UK's Cameron: will mend "broken society" after riots (Reuters)

WITNEY, England (Reuters) – Prime Minister David Cameron Monday promised a law and order "fightback" and robust action to mend what he called Britain's broken society after riots and looting last week shocked Britons and tarnished its reputation abroad.

But he faced renewed questions over how far his plans to cut government spending may further alienate the young and the poor.

In a speech full of tough language likely to please his traditional Conservative supporters, Cameron vowed more "no-nonsense policing" and tougher sentencing to tackle gang culture and known troublemakers, and said he would to do more to promote families, boost discipline in schools and encourage hard work.

In north London, where riots began nine days ago, many welcomed his hard line -- but young people ushered in to hear his speech in rural Oxfordshire doubted it would do much to close a growing gap between rich and poor, or heal troubled communities facing his government's deep public spending cuts.

"We have been too unwilling for too long to talk about what is right and wrong," Cameron said in a speech at a youth center in his mostly affluent constituency of Witney, near Oxford.

More than 2,800 people have been arrested since a protest over a fatal shooting by police on August 4 prompted rioting and looting in the poor London district of Tottenham. That spread across the capital and sparked violence in other English cities.

Cameron, who returned from holiday abroad last week after days of unrest, is seeking to tap into widespread public anger over the violence. They came 15 months after he took office at the head of a center-right coalition committed to cuts in welfare and other spending that critics say will hit the poor.

FEARS

"I think he's right," Nicola Pastore, 26, told Reuters as she pushed a pram in Tottenham. "I don't think the police have enough control. My kids are scared to go to sleep at night."

Cameron, who faces criticism for plans to cut spending on police and for his management of the crisis, said the riots had been a "wake-up call" for Britain, whose reputation abroad was tarnished by the images of groups rampaging through its cities.

Behind him as he spoke was a graffiti-style mural centered on characters in the kind of hoods and masks worn by many looters.

The stakes are high for Cameron. Any repeat of last week's lawlessness, in which shops were smashed and set on fire and five people died, will sap public confidence in his government.

However, analysts say the 44-year-old premier, a former public relations executive from a wealthy establishment background, could benefit politically if he provides the tough law and order response some voters are seeking.

Cameron has taken a hard line in rhetoric. His speech on Monday talked of the dangers of indiscipline in schools and family breakdown, succor to traditional Conservatives who feel their young leader has been too liberal on social issues.

CUTS

Cameron and his center-left Liberal Democrat coalition partners will review their program over the coming weeks, looking at issues like welfare and substance addiction in an effort to promote more stable communities.

But the prime minister has ruled out easing spending cuts which some critics on the left say are fuelling tensions in Britain's cities, where the gap between rich and poor is gaping.

Planned austerity has put Cameron on a collision course with the police, still smarting over his criticism of their initial response to the riots. [ID:nL5E7JE04J] Police chiefs say a 20 percent cut in their budget over the next four years will make it harder for them to maintain law and order.

London's Conservative mayor, Boris Johnson, has also said now is not the time for cuts to spending on police.

But Cameron has refused to budge on plans to ease austerity measures, believing jittery financial markets will take fright at any sign of backtracking on plans to erase by 2015 a budget deficit that peaked at over 10 percent of national output.

DOUBTS

At Witney Ecumenical Youth Trust, where Cameron gave his speech, young people questioned how spending cuts squared with his plans to deal with social problems, and felt his speech created even more of a sense of 'them and us'.

Cameron was subjected to hostile whistling on arrival. After his televised speech, he took questions from journalists until a reporter chided him for not responding directly to young people in the audience. The prime minister later left to the sounds of hecklers clucking like chickens to accuse him of cowardice.

"He tried putting it across like everyone who's had a broken family was wrong. It's like he's having a dig at us," said Jesse Day, 19. She and her friends stressed the importance of community organizations like theirs -- a charity which relies on donations and which almost closed a few months ago.

"He says he wants people to get in touch with their families. But for some people, their families aren't there and the youth centre's the only people to talk to," said Ryan Clayton, 15. "But he's shutting all the youth centers."

Others in Witney welcomed Cameron's emphasis on behavior.

"I agree entirely," said 74-year-old Colin Bayliss.

"Discipline's gone out the window. The family identity has gone out the window. There's more single parents around. More people need to take responsibility for their families and their children."

Opposition Labor leader Ed Miliband said a lack of morality was not confined to a "feral underclass" but was also displayed by risk-taking bankers, legislators who fiddled their expenses and newspaper reporters who hacked telephones for stories -- all major topics of debate in Britain in the past couple of years.

"When we talk about the sick behavior of those without power, let's also talk about the sick behavior of those with it," he said in a speech at his old school in London Monday.

It was a line echoed by Cameron. Leaders are conscious that voters, disillusioned by what many see as a failure to punish bankers they hold responsible for the financial crisis, could take unkindly to being lectured by politicians, the press and police, all institutions hit by scandal in the recent past.

(Additional reporting by Keith Weir, Adrian Croft and Avril Ormsby; Editing by Jodie Ginsberg and Alastair Macdonald)

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Rioting spreads as UK's Cameron vows crackdown (Reuters)

LONDON (Reuters) – Prime Minister David Cameron said Wednesday "a fightback is under way" to restore law and order to Britain's streets despite rioting, looting and arson by gangs of youths spreading from London to other cities.

Youths fought running battles with police in the northern cities of Manchester and Liverpool as well as in the Midlands overnight Tuesday.

They smashed shop windows, carted off televisions and designer clothes, and torched buildings as police armed with shields and batons struggled to contain the disturbances.

A boosted police presence meant London itself -- an international financial center and host of next summer's Olympic Games -- was relatively quiet after three days of violent unrest that raised questions about the divided state of modern Britain.

About 16,000 policemen patrolled London's streets Tuesday night. Shops, pubs and businesses in many areas closed early after boarding up windows and the capital had the air of a city under siege.

"We needed a fightback and a fightback is under way," Cameron said after a meeting Wednesday of the government's COBRA committee that deals with national security crises.

"Whatever resources police need they will get."

This included baton rounds and water cannon, Cameron said.

The prime minister branded the unrest, which erupted in poor, inner-city areas of London at the weekend, as nothing more than criminality.

He made no reference to social and economic conditions which community leaders say sparked the problems. The initial trouble followed the death of an Afro-Caribbean man in north London from a gunshot wound after an incident involving armed police.

