Ofcom looks at stripping Murdoch of BSkyB

Mogul under scrutiny in 'fit and proper' test

A special team at the media regulator Ofcom is examining whether James Murdoch is fit to remain chairman of BSkyB and if News Corp should be stripped of its stake in the broadcaster because of the phone-hacking scandal, it emerged last night.

Freedom of Information disclosures show that Ofcom has created a unit called Project Apple to assess the fitness of Rupert Murdoch's global news empire to hold a controlling 39 per cent stake in Britain's biggest broadcaster. It is a considerable escalation in Ofcom's response to the disclosures that News Corp's British newspaper subsidiary, News International, has engaged in widespread criminality.

Ofcom first said last July – days after the disclosure that the News of the World hacked Milly Dowler's phone – that it had an ongoing duty to be satisfied that owners of broadcasting licences were "fit and proper" persons and pointedly mentioned that it was "closely monitoring" developments.

However its concern has increased following a string of damaging allegations at the Leveson Inquiry into press standards about the behaviour of News International, which owned the now-closed NOTW and still owns The Sun, The Times and The Sunday Times. Only last week, Sue Akers, the Deputy Assistant Commissioner of the Metropolitan Police, told the judicial inquiry that current evidence indicated that The Sun was running a network of "corrupted officials" and had tried to conceal bribes of tens of thousands of pounds to civil servants and police.

The Met is carrying out criminal inquiries into phone hacking, computer hacking and bribery at NI's headquarters in Wapping, east London.

Ofcom's minutes show that in September and November its chief executive, Ed Richards, gave routine updates about the BSkyB "fit and proper" persons test. That changed at board meetings in January and February when for the first time Mr Richards referred to the work of Project Apple.

Under the Broadcasting Acts 1990 and 1996, Ofcom must be satisfied "that any person holding a broadcasting licence is, and remains, fit and proper to do so".

A spokesman for Ofcom said last night: "In relation to the hacking and corruption allegations, new evidence is still emerging from the various inquiries. Ofcom is continuing to assess the evidence that may assist it in discharging these duties."

If the regulator did strip News Corp of its stake in BSkyB it would be an extraordinary turnaround. Last summer the Culture Secretary, Jeremy Hunt, was waving through a £7bn News Corp bid for the whole of BSkyB, only to sharply reverse that position as the political storm around phone hacking grew. Rupert Murdoch abandoned the bid shortly after closing NOTW.