Parliament recalls James Murdoch over hacking probe

James Murdoch has been recalled to face parliament's media select committee for further questioning over phone hacking at the News of the World after his former colleagues contradicted his repeated claims of innocence.

James Murdoch, chairman of News Corp's UK newspaper arm News International, spent almost three hours in front of the committee with his father in July, answering questions over what they had done to unravel the scandal at the tabloid.

But James's testimony, and his insistence that he did not know the problem stretched beyond 'one rogue reporter' until earlier this year, has since been undermined by two senior employees who say they made him aware of a wider problem in 2008.

The news of James Murdoch's recall came as US investors in the parent company filed fresh complaints over the board's lack of governance controls over the Murdoch family.

News Corp has been engulfed by the scandal since July when it was revealed that the phone hacking extended beyond celebrities and politicians to murder victims including schoolgirl Milly Dowler, and British war dead.

The crisis has already wiped billions of dollars off News Corp's market value, cost it two senior executives, forced it to drop a $12bn bid for BSkyB and to shut down the 168-year-old News of the World tabloid.

A revised lawsuit filed by News Corp shareholders has claimed the board of News Corp knew more than ten years ago that the its US subsidiaries were illegally hacking competitors' computers.

Beyond phone hacking by some journalists in the UK, the News Corp board was also long aware of improper conduct at two US subsidiaries, News America Marketing and NDS Group, according to allegations in the lawsuit.

News America Marketing has been the subject of five lawsuits alleging anti-competitive behavior, including one by a competitor that claimed the unit hacked into its computer system 11 on separate occasions, according to shareholders.

The litigation forced the company to pay out more than $650m in settlements to three competitors, they said.

The complaint contends that News Corp's board failed to properly oversee the company's chairman and founder, Rupert Murdoch, even when there were warning signs that company's practices were unethical and illegal.

"For more than a decade, News Corp subsidiaries have engaged in highly improper practices that have subjected News Corp to great financial and reputational damage,' said the complaint filed in Delaware Chancery Court.

"This misconduct was so pervasive that the News Corp board must have either been aware of the wrongdoing or was deliberately indifferent to the corporate culture that encouraged this type of behavior."

Tom Watson, the most dogged member of the UK committee to pursue the hacking inquiry, told Reuters they would first want to speak to Les Hinton, the most senior News Corp executive to stand down over the scandal, several lawyers and then James Murdoch.

"We're inviting him back," he said. "We feel we should hear from Les Hinton and a couple of the lawyers before James Murdoch, so realistically we are talking about November."