"There are pockets of our society that are not just broken but frankly sick," said Cameron, who made fixing "broken Britain" a cornerstone of his premiership.

The spread of the unrest to other cities including Birmingham, Britain's second biggest, means the crisis is anything but over.

Gangs of youths in hooded tops battled police in Manchester, smashing windows and looting shops, and setting fire to a clothes shop. In nearby Salford, rioters threw bricks at police and set fire to shops and cars.

"These people have nothing to protest against," Greater Manchester's Assistant Chief Constable Gary Shewan said. "It is, pure and simple, acts of criminal behavior."

In the port city of Liverpool, rioters attacked two fire engines and a fire officer's car, police said. Some 200 youths throwing missiles wrecked and looted shops.

Police said they had arrested 113 people in Manchester and Salford, and 50 in Liverpool.

Cars were burned and stores looted in West Bromwich and Wolverhampton in central England; and in Nottingham a gang set fire to a police station.

The police -- already facing manpower losses due to public spending cuts -- are at full stretch. With thousands of reinforcements sent from regional forces to London, other cities might find their own police ranks depleted.

VIGILANTES

In Birmingham, police launched a murder inquiry after three Muslim men died after being run over by a car in the mayhem there. A friend of the men told BBC radio they had been part of a group of British Asians protecting their area from looters after attending Ramadan prayers at a mosque.

Shopkeepers and residents in London and other cities were reported to be organizing vigilante groups to protect their property.

The Muslim Council of Britain condemned the violence and called on its community to remain calm and to support the authorities. It also urged them to help clean up the streets. Many small shops and businesses in England are run by Muslims of south Asian heritage.

The violence has appalled many Britons who have been transfixed by television pictures of rioters attacking individuals and raiding family-owned stores as well as targeting big business.

It has also prompted soul-searching.

Community leaders said the violence in London, the worst for decades in the multi-ethnic capital of 7.8 million people, was rooted in growing disparities in wealth and opportunity.

"This disturbing phenomenon has to be understood as a conflagration of aggression from a socially and economically excluded underclass," the liberal Independent newspaper said.

"These youths live in the heart of British cities but they do not feel part of them. Far too little has been done by successive generations of politicians and public servants to integrate these individuals into normal society. The fuse for this explosion has been burning down for many years."

The right-wing Daily Telegraph took a harder line.

"The thugs must be taught to respect the law the hard way. These riots have shamed the nation and the government must be held to account."

'GREED IS GOOD'

Critics say government policies of chopping public spending and raising taxes to cut a huge budget deficit have aggravated the plight of urban youth as the economy struggles to grow and unemployment rises.

The awarding of huge bonuses to bankers has become emblematic of a culture of flashy consumption for the elite.

Alleged corruption within London's police force and a 2009 scandal over parliamentarians' expenses have also fueled the notion that greed is a motivating factor across the spectrum of British society.

"Everyone's heard about the police taking bribes, the members of parliament stealing thousands with their expenses. They set the example. It's time to loot," a youth in the riot-torn London district of Hackney told Reuters.

John McDonnell, a legislator for the opposition Labor Party, wrote in the left-leaning Guardian newspaper: "We are reaping what has been sown over the last three decades of creating a grotesquely unequal society with an ethos of grab as much as you can by any means.

"A society of looters created with MPs and their expenses, bankers and their bonuses, tax-evading corporations, hacking journalists, bribe-taking police officers, and now a group of alienated kids are seizing their chance."

In London court sessions, which ran through the night processing suspects, people from a variety of ethnic backgrounds, ages and employment circumstances appeared before the magistrates.

They included a 31-year-old primary teacher from Stockwell, south London, who pleaded guilty to burglary in Croydon, several miles from his home.

Police said they had arrested a total of 770 people, one as young as 11, in London since the unrest began.

(Additional reporting by Tim Castle, Paul Hoskins, Adrian Croft, Avril Ormsby, Peter Griffiths; Jodie Ginsberg, Stephen Addison and Mohammed Abbas; Writing by Angus MacSwan; Editing by Robert Woodward)

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Cameron "regrets" hiring scandal-hit tabloid editor (Reuters)

LONDON (Reuters) – Prime Minister David Cameron, defending his integrity to parliament in emergency session on Wednesday, said he regretted hiring a journalist at the heart of a scandal that has rocked Britain's press, police and politics.

But in hours of stormy questioning he seemed to rally his Conservative party behind him and stopped short of bowing to demands that he apologize outright for what the Labour leader called a "catastrophic error of judgment" in appointing as his spokesman a former editor of Rupert Murdoch's News of the World.

Only if Andy Coulson, who has since resigned, should turn out to have lied about not knowing of illegal practices at his newspaper would the prime minister offer a "profound apology."

Analysts said Cameron emerged from the debate looking stronger than when he was forced to fly home early from Africa to face lawmakers who had delayed their summer recess by a day. But he left some lingering questions unanswered, notably about his role in Murdoch's takeover bid for TV network BSkyB.

After his toughest two weeks in office, the 44-year-old premier spoke with feeling of the Coulson saga: "You live and you learn -- and believe you me, I have learnt," he said.

"It was my decision ... Of course I regret and I am extremely sorry about the furor it has caused. With 20:20 hindsight ... I would not have offered him the job."

He said of Coulson, who is under suspicion of conspiring to intercept calls and bribe police: "I have an old-fashioned view about innocent until proven guilty. But if it turns out I have been lied to, that would be a moment for a profound apology.

"And, in that event, I can tell you I will not fall short."

Beleaguered but hardly under serious threat of being ousted by his party allies after less than 15 months in power, Cameron defended his actions and those of his staff in dealings with Murdoch's News Corp global media empire and with two senior police chiefs who resigned this week over the affair.

"He seems to have gained a bit of breathing space over the course of this debate," said Andrew Russell, senior politics lecturer at Manchester University. "He looked more self assured today than he has been for a little while."

Conservative member of parliament George Eustice spoke for a party relieved by the leader's performance: "Cameron did really well. He's got back on the front foot and taken the initiative."

He added: "The idea that his position as prime minister was in doubt was a complete nonsense."

LABOUR ATTACK

Labour's Ed Miliband, whose muted first year as opposition leader has been fired up by attacking Cameron on the scandal, has not gone so far as to demand Cameron's resignation.

