MPs' attack provokes the wrath of Murdoch

Seminal report by Culture Select Committee outlines major changes to press regulation and libel laws. News International accused of doing 'substantial damage' to newspaper industry over phone hacking

Rupert Murdoch's News International media organisation has accused a powerful House of Commons committee of bias after it issued a damning report on the company, which it said had caused "substantial damage to the newspaper industry as a whole".

In its report Press Standards, Privacy and Libel, the Culture, Media and Sport (CMS) Committee accused News International executives of having "collective amnesia" when asked by MPs about the extent of phone hacking by reporters from the News of the World, its biggest-selling newspaper.

News International said the report would undermine the credibility of Parliament. "News International believes that the select committee system has been damaged and materially diminished by this inquiry, and that certain members of this CMS Committee have repeatedly violated the public trust."

The MPs said News International "did not carry out a full and rigorous inquiry" into the extent of phone hacking after its royal editor Clive Goodman and the private detective Glenn Mulcaire were jailed for such activities five years ago.

"It is inconceivable that no one else at the News of the World knew," said John Whittingdale MP, the chairman of the committee. "This episode has done substantial damage to the newspaper industry as a whole. We were also concerned at the reluctance of witnesses from News International to provide the detailed information that we sought, and the collective amnesia that afflicted them in relation to these matters."

The report was critical of the former News of the World editor Andy Coulson, who is now the director of communications for David Cameron at the Conservative party. Although the committee said it had "seen no evidence" that Coulson, who was questioned by the MPs, knew that phone hacking was taking place, it still found him culpable.

"That such hacking took place reveals a serious management failure for which as editor he bore ultimate responsibility, and we believe that he was correct to accept this and resign."

News International, which also publishes The Times, Sunday Times and Sun, responded with a furious statement accusing some of the MPs of pursuing a "party-political agenda". It said the committee's report was biased and had been distorted by external influences, particularly The Guardian newspaper which has alleged that the culture of phone hacking at the News of the World was widespread.

"The credibility of the select committee system relies on committee members exercising their powers with responsibility and fairness, and without bias or external influence. Against these standards this CMS committee has consistently failed," News International said. "Rather than work in the public interest, certain members of the committee appear to have pursued a party-political agenda. They have worked in collusion with The Guardian, consistently leaking details of the committee's intentions and deliberations to that newspaper."

The company claimed that MPs, who were undertaking a far-reaching inquiry into press standards and the laws on libel and privacy, had become obsessed with the phone-hacking issue.

"The committee has spent seven months – close to half of its time on the inquiry – on allegations made by The Guardian, despite its wide-ranging remit to examine issues of vital importance to the newspaper industry. In all this time, the committee has failed to come up with any new evidence to support The Guardian's allegations. Sadly, this has not stopped members of the committee from resorting to innuendo, unwarranted inference and exaggeration."

News International said it "strongly rejects" the committee's claims that its executives had suffered "collective amnesia" or been involved in "deliberate obfuscation and concealment of the truth". Among those who gave evidence to the MPs was Rupert Murdoch's close aide Les Hinton, the former executive chairman of News International.

In response to the accusations by News International, Mr Whittingdale, a Tory MP, defended the committee's report. "I was certainly not subject to external political pressure at all, and we stand by our report," he said.

The report was unanimously agreed by the committee, except for one paragraph referring to Mr Coulson's involvement in an industrial tribunal hearing in which a former News of the World reporter was awarded £800,000 after being bullied. Tory MPs on the committee argued that the matter was not relevant to their inquiry.

The criticisms, Mr Whittingdale believed, were aimed at two Labour members of the committee, Tom Watson and Paul Farrelly, who is a former journalist at The Observer, the sister paper of The Guardian and has written for the Guardian website.

Libel reform: 'The libel laws need a massive overhaul'

Investigative journalism in Britain is being "deterred by the threat and cost of having to defend libel actions", a Commons committee has warned in a historic report that called for a root-and-branch overhaul of the regulation of the press.

The Culture, Media and Sport Committee warned that the balance in libel cases had "tipped too far" in favour of those who bring actions. The law should be changed in respect of large corporations reversing the burden of proof so that organisations which sue the media have to prove that accusations are false.

Lawyers taking libel cases under conditional fee agreements should no longer be able to charge 100 per cent of their costs to the losing party but "should be limited to no more than 10 per cent", with the remaining costs covered by the clients or the lawyers themselves, the committee argued.

The chairman of the committee, John Whittingdale MP, said that the threat to investigative journalism was "a matter of serious concern to all those who believe that a free press is an essential component of a free society".

He said it was a source of "humiliation" that a country which prided itself on protecting freedom of speech should be seen as a destination for libel tourism. "It should be a matter of profound concern that the UK is now regarded as the jurisdiction of choice for litigants to bring libel actions," he said. "It is a humiliation that US legislators have felt it necessary to take steps to protect freedom of speech from what are seen as unreasonable incursions by our courts."

The committee called on the Lord Chancellor to raise the issue of libel tourism with his US counterparts, saying that "discussions should take place as soon as possible".

The MPs said a modern statute should be enacted to protect the right to report proceedings in Parliament, following attempts by the legal firm Carter Ruck to impose a super-injunction on the media to ban coverage of parliamentary questions regarding its client Trafigura, a company accused of dumping toxic waste in Ivory Coast.

"The free and fair reporting of proceedings in Parliament is a cornerstone of our democracy and the Government should introduce a clear and comprehensive statute to put this freedom beyond doubt," said Mr Whittingdale.

Ian Burrell

Press regulation: 'PCC should have the power to fine papers'

Newspapers have been threatened with being fined and suspended from publishing in recommendations designed to give greater powers to the Press Complaints Commission.

The Culture, Media and Sport committee argued that the press industry watchdog should be able to impose a "financial penalty" on publications that were found to be in serious breach of the PCC's code. "The PCC as it currently operates is widely viewed as lacking credibility and authority," the committee chairman John Whittingdale said. "To counter this, we believe... that it should have the power to impose financial penalties on newspapers which breach the PCC code."

Industry sources said the measures would be unlike any existing at similar bodies elsewhere in the world and were unlikely to be introduced.

But the committee argued that the PCC needed more muscle and recommended that its name be changed to the Press Complaints and Standards Commission "reflecting its role as a regulator, not just a complaints handling service". The report follows the most wide-ranging and complex inquiry in the history of the committee and follows a succession of controversies around press standards, including the reporting of the disappearance of Madeleine McCann, the News of the World's intrusion into the privacy of Formula 1 chief Max Mosley by revealing his involvement in a sado-masochistic sex orgy, and the hacking of mobile phones by the same newspaper.

The MPs felt there was no need for a law on privacy, but recommended that the PCC amended its code so that journalists were required to notify the subjects of their articles "prior to publication" unless it was not in the public interest for them to do so.

Although the committee argued that the way the McCann story had been reported was an instance in which "self-regulation signally failed" it concluded that such a system was "greatly preferable to statutory regulation".

The PCC responded by saying: "We are concerned that the committee has somewhat underrated the level of proactive work already undertaken by the PCC. This includes the widespread contact with potential complainants, and with representatives of vulnerable people."

Ian Burrell