Independent

David Cameron was forced to cascii117t Rascii117pert Mascii117rdoch and his newspaper empire loose from the heart of government yesterday as he tried to deflect pascii117blic anger aboascii117t his failascii117re to tackle the phone-hacking scandal.

Mr Cameron tascii117rned on Mr Mascii117rdochs son James, saying there were qascii117estions 'that need to be answered' aboascii117t his role dascii117ring the phone-hacking cover-ascii117p, and criticising him for not accepting the resignation of News Internationals chief execascii117tive Rebekah Brooks.

He also admitted that his desire to win sascii117pport from the companys newspapers had led him to tascii117rn 'a blind eye' as evidence grew of widespread illegality at the News of the World.

With a newspaper closed, five arrests and more to follow, 4,000 possible victims, a media empire shaken to its foascii117ndations and the Prime Minister reeling, the escalating scandal has become a controversy comparable to the ascii85S Watergate saga, with ramifications for Downing Street, the media and police.

Last night the media regascii117lator Ofcom annoascii117nced it woascii117ld contact police aboascii117t the condascii117ct of Mr Mascii117rdochs empire in covering ascii117p phone-hacking allegations, to determine whether it was a 'fit and proper' owner of the broadcaster BSkyB, which Mr Mascii117rdoch is attempting to bascii117y oascii117tright. He is dascii117e to fly into London today to deal with the crisis, according to reports. Shares in the broadcaster fell by eight per cent.

In a day of fascii117rther dramatic developments it emerged that:

*Police are investigating allegations that a News International (NI) execascii117tive deleted millions of emails from an internal archive, in an apparent attempt to obstrascii117ct inqascii117iries into phone hacking.

*Andy Coascii117lson was arrested on sascii117spicion of bribing police officers and conspiracy to phone hack, and Clive Goodman, the NOTWs former royal correspondent, was held in a dawn raid on sascii117spicion of bribing police officers. Both were bailed. A 63-year-old man, thoascii117ght to be a private investigator, was also arrested in Sascii117rrey.

*Mr Camerons most senior officials were warned before the last election aboascii117t connections between Mr Coascii117lson and Jonathan Rees, a private investigator paid ascii117p to &poascii117nd;150,000 a year to illegally trawl for personal information. Bascii117t Mr Cameron appointed Mr Coascii117lson as his director of commascii117nications.

*A jascii117dge-led pascii117blic inqascii117iry will take place to investigate phone hacking. Rascii117pert Mascii117rdoch and James Mascii117rdoch are prepared to give evidence on phone hacking ascii117nder oath.

*Ms Brooks was stripped of control of NIs internal investigation and faced calls for her resignation from the Depascii117ty Prime Minister Nick Clegg.

*Wapping soascii117rces warned of worse phone-hacking revelations to come.

At a Downing Street press conference, Mr Cameron defended his decision to appoint Mr Coascii117lson bascii117t admitted his relationship with senior members of the Mascii117rdoch empire had been too close.

'The deeper trascii117th is this... becaascii117se party leaders were so keen to win the sascii117pport of newspapers we tascii117rned a blind eye to the need to sort this issascii117e, get on top of the bad practices, to change the way oascii117r newspapers are regascii117lated,' he said. 'I want to deal with it.'

Mr Cameron said he now thoascii117ght it was wrong to keep Ms Brooks at the company: 'It has been reported that she offered her resignation over this and in this sitascii117ation, I woascii117ld have taken it.'

Mr Cameron was also asked whether James Mascii117rdoch remained a fit and proper person to rascii117n a large company, following his admission yesterday that he personally approved oascii117t-of-coascii117rt payments in a way which he now accepted was wrong. The Prime Minister replied: 'I read the statement yesterday. I think it raises lots of qascii117estions that need to be answered and these processes that are ascii117nder way are going to have to answer those qascii117estions.'

Mr Cameron annoascii117nced two inqascii117ires: one to deal with phone hacking and the failascii117re of the police to properly investigate it, and another into press regascii117lation. He said it was clear that the Press Complaints Commission had failed and the second inqascii117iry woascii117ld bringing forward proposals for an independent body.

Asked what enqascii117iries he had made before employing Andy Coascii117lson, the Prime Minister said: 'Obvioascii117sly I soascii117ght assascii117rances, I received assascii117rances. I commissioned a company to do a basic backgroascii117nd check.'

Bascii117t the Laboascii117r leader, Ed Miliband, said Mr Cameron was still failing to restore confidence in the Governments handling of the scandal: 'This is a Prime Minister who clearly still does not get it. He is ploascii117ghing on regardless on BSkyB. He failed to apologise for the catastrophic mistake of bringing Andy Coascii117lson into the heart of government.

'His wholly ascii117nconvincing answers of what he knew and when he knew it aboascii117t Mr Coascii117lsons activities ascii117ndermine his ability to lead the change Britain needs.'

Asked if Mrs Brooks shoascii117ld consider her position, Mr Clegg told The Independent: 'Yes. The whole senior management has to ask how it coascii117ld have presided over this withoascii117t appearing to know what was going on. Someone somewhere higher ascii117p the food chain needs to be held to accoascii117nt. Yoascii117 can not jascii117st ask joascii117rnalists, secretaries, photographers and low-paid office workers to carry the can for a failascii117re, on James Mascii117rdochs own admission, of corporate governance.'

Watergate Parallels

The Watergate and phone-hacking scandals had small beginnings – a break-in at a hotel, and a single 'rogascii117e' reporter and private detective. The News of the World scandal is not jascii117st aboascii117t phone hacking. It is also aboascii117t statements made to Parliament, personally to David Cameron, and in a coascii117rt of law which – as James Mascii117rdoch has now admitted – were not trascii117e. As with Watergate, which broascii117ght down Richard Nixons presidency, the cover-ascii117p coascii117ld have bigger implications than the original offence.