Murdochs 'in family fallout' over crisis

Biographer claims Elisabeth Murdoch's outburst was directed not just at Rebekah Brooks but also her brother James

• Jamie Doward and Lisa O'Carroll
• guardian.co.uk, Saturday 16 July 2011 19.03 BST
• Article history

Tensions at the heart of Rupert Murdoch's empire are threatening to explode into the open amid claims that the media mogul's children are turning on each other.

A biographer of Murdoch, Michael Wolff, claimed that the tycoon's daughter, Elisabeth, had said her brother James had "fucked the company".

This week Murdoch denied she had said something similar about the ousted News International chief executive, Rebekah Brooks. But Wolff wrote on Twitter that those reports were "incomplete": "She said: 'James and Rebekah fucked the company.' " Wolff said Elisabeth made the remark on Sunday at a book launch for the political analyst Philip Gould, hosted by her husband, Matthew Freud, and the editor of the Times, James Harding.

News Corp insiders questioned the truth of the claims, pointing out that Wolff has long been a critic of James Murdoch and has written about him disparagingly many times. But Elisabeth is known to have been dismayed by what is happening to her father's empire and it is understood there are tensions within the family.

Wolff, who stood by his claims on Saturday, said: "What we are seeing is an enormous amount of frustration. James absolutely cannot survive. Whether or not he is legally culpable, he certainly mishandled this entire situation and has done for a long period of time."

Wolff suggested the world was witnessing the end of the Murdochs' dynastic ambitions. "The Murdochs will be moved out of this company. James will go into some form of exile and Rupert will be put out to pasture and an outsider not named Murdoch will be put in charge."

Reliable sources have told the Observer the family have been having quarterly "summits" to discuss News Corp's long-term future. "The family have been getting together every quarter to discuss News Corp's legacy and what it stands for; the last meeting they had was held in Australia," said the source. "The fascinating thing now is that whatever the brand stood for earlier this year has been shot to pieces. News Corp is a world-class company in terms of how it is run and who it employs – it employs the brightest and the best throughout. Now it could be all over, if they find any evidence of hacking of 9/11 victims."

The concerns will add to the sense of crisis enveloping James Murdoch, who next week will be placed under further pressure when a parliamentary committee asks him to name those within News International whom he has publicly referred to as "wrongdoers".

In a highly unusual twist, the culture, media and sport select committee is contemplating placing Brooks and James and Rupert Murdoch under oath when they appear before it on Tuesday.

The committee is keen to probe James Murdoch on his statement to News International staff shortly before the News of the World was closed down. He said at the time: "Wrongdoers turned a good newsroom bad and this was not fully understood or adequately pursued. As a result, the News of the World and News International wrongly maintained that these issues were confined to one reporter."

A series of News International figures had previously appeared before the committee to insist there was no evidence of widespread phone hacking at the paper, including Les Hinton, former chief executive; Stuart Kuttner, then managing editor; former editor Andy Coulson and then editor Colin Myler; and Tom Crone, then its senior lawyer.

"Our inquiry is not going to end on Tuesday," said Paul Farrelly, a Labour MP on the committee. "We are going to ask James Murdoch which of the people who have come in front of us, as far as he knows, told us the truth or not."

Farrelly said the committee would recall witnesses in the light of Murdoch's statement. "We couldn't believe what he said when he closed the News of the World," Farrelly said. "He must have realised he would be summoned."