At issue is what he knew and when he knew it. In 2008, he authorized a $1-million settlement of an invasion of privacy suit brought by Gordon Taylor, CEO of the Professional Footballers Assn. A private investigator hired by News of the World who since has served jail time confessed to breaking into Taylor's phone messages.
Confidentiality and Taylor's silence were key components of the settlement. But in Britain it is illegal to silence a crime victim. "James Murdoch paid an astronomical sum in the settlement of a case in which a story was never written," Watson said. "It came with a confidentiality clause, meaning he knowingly bought the silence of a victim of a crime."
Scotland Yard would make that determination. The police agency has reopened its investigation into alleged phone hacking and police bribery by tabloids in London. Last week, a reporter for the Sun, a News Corp. paper, was arrested in connection with the police bribery probe — the first time accusations of wrongdoing extended beyond News of the World.
News Corp. said it would set up a fund to compensate victims of the phone hacking.
In October, at News Corp.'s annual shareholder meeting, about 70% of independent investors who voted opposed returning James Murdoch to the company's board of directors. He survived the challenge because the Murdoch family controls nearly 40% of the company's voting shares. Later this month, he will stand for reelection as chairman of British Sky Broadcasting.
"There will be calls for him to step down," said Claudio Aspesi, a London-based media analyst with Bernstein Research. News Corp.'s control of BSkyB voting shares will make it difficult for shareholders to unseat him, Aspesi said.
For now, his test will be to convince British lawmakers that he approved the Taylor settlement in 2008 without bothering to delve into the sordid details. He is expected to stand by earlier statements that he was unaware of the extent of the unethical behavior.
"James Murdoch would like to give the impression to you that he was mildly incompetent rather than thoroughly dishonest," Mark Lewis, the lawyer who represented Taylor, told Parliament last month.
On Monday, News Corp.'s British unit acknowledged it had inappropriately conducted surveillance of two lawyers who represented victims of alleged phone hacking by the company, including Lewis. The company said no one currently working within News Corp. "condoned" the monitoring.
In an interview last week, Lewis said: "This is like a house of cards that is falling down."
Times staff writer Janet Stobart in London contributed to this report.