Murdoch exec Rebekah Brooks arrested

News International chief executive Rebekah Brooks and News Corp. chairman Rupert Murdoch are seen outside his central London residence July 10, 2011. AP Photo/PA

Last Updated 3:06 p.m. ET

Rebekah Brooks, Rupert Murdoch's former British newspaper chief, was arrested Sunday on suspicion of phone hacking and bribing police, only 48 hours before both of them were to be grilled by U.K. lawmakers investigating widespread lawbreaking at a Murdoch tabloid.

The arrest of the 43-year-old Brooks, often described as a surrogate daughter to the 80-year-old Murdoch, brings the British police investigations into the media baron's inner circle for the first time. It also raises the possibility that his old friend Les Hinton, who resigned Friday as publisher of The Wall Street Journal, or Murdoch's 38-year-old son and heir apparent, James, could be next.

Brooks' detention also moves the police inquiry closer to the heart of British political power. Brooks is the ultimate social and political insider, who dined at Christmas with Prime Minister David Cameron and counts numerous celebrities and senior politicians among her friends.

Also today, London's Metropolitan Police commissioner Paul Stephenson quit after criticism arose over the hiring Neil Wallis, a former News of the World executive editor, as a part-time PR consultant in 2009. Wallis was arrested last week in connection with the hacking scandal.

Stephenson denied any wrongdoing.

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Until Friday, Brooks was the defiant chief executive of News International, Murdoch's British newspaper arm, whose News of the World tabloid stands accused of hacking into the phones of celebrities, politicians, other journalists and even murder victims. In the tumultuous last two weeks, she had kept her job even as Murdoch shut down the 168-year-old tabloid and tossed 200 other journalists out of work.

On Sunday she showed up for a prearranged meeting with London police investigating the hacking and was arrested. She was being questioned on suspicion of conspiring to intercept communications — phone hacking — and on suspicion of corruption, which relates to bribing police for information.

Brooks' spokesman, David Wilson, said police contacted her Friday to arrange a meeting and she "voluntarily attended a London police station to assist with their ongoing investigation." He claimed that Brooks did not know she was going to be arrested.

The arrest threw Brooks' appearance at Tuesday's parliamentary hearing into doubt.

"Obviously this complicates matter greatly," Wilson said. "Her legal team will have to have discussions with the committee to see whether it would still be appropriate for her to attend. "

Lawmaker Adrian Sanders said if Brooks did not appear, "that is not going to go down very well with my fellow committee members."

The arrest was the latest blow for Murdoch, the once all-powerful figure courted by British politicians of all stripes. Now Murdoch is struggling to tame a scandal that has already destroyed his muckraking tabloid News of the World, cost the jobs of Brooks and Hinton and sunk the media baron's dream of taking full control of a lucrative satellite broadcaster, British Sky Broadcasting.

"(Murdoch) needs to come absolutely clean about what he knew, about what his senior executives knew, and why this culture of industrial-scale corruption — so it is alleged — appeared to have grown up without anyone higher up in the food chain taking any real responsibility for it," Deputy Prime Minister Nick Clegg said Sunday.

Even more senior figures could face arrest, including James Murdoch, chairman of BSkyB and chief executive of his father's European and Asian operations. James Murdoch did not directly oversee the News of the World, but he approved payments to some of the paper's most prominent hacking victims, including 700,000 pounds ($1.1 million) to Professional Footballers' Association chief Gordon Taylor.

James Murdoch said last week that he "did not have a complete picture" when he approved the payouts.

Britain's bribery law gives authorities the power to prosecute corporate chiefs for failing to prevent bribery, something that had previously been difficult, but the bar for proof is high.

Chandrashekhar Krishnan, executive director of Transparency International UK, said British prosecutors seeking to prove that bribes that were approved at a high level would have to uncover strong evidence such as memos or minutes of a meeting.

