THE NEWS of the World's ex-legal manager said today that he told James Murdoch there was "direct and hard evidence" that phone hacking extended beyond a single reporter.
Tom Crone said he showed the News International chairman a printout of the now-notorious "For Neville" email at a meeting on June 10 2008 also attended by the paper's then-editor Colin Myler.
The email, which contained transcripts of illegally intercepted voicemail messages, was apparently destined for the News of the World's chief reporter Neville Thurlbeck.
Mr Crone told the Leveson Inquiry into press standards he showed Mr Murdoch a number of documents.
"I cannot remember whether they were passed across the table to him, but I am pretty sure I held up the front page of the email," he said.
"I am also pretty sure that he already knew about it - in terms of it had been described to him already, which I think the other documents that have come out suggest anyway."
Mr Crone also warned Mr Murdoch that News International reporters were implicated in an Information Commissioner's Office investigation into the illegal sale of private data called Operation Motorman, the inquiry heard.
Clive Goodman, the News of the World's former royal editor, was jailed along with private investigator Glenn Mulcaire in January 2007 after they admitted intercepting voicemail messages left on royal aides' phones.
The "For Neville" email apparently contradicted News International's previous stance that phone hacking at the paper was confined to a single "rogue reporter".
Mr Crone said: "What was certainly discussed was the email - not described as For Neville, but the damning email - and what it meant in terms of further involvement in phone hacking beyond Goodman and Mulcaire.
"And what was relayed to Mr Murdoch was that this document clearly was direct and hard evidence of that being the case.
"At the same time, I think I must have referred at some stage to Operation Motorman."
Mr Murdoch has insisted that he was not shown the email or told that it proved phone hacking was more widespread at the News of the World than previously thought.
The meeting with Mr Murdoch was arranged to discuss a claim brought by Professional Footballers' Association chief executive Gordon Taylor over the hacking of his phone by the News of the World, the inquiry heard.
Mr Crone said he only "temporarily" breathed a sigh of relief when the case was settled, adding: "I was expecting another claim, frankly."
Explaining why the paper's publishers agreed to pay Mr Taylor £425,000 plus costs, the lawyer said the company wanted to protect its reputation and reduce the likelihood of further expensive litigation.
Robert Jay QC, counsel to the inquest, asked him: "This might also be interpreted as, to use a blanket term, a culture of cover-up. Would you accept that?"
Mr Crone replied: "No, I don't think I would. It's a culture of avoiding reputational damage through bad publicity, but it certainly isn't a culture of cover-up if the damning documents are in the police's possession and in fact came from the police."
Mr Crone also said he understood a representative of Madeleine McCann's family gave the News of the World permission to publish the personal diary of the missing girl's mother.
Kate McCann told the inquiry last month that she felt "violated" and like "climbing into a hole and not coming out" when the intensely private journal appeared in the paper on September 14, 2008.
Mr Crone said today: "My understanding was that the representative of the McCanns had given the OK, the permission to the head of the newsdesk at the News of the World, to run the diaries or extracts from the diaries. I think he had emails to support that."
Mr Jay said: "I have seen some documents which on one interpretation of them broadly support what you are saying."