Jailed News of the World royals editor Clive Goodman was paid £140,000 to avoid him making damaging claims about phone-hacking in public at an employment tribunal, former News International executives have told MPs.
Former head of human resources for News International Daniel Cloke and former director of legal affairs Jonathan Chapman were among those interrogated by the House of Commons Culture Media and Sport Select Committee this morning.
MPs were incredulous that Goodman was given a payout totalling £230,000 by the News of the World following his criminal conviction and jail sentence in January 2007 for intercepting the phone messages of royal aides. They suggested that it was evidence of a cover-up and that News International had sought to buy Goodman's silence.
Chapman revealed that an initial severance payment of £90,000 offered to Goodman following his release from prison in 2007 was a compassionate gesture by then executive chairman of News International Les Hinton.
He said: 'Mr Hinton indicated that he wanted to pay 12 months' salary and to do it on compassionate grounds because of the family situation of Mr Goodman."
Subsequent to that offer, Goodman sent a letter to Hinton indicating his intention to appeal against his dismissal on the grounds that it was inconsistent because other members of staff were also involved in phone-hacking and that this was known by then editor Andy Coulson.
Explaining why the company then decided to pay Goodman a further £140,000 to settle his unfair dismissal claim, Cloke said that Goodman's allegations had come from 'left-field'at a time the company was trying to put the matter behind it.
He said: 'We didn't think his allegations were substantiated. Bearing in mind things were starting to get back to normal we didn't want this matter to go to an employment tribunal where proceedings would be widely reportedâ€¦These sort of commercial judgements are made very frequently at many companies."
Neither executive appeared to know why Goodman was paid a year's salary of £90,000 in addition to the £140,000 for his settlement.
MPs heard that senior News International executives were "surprised" to hear the claims made in Goodman's letter that phone-hacking was widespread at the News of the World.
Chapman said that a "thorough" review of internal emails in 2007 turned up "nothing that indicated reasonable evidence" of voicemail interception and that "no other illegal activity stood out". He also said that the confidentiality clause included in Goodman's severance deal was "standard".
The review involved 2,500 emails sent between Goodman and News of the World executives Andy Coulson, Stuart Kuttner, Ian Edmondson, Neil Wallis and Jules Stenson.
Lawyers Harbottle and Lewis also reviewed the emails and told News International that they could find "no reasonable evidence" in them that Clive Goodman's "illegal actions" were known about by those individuals.
It has since emerged (on BBC business reporter Robert Peston's blog initially) that these emails may have contained evidence that Andy Coulson had authorised illegal payments to police for stories and that this evidence was handed over to police by News International in June this year.
Chapman told MPs that they had concerns about some of the emails at the time, but not when they were viewed "in context".