Phone-Hacking: The Smoking Gun

News International executives were told four years ago that phone hacking was rife at the News of the World and subsequently paid a jailed employee a quarter of a million pounds after he claimed that Andy Coulson authorised and then tried to hide the extent of it at the newspaper when he was editor.

Previously secret papers show that Rupert Murdoch's most senior lieutenants paid the NOTW's disgraced royal editor, Clive Goodman, £243,000 in compensation soon after he had made damaging accusations against the company and its senior staff.

These included the claims that phone hacking was widely discussed at NOTW editorial meetings until Mr Coulson "banned" mention of it. Mr Goodman also alleged in a letter to the company that Mr Coulson promised him "a job at the newspaper" after he came out of prison if he "did not implicate the paper or any of its staff" in his mitigation plea.

The hundreds of pages of documents, released by the House of Commons Culture, Media and Sport Committee, also shed doubt on key aspects of James and Rupert Murdoch's evidence to MPs last month. A firm of lawyers acting for the company claimed that parts of the Murdochs' evidence were "hard to credit", "self-serving" or "inaccurate and misleading".

James Murdoch also now admits that he misled the committee when he claimed that a payout made to a victim of phone hacking had not been influenced by a desire to keep details of the settlement confidential.

When the company settled with Gordon Taylor, chief executive of the Professional Footballers' Association, Mr Murdoch now says: "I did not know at the time or when I gave my evidence that any part of the Taylor settlement related to the confidentiality aspect... I have [since] been informed that confidentiality was a factor in determining the amount of the settlement payment."

But it is the allegation that Mr Coulson knew about phone hacking and the financial attempts to prevent such information coming out in an employment tribunal that is most damaging.

It will also be also troubling for David Cameron, who hired Mr Coulson as his media adviser on the basis that he knew nothing about phone hacking. Goodman's letter dated 2 March 2007 was written soon after he was released from a four-month prison sentence and addressed to News International's director of human resources, Daniel Cloke. It registers his appeal against the decision of Les Hinton, who was then the company's chairman and Rupert Murdoch's closest adviser, to sack him.

Goodman argues that the decision to sack him is perverse because he acted with the knowledge and support of senior journalists whose names were redacted from the published letter at the request of Scotland Yard, which is pursuing a criminal investigation.

Goodman also reveals that the paper continued to consult him on stories even though it knew he was going to plead guilty to phone hacking and that its lawyer at the time, Tom Crone, knew all the details of the case against him.

Two versions of his letter were provided to the committee: one from Harbottle & Lewis was redacted by the law firm to remove the names of journalists, at the request of police.

But the other, which was supplied by News International, was redacted more extensively to remove the names and all references to hacking being discussed in Mr Coulson's editorial meetings and to Mr Coulson's alleged offer to keep Goodman on staff.

John Whittingdale, chairman of the committee, said Goodman's letter suggested there was "widespread" knowledge about phone hacking.

The committee has called Mr Crone, Mr Cloke, the former NOTW editor Colin Myler and former legal director John Chapman to give further evidence on 6 September. The MPs have also written to Mr Coulson and his predecessor as editor, Rebekah Brooks, the tabloid's former managing editor Stuart Kuttner, and Mr Hinton to ask whether they wish to clarify earlier evidence given to the committee.

A News International spokeswoman said: "We recognise the seriousness of materials disclosed to the police and Parliament and are committed to working in a constructive and open way with all the relevant authorities."

The latest documents: Key extracts from the new evidence – and what they tell us

Clive Goodman letter "This practice [phone hacking] was widely discussed in the daily [News of the World] editorial conference, until explicit reference to it was banned by the editor [Andy Coulson]."

Extract from former News of the World Royal Correspondent Clive Goodman's appeal against his dismissal, March 2007

What it means This suggests Andy Coulson not only knew about phone hacking but tried to cover it up. It is now seems clear that News International's main concern was to conceal evidence Goodman was not just a "rogue reporter".