"That usually proves to be very, very difficult," he said

James Murdoch's ties to the hacking scandal might bolster the position of his 42-year-old sister, Elisabeth Murdoch, who was not with News Corp. during much of the period in question. The Independent newspaper quoted unnamed News Corp. insiders as saying Rupert Murdoch is eager to get Elisabeth on the News Corp. board.

Hinton, too, could face questioning over wrongdoing at the News of the World during his 12 years as executive chairman of News International. That could be complicated by the fact that he is an American citizen living in the U.S., so British authorities would have to seek extradition if he refused to come willingly.

Brooks stepped down Friday as head of Murdoch's British newspapers, saying she was going to "concentrate on correcting the distortions and rebutting the allegations about my record."

She was editor of the now-defunct News of the World between 2000 and 2003, when some of the phone hacking took place, but has always said she did not know it was going on, a claim greeted with skepticism by many who worked there.

At an appearance before U.K. lawmakers in 2003, Brooks admitted that News International had paid police for information. That admission of possible illegal activity went largely unchallenged at the time and lawmakers are keen to ask her about it again.

Police have already arrested nine other people, including several former News of the World reporters and editors, over allegations of hacking and bribery. Those include Andy Coulson, a former News of the World editor who became Cameron's communications chief before resigning in January. No one has yet been charged.

Some Murdoch critics were suspicious of the timing of Brooks' arrest, which may draw attention away from uncomfortable questions about police actions.

"The timing stinks," said Mark Lewis, lawyer for the family of Milly Dowler, the murdered 13-year-old whose phone was hacked by News of the World journalists in 2002.

Cameron's Conservative-led government and the London police also are facing increasing questions about their close relationship with Murdoch's media empire.

Cameron has held 26 meetings with Murdoch executives since he was elected in May 2010 and invited several to his country retreat.

London police are under pressure to explain why their original hacking investigation several years ago failed to find enough evidence to prosecute anyone other than News of the World royal reporter Clive Goodman and private investigator Glenn Mulcaire. Detectives reopened the investigation earlier this year and now say they have the names of 3,700 potential victims.

Records show that senior officers — including Paul Stephenson, chief of London's Metropolitan Police — have had numerous meals and meetings with News International executives in the past few years. The police force also hired Neil Wallis, a former News of the World executive editor arrested last week in the scandal, as a part-time PR consultant for a year until September 2010.

Tuesday's televised public inquisition by a parliamentary committee is one both Murdochs fought to avoid, but later reluctantly agreed to attend.

Politicians want answers about the scale of criminality at the News of the World, while the Murdochs wan to avoid incriminating themselves or doing more harm to their business. They will have to walk a fine line: misleading Parliament is a crime.

Murdoch is eager to stop the crisis from spreading to the United States, where many of his most lucrative assets — including the Fox TV network, 20th Century Fox film studio, The Wall Street Journal and the New York Post — are based.

The FBI has already opened an inquiry into whether 9/11 victims or their families were also hacking targets of News Corp. journalists.

On Sunday, Murdoch took out full page ads in British newspapers promising that News Corp. would make amends for the phone hacking scandal. The ad, titled "Putting right what's gone wrong," said News Corp. would assist the British police investigations into phone hacking and police bribery and vowed there would be "be no place to hide" for wrongdoers.

"It may take some time for us to rebuild trust and confidence, but we are determined to live up to the expectations of our readers, colleagues and partners," the ad said.

That follows a full-page Murdoch ad in Saturday's British papers declaring, "We are sorry."

But Murdoch's critics say that is not enough. Labour Party leader Ed Miliband said Sunday that Murdoch has "too much power" in Britain and his share of media ownership should be reduced. Murdoch still owns three national British newspapers — The Sun, The Times and The Sunday Times — and a 39-percent share of BSkyB.

"We've got to look at the situation whereby one person can own more than 20 percent of the newspaper market, the Sky platform and Sky News," Miliband told The Observer newspaper.

"I think it's unhealthy because that amount of power in one person's hands has clearly led to abuses of power within his organization," Miliband said.

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