But he asked during the debate: "Why doesn't he do more than give a half-apology and provide the full apology now for hiring Mr Coulson and bringing him into the heart of Downing Street?"

Opposition members of parliament questioned the credibility of Cameron's defense that Coulson had assured him when being hired in 2007 that, as editor of the News of the World, he knew nothing of the hacking of voicemails which led to the paper's royal correspondent and an investigator being jailed.

Coulson left Cameron's office in January just before police reopened an investigation in which Coulson and his predecessor as editor, Rebekah Brooks, have been arrested and bailed.

Labour lawmakers also questioned Cameron about contacts with Murdoch and his staff, including his friendship with Brooks, who resigned as head of British newspaper unit News International.

The prime minister repeatedly deflected questions on what he may have discussed with News Corp about its $12-billion bid to buy out other shareholders in BSkyB. He insisted he had "no inappropriate" conversations and played no role in a government decision to let the bid proceed in the face of protests it would give Murdoch too great a share of media ownership in Britain.

Last week, as scandal engulfed News International, Cameron joined Labour in calling for News Corp to drop it. It did.

While he has derided suggestions from some on the left that backing the BSkyB bid might have been a payback for Murdoch's papers switching from supporting Labour to promoting Cameron at the 2010 election, Cameron told parliament it may make sense to "further remove politicians" from decisions about media mergers.

Tim Bale, politics professor at Sussex University, said Cameron had sounded evasive on the subject and could face a drip-feed of criticism from the scandal for a long time: "There was a very strong sense of him searching for a form of words that would not get him into trouble. The Commons picked up on that and there will be more questions to answer in that regard."

Before the debate, a poll by Reuters/Ipsos MORI showed Britons' satisfaction with Cameron had fallen to its lowest level since he entered office in May last year. Only 38 percent were happy with the way he was doing his job.

But Helen Cleary of Ipsos MORI cautioned: "We know from other scandals that public opinion tends to bounce back."

And she added: "Even now, after Ed Miliband's boost from the scandal, Cameron is ahead ... on personal satisfaction ratings."

Cameron tried during the debate to move the political agenda away from the scandal, saying voters wanted him to concentrate on handling an economic crisis and other pressing matters.

Bale said: "It's going to be very difficult to draw a line under it permanently. But stressing the need to ... start talking about some of the very serious issues on the economy that are going on makes intuitive sense to a lot of people."

CAMERON ATTACKS

As the rowdy session in the House of Commons continued, he also landed blows of his own by pointing out the close relations Miliband's predecessors, Labour prime ministers Tony Blair and Gordon Brown, had maintained with Murdoch, who has been courted and feared by British leaders for four decades.

Referring to Brooks's reported attendance at a gathering hosted by Brown's wife at the prime minister's official country residence in 2008, Cameron taunted the Labour benches: "I've never held a slumber party or seen her in her pajamas."

He referred repeatedly to controversial former journalists hired by Labour and to another former News International reporter, from the Times, who is now a senior aide to Miliband.

A day after Murdoch apologized to a parliamentary committee but denied personal responsibility for the affair, Cameron gave details of a judicial inquiry he has ordered into the scandal and wider issues it has raised over relationships among Britain's media, police and political establishment.

The smoldering scandal exploded in the public consciousness on July 4, when the family of a schoolgirl abducted and murdered in 2002 said police had told them they believed someone from the paper had hacked in to the teenager's voicemail, misleading detectives looking for her and giving her parents false hope.

Police say 60 officers are probing the hacking of messages of possibly 4,000 people, not just the rich, famous or powerful, but crime victims and families of soldiers killed in action.

Many of the leads come from the notes of Glenn Mulcaire, an investigator jailed with the News of the World reporter in 2007.

The 80-year-old Murdoch, who was attacked by a protester with a foam pie during Tuesday's committee hearing, sent a message to his staff that his company was taking steps to ensure that "serious problems never happen again." [ID:nL6E7IK092]

"Those who have betrayed our trust must be held accountable under the law," he said in an e-mail sent late on Tuesday.

An ethics board which Murdoch set up this week said it had now ended continuing payments for legal costs to Mulcaire -- payments questioned by the parliamentary committee on Tuesday.

Cameron's Media Minister Jeremy Hunt said News International still needed to explain how malpractice happened without Murdoch or his son James, now News International chairman, being told. They shut down the 168-year-old News of the World this month.

Shares in News Corp gained 0.7 percent in New York, adding to Tuesday's 5.5 percent rise. Some investors speculate the scandal may hasten a handover of power in the company from the Murdoch family in a way that may streamline global operations.

In Murdoch's native Australia, Prime Minister Julia Gillard said the local arm of News Corp would face "hard questions" after the phone-hacking in Britain.

(Additional reporting by Tim Castle, Kate Holton, Mohammed Abbas, Paul Hoskins, Peter Griffiths, Olesya Dmitracova, Georgina Prodhan and Stephen Mangan; Writing by Alastair Macdonald)

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Cameron denies staff tried to halt hacking probe (AP)

LONDON – Prime Minister David Cameron emphatically denied claims that his staff tried to stop an inquiry into phone hacking at the News of the World and defended his decision to hire one of the tabloid's editors as his communications chief.

In a raucous emergency session Wednesday in Parliament, Cameron did admit that both the ruling Conservatives and the opposition Labour parties had failed to pursue key developments in the hacking case and had actively courted media baron Rupert Murdoch.

"The clock has stopped on my watch and we need to sort it out," Cameron told lawmakers, promising that a government inquiry would examine the cozy relationship between British politicians and media and investigate whether other news organizations may have broken the law.

Police are also probing whether news media breached privacy laws.

Cameron cut short his Africa trip and the House of Commons delayed its summer break to debate issues engulfing both Britain's political and media elite and Murdoch's global communications empire, News Corp.

Murdoch owned the troubled News of the World, where the phone hacking claims first emerged in 2005, when the royal household alerted police that the tabloid may have learned about Prince William's knee injury by illegally intercepting phone messages.

Cameron's former communications chief Andy Coulson — a former editor at the tabloid — is among 10 people who have been arrested in the scandal. One has been cleared.

Lawmakers wanted to know why Cameron insisted on hiring Coulson despite warnings and how much the prime minister knew about the phone hacking investigation. There have been allegations that some people on Cameron's staff may have met with police to pressure them to drop the investigation.

