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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