Law firm given right of reply over 'failure' to expose bribery

A law firm blamed by Rupert Murdoch for failing to raise the alarm over evidence of police bribes at News International was last night given the go-ahead to put its side of events to police and MPs.

Harbottle & Lewis, who also represent the Queen, was said to be furious at the allegations of wrongdoing made against it by the Murdochs but unable to explain why it did not hand over files to the police due to client-lawyer confidentiality.

News Corp's management and standards committee announced after 7pm yesterday, on a day when Parliament went into recess, that its British arm, News International, had given the law firm permission to answer questions from Scotland Yard and parliamentary committees.

"News International has today authorised the law firm Harbottle & Lewis to answer questions from the Metropolitan Police Service and parliamentary select committees in respect of what they were asked to do." Earlier in the day Harbottle had said News International's refusal to release it from professional duties of confidentiality effectively prevented it from responding to "any inaccurate statements or contentions".

News International also announced it had halted the payment of legal fees to the disgraced private investigator Glenn Mulcaire. It is believed to have been paying the fees since he was first arrested in 2006.

Further light on why News International failed to produce evidence of the extent of hacking is expected to be provided by the company's former director of legal affairs, Jon Chapman, who was accused by News Corp chairman Rupert Murdoch of sitting on a report into hacking prepared by Harbottle & Lewis. Addressing MPs on Tuesday, he said: "Mr Chapman, who was in charge of this, has left us. He had that report for a number of years." Mr Chapman, who left NI this month, is said to be preparing a letter answering the allegations for the Commons committee on Culture, Media and Sport.

The publicist Max Clifford revealed he has been talking to the police for several months in relation to its Operation Weeting inquiry into hacking and that he would be happy to co-operate with the Serious Fraud Office if it opens an investigation into News International.

Richard Alderman, the director of the SFO, is considering whether there are grounds for an investigation into potential breaches of company law by the media firm after it admitted making payments to Mr Clifford and Gordon Taylor, the chief executive of the Professional Footballers' Association. "The payment of large sums in order to prevent details of criminal activity by employees becoming public is a gross misuse of shareholders' money," wrote Tom Watson, the Labour MP, to Mr Alderman, alleging that the payments had been made in order to suppress further investigation of the scale of phone-hacking.

Mr Clifford described his payment as "very simple". He said: "When I found out what happened to me, I got all the information and eventually they caved in and apologised." The £1m settlement was negotiated "over lunch" with News International's chief executive, Rebekah Brooks, who resigned last week. "That fee was based on what I would have made from them in the four years I was not dealing with them," Mr Clifford said.