"To risk any perception that No 10 (Downing Street) was seeking to influence a sensitive police investigation in any way would have been completely wrong," he said.

Cameron did, however, meet with News Corp. executives more than two dozen times from May 2010 to this month — meetings that were criticized in Parliament by Labour leader Ed Miliband, who said Cameron had made a "catastrophic error of judgment" in hiring Coulson.

Coulson was an editor at the News of the World when royal reporter Clive Goodman and private investigator Glenn Mulcaire were arrested and jailed in 2007 for phone hacking. The original police inquiry into phone hacking was dropped, Coulson quit the paper and Cameron — then opposition leader — hired him.

This January, police reopened the hacking investigation. They are now investigating some 3,870 people whose names and telephone numbers were found in the News of the World files. It remains unclear how many were hacking victims. Coulson resigned his government post that same month.

News Corp. said Wednesday it had now eliminated legal payments to Mulcaire — a day after Murdoch told lawmakers in a special parliamentary committee hearing that he would try to find a way to stop the payments. Mulcaire's lawyer, Sarah Webb, declined to comment on the development.

In other phone hacking news, a judge Wednesday awarded "Notting Hill" actor Hugh Grant — one of the most prominent celebrity critics of the Murdoch empire — the right to see whether he was one of the tabloid hacking victims.

The scandal captivated television audiences from America to Murdoch's native Australia on Tuesday, as Murdoch endured a three-hour grilling by U.K. lawmakers. The media baron said he had known nothing of allegations that staff at News of the World hacked into cell phones and bribed police to get information on celebrities, politicians and crime victims.

He also said he had been humbled by the allegations and apologized for the "horrible invasions" of privacy.

Murdoch flew out of London on Wednesday.

Politicians from both the Conservative Party and Labour Party have been tainted by the scandal.

During Wednesday's session, Miliband reminded Cameron that his own Deputy Prime Minister Nick Clegg had warned Cameron against bringing Coulson into Downing Street last year as communications chief. Clegg sat stone-faced during much of Wednesday's rowdy session.

Cameron later countered, saying the Labour Party was also guilty of hiring questionable characters, including Miliband's current strategist, Tom Baldwin, another former Murdoch journalist from a different paper.

Conservative donor Lord Ashcroft, a Belize-based billionaire who has funded the party for more than a decade, has accused Baldwin of trying to get private banking information in 1999.

Cameron defended Coulson's work and said if it emerged that Coulson had lied to him about his role in the hacking case he would take it seriously.

"Andy Coulson is innocent until proven guilty," Cameron said.

Buckingham Palace reacted sharply to a claim by one lawmaker that it had raised concerns with Cameron's office over his decision to hire Coulson. "It is outrageous to suggest this," said a palace spokesman.

Britain's Conservative Party reported it had just learned that another recently arrested phone-hacking suspect, former News of the World executive editor Neil Wallis, may have advised Coulson before the 2010 national election that put Cameron into power. It said Wallis was not paid for the advice, however.

Cameron also said the hacking affair raises questions over the ethics and values of London's police force and vowed Wednesday that he would bring in new leadership to the force. Two top police resigned this week over their close ties to Wallis.

Meanwhile, a House of Commons committee on Wednesday blasted both News International, the News Corp. unit that operates the British papers, and the London Metropolitan Police for their performance on the scandal.

"We deplore the response of News International to the original investigation into hacking. It is almost impossible to escape the conclusion ... that they were deliberately trying to thwart a criminal investigation," said the Home Affairs committee, which has been grilling past and present Metropolitan Police officials about their decision not to reopen the hacking investigation in 2009.

On Wednesday, police charged Jonathan May-Bowles, 26, with behavior causing harassment, alarm or distress in a public place for trying to hit Murdoch with a foam pie at the U.K. hearing.

As the scandal exploded this month, Murdoch shut down the 168-year-old News of the World, gave up on buying full control of British Sky Broadcasting, Britain's biggest commercial television company, and accepted the resignations of two top executives.

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Cassandra Vinograd, Danica Kirka, Meera Selva and Robert Barr contributed to this report

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Cassandra Vinograd, Danica Kirka, Meera Selva and Robert Barr contributed to this report from London.

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Second police chief quits as scandal pressures Cameron (Reuters)

LONDON (Reuters) – A second senior British policeman resigned Monday over the corruption scandal that has engulfed Rupert Murdoch's global media empire and forced Prime Minister David Cameron to defend his own position.

Scotland Yard's counter-terrorism chief, John Yates, quit a day after the head of the Metropolitan Police. The force faces a storm of questions from parliament and voters over officers' relationships with the Murdoch press and their failure to probe allegations of phone-hacking by the News of the World.

With events accelerating in an affair that has electrified public life and strained ties among Britain's press, police and politicians, Cameron curtailed a visit to Africa and defended himself from police criticism over his choice of the tabloid's former editor as government spokesman.

Though he faces no challenge yet to his leadership, some of his Conservative supporters began to raise the possibility, albeit remote, that Cameron might face pressure to go himself. He will return from Africa late Tuesday, rather than early Wednesday, to face a new parliamentary debate on the scandal.

Following the arrest Sunday of Murdoch's British newspaper chief Rebekah Brooks, a personal friend of Cameron and one of two top News Corp executives to resign on Friday, the Murdoch family's management of its global business interests was also being questioned by investors.

The company said it was setting up an independent ethics committee under Anthony Grabiner, a commercial lawyer and member of the upper chamber of parliament, the House of Lords.

Rupert Murdoch, 80, and his son and heir apparent James, 38, along with the 43-year-old Brooks, a former editor of the News of the World, will be quizzed by the media committee of the lower house Tuesday in what promises to be a fiery showdown.

News Corp shares were 3.7 percent down in New York. That was over 16 percent lower than when news broke on July 4 that police were investigating whether journalists in 2002 had hacked voicemail for a missing teen-ager who was later found murdered.

That has reignited a five-year-old scandal that once had seemed limited to spying on the rich, famous and powerful. Ten journalists have been arrested and released on bail.

POLICE CRITICIZE CAMERON

Police, under pressure for failing to probe more widely after the jailing of a News of the World reporter in 2007, have since said an inquiry they relaunched in January has the names of some 4,000 people who may have been spied on, including child crime victims and the parents of soldiers killed in war.

