Our cover-up, by Murdoch's heir.(News)

Byline: Stephen Wright

RUPERT Murdoch's son and heir to his media empire has sensationally admitted that News International misled Parliament over the phonehacking scandal.

In an email to staff explaining the momentous decision to close the News of the World, James Murdoch admitted the Sunday paper's publishers had knowingly covered up the controversy.

He said the paper had 'wrongly maintained' that phone hacking was carried out by just one reporter, and said it was 'a matter of serious regret' that he had approved out-of-court settlements with victims of the practice.

Publicist Max Clifford, actress Sienna Miller and Professional Footballers' Association chief Gordon Taylor are among those to have received payments.

Mr Murdoch's extraordinary confession - which comes a day after an MP used Parliamentary privilege to claim that News International had 'entered the criminal underworld' - could have legal repercussions amid speculation that his executives could face an investigation for perverting the course of justice. The statement made no reference to former News of the World editor Rebekah Brooks - now chief executive of News International - who faces repeated calls to quit.

Privately, a number of journalists accused Mr Murdoch of being a coward for not addressing staff personally.

But in an interview with Sky News, the aspiring media mogul defiantly insisted that Mrs Brooks had no reason to step down - saying her 'leadership was the right thing'.

Mr Murdoch, 38, who is chairman of News International, used fewer than 1,000 words to explain to staff why the News of the World was closing after 168 years.

'The good things the News of the World does have been sullied by behaviour that was wrong,' he said. 'Indeed, if recent allegations are true, it was inhuman and has no place in our company.

'The News of the World is in the business of holding others to account. But it failed when it came to itself.

'In 2006, the police focused their investigations on two men. Both went to jail. But the News of the World and News International failed to get to the bottom of repeated wrongdoing that occurred without conscience or legitimate purpose.

'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.

'We now have voluntarily given evidence to the police that I believe will prove that this was untrue and those who acted wrongly will have to face the consequences.' London-born Mr Murdoch, who was educated in the U.S. and speaks with a heavy American accent, went on to admit: 'This was not the only fault.

'The paper made statements to Parliament without being in the full possession of the facts. This was wrong.

'The company paid out-of-court settlements approved by me. I now know that I did not have a complete picture when I did so. This was wrong and is a matter of serious regret.' He said News International was only now 'co-operating fully and actively' with two police investigations: one into phone hacking and the other into claims that the newspaper paid police officers for tip - offs.

'We have also admitted liability in civil cases,' he added. 'Apologising and making amends is the right thing to do.' Despite his extraordinary statement, Mr Murdoch's position remains perilous.

The married father of two - seen by many as the heir apparent to his billionaire father - faces a barrage of questions over how he has managed the phone hacking affair. On Wednesday, during an emergency debate in the Commons, former Labour minister Tom Watson called for police to investigate alleged attempts to destroy incriminating News International email evidence held at a storage facility in India.

'We know now that News International had entered the criminal underworld,' Mr Watson told MPs.

James Murdoch was also accused of engaging in an attempt to pervert the course of justice by paying hush money to hacking victims.

Rebekah Brooks, meanwhile, was accused of ignoring warnings from police a decade ago that staff on the News of the World, which she then edited, were breaking the law.

Born in 1972, James Murdoch is the youngest of Rupert Murdoch's three adult children from his first marriage, the others being sister Elisabeth and brother Lachlan.

Schooled in New York, he studied film and history at Harvard University, but dropped out in the mid-1990s without completing his degree. Gaining a reputation as the family rebel, he then set up an independent record company, Rawkus Records, which was eventually bought by News Corporation.

In 1996, he was appointed chairman of another News Corporation music label, Australia-based Festival Records, going on to take charge of the company's fledgling internet operations.

Four years later, he was appointed chairman and chief executive of News Corporation's Asian satellite service, Star Television. He remained there for three years before taking the top job at BSkyB in 2003, where he became the youngest ever boss of a FTSE-100 company.

s.wright@dailymail.co.uk

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Father and son: James Murdoch and his father Rupert at Cheltenham Festival last year