Everything to play for – for the Met and the Murdochs

At the end of Week Two, the media and political landscape has changed utterly. Brian Brady asks where things might go from here

(Reuters)

Where does the criminal investigation go from here?

Police have so far arrested nine people and expect to haul in up to 12 more. They have searched the abandoned News of the World offices, and other suspects are co-operating with inquiries. Those arrested have been bailed until September, which gives the Crown Prosecution Service two months to decide whether there is a case to answer.

Why was Neil Wallis hired by the Metropolitan Police? What did he do?

The "Wolf Man", a former NOTW deputy editor, was temporary head of public affairs at the Met for 11 months, from 2009. His duties included advising Met Commissioner Sir Paul Stephenson and Assistant Commissioner John Yates during the time the force rejected calls to reopen the hacking inquiry.

Why did Sir Paul fail to tell London Mayor Boris Johnson that his force had employed Wallis, a hacking suspect, when they met last week?

Difficult to explain – either a complete oversight or an attempt to avoid a difficult issue. Observers maintain that it betrays Scotland Yard's failure to take the whole matter seriously.

Has Yates got a future? The Cambridge-educated detective was touted as a future head of the Met during his high-profile investigation of the "cash-for-honours" allegations. But the failure to recognise the significance of the hacking claims when reviewing the original 2006 inquiry has undermined confidence in his judgement. Yates refuses to resign, but faces an uphill struggle to regain his credibility.

Why has the FBI started investigating the hacking claims?

Its inquiry sprang from allegations that News International journalists in the UK asked a New York investigator for phone numbers of victims of the 9/11 attacks. There is as yet no evidence to support this, but the story was picked up by a number of people, including vociferous New York congressman Peter King.

Is this dangerous for the Murdochs?

Critically, as so much of their empire – including the New York Post and Fox News – is US-based and could be tainted. The investigatory powers wielded by American authorities are also stronger than in the UK – for example, the Foreign Corrupt Practices Act extends a US prohibition against bribery to include US companies operating abroad.

Will other newspapers be brought into this?

Police have their hands full with the NOTW, but previous investigations have established that investigators responsible for hacking dealt with several other media organisations. The Information Commissioner's What Price Privacy? report in 2006 identified 305 national journalists at 31 different publications involved in the illegal trade of personal information. Jude Law yesterday confirmed he is suing The Sun for hacking his phone.

Why was News Corp so slow to act?

Bluntly, it expected to ride out the latest development in an affair that had already rumbled on for years with no significant damage. Rupert Murdoch's decision to fly to the UK was seen as dramatic enough to halt the slide, but News Corp has still been forced into a series of increasingly desperate moves since. The empire has shown itself to be behind the curve at every stage.

Who is the real key figure in the weeks ahead?

Billionaire News Corp shareholder Prince Al-Waleed bin Talal, who precipitated the departure of Rebekah Brooks, has emphasised Murdoch's vacillation. Murdoch's deputy, Chase Carey, is heading the damage-limitation operation and is seen as a figure that shareholders can trust. But Murdoch's daughter, Elisabeth, already due to join the company in October, could represent a compromise candidate.

Is James Murdoch finished?

Probably. The worst excesses of the hacking scandal happened before he arrived, but he approved out-of-court settlements for victims – a move he now admits "is a matter of serious regret". Without the firewalls of Brooks and Les Hinton, and amid shareholder discontent over his performance, he'll struggle to cling on.

Will his father follow?

It is difficult to see him keeping his grip on the empire amid evidence that his powers are waning. The scandal has exposed the financial price of his UK newspaper stable and diminished the political influence it afforded, while costing the company the lucrative BSkyB deal. Murdoch's judgement, particularly his support for Brooks, has been questioned in recent days. The crisis, and his grip on the empire, are at a critical stage.

When will the Leveson inquiry start work?

Lord Justice Leveson has already begun work into the ethics and culture of the media and hopes to hold the first hearings by the end of the summer. The second part of his inquiry, into the hacking allegations, will be delayed by police inquiries into the issue.

What impact could it have on journalists and politicians?

The first casualty of the drive to control media excesses is likely to be self-regulation, represented by the oft-criticised Press Complaints Commission. The alternative could be statutory regulation, meaning at its most extreme restrictions on media ownership, an enforceable code of conduct and a privacy law. It could also restrict responsible journalism and the public-interest defence that justifies many investigations.