Yates, who was savaged by a parliamentary committee at a public hearing last week, had been the focus of complaints that in 2009 he reviewed evidence of phone-hacking by the News of the World and ruled that it did not merit reopening inquiries. The mayor of London said Yates, an assistant commissioner of the Metropolitan Police, had resigned rather than be suspended.

In stepping down as Britain's top policeman Sunday, Yates's boss Paul Stephenson, commissioner of the Metropolitan Police, said he could not carry on while investigations continue into the appointment by his force of a former deputy editor of the News of the World as a public relations consultant.

Stephenson also made an unusual, if veiled, personal attack on the prime minister by contrasting Cameron's defiant reaction to revelations about his spokesman Andy Coulson with the police chief tendering his resignation in response to the hiring of Neil Wallis, Coulson's former deputy, as an adviser.

Stephenson noted that Cameron had appointed Coulson in 2007, shortly after Coulson resigned as the paper's editor following the jailing of a reporter for hacking. And he said Wallis had, until this month, not been linked to the scandal at all.

"Unlike Mr. Coulson, Mr. Wallis had not resigned from News of the World or, to the best of my knowledge, been in any way associated with the original phone-hacking investigation," Stephenson said.

Picking up on that, opposition Labor leader Ed Miliband highlighted the "sharp contrast" between Cameron and the police response, but he stopped short of calling outright for the prime minister, in office for only 14 months, to resign.

Cameron, beginning a two-day trip to Africa which had already been curtailed by the need to deal with the scandal, said the case of the government and police was not comparable.

"I don't believe the two situations are the same in any shape or form," he told a news conference in Pretoria.

"There is a contrast with the situation at the Metropolitan Police, where clearly the issues have been around whether or not the investigation is being pursued properly."

Cameron also said parliament would delay its summer recess by a day to let him address lawmakers again Wednesday.

POLITICAL FALLOUT

Cameron, a 44-year-old former public relations executive, revived Conservative fortunes after taking the leadership in 2005, winning power last year after 13 years of Labor rule.

Many see the scandal as his biggest test to date.

His deputy prime minister Nick Clegg, leader of coalition partners the Liberal Democrats, rubbished any suggestion of Cameron's resignation Monday -- analysts note that Clegg's party's own dismal poll ratings after its first taste of power in 70 years ensures they will not provoke an early election.

Asked whether Cameron might be forced out over the scandal, Clegg replied: "Of course not. Let's keep some perspective."

However, some commentators said his troubles were not over.

"This crisis has understandably shaken the Cameron circle. Some dared to hope the storm had passed," wrote Andrew Grice, political editor of the Independent newspaper. "Yesterday they realized the storm is still gathering pace. It could last for years. No one knows where it will end, least of all Mr Cameron."

Iain Dale, a prominent Conservative commentator, wrote on his blog: "I can't believe I am even writing this, but it is no longer an impossibility to imagine this scandal bringing down the prime minister, or even the government."

Yet, he said, that remained far-fetched, as did Toby Young, a commentator blogging at the Conservative-supporting Daily Telegraph, who cited Cameron's assured demeanor in public and efforts to highlight Labor's own long relationship with the Murdoch press as reasons for expecting the crisis to blow over.

"I don't rule out the prime minister being toppled by this scandal," Young wrote. "I just don't think any of the details that have emerged so far, or his handling of the crisis, put him in serious jeopardy."

MURDOCHS UNDER FIRE

The affair has prompted Murdoch to shut down the 168-year-old News of the World, Britain's top-selling Sunday paper, and to drop a bid for highly profitable BSkyB that was a key part of News Corp's global expansion in television. That in turn has raised questions from investors over the family's management.

"People would rather be cautious and mark it down rather than find a reason to defend it," said Jackson Leung at News Corp shareholder Invesco of the multinational's share price.

James Murdoch is the executive most in the firing line, many analysts believe, following the resignations Friday of Brooks and of her former colleague in London Les Hinton, head of Murdoch's Dow Jones & Co, publisher of the Wall Street Journal.

Shares in British pay-TV network BSkyB, in which News Corp owns 39 percent, were little changed Monday, still 15 percent down on their July 4 level after political uproar forced Murdoch last week to drop the $12-billion buyout bid.

Some minority shareholders said James Murdoch may have to step aside as chairman of the broadcaster.

Labor leader Miliband, who wants to block any future takeover of BSkyB by Murdoch, called for new rules to curb how much of Britain's media could be controlled by one proprietor: "Concentrations of power damage our culture," he said.

Murdoch, who some media commentators say at first misjudged the strength of public anger against a man who has influenced British politics for decades, published apologies in several rival newspapers at the weekend. He also apologized in person to the parents of the murdered schoolgirl whose phone was hacked.

His company, and Cameron's government, are likely to face many uncomfortable moments over the coming months as the police investigation and public inquiry more ahead. However, interest among voters may wane, with an election not likely before 2014.

"If the story continues and starts affecting the government it will obviously be huge. But phone-hacking has been going on for years so why has it gone so big all of a sudden?" said London teacher Robert Rogers, 26.

"It's terrible the victims have had their privacy invaded. But after tomorrow it will all blow over and will be forgotten in a week."

(Additional reporting by Jodie Ginsberg in Pretoria and Stephen Mangan, Christina Fincher, Sven Egenter, Ralph Gowling and Michael Roddy in London; Writing by Alastair Macdonald; Editing by Myra MacDonald)

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Murdoch apology in UK papers, Cameron defends links (AFP)

LONDON (AFP) – Britain's government defended its links with Rupert Murdoch on Saturday as the embattled media mogul published apologies in national newspapers over the phone hacking scandal saying: "We Are Sorry."

A day after Murdoch suffered the loss of two of his closest aides, the crisis returned to haunt British Prime Minister David Cameron as it emerged he had 26 meetings in 15 months with key figures from the Australian-born magnate's empire.

British Foreign Secretary William Hague came to Cameron's defence, saying he was "not embarrassed" by the extent of the contacts with those close to Murdoch, 80, who has wielded his influence over British politics for decades.

Those invited to Cameron's country retreat, Chequers, included Rebekah Brooks, who quit as chief executive of News International, Murdoch's British newspaper wing, on Friday and was a previous editor of the News of the World, now closed.

