Phone hacking was "widely discussed" at News of the World, the royal correspondent jailed and sacked for the practice wrote in 2007, according to documents released Tuesday by a Parliament committee investigating the scandal.
The letter was among a string of documents released by the Culture, Media and Sport Committee relating to the scandal.
The committee is likely to call News Corp. executive James Murdoch to testify before them again as members try to determine whether he misled them last month about the scale of phone hacking at News of the World and who knew about it, member of Parliament Tom Watson said Tuesday.
Executives at News International have argued that illegal activities were not widespread.
Both James and his father Rupert Murdoch, as well as former News International chief executive Rebekah Brooks, who previously edited News of the World, gave evidence to the committee last month.
James Murdoch ordered the closure of the News of the World, Britain's best-selling Sunday paper, in July in the face of allegations of illegal eavesdropping and police bribery by its employees. The scandal has led to the resignation of a number of senior police officers and executives at News International, the British arm of News Corp. which ran the newspaper.
The letter published Tuesday reveals that while fighting his dismissal from the paper, former royal correspondent Clive Goodman alleged that "other members of staff were carrying out the same illegal procedures."
He also wrote that "explicit reference" to phone hacking was "banned."
The copy of the letter, published by lawmakers investigating the scandal, blacks out the name of the person who banned it.
Andy Coulson, who resigned as Prime Minister David Cameron's spokesman at the start of this year amid renewed questions over phone hacking, has denied knowing it was going on while he was editor of News of the World. He resigned from that position on the day Goodman was jailed. Coulson was arrested and released on bail last month.
John Whittingdale, who chairs the parliamentary committee, said after its members met Tuesday that he anticipated James Murdoch, as chairman of News International, would have more questions to answer on the phone-hacking issue.
"James Murdoch clearly is the man who is ultimately responsible for News International in this country," he said, adding that Rupert Murdoch seemed to have less insight into the detail of the case.
Commenting on the evidence from the committee, a News International statement said: "News Corporation's board has set up a Management and Standards Committee, chaired by independent Chairman Lord Grabiner, which is co-operating fully with the Metropolitan Police and is facilitating their investigation into illegal voice mail interception at the News of the World and related issues.
"We recognize the seriousness of materials disclosed to the police and Parliament and are committed to working in a constructive and open way with all the relevant authorities," the statement said.
Claims that the voice mail of murdered British teenager Milly Dowler was among those hacked by the paper's staff, potentially hindering a police investigation, sparked particular outrage.
The correspondence released Tuesday reveals that Whittingdale sent James Murdoch a list of 19 questions after his testimony before the committee, ranging from who was on duty at News of the World when Milly Dowler's phone was hacked to what legal fees News International paid for private investigator Glenn Mulcaire.
News International has no record of who edited the 2002 issue of News of the World that included reference to a Milly Dowler voice mail, James Murdoch told British lawmakers in the newly-released written evidence.
Brooks, the editor of the paper at the time, was on vacation that week, he said, and the company records do not show who deputized for her, he said. Peter Smith was night editor, and Neville Thurlbeck, who was arrested earlier this year in connection with the phone hacking investigation, was news editor.
James Murdoch was asked to provide the written response after additional questions were raised by a former editor of the News of the World and the paper's former head of legal affairs, Colin Myler and Tom Crone. They said Murdoch had been "mistaken" in his testimony regarding an important piece of evidence.
Crone and Myler said they had told Murdoch of an e-mail regarded as central to the question of whether more than one reporter at the paper was involved in illegal activity. Murdoch gave contradictory evidence to the committee.
The e-mail referred to by Crone and Myler is known as the "for Neville" e-mail, so named for its apparent connection to Thurlbeck. It is thought to have played a key role in the decision by executives at News International to agree to an out-of-court settlement with Gordon Taylor, chief executive of the Professional Footballers' Association. James Murdoch admitted in testimony to the parliamentary committee that the payout was for "illegal voice mail interception."
In a letter to Whittingdale released Tuesday, Crone said he believed he had informed James Murdoch of the "for Neville" e-mail in a June 2008 meeting.
He wrote: "Since the 'for Neville' document was the sole reason for settling and, therefore, for the meeting, I have no doubt that I informed Mr. Murdoch of its existence, of what it was and where it came from. I do not recall if I produced it and showed him a copy of it."
"There seems to be a question as to whether James Murdoch misled the committee. We have not drawn a conclusion on that," Watson told Sky News before the documents were released.
He told Sky the letter apparently written by Goodman would be "devastating" evidence of a cover-up if it proved to be accurate.
Whittingdale said the committee wanted to know more about decisions made by James Murdoch as he authorized certain payments.
But it does not intend to duplicate the work of the judicial inquiry led by Lord Justice Leveson into the conduct of other news organizations, he said, and would focus specifically on whether Parliament was misled by in the evidence already given to it.
The committee also has no plans to call Rupert Murdoch for more testimony, Watson and Whittingdale told Sky News.
Two police investigations are also under way into the allegations that journalists from the News of the World hacked into voice mails of people ranging from celebrities to crime victims and illegally paid police for information. A dozen people have been arrested in connection with the inquiries.
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