What next... The police will want to trace those who were present at editorial conferences and ask them under oath whether what Goodman said is true.

Clive Goodman letter "Tom Crone and the editor promised on many occasions that I could come back to a job at the newspaper if I did not implicate the paper or any of its staff in my mitigation plea."

Extract from Clive Goodman's appeal

What it means Another potentially damning allegation. It suggests that the NOTW realised Mr Goodman was only doing what he was expected to do and would be looked after by the paper as long as he took his punishment quietly.

What next... The committee will put this allegation to Tom Crone when they recall him to give evidence in September. He was made redundant when the NOTW closed and is now no friend of the company. If he confirms this it will be hugely damaging to Andy Coulson and his next employer, David Cameron.

James Murdoch letter "I am informed that Mr [Clive] Goodman was paid £90,502.08 in April 2007 and £153,000 (£13,000 of which was to pay for his legal fees) between October and December 2007."

James Murdoch in further written evidence to MPs last month

What it means This is the first time News International has put a figure on the payout Clive Goodman received. The committee will want to know why it was necessary to pay off a convicted criminal far more than he could ever have got from an employment tribunal.

What next... Another document released yesterday reveals that in March 2007 the News International chief executive and Murdoch confidant Les Hinton offered to pay Goodman a year's salary (thought to be the £90,000 payment) when he was dismissed. The committee will want to know why this was increased so drastically just six months later.

Jon Chapman letter "The 2007 email review was never intended to be a general internal inquiry or investigation into the issue of voicemail interception at the News of the World. To characterise it as such now and to refer to it on several occasions... seems to me to be very misleading."

Jon Chapman, former head of legal affair at News International, in written evidence to MPs

What it means This sticks the knife into Rupert and James Murdoch who, in their evidence to MPs last month, appeared to blame Mr Chapman and the law firm Harbottle & Lewis for not uncovering evidence of wider phone hacking when they carried out a review of company emails in 2007. Mr Chapman's statement is very damaging to the Murdochs as it undermines their assertion that the company did take phone hacking seriously – but were let down by Mr Chapman and Harbottle and Lewis.

What next... The committee have yet to formally recall James Murdoch but are almost certain to do so. They will want to know why he attached such weight to the Harbottle & Lewis "report" and what other actions the company took to investigate hacking.

Tom Crone letter "Since the 'for Neville' document was the sole reason for settling and, therefore, for the meeting, I have no doubt I informed [James] Murdoch of its existence, of what it was and where it came from."

Tom Crone, former legal manager at the News of the World

What it means This refers to the decision by News International to pay around £250,000 to Gordon Taylor, former head of the Professional Footballers Association, to settle his phone hacking claim. In his evidence to MPs James Murdoch claimed the only reason the company settled was because it would have cost more if it had gone to court. Mr Crone's evidence would appear to contradict that.

What next... The committee is likely to recall both men for further questioning. Ultimately it will come down to who the committee believes – but Mr Murdoch has already suffered considerable reputational damage from the suggestion he was being disingenuous.

James Murdoch letter "I did not know at the time or when I gave my evidence that any part of the Taylor settlement related to the confidentiality aspect... I have (now) been informed that confidentiality was a factor in determining the amount of the settlement payment."

James Murdoch in further written evidence to MPs

What it means James Murdoch now accepts he misled the committee on this fact. It is damaging because it suggests the company was trying to "buy off" Taylor and stop more damaging facts coming to light.

What next... The committee will want to know how much the "confidentiality aspect" of the settlement was worth.

What they've said - and the questions they now face

Andy Coulson, NOTW editor until 2007

Then "I have never condoned the use of phone hacking and nor do I have any recollection of incidences where phone hacking took place... I took full responsibility at the time for what happened but without my knowledge and resigned." (Media select committee, July 2009)

Now Clive Goodman's letter has not been tested before a court of law but its central claims make life difficult for Mr Coulson by suggesting that phone hacking was discussed in News of the World editorial meetings and the then editor later banned "explicit reference" to it. The former Downing Street spin doctor is currently on police bail following his arrest on suspicion of conspiracy to intercept voicemails and conspiracy to make corrupt payments.

