Ofcom rules Sky is fit and proper to hold a broadcasting licence. But Murdoch? Well...

Ofcom criticised James Murdoch for his 'lack of action' over the phone hacking scandal and said his behaviour was 'difficult to comprehend and ill-judged' (AP)

The prospect of a renewed bid by Rupert Murdoch's News Corp empire for total control of BSkyB grew yesterday with a ruling from the media regulator Ofcom that the satellite broadcaster was a "fit and proper" company to hold a licence.

But in a damaging assessment of James Murdoch, the former BSkyB chairman, Ofcom found that his management of News Corp's British newspaper business "repeatedly fell short of the conduct to be expected of as a chief executive and chairman".

The regulator criticised him for his "lack of action" over the phone hacking scandal and said his behaviour was "difficult to comprehend and ill-judged".

Ofcom found "no evidence that Sky was directly or indirectly involved in any of the wrong doing either admitted or alleged to have taken place at the News of the World or The Sun".

News Corp, which is under investigation by the US Department of Justice, seized on the regulator's lack of evidence of corporate wrongdoing. "We are... pleased that Ofcom determined that the evidence related to phone hacking, concealment and corruption does not provide any basis to conclude that News Corporation and Rupert Murdoch acted in a way that was inappropriate, and that there is similarly no evidence that James Murdoch deliberately engaged in any wrongdoing."

But the Ofcom finding may not be its final word on the subject. "Should further relevant evidence become available in the future, Ofcom would need to consider that evidence in order to fulfil its duty," the regulator said.

Critics of News Corp and its attempts to take control of BSkyB voiced frustration at yesterday's finding. Tom Watson, the Labour MP for West Bromwich East told Radio 4: "I am disappointed by it obviously, but not surprised – but I do think it shows the flaws in Ofcom's methodology, they can't do deep investigations in the way that other organisations can and they also do hedge their bets."

His colleague Chris Bryant, another fierce critic of News Corp, suggested that the regulator might be forced to change its position in the light of evidence that would emerge at forthcoming criminal prosecutions of News Corp employees. "I suspect that when Ofcom hear what went on at News Corp in the court cases they will revise their assessment on BSkyB if James M remains," he said on Twitter.

News Corp said that it rejected Ofcom's criticisms of James, the company's Deputy Chief Operating Officer, saying they were "not at all substantiated by evidence". But the regulator's finding will further damage James's reputation ahead of an important meeting of News Corp shareholders next month, when the future leadership of the company will be under discussion.

David Elstein, a former chief executive of Channel 5 and head of programming at BSkyB, said he believed that News Corp would now be planning to submit a fresh bid to take full control of the highly-profitable satellite broadcaster later next year after the completion of the phone hacking court cases. It is a business that Rupert Murdoch knows intimately and one that he knows the potential of. It would be entirely logical for News Corp entertainment to come back as soon as the embarrassment of the court cases has receded."

Sunday Times exposé was based on flawed evidence

The Crown Prosecution Service has dropped charges against two medical professionals who were arrested on suspicion of carrying out female genital mutilation following a sting by The Sunday Times. Birmingham-based doctor Ali Haji Mao-Aweys and dentist Omar Sheikh Mohamed Addow were arrested in May after the News International-owned newspaper claimed they had offered to carry out the procedure on teenage girls to an undercover reporter posing as their aunt. Both men denied the allegations and insisted they were opposed to the practice.

The report was published under the bylines of Eleanor Mills and Mazher Mahmood, the former News of the World "Fake Sheikh". But prosecutors yesterday said they were forced to drop the case against the doctors because of significant flaws in the evidence gathered by reporters. In a statement, Harry Ireland, Chief Crown Prosecutor for the West Midlands Area, claimed the undercover journalist who secretly recorded the doctors "consistently failed to sign her draft statement for the police despite being given every opportunity to do so over the past five months".

It is believed the reporter was not named in the final article to protect her identity for future stings. Mr Ireland added that he also had serious concerns over discrepancies between the journalist's draft statement and the evidence from the covert recordings. "At one stage the covert recordings record the doctors refusing to help the woman with her request," Mr Ireland said. The CPS decision raises question marks over the quality of the investigation that The Sunday Times claims it carried out.

A spokesperson for paper said: "The intention of this investigation was to highlight the alarming practice of female genital mutilation. The article was not accusing the doctors of committing a crime, but of being willing to consider aiding FGM. We stand by our investigation and contest the statement made by the CPS."

Jerome Taylor