According to his autobiography, to be published this month, Mr Neil insisted on a "golden parachute" agreement to pay him pounds 1m to leave after Mr Murdoch became alarmed about repercussions for his media operations in the Far East and South East Asia. Mr Murdoch owns Star TV, the satellite channel which is beamed into millions of homes in India, China and the booming tiger economies of South East Asia from Hong Kong.
Mr Neil was moved to front a new current-affairs show on Fox TV in the United States - doomed never to appear - after receiving his pay-off.
According to the book, ministers told Mr Neil and the Sunday Times that a deal had been worked out between Mr Murdoch and Dr Mahathir under which Mr Neil's head was offered on a plate in return for the media tycoon being allowed to do business in Malaysia.
Dr Mahathir complained directly to Mr Murdoch about the Sunday Times's claim about the Malaysian Prime Minister's business dealings. Mr Murdoch soothed him by saying Mr Neil was a "rogue editor" and would be sorted out.
The newspaper chief's over-riding concern was the fall-out for Star TV, not only in Malaysia, which he regarded as an ideal target but in the rest of the region. He also feared that the Sunday Times may have started investigating other eco-nomies and their leaders. India and China were two big Star TV markets. There was also the pressure from big British companies which had seen their trade destroyed by worsening relations with Malaysia, not only by the Sunday Times report but also by the parallel Pergau Dam affair.
At the time, Mr Neil's move was a surprise. He had always revelled in being editor of the Sunday Times, but it appears Mr Murdoch became envious of the limelight he enjoyed. On one occasion he was dining with Mr Murdoch in a restaurant when another diner came to their table and greeted him but ignored the News International tycoon. But the book makes plain that it was his paper's onslaught against Dr Mahathir and the Malaysian leader's violent reaction which provoked his demise.
Ironically, one country that Star TV does not reach is Malaysia, as Dr Mahathir regards it as too Western. However, Mr Murdoch was determined to crack the country which has the fastest-growing economy in the region. Mr Murdoch was incandescent with rage at the paper's report in early 1994 about Dr Mahathir .
Mr Neil's disclosures in his book, Full Disclosure, are bound to damage relations between Mr Murdoch and Mr Mahathir, not least because Mr Neil stands by his paper's story.
It will seriously embarrass Mr Murdoch, who is sensitive to claims that his wider business affairs hold sway over his domestic British newspaper and television operations.
Dr Mahathir's response to the article in 1994 was to impose a blockade on British companies dealing with Malaysia.
While that ban was eventually lifted, Mr Neil says he was in no doubt that Mr Murdoch was worried about lasting harm to his Star TV channel, which he wanted to broadcast to Malaysia and across South East Asia. It was in order to placate the Malaysian Prime Minister, Mr Neil makes plain for the first time, that he was moved to America, to Fox TV, another Murdoch station.
While the job at Fox was exciting, it achieved Mr Murdoch's initial purpose: to get rid of an awkward editor. If Mr Neil was a success in the post, as anchor on a new prime-time current-affairs show, all well and good. If he was not, he could be dealt with later.
Subsequently, the two became reconciled: Dr Mahathir was guest of honour at Mr Murdoch's conference for senior executives in Australia, also attended by Tony Blair.
Battering ram, page 28Reuse content