Unrest at Wapping spreads to The Sun after arrest

Editor tries to reassure staff amid concerns that journalists are being scapegoated

Only three months after the closure of the News of the World, the future of Rupert Murdoch's other mass-selling British tabloid, The Sun, is threatened by an unprecedented crisis.

On Monday, the newspaper's young editor Dominic Mohan took action to rally the paper's editorial team following fears that journalists are being made scapegoats for wider problems within the News Corp media empire.

Mr Mohan addressed staff following discontent among reporters over the arrest on Friday of the veteran Sun correspondent and former news editor Jamie Pyatt, who is accused of making illegal payments to police.

The development comes as the News Corp deputy chief operating officer, James Murdoch, who until the summer was in charge of the company's British newspapers, prepares to be questioned on his previous evidence to the House of Commons Culture, Media & Sport Committee's inquiry into phone hacking tomorrow.

At 5.45pm on Monday, employees from the sports and magazine departments were summoned to gather with reporters and sub-editors in the ninth floor newsroom at News International's headquarters at Thomas More Square in Wapping, east London, to hear Mr Mohan try to assure them by saying he had recently met with Rupert Murdoch in New York to discuss The Sun's future. Mr Murdoch was "up for the fight", he told them.

Alongside Mr Mohan was Tom Mockridge, thechief executive of News International, who was appointed in July in the wake of the resignation of Rebekah Brooks. Mr Mockridge has been told to clean up the company's reputation, which has been badly damaged by the phone-hacking scandal.

Mr Mockridge also addressed The Sun's journalists to explain why News International was supplying the Metropolitan Police with information about the activities of staff. He warned them that without the company's co-operation – and that of its staff – police officers would be entering the newsroom with search warrants.

The prospect of further arrests has generated worry among The Sun's senior journalists, several of whom have been interviewed as part of an internal investigation being conducted by the legal firm Linklaters, which was appointed by News Corp's Management & Standards Committee (MSC), which is reviewing practices across News International.

For more than two years, NI has been desperate to protect the reputation of its lucrative Sun brand from being tainted by the phone-hacking scandal. Any talk of corrupt practices at the title has been furiously denied.

But in recent months, its journalists have felt increasingly threatened. The Linklaters review followed the abrupt sacking of The Sun features editor Matt Nixson in July. Nixson, who had formerly worked at the News of the World, is suing both NI and the MSC and those familiar with his case say he has been told he is not under police investigation.

Pyatt's arrest on Friday has shocked colleagues. "They have opened up a Pandora's Box and there may be other trails. They might not be able to stop," said one journalist. In what was called a "stumbling speech", Mr Mohan tried to rally his troops. But in raising the question of Rupert Murdoch's support, the editor had increased concerns that the paper, which the media magnate has owned since 1969, might be put up for sale. At the end of the address, Mr Mohan and Mr Mockridge asked for questions. There were none and staff walked away in silence. "People felt like they were watching the end of The Sun," said one.

Private eye spied on up to 100 figures

A former policeman hired by the News of the World to carry out surveillance of lawyers bringing phone-hacking damages cases claims he also followed dozens of public figures for the tabloid, including the Duke of Cambridge.

Derek Webb was paid to follow nearly 100 targets selected by NOTW staff. Some held sensitive political roles, such as Lord Goldsmith, then the Attorney General. Last night senior Labour MPs claimed the former Foreign and Home Secretaries, David Miliband and Alan Johnson, were followed by Mr Webb throughout the party's 2009 conference. Chris Bryant MP said: "Clearly News International learnt nothing from the furore in 2006 and 2007." Other celebrities targeted included the football pundit Gary Lineker and Prince Harry's ex-girlfriend Chelsy Davy. Mr Webb told Newsnight he spent more than eight years following individuals on the orders of the NOTW newsdesk.

Cahal Milmo and James Cusick

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