Rupert Murdoch, chairman of News Corp

Then "If you're talking about illegal tapping by a private investigator, that is not part of our culture anywhere in the world, least of all Britain." (Statement in February 2007)

Now Arguably the damage was done to Murdoch Senior during his testimony to MPs last month, which made clear that he had, at best, taken his eye off the ball when it came to the running of the NOTW. Harbottle & Lewis claim Mr Murdoch gave "inaccurate and misleading" testimony when he suggested the law firm had been brought in to "find out what the hell was going on" at the Sunday title.

James Murdoch, chairman of News Corp in Europe since 2008

Then "I have no recollection of 'Thurlbeck' or a 'for Neville' email. Neither Mr Myler nor Mr Crone told me that wrongdoing extended beyond Mr Goodman or Mr Mulcaire." (Letter to MPs, August 2011)

Now Two of James Murdoch's key lieutenants have contradicted his claim that he knew nothing of the "for Neville" email, which undermined the company's "rogue reporter" defence. The law firm Harbottle & Lewis says it finds it "hard to credit" his assertion that NI rested on a letter it provided apparently confirming there was no evidence of hacking beyond Clive Goodman.

Tom Crone, News of the World lawyer, left the company in July

Then "At no stage... did any evidence arise that the problem of accessing by our reporters, or complicity of accessing by our reporters, went beyond the Goodman Mulcaire situation." (Media Select Committee, July 2009)

Now Crone has emerged as one of the key critics of testimony by James Murdoch, but in doing so has raised questions about what he himself knew. His letter to MPs this month states he had "no doubt" he told Mr Murdoch about the "for Neville" email, meaning he was aware of evidence contrary to the NOTW's key defence that hacking went beyond the "Goodman... situation".

Colin Myler, editor of the News of the World between 2007 and its final edition

Then "Our internal inquiries have found no evidence of involvement by NOTW staff other than Clive Goodman in phone-message interception." (Testimony to the Press Complaints Commission, August 2009)

Now Mr Myler has confirmed knowledge of the "for Neville" email when seeking James Murdoch's authorisation for a £700,000 settlement in a case brought by the footballers' union boss Gordon Taylor. This raises questions of his previous assertions that a clean bill of health had been provided to all staff.

Rebekah Brooks, NOTW editor until 2003, News International CEO until last month

Then "We believe it is essential to defend the reputation of NOTW and News International as independent media that make a major contribution to life in Britain." (Letter to media select committee, July 2009)

Now Ms Brooks criticised The Guardian for suggesting that "thousands" of people were the subject of illegal phone hacking. Now, she must reconcile her denials with the growing evidence of a cover-up within NI. She is on bail on suspicion of conspiring to intercept voicemails and conspiracy to make corrupt payments.

Les Hinton, News International executive chairman until 2007; left to run Dow Jones

Then "There was never firm evidence provided... that implicated anybody else other than Clive within the staff of the NOTW. It just did not happen and had it happened then we would have acted." (Home Affairs Select Committee 2009)

Now Mr Hinton resigned on the same day as Ms Brooks. If he received a copy of the letter from Mr Goodman in 2007, he faces difficult questions. It alleged widespread knowledge of hacking at the NOTW, which contradicts his evidence to MPs. And it should have been passed to police.

Clive Goodman, former royal editor of the NOTW, jailed in 2007 for phone hacking

Then "Mr Goodman does not seek through me to excuse or minimise the conduct in which he was engaged. But what I do seek is to explain how it is that a hitherto highly respected journalist, with an unblemished record, both personally and professionally, departed from a lifetime of the highest standards of professional integrity." (Mitigation at his sentencing in January 2007)

Now The former royal editor claims he honoured his side of the deal not to mention his knowledge of alleged hacking at the notw beyond his own activities.