Police chief quits, Brooks bailed

Former News International chief Rebekah Brooks has been released on bail after her arrest earlier today in the phone hacking scandal.

The 43-year-old had gone to a prearranged meeting with police as part of their investigation into phone hacking and bribery by employees of media mogul Rupert Murdoch.

Instead she was arrested.

Reuters is now reporting she's been released on bail.

As Brooks was being questioned, Britain's most senior police officer Paul Stephenson resigned from his post due to speculation about his links to Murdoch's empire and the force's botched investigation into hacking at the now-defunct News of the World tabloid.

Stephenson said he was resigning as commissioner of London's force because of "speculation and accusations" about his connection to Neil Wallis, a former News of the World executive editor, who also worked for the London police as a part-time PR consultant for a year until September 2010. Wallis was arrested last week.

Stephenson said he did not make the decision to hire Wallis and had no knowledge of Wallis's links to phone hacking, but he wanted his police force to focus on preparing for the 2012 London Olympics instead of wondering about a possible leadership change.

"I had no knowledge of the extent of this disgraceful practice and the repugnant nature of the selection of victims that is now emerging," Stephenson said.

"I will not lose any sleep over my personal integrity."

Brooks' the ultimate insider

The arrest of the 43-year-old Brooks, often described as a surrogate daughter to the 80-year-old Murdoch, brings the British police investigations into the media baron's inner circle for the first time.

It also raises the possibility that his old friend Les Hinton, who resigned on Saturday as publisher of The Wall Street Journal, or Murdoch's 38-year-old son and heir apparent, James, could be next.

Brooks' detention today moves the police inquiry closer to the heart of British political power. Brooks is the ultimate social and political insider, who dined at Christmas with Prime Minister David Cameron and counts numerous celebrities and senior politicians among her friends.

Until Saturday, she was the defiant chief executive of News International, Murdoch's British newspaper arm, whose News of the World tabloid stands accused of hacking into the phones of celebrities, politicians, other journalists and even murder victims. In the tumultuous last two weeks, she had kept her job even as Murdoch shut down the 168-year-old tabloid and tossed 200 other journalists out of work.

This morning she showed up for a prearranged meeting with London police investigating the hacking and was arrested. She was being questioned on suspicion of conspiring to intercept communications - phone hacking - and on suspicion of corruption, which relates to bribing police for information.

Brooks' spokesman, David Wilson, said police contacted her Saturday to arrange a meeting and she "voluntarily attended a London police station to assist with their ongoing investigation." He claimed that Brooks did not know she was going to be arrested.

The arrest threw Brooks' appearance at Tuesday's parliamentary hearing into doubt.

"Obviously this complicates matter greatly," Wilson said. "Her legal team will have to have discussions with the committee to see whether it would still be appropriate for her to attend. "

Lawmaker Adrian Sanders said if Brooks did not appear, "that is not going to go down very well with my fellow committee members."

Murdoch struggling to tame scandal

The arrest was the latest blow for Murdoch, the once all-powerful figure courted by British politicians of all stripes. Now Murdoch is struggling to tame a scandal that has already destroyed his muckraking tabloid News of the World, cost the jobs of Brooks and Hinton and sunk the media baron's dream of taking full control of a lucrative satellite broadcaster, British Sky Broadcasting.

"(Murdoch) needs to come absolutely clean about what he knew, about what his senior executives knew, and why this culture of industrial-scale corruption - so it is alleged - appeared to have grown up without anyone higher up in the food chain taking any real responsibility for it," Deputy Prime Minister Nick Clegg said today.

Even more senior figures could face arrest, including James Murdoch, chairman of BSkyB and chief executive of his father's European and Asian operations. James Murdoch did not directly oversee the News of the World, but he approved payments to some of the paper's most prominent hacking victims, including 700,000 pounds ($1.1 million) to Professional Footballers' Association chief Gordon Taylor.

James Murdoch said last week that he "did not have a complete picture" when he approved the payouts.

Brooks seeks to defend reputation

Brooks stepped down Saturday as head of Murdoch's British newspapers, saying she was going to "concentrate on correcting the distortions and rebutting the allegations about my record."

She was editor of the now-defunct News of the World between 2000 and 2003, when some of the phone hacking took place, but has always said she did not know it was going on, a claim greeted with skepticism by many who worked there.

At an appearance before UK lawmakers in 2003, Brooks admitted that News International had paid police for information. That admission of possible illegal activity went largely unchallenged at the time and lawmakers are keen to ask her about it again.

