Murdoch hit by FBI 9/11 hacking inquiry

US development heaps new pressure on embattled tycoon

(REUTERS)

The investigation into criminal behaviour by journalists at Rupert Murdoch's News Corp crossed the Atlantic yesterday as the FBI opened an inquiry into claims that the News of the World tried to hack the phones of victims of the 9/11 terrorist attacks.

As News Corp's shares slid in New York and legal problems threatened to engulf the rest of his media empire, Mr Murdoch launched a vigorous defence of his own handling of the scandal and of the conduct of his son, James.

The FBI opened the inquiry after sustained pressure from both Republican and Democrat politicians, who expressed outrage at the claims that 9/11 victims could have been among the NOTW's targets. The FBI is following claims first made in the Daily Mirror at the start of this week that NOTW journalists contacted a former New York police officer, now working as a private investigator, and offered to pay him to retrieve the phone records of those killed in the 2001 terrorist attacks. Police sources said the investigation is at a preliminary stage.

The action follows a direct appeal to the head of the FBI from a Congressman whose district was home to scores of people who died in the attacks. New York Representative Peter King is also the chairman of the House Homeland Security Committee and the first Republican to demand Mr Murdoch's company be investigated.

"It is revolting to imagine that members of the media would seek to compromise the integrity of a public official for financial gain in the pursuit of yellow journalism," he wrote. Victims' families had also joined in calls for the police to examine the allegations against News Corp.

The investigation into News International went global yesterday as:

* It was revealed that the former News of the World executive arrested on yesterday, Neil Wallis, had been employed as an advisor to Scotland Yard until last year.

* Rupert Murdoch promised to set up an independent committee to investigate "improper conduct" at News International.

* Mr Murdoch, his son James and their UK newspapers chief Rebekah Brooks agreed to appear before a UK Parliamentary committee investigation into the hacking affair.

* A major News Corp shareholder called on NI Chief Executive Rebekah Brooks to quit.

Pressure from across the Atlantic for a separate inquiry, in addition to the FBI probe and similar to the hearings taking place in the UK, grew significantly yesterday.

The California Democrat Anna Eshoo, a member of a House of Representatives committee that examines privacy issues, said that it should investigate News Corp. And the committee chairman Mary Bono Mack said she has asked phone companies if UK-style hacking is possible in the US. Separately, Representative Bruce Braley, an Iowa Democrat, called for an investigation by the House Oversight and Government Reform Committee into whether News Corp broke US anti-corruption laws by bribing British police officers.

But US Senator John McCain, who sits on the committee on Homeland Security, was less eager for similar proceedings in the US. He said: "I have heard of no evidence of allegations yet of anything being done in the United States of America."

In the UK, Sir Paul Stephenson, the Met Commissioner, will be questioned by the Commons home affairs select committee on Tuesday about the employment of Neil Wallis as a consultant to Scotland Yard. Its chairman, Keith Vaz, said: "There seems to have been a lot of connections between the Metropolitan Police and an organisation they were investigating."

Investors have until now been confident that the company will be able to isolate the scandal to the UK, and if it means selling the poorly performing UK newspaper business, then so much the better.

Now though, the involvement of the FBI, gathering scrutiny from Congress and a growing internet campaign against the Murdoch empire, raise the spectre of expensive legal battles stretching into the future and a hit to the company's bottom line.

Last night, the second biggest shareholder in News Corp, Prince Alwaleed bin Talal, called on Rebekah Brooks to quit as the scandal deepened. "For sure she has to go, you bet she has to go," the Saudi billionaire told the BBC's Newsnight programme. Alwaleed says his Kingdom Holding is the second biggest shareholder in News Corp and controls 7 per cent of the votes. News Corp did not respond to a request for comment on the FBI investigation.