAOUL: Great stuff, it's the same number?

GLENN MULCAIRE: Same number, do not delete anything. Correct, you put his number in.

RAOUL: Yeah.

GLENN MULCAIRE: It asks you for the PIN, then put his number back in.

RAOUL: Yeah.

GLENN MULCAIRE: And there's three messages in there from Tottenham alright?

RAOUL: Fantastic, thanks very much for that

GLENN MULCAIRE: Cheers. Give me a text to make sure it works, yeah?

RAOUL: Right, bye.

(end of reconstruction)

SARAH FERGUSON: The infamous "for Neville" email contained transcripts of 32 voicemail messages hacked from Gordon Taylor for the attention of "Neville", senior editor Neville Thurlbeck.

MARK LEWIS: It was a key discovery. It wasn't the only discovery in the case but it was a key discovery because it gave lie to the fact that there was a rogue, one rogue reporter.

SARAH FERGUSON: The critical email so shattered the paper's defence that the senior lawyer Tom Crone rushed to Lewis' office.

MARK LEWIS: I remember him coming to see me and starting the conversation with the words. "We thought this had all gone away."

SARAH FERGUSON: What was their attitude to what you now had, how afraid were they?

MARK LEWIS: Well it changed, it changed completely. Right the um from it was almost at that point that we felt like we'd won the case. And then they wanted to negotiate.

SARAH FERGUSON: Put in charge of handling the crisis, the new CEO James Murdoch signed off on a massive damages payout for Gordon Talyor, more than 700,000 pounds, in a case where no story had ever appeared.

MARK LEWIS: Either he's completely incompetent that someone puts a cheque in front of him and says oh please sign here and he doesn't ask any questions at all. It's more likely I would think that he did know exactly what he was doing, he knew exactly why he was signing and he was signing something to get rid of the potential revelation that this was a much wider, a much wider practice.

SARAH FERGUSON: In the final moments of last month's hearing, Murdoch was put on the spot.

(excerpt from the House of Commons media committee 19 July 2011)

TOM WATSON: When you signed off the Taylor payment, did you see or were you made aware of the full Neville e-mail, the transcript of the hacked voicemail messages?

(end of excerpt)

NICK DAVIES: Watson pitched this to James, who had to make a decision, black or white.

(excerpt from the House of Commons media committee 19 July 2011)

James Murdoch: No I wasn't aware of that at the time.

(end of excerpt)

NICK DAVIES: And leapt in one direction, which was to pretend, I would say pretend, that he never knew of this evidence.

TOM WATSON: That was contradicted 24 hours later by Tom Crone the lawyer and the editor of News of the World himself. We'll find out who was telling the truth in weeks to come.

SARAH FERGUSON: For years Rupert Murdoch has attacked his critics.

RUPERT MURDOCH (4 Corners 1971): I'm not ashamed of any of my newspapers at all and I'm rather sick of snobs who tell us that they're bad papers, snobs who only read papers that no one else wants.

LORD PRESCOTT: It's his business model. He does it everywhere. He's done it in Australia, America. You've only got to have a look at these countries what he's been doing; he uses power, political influence, money.

SARAH FERGUSON: For more than a decade the News of the World brought the corrupt and the criminal into the heart of Murdoch's operation in the UK.

MICHAEL WOOLFF: In 60 years of running newspapers this is the culture that they have, that Rupert Murdoch has fostered. We operate in an incredibly competitive world. If we don't win we lose.

SARAH FERGUSON: Twelve News of the world journalists and editors have been arrested.

Operation Weeting, the police investigation into phone hacking, has widened to include payments to police, computer hacking and now masses of evidence from the files of private detective Jonathan Rees. Passed on to investigators after the collapse in March this year of the last attempt to try Rees for the murder of his partner Daniel Morgan.

TOM WATSON: The Rees files are deep, revealing and extensive. They were used as part of a murder enquiry and are now being assessed by the Metropolitan Police.

SARAH FERGUSON: In a just over week the British parliament will reopen its hearings.

CHRIS BRYANT: I think Murdoch's strategy has been for the Last few months what I call the plimsoll line strategy, which is you draw a line round the edge of the ship and every time the ship starts sinking you chuck somebody else overboard. At first it was some journalists then it was Andy Coulson then it was the newspaper itself the News of the World itself and finally Rebekah Brooks. But to be honest it just means that the water's lapping round the ankles of well, in fact round the midriff probably now, of James Murdoch.

SARAH FERGUSON: The son and heir IS now in danger of slipping under the waves.

And as more evidence emerges of the corrupt internal culture in their British operation, the Murdochs' critics have become emboldened.

TOM WATSON: If we were to apply a fit and proper person test to the ownership of newspapers they would fail it.

SARAH FERGUSON: Unless Rupert Murdoch can insulate himself, that fundamental question will resonate around every corner of his media empire.

Is he a fit and proper person to wield the power he does?

RUPERT MURDOCH: I apologise and I have nothing further to say.

KERRY O'BRIEN: How often have Murdoch newspaper editorials railed against the perceived unethical behaviour of others. A case, it seems, of do as I say, not as I do, in Britain at least.

Next week on Four Corners. As the 10th anniversary of the September 11 attacks, Matthew Carney and Thom Cookes, travel to Afghanistan, where war has been waged ever since, to investigate the role of Australian Special Forces there.

Until then, goodnight.

[END OF TRANSCRIPT]