Have journalists and politicians been too close, and will this change things?

The real concern, particularly of many MPs, has been their leaders' relationship with media moguls which, in Murdoch's case, has often been seen as unequal. The rupture of the link could be healthy – but it could also mean journalists can only access government press releases, rather than the inside information that requires closer contact.

David Cameron has published details of meetings with media figures, but do they tell the whole story?

The admission that Cameron had held personal meetings with Rupert and James Murdoch, Brooks and Andy Coulson – two months after his resignation – was uncomfortable. But Downing Street's list of guests was not quite complete, as it did not contain less formal encounters and those outside official residences. At least two meetings with Brooks alone were omitted.

How has Cameron performed?

The PM recovered from a bad start, seizing back the initiative with his plans for inquiries into the scandal. But he remains largely on the back foot because of the Coulson affair – and the suspicion that he doesn't quite get the significance of the hacking scandal.

Is this the start of something for Ed Miliband?

The Labour leader has played the crisis well and racked up four significant "wins" over the inquiry, an end to the BSkyB bid, Brooks's resignation and a personal apology. Today's IoS poll shows a 7 per cent bounce in his personal rating. His performance might make it easier for him to get a fair hearing, but he must find something significant to say.

Are the politicians handling this well?

Dogged individuals such as Tom Watson, have been at the forefront of the campaign from the start, and their colleagues are now happily jumping on the bandwagon. Their interrogation of the police and media can smack of self-satisfaction – and perhaps just a little score-settling over past grievances, such as the revelations over cash-for-honours and MPs' expenses.

Does the public really care?

There was an explosion of interest in this saga after the Milly Dowler revelations, but at the end of Week Two it is being sucked back within the Westminster beltway. If hacking becomes an issue once again for politicians, police and celebrities, rather than the abuse of ordinary people, it might allow Murdoch the breathing space he needs.

But nothing in this so far has been predictable...

Who, this time last week, would have predicted the resignations of two of Murdoch's closest aides or the withdrawal of the BSkyB bid? There is a lot to investigate in a lot of places and, as a number of key figures have already warned, much more to be revealed – which makes it an incendiary problem for the Murdochs.

The key players: Police personnel appearing before MPs

Sir Paul Stephenson, Metropolitan Police Commissioner

Having seen the rough treatment meted out to his subordinate, Assistant Commissioner John Yates, as well as to former colleague Andy Hayman, by MPs on the Culture, Media and Sport select committee, Sir Paul will not relish his own appearance before the Home Affairs Committee this week.

He will arrive already facing resignation calls over the Met's hiring of the former News of the World deputy editor, Neil Wallis, as a public relations consultant.

Those calls got louder last night when it was claimed Sir Paul had enjoyed free accommodation at a luxury health spa near Tring, Hertfordshire, while recuperating from an operation on his leg. The spa was a client of Mr Wallis's PR company. Scotland Yard and Mr Wallis insisted last night that the link was coincidental.

Stephen Purdew, managing director of Champneys, said last night Sir Paul was a long-standing family friend. Mr Wallis's lawyer, Phil Smith, said there was "no link whatsoever" between his client's work and Sir Paul's stay. The Met denied Sir Paul was "considering his position".

The Commissioner will face questions about the number and nature of meetings he enjoyed with News International executives since the hacking investigation started. Of 24 meetings, three quarters were lunches or dinners. One of the meetings in 2006 was with Mr Wallis.

Sir Paul is likely to still be tender after his summons last week for a "frank discussion" about the Met's hiring of Mr Wallis with an unhappy London Mayor Boris Johnson. The Home Secretary, Theresa May, has also demanded he give her "the full picture" of what happened.

Dick Fedorcio When Sir Paul Stephenson sits down before MPs to answer what will undoubtedly be some ugly questions about the phone-hacking scandal, sitting with him will be Dick Fedorcio. As director of public affairs and internal communication for the Met since 1997, he is the nearest thing to a spin doctor Scotland Yard possesses.

This weekend it emerged that the spin included persuading journalists that stories about phone hacking were wrong. MPs will also want to quiz him about his role in appointing NOTW deputy editor Neil Wallis as consultant.