Police have already arrested nine other people, including several former News of the World reporters and editors, over allegations of hacking and bribery. Those include Andy Coulson, a former News of the World editor who became Cameron's communications chief before resigning in January. No one has yet been charged.

Some Murdoch critics were suspicious of the timing of Brooks' arrest, which may draw attention away from uncomfortable questions about police actions.

"The timing stinks," said Mark Lewis, lawyer for the family of Milly Dowler, the murdered 13-year-old whose phone was hacked by News of the World journalists in 2002.

Police face fresh questions

London police are under pressure to explain why their original hacking investigation several years ago failed to find enough evidence to prosecute anyone other than News of the World royal reporter Clive Goodman and private investigator Glenn Mulcaire. Detectives reopened the investigation earlier this year and now say they have the names of 3,700 potential victims.

Records show that senior officers - including Stephenson - have had numerous meals and meetings with News International executives in the past few years.

Murdochs to front parliamentary committee

Tuesday's televised public inquisition by a parliamentary committee is one both Murdochs fought to avoid, but later reluctantly agreed to attend.

Politicians want answers about the scale of criminality at the News of the World, while the Murdochs wan to avoid incriminating themselves or doing more harm to their business. They will have to walk a fine line: misleading Parliament is a crime.

Murdoch is eager to stop the crisis from spreading to the United States, where many of his most lucrative assets - including the Fox TV network, 20th Century Fox film studio, The Wall Street Journal and the New York Post - are based.

The FBI has already opened an inquiry into whether 9/11 victims or their families were also hacking targets of News Corp. journalists.

On Sunday, Murdoch took out full page ads in British newspapers promising that News Corp. would make amends for the phone hacking scandal. The ad, titled 'Putting right what's gone wrong,' said News Corp. would assist the British police investigations into phone hacking and police bribery and vowed there would be "be no place to hide" for wrongdoers.

"It may take some time for us to rebuild trust and confidence, but we are determined to live up to the expectations of our readers, colleagues and partners," the ad said.

That follows a full-page Murdoch ad in Saturday's British papers declaring, "We are sorry."

But Murdoch's critics say that is not enough. Labour Party leader Ed Miliband said Sunday that Murdoch has "too much power" in Britain and his share of media ownership should be reduced. Murdoch still owns three national British newspapers - The Sun, The Times and The Sunday Times - and a 39-per cent share of BSkyB.

"We've got to look at the situation whereby one person can own more than 20 per cent of the newspaper market, the Sky platform and Sky News," Miliband told The Observer newspaper.

"I think it's unhealthy because that amount of power in one person's hands has clearly led to abuses of power within his organization," Miliband said.

Wall Street Journal: We're not involved

The independent committee charged with monitoring editorial integrity at The Wall Street Journal has said it is not aware of any wrongdoing at the Journal or its parent company, Dow Jones & Co.

Dow Jones is owned by News Corp., which is mired in a phone-hacking scandal involving its British newspapers.

The committee that monitors the Journal's editorial practices also said in a statement that it did not believe Les Hinton's resignation as publisher of the Journal and chief executive of Dow Jones was related to activities at the Journal or Dow Jones.

Hinton, who resigned on Friday, had been chairman of News Corp.'s British newspaper arm for some of the years its staffers are alleged to have unlawfully accessed the voicemail messages of politicians, sports figures, and celebrities in search of news scoops.

Thomas Bray, chairman of the committee, said the group did not conduct an independent investigation to come to its conclusion.

"All we can testify to is what has or has not come to our attention," Bray said when reached Saturday. "That's our function. We're not a police force."

Even so, Bray said the committee knows a number of staff members at the Journal well enough that if there were a systemic problem like phone-hacking or other illegal activities at the paper, he is "pretty sure we would have known about it."

"Obviously, (there are) no flat guarantees about this sort of thing," Bray said.

The Dow Jones Special Committee was formed in 2007 as a condition of News Corp.'s $5.7 billion purchase of Dow Jones. The acquisition was seen as "the cherry on top of the cake in terms of respectability," for News Corp.'s chief executive Rupert Murdoch, says newspaper analyst Ken Doctor.

Murdoch agreed to set up the committee to ease concerns that the paper's quality and independence would suffer under his control. Each of the group's five members is paid $100,000 a year to monitor the editorial independence of the Journal and Dow Jones.

- AP and AFP