- Associated Press - Friday, November 4, 2011

LONDON (AP) - Rupert Murdoch’s News International said Friday it had launched a new compensation plan for victims of phone hacking by the media mogul’s now-defunct Sunday tabloid.

The company said Friday it has set up the scheme as “a speedy, cost-effective alternative to litigation” for people who had been spied upon by the News of the World. But victims’ lawyers suggested News International was trying to save on attorney’s fees.

“That’s a commercial decision _ they’re saving a lot of money on legal costs with this procedure,” said Tamsin Allen, who is coordinating the litigation for the 60 people suing News International over phone hacking.

Such compensation could be useful for some victims, but there are some questions which “will only be answered if they’re pushed through the courts with the power of disclosure,” she said.

Mark Lewis, another victims’ lawyer, said it “remained to be seen” whether claimants would be disadvantaged by settling out of court.

He noted that the family of murdered schoolgirl Milly Dowler _ whose phone was hacked by reporters investigating her disappearance _ got a 2 million pound ($3.2 million) payout from News International without going to trial.

News International’s compensation proposal came as it announced that one of its employees had been arrested on suspicion of police corruption. Scotland Yard said earlier Friday that they had arrested a 48-year-old man “outside of London” and had brought him to the capital for questioning.

No other information was disclosed.

More than a dozen former News of the World journalists have been arrested in recent months over allegations of systematic wrongdoing at the tabloid, which Murdoch was forced to close in July. The arrest of a serving employee is rare. The only other current employee of the company known to have been arrested as a result of the scandal was the Times of London’s deputy football editor, Raoul Simons.

News International, which also publishes the Sunday Times and The Sun tabloid, refused to say which publication the man arrested Friday worked for.

News International long maintained that illegal behavior at the News of the World was limited to a single rogue journalist, but that contention fell apart as evidence of widespread wrongdoing became public. Murdoch shut the 168-year-old paper after it emerged that staff had routinely intercepted the cell phone voicemails of public figures _ including celebrities, sports stars, politicians, and even high-profile crime victims such as Dowler.

On Thursday, British police said they had identified 5,795 potential victims of phone hacking, and that the number could still rise.


Associated Press writer Cassandra Vinograd contributed to this report.

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