July 17, 2011 6:20 pm

SFO urged to investigate hacking pay-outs

The Serious Fraud Office has been urged to open an investigation about payments made by News International in the aftermath of the original phone hacking case in 2007, in case they breached the fiduciary duty of directors.

Tom Watson, a Labour member of the culture, media and sport committee, wrote on Sunday to Richard Alderman, the director of the SFO, pointing out his concerns over payments made to Gordon Taylor, the chief executive of the Professional Footballers’ Association, amounting to about £700,000.

His voicemail had been hacked into by people working for the News of the World, a newspaper published by News International. No stories were published as a result. Nonetheless, the six-figure sum was paid to Mr Taylor, Mr Watson says.

“The settlement came with a confidentiality clause and was predicated on the court papers relating to the case being sealed.

“This prevented evidence of widespread phone hacking ... becoming public. I can only draw the conclusion that this was done to buy the silence of a victim of crime.”

Mr Watson also asked the SFO to look into possible breach of fiduciary duties to shareholders over the alleged use of company money to pay the legal fees of Andy Coulson, former editor of the News of the World and later director of communications to the prime minister, and to Glenn Mulcaire and Clive Goodman, respectively the private detective and royal correspondent who were jailed in 2007 for phone hacking.

The MP’s letter also points to payment made to Clive Goodman when, after being released from jail, he claimed he had been unfairly sacked for gross misconduct. This claim prompted an internal inquiry by News International, which now appears to have reached a different conclusion from the one reported to MPs at the time.

Mr Watson cites “other payments to hacking victims, including Max Clifford, who is reported to have received £1 million from [NI], again with all evidence of criminal activity at NGN suppressed by means of a confidentiality agreement”.

In the letter, he adds: “The payment of large sums in order to prevent details of criminal activity by employees becoming public is a gross misuse of shareholders’ money.

“All the more so when these payments far exceed any damages ever awarded by the courts for breach of privacy, which was the basis for the civil actions in question. These settlements may also be seen to have been used to ensure the persons concerned remained on friendly terms with the company and so less likely to reveal details of criminal activity at [the News of the World].”

Mr Watson concludes that if NI was a listed company with an independent board, “it would be hard to imagine that the [board] would approve the use of shareholders’ money in this fashion”.

The SFO said it would study the letter when it was received. Previously, the office has indicated that it regards phone hacking as a police investigation. People close to the Department of Justice say there have been initial discussions with the SFO over any possible future investigation of companies which are subsidiary to News Corp of the US.

Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.


Sign up for email briefings to stay up to date on topics you are interested in