News Corp in bugging claim

Rupert Murdoch's News Corporation has been hit by a fresh wave of allegations of illegal bugging and fraud as part of a vicious legal tit-for-tat involving its satellite broadcasting know-how.

The battleground is in Israel, but the repercussions have been felt around the world to London, Mr Murdoch's home turf in Australia, and New York, where a $650m flotation of his TV technology arm has been stalled.

Today Michael Clinger, a former executive of News Corp's supplier of smartcards to BSkyB, will go to the High Court in Jerusalem to seek leave to sue the media mogul internationally.

Mr Clinger is claiming damages over alleged wire-tapping, following the emergence of tapes of privileged conversations between himself and his solicitors.

The tapes were allegedly found in the safe of Abe Peled, the head of Mr Murdoch's Israeli-based firm, News Datacom Research (NDR), during a raid by Israeli tax investigators last October.

NDR is the source of BSkyB's crucial "Videocrypt" technology, the satellite codes that allow it to restrict broadcasts to subscribers.

News Corp denies the allegations, saying they are part of a campaign to embarrass it into dropping a pounds 20m UK lawsuit against its former employee.

But in the London High Court this week, its lawyers will press for an early trial - perhaps June or October - that might yet see Mr Murdoch take the stand.

"The whole purpose of all these allegations is to stop us recovering our losses," said Genie Gavenchak, News Corp's deputy legal counsel.

"He is trying to get some court somewhere to say we can't prosecute our action against him, because he knows he's going to lose."

News Corp is suing Mr Clinger for allegedly conspiring to inflate the price of smartcards up to late 1995.

As revealed in the Independent on Sunday last November, it has uncovered firms in Switzerland, Liberia, Panama and other tax havens through which the rake-off allegedly took place.

Since then, Mr Clinger's main co-defendant, Indian-born businessman B K Marya - whose firms made the cards - has settled with Mr Murdoch.

The terms remain confidential, but he is understood to have paid a seven- figure sum and given an affidavit supporting News Corp's case.

Early in February, Mr Clinger's City solicitors Clifford Chance also resigned.

The Murdoch camp argues there is no coincidence between these moves and the latest bugging claims. Allegations of tax evasion have also been drummed up by Mr Clinger, it says.

Speaking from Jerusalem this weekend, Mr Clinger denied suggestions he had planted tapes of his own conversations with his advisers at NDR.

"All this is hogwash that it is all manipulation by me," he said. "The Israeli government has a good case and is pursuing it."

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