Another was Murdoch's son James, the chairman of News International.

"Personally, I'm not embarrassed by it in any way. But there is something wrong here in this country and it must be put right. It has been acknowledged by the PM and I think that's the right attitude to take," Hague told the BBC.

Cameron also invited Andy Coulson, his former media chief and another one-time editor of the News of the World tabloid, to Chequers in March, two months after Coulson quit Downing Street.

Coulson was arrested last week in connection with the scandal over alleged hacking and payments to police, one of nine people held since police reopened their investigations in January. He denies the charges.

Hague said: "In inviting Andy Coulson back the prime minister has invited someone back to thank him for his work, he's worked for him for several years, that is a normal, human thing to do, I think it shows a positive side to his character."

On Saturday, Murdoch abandoned his previously defiant stance and ran full-page adverts in seven national British dailies, apologising for the hacking scandal at the News of the World, which he closed down last week.

"We are sorry," the headline of the ads read. They were signed "Sincerely, Rupert Murdoch."

It said: "We are sorry for the serious wrongdoing that occurred. We are deeply sorry for the hurt suffered by the individuals affected. We regret not acting faster to sort things out."

In a further show of contrition, Murdoch on Friday met the parents of murdered teenager Milly Dowler, whose phone was allegedly hacked by the News of the World in 2002, when Brooks was editor of the paper.

Murdoch's determination to keep his empire afloat was shown, however, when he accepted the resignation of Brooks on Friday and then, hours later that of Les Hinton, head of Dow Jones, the publisher of The Wall Street Journal.

Hinton had worked with Murdoch for 50 years.

British-born Hinton said that although he knew nothing of the phone hacking when he was chairman of News International from 1995 to 2007, he must take responsibility for the "unimaginable" pain it caused.

Brooks denies any wrongdoing, but as editor of News of the World when Dowler's phone was allegedly hacked, she became a lightning rod for outrage.

The 43-year-old, who started out as a secretary at the tabloid and is viewed almost like a daughter by Murdoch, told News International staff she felt a "deep sense of responsibility for the people we have hurt".

The departures of Brooks and Hinton capped a disastrous week for Murdoch in which he was also forced to scrap a buy-out of British pay-TV giant BSkyB.

They have also now exposed Murdoch's heir-apparent James, 38, who is the chairman of News International and also runs the Asian and European operations of parent company News Corporation.

The British government has announced a full public inquiry into the scandal.

Rupert Murdoch, James Murdoch and Brooks have all been summoned to testify before British lawmakers on Tuesday.

But the scandal continued to spiral with the news that British actor Jude Law is suing The Sun over phone hacking in 2005 and 2006, when Brooks was editor, in the first such claim against the Murdoch-owned daily.

News International dismissed the claims as a "deeply cynical".

In the United States, the FBI has began probing allegations that Murdoch's US employees may have hacked the phones of victims of the September 11 attacks, dealing a potentially huge blow to his US-based News Corp.

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As ex-spokesman arrested, Cameron vows press shake-up (Reuters)

LONDON (Reuters) – Police arrested David Cameron's former spokesman on Friday over the scandal that has shut down Rupert Murdoch's News of the World, forcing the prime minister to defend his judgment while promising sweeping new rules for the British press.

As Cameron fielded hostile questions over why he hired Andy Coulson after he resigned from editing the paper in 2007 -- despite knowing that one of his journalists had been jailed for hacking into voicemails in search of scoops -- Coulson was being arrested by police on suspicion of conspiring in the practice.

Cameron said he took "full responsibility" for his decision to appoint Coulson, who quit Downing Street in January when police relaunched inquiries. But the premier rebuffed criticism and strove to spread the blame for an affair that has generated public outrage against the press, politicians and police.

"Murder victims, terrorist victims, families who have lost loved ones in war..." he said: "That these people could have had their phones hacked into in order to generate stories for a newspaper is simply disgusting."

So widespread was the rot, Cameron told an emergency news conference after Murdoch shut down his best-selling Sunday paper, that only a completely new system of media regulation and a full public inquiry into what went wrong over a decade at News of the World and beyond would meet public demand.

"This scandal is not just about some journalists on one newspaper," Cameron said. "It's not even just about the press. It's also about the police. And, yes, it's also about how politics works and politicians too."

In a sign of spreading fallout, police investigating allegations of phone hacking raided another tabloid, the Daily Star.

PRESS BARONS' GRIP

While defending himself for hiring Coulson, Cameron said politicians of all parties had been in thrall to press barons for decades and he indicated a new willingness to challenge the Murdoch empire by withholding overt endorsement of News Corp's bid for broadcaster BSkyB.

Shares in the pay-TV chain fell nearly 5 percent after the media ministry said it would take events at the News of the World into account before giving its approval to the takeover.

Cameron also criticized his friend and neighbor Rebekah Brooks, Coulson's predecessor as editor and now a top executive and confidante of Murdoch. She should have resigned herself, he said, after closing down the newspaper at a cost of 200 jobs.

Staff involved in putting together the final edition of the 168-year-old title, which is Britain's biggest-selling Sunday paper, said Brooks had said she would address them at 4 p.m. (1500 GMT). Having been publicly repudiated by both Cameron and Labor leader Ed Miliband, the 43-year-old Brooks, dubbed a consummate "networker," has seen her value to Murdoch reduced.

Miliband, and Cameron's Liberal Democrat deputy prime minister, Nick Clegg, offered broadly similar prescriptions for addressing what many Britons believe is a tabloid press out of control in its readiness to invade other people's privacy.

But media and civil liberties groups will resist efforts to impose regulation they believe would curb free speech or thwart scrutiny of corruption and hypocrisy.

PRIME MINISTER'S JUDGMENT

Cameron, who worked in public relations before being elected, faced the stiffest questioning over his association with Coulson, 43. He was hired to bring a feel for what grass-roots electors wanted to hear to the wealthy Cameron and his privately-educated fellow Conservative leaders.

"Very bad things had happened at the News of the World. He had resigned. I gave him a second chance," Cameron said of hiring Coulson in 2007. "I wasn't given any specific sort of actionable information about Andy Coulson."

Critics pointed out that many British journalists doubted Coulson's assertions that he, as News of the World editor, had known nothing of the hacking of phones used by aides to Prince William -- for which royal correspondent Clive Goodman and a private detective were jailed in 2007.

