Rupert Murdoch has taken the highly unusual step of issuing an official public statement backing Rebekah Brooks over the phone-hacking scandal engulfing his UK newspaper business.
The News Corporation boss described the recent allegations about phone hacking and payments to police officers by the News of the World "deplorable and unacceptable".
"I have made clear that our company must fully and proactively co-operate 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 News Corp chairman and chief executive added, in a statement issued from the annual Allen & Co media business conference he is attending in Sun Valley, Idaho.
Murdoch also said he had asked Joel Klein, who heads News Corp's recently created education unit, "to provide important oversight and guidance". Viet Dinh, a non-executive director, is keeping the News Corp board informed along with Klein, he said.
Murdoch's backing came on a day of mounting pressure on Brooks and News International, with prime minister David Cameron bowing to calls for public inquiries into phone hacking by the News of the World and the Labour leader, Ed Miliband, saying the chief executive should "consider her position".
News Corp also faced criticism from MPs during an emergency debate on phone hacking in the Commons on Wednesday afternoon, with Labour's Tom Watson alleging there was "further evidence" that Brooks "knew about the unlawful tactics of News of the World as early as 2002, despite all her denials yesterday".
Watson also called for Rupert's son James Murdoch, who as deputy chief operating officer oversees the company's European and Asian businesses including News International, to be suspended while the Metropolitan police investigate "what I believe is his personal authorisation of the coverup of this scandal".
Shares in News Corp and BSkyB fell as the News of the World phone-hacking scandal put Murdoch and his bid to take control of the satellite broadcaster under fresh scrutiny.
News Corp shares fell on Wednesday by 5% at one stage on Wall Street, to $17.17, as US investors reacted to the latest developments. BSkyB shares fell as low as 818p at one point in London, a fall of more than 3%, and closed 2.1% lower at 827p.
Sky shares came under pressure after Miliband called during prime minister's questions in the Commons for News Corp's takeover offer to be referred to the Competition Commission, a move that could potentially thwart Murdoch's ambitions. However, Cameron rejected Miliband's call for a Competition Commission review, insisting that the government was following the correct legal processes.
Advertisers including Halifax, Co-op, Vauxhall and Butlins joined Ford in pulling ads from this weekend's News of the World following the latest phone-hacking allegations.
Murdoch's statement came after it emerged on Wednesday that News International will claim Brooks, the News of the World publisher's chief executive, was on holiday when a mobile phone belonging to missing teenager Milly Dowler was hacked into in 2002 when Brooks was editing the Sunday tabloid.
The Guardian understands that the company has established that Brooks, News of the World editor from May 2000 until January 2003, was on holiday in Italy when the paper ran a story that referred to a message that had been left on the teenager's phone. The article, which was about a message left by an employment agency on the murdered schoolgirl's mobile, was published on 14 April 2002.
News International also believes Brooks was away in the two weeks following the murder of Holly Wells and Jessica Chapman in Soham. It is thought that mobile phones belonging to the parents of the two girls were targeted in the days following their death.
That is likely to focus attention on Andy Coulson, who was Brooks's deputy at the time, and would normally have edited the paper in her absence.
Coulson replaced Brooks as editor in early 2003 and has always maintained that he was unaware of any phone-hacking activity by the News of the World. He resigned in January 2007 after the royal reporter, Clive Goodman, and private investigator Glenn Mulcaire were jailed for intercepting the voicemail messages of members of the royal household, saying he accepted responsibility for what had happened but knew nothing about it.
Earlier, in a dramatic prime minister's question time dominated by the hacking scandal, Miliband also accused Cameron of being out of touch with public opinion on the issue of BSkyB and of a "failure of leadership" in the biggest press scandal in modern times.
Cameron told the Commons the inquiries could not be started immediately because of the major police investigation currently under way, though he conceded it "may be possible" to start some of the work earlier.
"We do need to have an inquiry, possibly inquiries, into what has happened," Cameron said. "We are no longer talking here about politicians and celebrities, we are talking about murder victims, potentially terrorist victims, having their phones hacked into.
"It is absolutely disgusting, what has taken place, and I think everyone in this house and indeed this country will be revolted by what they have heard and what they have seen on their television screens."
He said there were two "vital areas" that needed to be considered: why the original police inquiry failed to "get to the bottom of what happened", and the behaviour, practices and ethics of journalists and media organisations.
Cameron said it was important that lessons were learned from "what has become a disgraceful episode".
The Labour leader called on Cameron to appoint a senior figure, possibly a judge, to lead the inquiry, which he said should have the power to call witnesses under oath.
Miliband said the investigation should cover "the culture and practices of the industry, the nature of regulation ... and also the relationship between the police and the media".
Cameron said he did not think it would be possible to investigate the original police inquiry until the new one had concluded.
"Clearly, we can't start all that sort of inquiry immediately because you must not jeopardise the police investigation, but it may be possible to start some of that work earlier," he said.
He offered to hold talks on the matter with other party leaders, the attorney general, Dominic Grieve, and the cabinet secretary, Sir Gus O'Donnell.
But he resisted separate calls by Miliband for the bid by News International to take over BSkyB to be referred to the Competition Commission, saying to do so would be illegal.
Miliband said the public would react "with disbelief" if the deal went ahead in the next few days when News International was the subject of a major criminal investigation.
However, Cameron said the government had followed the correct legal processes, with Jeremy Hunt, the secretary of state for media, culture and sport, handling the matter in a quasi-judicial role. Cameron said: "On the issue of BSkyB, what we have done here is followed absolutely to the letter, the correct legal processes. That is what the government has to do."
The prime minister refused to be drawn on whether Brooks should stand down. Confronted by claims by Miliband that he had made a "catastrophic error of judgment" by taking on Coulson as his director of communications after he resigned from the News of the World, the prime minister said he took "full responsibility" for everyone he employed and appointed to work for him.
While News International issued a statement welcoming MPs' calls for a wide-ranging public inquiry into standards in the media industry to address public concerns, the broadcasting regulator Ofcom said it was monitoring the situation "and in particular the investigations by the relevant authorities into the alleged unlawful activities".
Ofcom said: "In the light of the current public debate about phone hacking and other allegations, Ofcom confirms that it has a duty to be satisfied on an ongoing basis that the holder of a broadcasting licence is 'fit and proper'."
The Metropolitan police commissioner, Paul Stephenson, also revealed that members of his force faced investigation after it was reported on Tuesday night that News International had handed over details of payments made by the News of the World to police officers. He said the documents appeared to "include information relating to alleged inappropriate payments to a small number of [Met] officers".
Stephenson said the matter would be investigated by the deputy commissioner Sue Akers in conjunction with the Met's Directorate of Professional Standards. He added that no senior officer had been implicated. Given that the reports relate to police payments allegedly made between 2003 and 2007, when Coulson was editor, many commentators have suggested they are an attempt to relieve the pressure on Brooks.
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