James Murdoch was given "hard evidence" that phone hacking inside the News of the World went beyond a lone rogue reporter more than three years ago, one of his closest lieutenants said on oath for the first time yesterday.
News International's former legal manager, Tom Crone, told the Leveson Inquiry that NI's chairman knew the illegal accessing of voicemails at the NOTW was "rife" when he authorised a record confidential-damages settlement with Gordon Taylor, chief executive of the Professional Footballers' Association, in June 2008.
Mr Crone said that the crucial "for Neville" email was held up in front of Mr Murdoch at a meeting on 10 June, and may have been passed across a table to him. The brief meeting has been discussed and dissected by MPs investigating the phone-hacking scandal. It has become central to Mr Murdoch's credibility and his chances of inheriting his father's media empire. In July this year, Mr Murdoch was asked by the Commons media select committee if he saw or was made aware of an email that contained a transcript of hacked voicemail messages before he signed off the payment to Mr Taylor. Mr Murdoch replied: "No I was not aware of it at that time."
Two days later, Mr Crone and the Sunday tabloid's last editor, Colin Myler, wrote to MPs insisting, "we did inform him [Mr Murdoch]" of what became known as the "for Neville" email, prompting Mr Murdoch to say the next day that he had "answered truthfully".
Last month, again in front of MPs, Mr Murdoch repeated his assertion that the suspicion of a "wider spread of wrongdoing" or a written opinion from the company's leading counsel were never mentioned to him when he authorised an increased offer to Mr Taylor. "I want to be very clear: no documents were shown to me at that meeting or given to me at that meeting, or prior," he said.
Mr Crone's version to the inquiry yesterday is a polar opposite account. He told Lord Leveson he had shown the NI chairman a print-out of the "for Neville" email and that he had previously discussed the issue and shown him other documents prior to the 10 June meeting. Mr Crone said: "I cannot remember whether they were passed across the table, but I am pretty sure I held up the front page of the email... I am also pretty sure that he already knew about it... It had been described to him already."
Mr Crone told the inquiry that after he was shown the telling email, which destroyed the company line that only the jailed former royal correspondent had been involved in hacking, he spoke to four NOTW reporters.
He said the hacking "project" had "emanated from Mr Miskew" (the former news editor) but the inquiry's counsel, Robert Jay QC, stopped Mr Crone from "going too far".
Police in Operation Weeting are investigating hacking claims. A total of 18 people have been arrested and bailed.
Judge demands the truth about Milly messages
The confusion over who deleted the voicemails of the murdered schoolgirl Milly Dowler must be "sorted out" by Christmas, Lord Leveson ordered yesterday.
The direction was made after the barrister for the Dowler family and other victims of phone-hacking by the News of the World said there had been a "storm of misreporting" after The Guardian revealed last weekend that the jailed private investigator, Glenn Mulcaire, may not have been responsible for the initial deletions from Milly's voicemail that led to Bob and Sally Dowler believing their daughter was still alive.
David Sherborne QC revealed the Daily Mail had contacted the family's lawyer, Mark Lewis, and asked him if Mr and Mrs Dowler would be returning the £3 million damages payments they received from News International. A Daily Mail spokesman said, "This was a perfectly legitimate journalistic inquiry. The Mail did not publish a story based on the phone call and made no attempt to contact the Dowlers directly".
Mr Sherborne said the hacking of Milly's voicemails by the NOTW was "not in dispute" and said this was "not the only reason why this inquiry is being heard".