"I thought we had a prime minister today who showed he doesn't get it. He doesn't get it over BSkyB," said Miliband, who wants the Murdoch takeover of the pay-TV group blocked.

"He also doesn't get it on Andy Coulson ... He's got to come clean and he has got to apologize."

Coulson's former colleague Goodman, the former royal correspondent, was re-arrested on Friday, a police source said, to answer questions about alleged payments to police officers.

Alan Rusbridger, editor of the left-leaning Guardian which has campaigned to expose more of the scandal, told Reuters Cameron could be faulted: "I just wonder what vetting process was done. I think it shows extremely poor judgment."

Nonetheless, with probably nearly four years until a general election, the damage to Cameron may well be limited.

MURDOCH UNDER PRESSURE

Murdoch, the 80-year-old Australian-born billionaire, ordered that Sunday's News of the World should be the last after 168 years as he battles to prevent the scandal fueling political opposition to his $22-billion takeover bid for BSkyB -- a company that makes 100 times the profit of the newspaper.

Cameron's government has already given its informal blessing to the deal, despite concern especially on the left that it would give Murdoch's U.S.-listed News Corp too much power.

But at Friday's news conference, the prime minister refrained from any endorsement of the BSkyB bid, and stressed that "proper legal processes" would "take some time." Murdoch already has a 39 percent stake in the company.

Brooks has denied knowing that journalists on the paper were hacking the voicemails of possibly thousands of people.

But she has become the focus of anger among the 200 News of the World staff sacked with little ceremony on Thursday.

There was "seething anger" and "pure hatred" directed toward her, one reporter said: "We think they're closing down a whole newspaper just to protect one woman's job."

Cameron said he had heard that Brooks offered her resignation. "I would have taken it," he said.

At the east London plant of News International, the News Corp arm that also owns top selling daily the Sun as well as London's broadsheet times, journalists were working on the last edition of the News of the World. "As you might expect, it is very subdued," said political editor Ian Kirby.

"There's a pride and a professionalism and the paper has to look good ... It will be a News of the World to remember.

"There is naturally a lot of frustration at the paper being closed down, frustration that we're being made to pay the price for what other people have done in the past."

Fellow journalists saluted the end of a venerable, muckraking title: "Hacked To Death" headlined Murdoch's own Times newspaper in London. "Paper That Died Of Shame" was the verdict of the Daily Mail, a rival tabloid.

PRESS REGULATION

Both Cameron and Miliband have concluded that a system under which newspaper publishers largely supervise their own code of conduct must be tightened. Cameron said an independent panel could start work within months -- much sooner than the public inquiry which must wait for the end of the police case -- and that it must be free to draft its own proposals.

While ensuring a free press, he said, "It should be truly ... independent of the press, so the public will know that newspapers will never again be solely responsible for policing themselves."

The police also face tough questions over why an initial investigation into phone hacking was closed after Goodman was jailed in 2007. Detectives are also now looking into payments, in the tens of thousands of pounds, by journalists to police.

A police source said Coulson had been arrested on suspicion of conspiring to intercept communications and of corruption.

Cameron, trying to strike a balance between accepting his own share of responsibility and sharing out blame to his opponents said: "It's no good ... just criticizing the police.

"Because party leaders were so keen to win the support of newspapers ... we turned a blind eye to the need to sort this issue, get on top of the bad practices."

Emphasizing that he saw it as an issue of which Labor, in power with the endorsement of some of the Murdoch press for 13 years, should not make electoral capital, Cameron likened it to a recent scandal over parliamentary expenses, which tarnished the image of politicians across the party spectrum.

POLICE INVESTIGATIONS

Several other journalists have been arrested in recent weeks as police pursue inquiries, much of them based on the files of the investigator jailed with Goodman four years ago.

Police say the files contain some 4,000 names -- a revelation which vindicated complaints by celebrities and politicians who campaigned for police to reopen investigations in the face of apparent reluctance from senior officers and from Cameron and his Labor predecessors Tony Blair and Gordon Brown.

The scandal took on devastating proportions for Murdoch this week with the leak of an allegation that a News of the World investigator had, in 2002 when Brooks was editor, not only listened in to cellphone voicemails left for missing 13-year-old Milly Dowler but deleted some to make room for more.

The schoolgirl was found murdered six months later, but her killer was only convicted last month, ensuring public memories of the notorious case were still vivid and raw.

As more allegations were published, including that the phones of soldiers killed in Iraq and Afghanistan may have been hacked, the tabloid hemorrhaged advertising, alienated readers and turned an aging asset into a growing threat to Murdoch's ambitions for BSkyB.

Many analysts, however, expect the gap in the shrinking but still lucrative Sunday market to be short-lived; the Internet domain name sunonsunday.co.uk was registered on Tuesday, according to domain names service Who.is. That makes sense if the News of the World is to be replaced by its daily sister paper the Sun publishing on a seventh day.

Last month, Brooks prepared the ground for seven-day working across News International's four titles, and appointed two new managing editors, one with responsibility for the tabloids and one for the broadsheets. Other publishers have also tried to cut costs by merging Sunday and daily operations.

(Additional reporting by Georgina Prodhan, Kate Holton, Mike Collett-White and Stefano Ambrogi; Writing by Alastair Macdonald; Editing by Philippa Fletcher)

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Murdoch defends papers as Cameron pledges hacking probe (Reuters)

LONDON (Reuters) – Rupert Murdoch promised full cooperation on Wednesday to resolve a scandal shaking his media empire after British Prime Minister David Cameron promised an inquiry into what he called "disgusting" phone hacking by a newspaper.

Responding in parliament to allegations that the News of the World eavesdropped on voicemail for victims of notorious crimes, including child murders and suicide bombings, Cameron said he was "revolted" and would order inquiries, probably into both the specific case and more widely into Britain's cut-throat media.

The opposition, keen to highlight Cameron's own ties to Murdoch and to two former editors at the eye of the storm, noted that any inquiry would not start, let alone finish, for months if not years. Critics accused the Conservative government of trying to bury the embarrassment of the long-running saga.

Murdoch, whose News International group faces boycotts from advertisers and readers as well as questions over a takeover bid for broadcaster BSkyB, made a rare public statement to say he too found the hacking, and reports of buying tips from police, "deplorable and unacceptable" and would ensure transparency.

