The FBI has told Scotland Yard it is "prepared to step in" if the Metropolitan Police fails to investigate the full extent of impropriety in the Murdoch empire. The warning came at a meeting between the transatlantic law enforcement groups at the Ministry of Justice in London.
Every piece of evidence surrendered by News Corporation to Scotland Yard is also being passed to US investigators. The disclosures, which prompted more than 20 arrests, including Sun journalists, have also sparked a separate FBI inquiry into whether News Corporation bribed officials in Russia. US investigators are collecting evidence given to the Leveson inquiry and parliamentary select committees.
"The FBI made it perfectly clear that if the British police drop the ball on this they will pick it up and run with it," said one legal source familiar with the US investigation.
Fear of such a US investigation, where financial penalties and potential jail sentences are held to be more punitive than in the UK, is one reason cited why News Corp, Murdoch's US holding company, has stepped up efforts to assist UK police in recent months. It is widely believed to be one of the reasons it handed over to police a cache of millions of emails containing evidence of possible crimes, to the dismay of many of its own staff. The Murdoch operation has assembled a team of US legal "big guns" to deal with inquiries by the FBI and other investigators, including the Securities and Exchange Commission.
It is reported that the FBI has found no evidence of phone hacking by News Corp in the US so is focusing on potential breaches of the Foreign Corrupt Practices Act designed to stop US-based firms bribing officials overseas. Murdoch executives could be vulnerable if evidence exists that they demonstrated "wilful blindness" by failing to question rigorously wrongdoing.
James Murdoch, former chairman of News International, which oversees the scandal-hit newspapers, stood down from the board of Sotheby's, the auctioneer, on Friday. His departure followed demands he resign over his role in the phone-hacking scandal. Critics said the scandal made him "ill-suited for service" as a company director. Mr Murdoch resigned from the GlaxoSmithKline board in January. He quit as chairman of News International last month.
A Sotheby's spokesman said he decided not to stand for re-election at the annual meeting in May in order to focus on his role as News Corp's deputy chief operating officer. James Murdoch repeatedly denied knowing about widespread hacking at the now defunct News of the World, though executives have called this into question.
The former editor of The Times Sir Harry Evans, who resigned his editorship after disagreements with Rupert Murdoch, yesterday told BBC radio that Mr Murdoch should be deprived of his ownership of The Times: "He's not the only saviour of the beast. This is part of the mythology 'the only man who can save Times newspapers' – hellfire! The Sunday Times was a hugely profitable newspaper before he took it over – he's made it more profitable ... – but it doesn't in my view obviate all the things that came about." He added: "Time and time again, Times newspapers have been used to push his commercial interests", showing a "lack of integrity". It was, he said, "against all my concepts of what an independent newspaper should be".
He added that corruption was the penalty Britain had paid because "the leadership of the country is so in hock to a press proprietor".
Harriet Harman, Labour's deputy leader, yesterday blamed a concentration of media power for a sense of "invincibility and impunity" and urged the Government to make the "fit and proper person test" the first hurdle for proposed cross-media takeovers. She admitted Labour had also failed to do enough to curb the "media barons".