Press probe says more papers may have phone-hacked (Reuters)

LONDON (Reuters) – Other tabloids besides Rupert Murdoch's News of the World may have hacked phones, a London court heard on Monday as it began an investigation into newspaper practices that could lead to tougher regulation of the entire UK press.

The Leveson inquiry, expected to take about a year, was set up by Prime Minister David Cameron after it was revealed in July that the News of the World ordered hacking of the voicemail of missing schoolgirl Milly Dowler, who was later found murdered.

"The inquiry is beginning to receive evidence to indicate that phone hacking was not limited to that organization," said Robert Jay, counsel to the inquiry.

He said Glenn Mulcaire, who was jailed for phone-hacking in 2007 along with the News of the World's royal reporter Clive Goodman, had written the words "Daily Mirror" and "The Sun" in his notebooks, referring to other tabloids.

Jay said the names of 27 other News of the World reporters besides that of Goodman, long scapegoated by News Corp's British newspaper arm as a lone "rogue" reporter, had been found in Mulcaire's notebooks.

As police work through a list of 5,800 potential hacking victims, including actor Hugh Grant, Harry Potter author J.K. Rowling and ex-soccer star Paul Gascoigne, the scale of the scandal at and beyond the News of the World is still unclear.

News Corp executive James Murdoch, son of Chief Executive Rupert Murdoch and executive chairman of the group's British newspaper arm, is meantime fighting for his credibility as heir to the media empire.

James Murdoch has testified twice to a British parliamentary committee that he knew nothing of the scale of phone-hacking at the once best-selling tabloid, which he closed down in July in an attempt to limit the damage.

Neville Thurlbeck, a former chief correspondent at the tabloid whose name appears in a key piece of evidence, told Reuters on Monday he believed Murdoch had indeed been kept in the dark.

CHILLING

Murdoch's claims to have cleaned up the newspaper's culture, however, have been undermined by the News of the World's recent admission that it ordered surveillance of figures including lawyers representing hacking victims as early as this year.

Last week, Murdoch apologized to members of the parliamentary committee for the fact that the News of the World had monitored their activities.

Louise Mensch, a member of the committee, asked on Monday: "What possible public interest could there be in that? It is chilling, it's terrifying. It sort of says: 'Don't mess with us because we'll come to get you.'

"If it is true, I want to know who did the authorization, when, and on what basis, and I certainly want to see any reports that were compiled about myself and my colleagues," the Conservative member of parliament told Sky News.

Labour MP Tom Watson, the most aggressive member of the committee, pulled out of an industry event on Monday to discuss what he described as fresh evidence that News Corp spied on his colleagues.

"Under the circumstances, I have to spend the day seeking advice from the Speaker (of parliament) and discussing the matter with fellow members of the DCMS Select Committee as to our legal and constitutional position," he said.

Jay said none of the instances of phone-hacking that had so far come to light, which include eavesdropping on crime victims and relatives of war dead, came close to being justified on public-interest grounds.

"What can be justified in the public interest and how can it be justified lies at the very epicenter of this inquiry," Jay said in his opening statement.

He cited the Guardian's dogged reporting on the phone-hacking scandal, the Telegraph's exposure of members of parliament fiddling expense claims, and the Sunday Times's 1960s campaign for compensation for thalidomide victims as instances in which underhand reporting methods had been justified.

But he said the press too often went on "fishing expeditions" without any idea of what they would find, fuelling a view of the press as ruthless, unscrupulous and willing to do anything to boost circulation.

Britain's press is currently self-regulated by the Press Complaints Commission, a voluntary body with little funding and no legal powers.

Its chairperson at the time of the hacking fallout, Peta Buscombe, announced after the Milly Dowler revelations that she would step down.

The PCC is not expected to survive in its current form, and the conclusions of the Leveson Inquiry, being held at London's Royal Courts of Justice, will be important in deciding what should replace it.

"The press provides an essential check on all aspects of public life. That is why any failure in the media affects all of us," Judge Brian Leveson, who is in charge of the inquiry, said in his opening statement.

"At the heart of this inquiry therefore may be one simple question: Who guards the guardians?"

(Additional reporting by Kate Holton; Editing by Andrew Heavens)

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New defense chief Panetta in Iraq, to press on drawdown (Reuters)

BAGHDAD (Reuters) – Leon Panetta arrived in Iraq on Sunday on his first trip there as defense secretary, saying he would press Baghdad on the future U.S. military presence and go after militants attacking U.S. forces with Iranian rockets.

The United States is scheduled to withdraw all of its remaining 46,000 troops from Iraq by the end of this year, under the terms of a bilateral security pact -- despite U.S. and Iraqi military concerns about expected gaps in security.

Panetta, who is fresh from a trip to Afghanistan, made hopeful remarks to Congress last month that Iraq's government might eventually ask some U.S. forces to remain beyond 2011. But he was cautious in his comments to reporters in Afghanistan, just before departing for Iraq.

Asked whether he would encourage Iraq to ask some U.S. forces to stay, Panetta said: "I'll encourage them to make a decision so that we'll know where we're going."

U.S. officials say that the clock is ticking and that the longer the Iraqis wait, the more difficult it becomes for Washington to say "yes."

"Nothing is actually completely impossible. But things do become costlier and riskier" the later in the year it gets, said one senior U.S. defense official, briefing reporters on condition of anonymity.

"They could conceivably ask General Austin as the last guy in Iraq at midnight on December 31st but it would be pretty difficult for us to say 'yes'," the official said, referring to Army General Lloyd Austin, commander of U.S. forces in Iraq.

The question is a tricky one for Iraqi Prime Minister Nuri al-Maliki's Shi'ite-led coalition government. At least one key group in Maliki's fragile cross-sectarian coalition -- the political bloc of anti-American Shi'ite cleric Moqtada al-Sadr -- openly opposes a continuing U.S. military presence.

Sadr's bloc has threatened to escalate protests and even "military resistance" if U.S. troops stay on.

Another political hiccup that is worrying Washington is Baghdad's failure so far to name a defense minister -- an issue Panetta said he would raise in his talks with Maliki on Monday.

(Reporting by Phil Stewart)

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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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