Computer Hacking: Murdoch's Next Scandal?

The Daily Beast, Tuesday, February 21, 2012, 1:26pm (PST)

By Mike Giglio

• For months, reporters in Britain have been keeping a watchful eye on a criminal case playing out in the crown court in Kingston, southwest London. The case centers on an investigation into blagging -- the practice of illegally obtaining confidential information such as bank statements and health records, often by private investigators who pose as their targets over the phone. Blagging has long been acknowledged to be widespread in British journalism. Four men pled guilty in the Kingston case.

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  On Monday, legal restrictions on the case were lifted, allowing reporters to publish the identity of one of the convicted: private investigator Philip Campbell Smith, who is separately alleged to have engaged in a far more controversial tactic -- computer hacking -- at the behest of Rupert Murdoch's News of the World, which the mogul shuttered this summer after evidence of the tabloid's purported phone hacking practices caused a public relations storm. Some Murdoch opponents see computer hacking as a potential crisis that could one day deal Murdoch a serious blow. Tom Watson, the MP who has been driving the phone hacking scandal in Parliament, has said it "could potentially dwarf" the scandal that has surrounded phone hacking so far.

  Reports of email hacking by Murdoch's U.K. newspapers have been surfacing of late. News of the World is said to have hacked the emails of Sienna Miller, the actress, and Christopher Shipman, the son of a British serial killer. It was even revealed that a young reporter from the stately Times of London allegedly hacked into an anonymous blogger's email account to break a story in 2009.

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  But the highest-profile case has been that of former British intelligence officer Ian Hurst, who has accused Campbell Smith of hacking his computer at the behest of editors at Murdoch's tabloids.

  Hurst worked as a handler of Irish Republic Army informants for the British Army. In 2006, according to an investigation last year by the BBC TV series Panorama, Hurst's computer was hacked using a Trojan virus, and emails obtained from his computer were reportedly faxed to the Dublin offices of News of the World. (According to the Guardian, Smith is reputed to be under investigation by Scotland Yard's Operation Kalmyk over the email hacking allegations.)

• After learning of the faxes, Hurst approached Smith -- who was kept anonymous in the broadcast, but can now be identified -- about the breach and recorded the ensuing conversation. In it, Smith admitted that the hack was relatively easy -- "I sent you an email that you opened, and that's it. It's in," he said -- and claimed that he was commissioned by Alex Marunchak, a former senior editor at News of the World who left the paper later in 2006. (Marunkchak has previously denied the allegations.)

  Hurst has since said the newspaper may have been looking for information about a famous secret agent known as Stakeknife. The BBC broadcast alleged that Marunchak hired out Smith through the private detective Jonathan Rees, a controversial figure from the News of the World's past. Rees ran an agency called Southern Investigations that was a major client of the newspaper in the 1990s, along with its rival tabloids the Daily Mirror and Sunday Mirror.

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  Police bugged Rees' office while investigating the 1987 axe murder of his former business partner Daniel Morgan -- which remains one of Britain's most notorious unsolved crimes -- and instead found evidence that Rees was paying corrupt police officers for information, according to a lengthy expose by the Guardian published in 2002, based off an authorized briefing by Scotland Yard. Rees was acquitted of the Morgan murder last year, and denies ever selling or providing information obtained through illegal methods. But Rees spent seven years in prison for a plot to plant cocaine on a woman so that her ex-husband would get custody of the children. After his 2004 release, he began working exclusively for News of the World, which was edited by Andy Coulson at the time. Coulson went on to become Prime Minister David Cameron's communications director before resigning over the phone hacking controversy last year.

  An undercover agent who had regular contact with Rees' agency said last year that its employees routinely supplied confidential information to reporters that had been obtained through computer hacking or other illegal means. "They boasted 'we could get the Queen's medical records if we needed it,'" he told BBC Radio 4. "There were very few stories, about one percent, that didn't involve some sort of illicit mining of confidential information." Rees has denied such allegations in the past.

• Testifying before the Leveson inquiry -- the public inquiry into press ethics sparked by the phone hacking scandal -- in November, Hurst said that Smith had done far more than obtain his emails, taking things like PIN numbers and his wife's resume. "He more or less charted the events from the middle of June 2006, he states for a three-month period, and all the documents he could access via the back-door Trojan: emails, the hard drive, social media," Hurst said, adding that "the type of Trojan which is deployed by newspapers or private detectives isn't that sophisticated".

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  Hurst also spread the blame to police, who he said had been aware of the computer hacking but failed to alert him. "I strongly feel that the matter was 'swept under the carpet,'" he said in a witness statement to the Leveson inquiry. "I am also absolutely certain that there were strong links between certain newspapers and former and current officers of the Metropolitan Police Service." (The Metropolitan Police has previously declined to answer questions on the allegations, but has opened in inquiry into possible instances of payments to police officers, as well as an inquiry into alleged instances of computer hacking.)

  Hurst reiterated those concerns to The Daily Beast today. "The Metropolitan police," Hurst says, "knew all about Mr. Smith and his activities […] yet chose to turn a blind eye. Why?"

  The next stage of the Leveson inquiry, which will turn its focus to the relationship between the press and police, begins next week

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