The Leveson inquiry is back after a two-week break. A lot has happened while it was away. A number of Sun journalists were arrested in dawn raids. A new newspaper has been born. And there has been a spirited fightback by assorted fellow travellers and friends of Rupert Murdoch – including, remarkably, a cabinet minister – to disparage the police and/or the Leveson inquiry itself. The police's behaviour was variously likened to Nazi Germany or the East German Stasi. Sun journalists, we were told, may have bought the odd copper a drink – but all in the public interest. And the education secretary, Michael Gove, suggested that, as a cure for the press's wrongs, Leveson might be "worse than the original disease".

A very different picture emerged yesterday as the inquiry moved into its second phase – looking at the relationship between the press and the police. The officer in charge of the current police investigations, Deputy Assistant Commissioner Sue Akers, gave compelling evidence about a culture of illegal payments at the Sun involving a network of corrupted officials. One such public servant had received £80,000, she claimed. A single Sun journalist had, over the years, handed out £150,000 in cash to such contacts across a wide range of public bodies. The vast majority of the information had no public interest but was "salacious gossip". Senior executives at the Sun knew about the payments, and the newspaper employed "tradecraft" to hide them.

There was also disturbing evidence from the former deputy prime minister, Lord Prescott, about the extraordinary lengths to which the police went in order to conceal from him and the public the suspicion that his phone had been hacked. It was revealed that the hacker-in-chief, Glenn Mulcaire, was questioned about targeting Prescott as early as 2006; that in the same year the police briefed News International's chief executive, Rebekah Brooks – a possible suspect – about their inquiry; that she and Andy Coulson, the News of the World editor, knew that Mulcaire had been paid £1m; and that Mulcaire had the new identities of people on witness protection programmes.

The police have much explaining to do – and will have to do better than yesterday's faltering attempt by the Met's QC to imply that hindsight was the main factor involved in the clear picture now emerging. Does Mr Gove still think Leveson is much ado about nothing? And, while it is absolutely true that all must be considered innocent until due process has been followed, the public is entitled to feel sceptical every time a former Murdoch employee takes to the BBC to talk about Britain's slide to a press-hating totalitarian state.

The News of the World was abruptly shut down because it had become such a toxic brand. The Sun is not remotely in that territory, though Mr Murdoch's haste to engineer an equally abrupt launch of the Sunday title may have been influenced by the knowledge that the police were taking such an active interest in its editorial practices. News Corp has two major concerns, the more so as damaging allegations emerge daily, if not hourly. One is the reaction of the FBI to the increasing likelihood that there will be bribery or corruption charges against News International employees: the last thing News Corp directors will want is to have to defend the board and company against inquiries under the US Foreign and Corrupt Practices Act.

The second concern is over James Murdoch, who was running the British newspapers at all material times while the public, police, press, regulator and parliament were lied to and evidence destroyed. He chaired the News Group board at a time when – as is now admitted for the purposes of damages – its directors and executives were engaged in a cover-up. If he knew what was going on, he was part of the cover-up. If he didn't, then he was, to put it kindly, not up to the job. Either explanation must bring into question whether he is a fit and proper person to be heading a major broadcasting company in this country. No wonder they are so cross with Leveson.


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