LONDON (Reuters) - News Corp executive James Murdoch could face a police investigation into claims he gave "mistaken" testimony to Britain's parliament this week, deepening the legal crisis that has engulfed the Murdoch family's media empire.

Police said they had received a letter on Friday from opposition lawmaker Tom Watson, who questioned whether Murdoch was involved in illegal efforts to cover up phone hacking.

Detectives investigating a phone hacking scandal centered on the Murdochs' now defunct News of the World tabloid were considering the letter, they said.

Murdoch, chairman of News Corp's British arm, and his father and company head Rupert appeared before parliament's media committee on Tuesday to answer questions on what they knew about the phone-hacking at the company's News of the World.

The company had long maintained that the practice was the work of a lone "rogue reporter." However, two former senior figures at its British newspaper arm have disputed James Murdoch's claim that he was unaware of an e-mail that suggested as early as 2008 that wrongdoing was more widespread.

"I think this is the most significant moment of two years of investigation into phone hacking," Watson, a Labour lawmaker, told BBC TV on Friday.

"If their statement is accurate, it shows that James Murdoch had knowledge that others were involved in hacking as early as 2008, that he failed to act to discipline staff or initiate some internal investigation," added Watson, part of the media committee who has long campaigned to expose wrongdoing at the newspaper.

"If their version of events is accurate, it doesn't just mean that parliament has been misled, it means the police have another investigation on their hands," Watson added.

Murdoch has said he stood behind his testimony to the committee and the company said on Friday that this statement still applied.

British Prime Minister David Cameron, who has come under fire for his close ties to senior News Corp figures, tried to distance himself from the company.

"Clearly James Murdoch has got questions to answer in parliament and I am sure that he will do that," he told reporters, "and clearly News International has got some big issues to deal with and a mess to clear up."

"That has to be done by the management of that company. In the end the management of a company must be an issue for the shareholders of that company."


Ex-News of the World editor Colin Myler and Tom Crone, who was the newspaper group's top legal officer, accused James Murdoch of giving "mistaken" testimony.

Watson said the dispute between senior figures past and present in News Corp marked a turning point in efforts to get to the bottom of a scandal dating backing to 2005.

"I think we're getting near to the core of this now, we're getting nearer the truth," Watson said.

"People are beginning to speak out. The company effectively closed ranks three years ago," he added.

"Now that News of the World is gone, now that the world's media hold this company in the spotlight, I think individuals are beginning to speak out and we will get the full picture."

News Corp long maintained that listening in to voicemails to get stories was the work of a single "rogue reporter" after their royal editor was jailed in 2007.

A series of legal actions by celebrities undermined that defense and raised questions about how far up the company responsibility went.

The floodgates opened two weeks ago when a lawyer for a murdered schoolgirl alleged that her telephone had been hacked while she was missing and messages deleted, giving her parents false hope she was still alive.

Facing public outrage and opposition from long compliant politicians, News Corp closed the News of the World newspaper after 168 years and dropped a $12 billion bid to buy full control of pay TV broadcaster BSkyB.

In a summer scandal shaking the British establishment, London's police chief and its head of anti-terrorism also resigned over their cozy links to a former News of the World deputy editor.

Prime Minister Cameron also faced strong criticism for hiring a former News of the World editor as his communications chief and for his social ties to Rebekah Brooks, who resigned this month as chief executive of the company's British arm.

The disputed testimony from Tuesday's dramatic televised session hinges on what James Murdoch knew about a 700,000 pound payment to soccer players' union boss Gordon Taylor to settle a legal claim that his phone had been hacked.

"What Myler's statement shows, if it's true, (is) that James Murdoch knowingly bought the silence of Taylor thereby covering up a crime," Watson said.

"Now in the UK that is called conspiring to pervert the course of justice and it's a very serious matter"

(Additional reporting by Stephen Addison)

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