But the 80-year-old Australian-born American media magnate made clear he was standing by Rebekah Brooks, the 43-year-old head of his British newspaper operation. She was editor in 2002 when, police say, a News of the World investigator listened to -- and deleted -- voicemails left for the cellphone of missing 13-year-old Milly Dowler, who was later found murdered.

Cameron said: "We do need to have an inquiry, possibly inquiries, into what has happened." The prime minister faces questions over his own judgment in appointing Brooks'successor as editor, Andy Coulson, as his spokesman. Coulson quit Cameron's office in January, but denies knowing of any hacking.

Cameron, who regularly hosts Brooks at his home, said: "We are talking about murder victims, potentially terrorist victims, having their phones hacked into. It is absolutely disgusting."

In a further twist to the affair, a spokesman for Finance Minister George Osborne confirmed media reports that police had told the senior cabinet minister that his name and home number were in notes kept by two people jailed for phone hacking.

"FULLY COOPERATE"

Murdoch said in his statement: "Recent allegations of phone hacking and making payments to police with respect to the News of the World are deplorable and unacceptable.

"I have made clear that our company must fully and proactively cooperate with the police in all investigations and that is exactly what News International has been doing and will continue to do under Rebekah Brooks' leadership."

The leader of the opposition Labour party, Ed Miliband, said Cameron had made a "catastrophic error of judgment" in hiring Coulson as his communication director and said Brooks, a high-flying Murdoch confidante, should resign her current post. She says she knew of no illegal hacking while editing the paper.

When its royal correspondent and an investigator were jailed in 2007 for hacking into the cellphones of royal aides to break a story about an injury to Prince William's knee, the newspaper insisted it was a case of one rogue reporter.

After campaigning by celebrities and politicians who suspected they too had been spied on, police launched a new inquiry in January and, following the arrests of several journalists, the affair has taken on dramatic new proportions.

Shares in Murdoch's News Corp, which also controls Fox television, the Wall Street Journal, London's Times and the New York Post among other titles, were down over 5 percent in New York, while shares in BSkyB fell more than 2 percent.

Major advertisers abandoned the News of the World.

Speaking for one carmaker Lance Bradley said: "Mitsubishi Motors in the UK considers this type of activity-- especially in such a distressing case-- to be unbelievable, unspeakable and despicable ... This is where we draw the line."

Internet campaigns and the actor Hugh Grant urged readers to boycott the paper which, if successful, may prove more damaging than political condemnation to Britain's best-selling Sunday paper, read by some 7.5 million people on sales of 2.6 million.

Sales of News Corp's daily sister paper the Sun never recovered in Liverpool after it offended the city's football fans in the wake of the 1989 Hillsborough stadium disaster.

"We need an inquiry that uncovers all the practices and the culture, not just of the News of the World but all tabloid journalism in this country," said Grant, a fixture of the gossip columns, who says he was a victim of phone hacking.

BROADCASTER BID

Though analysts believe the chances of the BSkyB purchase being derailed are slim, the watchdog which oversees Britain's broadcasting industry issued a statement pointing out that it had a duty to assess whether holders of a broadcasting license are 'fit and proper'. Murdoch is trying to buy the 61 percent of the BSkyB pay-TV group that it does not already own.

"There has been a shift in the last three days, there is now a consensus that this needs full and proper scrutiny," media consultant Steve Hewlett told Reuters.

Police have been criticized for being slow to investigate the phone-hacking claims but reject suggestions this was because of alleged payments to officers. The head of the Metropolitan Police Paul Stephenson said allegations of "inappropriate payments" to some officers were under investigation.

British politicians have said in the past they feared criticizing any of the Murdoch papers because they feared their own private lives might be exposed.

Among further allegations, families of Londoners killed by Islamist suicide bombers in 2005 said police had told them their voicemail messages may have been intercepted.

Graham Foulkes, whose son David was one of 52 people who died in the 7/7 bombings, told BBC radio he was contacted by police after they found his private contact details on a list as part of the investigation into hacking claims.

"We were using the phone frantically trying to get information about David and where he may have been and ... talking very intimately about very personal issues, and the thought that these guys may have been listening to that is just horrendous," Foulkes said. Relatives are preparing to mark the sixth anniversary of the attacks on Thursday.

News International said it would be contacting the Defense Ministry about reports the phone numbers of British soldiers killed in Iraq and Afghanistan were found in the files of a private investigator jailed for hacking phones.

"If these allegations are true we are absolutely appalled and horrified," it said in a statement.

On Tuesday the company said new information had been provided to police. The BBC said the material related to e-mails appearing to show payments to police officers for information and were authorized by Coulson when he was editor.

Commentators suggested information about the payments had been released to deflect attention from Brooks, who unlike Coulson is still a key part of Murdoch's business. The Guardian, a left-leaning daily which has taken a lead in investigating the scandal, said News International would also be saying that Brooks was on holiday at the time of key alleged incidents.

"If Rebekah falls then who is next? Well it's James Murdoch," said media consultant Hewlett, suggesting that keeping her in her position served to protect her superior, Murdoch's son James, from criticism. "This feels to me like a firewall."

Media commentator Stephen Barnett said Brooks's position seemed at risk but that Murdoch would likely support her: "If she has 100 percent backing of Rupert Murdoch then clearly she is untouchable and more importantly it shows that Murdoch himself thinks the company is untouchable," he said.

The Guardian said police investigating the phone-hacking claims were now turning their attention to all high-profile cases involving the murder or abduction of children since 2001.

The key allegation is that journalists, or investigators hired by them, took advantage of often limited password security on mobile phone voice mailboxes to listen to messages left for celebrities or people involved in major stories.

What has particularly outraged many was the suggestion, made by police to the family of Milly Dowler, that a News of the World investigator not only hacked into her mailbox during the six months of 2002 that she was missing but also deleted messages to make room for more -- misleading police and giving her family false hope she was still alive and well.

The child's killer was tried only this year and convicted just last month, refreshing painful memories of the case.

The parents of two 10-year-olds taken and murdered by a school caretaker in the town of Soham in 2002 -- one of Britain's most notorious crimes in recent years -- have been contacted by police probing hacking at the News of the World.

(Additional reporting by Georgina Prodhan, Michael Holden, Keith Weir, Olesya Dmitracova, Stefano Ambrogi and Alastair Macdonald; Editing by Jon Boyle)

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