Shareholders press James Murdoch for answers

Pressure mounts on News Corporation executive over why 2008 email that warned of extensive phone-hacking was ignored

James Murdoch is facing fresh questions from angry shareholders about the true extent of his knowledge of an email warning him about extensive phone hacking at the News of the World (NOTW). An influential US pension fund, California State Teachers' Retirement System (Calstrs), which owns $500m of News Corp shares, wants to know why the email – the existence of which Mr Murdoch admitted last week – was not revealed sooner.

Anne Sheehan, director of corporate governance at Calstrs, says the timing of the admission raises a number of issues. "Did some people know about this before News Corp's annual general meeting [in October] and did they delay its release?" she asks. "One has to wonder if the timing of this is related to the timing of the vote."

Mr Murdoch has said he didn't properly read the email, sent in June 2008, which warned that hacking was "as bad as we feared". In a letter last week he said he did not review the full email chain of four messages then or later, in part because it had been sent to his BlackBerry on a weekend. Lawyers for the News Corp committee that is overseeing a trawl through the company's files said they had only "recently become aware" of the key piece of evidence and declined to elaborate.

In his two appearances before a parliamentary select committee inquiry, in July and November this year, Mr Murdoch said he was unaware of any such notification. Nor did he recall any conversation with NOTW's editor, Colin Myler, soon afterwards.

Tom Watson, the MP at the forefront of the inquiry, said last night: "There is an army of lawyers and PR people advising Mr Murdoch on this matter. It stretches credulity to suggest this email has only just been discovered in recent days." He said he would seek to find out which employees were aware of the emails.

James Murdoch's latest admission increases the prospect of him being charged under the Racketeer Influenced and Corrupt Organizations (RICO) Act, according to lawyers.

Thomas Fox, a lawyer based in Houston, Texas, said the admission was "significant" because the email was opened before the alleged hacking at the News of the World ended. "It puts him more squarely in the firing line because he was formally put on notice," he told The Daily Telegraph. "That email stopped allowing him to bury his head in the sand."

Jeffrey Grell, a lawyer who has written books on RICO, added: "In a jury's mind, it created a big question over whether they believe he didn't read the whole email." Mr Murdoch has not been questioned or arrested in connection with any offence.

News International's involvement in phone hacking is set to be scrutinised again this week at the Leveson inquiry into press standards, when a sports reporter, Matt Driscoll, and Stuart Hoare, the brother of the late Sean Hoare – like Driscoll, a former employee of the NOTW – give evidence.