News Corp's James Murdoch was kept in the dark about the scale of phone hacking at the News of the World by his subordinates who tried to manage the problem, the newspaper's former chief reporter said on Monday.

Neville Thurlbeck has become a key figure in the scandal because he appears to be named in a crucial piece of evidence that critics of the company have seized on as proof the problem is widespread.

The evidence -- an email addressed 'for Neville' -- included the transcripts of voicemail messages and resulted in James Murdoch agreeing to make a payout of around 750,000 sterling ($1.2 million) to an early hacking victim, the soccer union boss Gordon Taylor.

Critics of the company have said the much larger than normal payout was intended to buy the victim's silence and prevent the scale of the problem from being made public because Taylor had secured a copy of the email.

However James Murdoch has consistently argued he was not made aware of the relevance of the email and said he simply followed legal advice in agreeing to the payout.

News Corp's British newspaper arm News International had long argued that the hacking of phones to secure stories was carried out by one rogue reporter, Clive Goodman, with the help of private investigator Glenn Mulcaire. That defense crumbled earlier this year under a host of disclosures.

Mr Murdoch had been kept in the dark and deprived of vital evidence showing phone hacking went far wider than the Goodman/Mulcaire issue, Thurlbeck said in a statement to Reuters.

Thurlbeck said he had sent a memo to the then editor Colin Myler and legal manager Tom Crone which also implicated another senior executive at the paper.

Myler and Crone failed to disclose this critical evidence to Mr Murdoch, Thurlbeck said in the statement. He said he had also recorded another reporter and another executive discussing the case and asked to speak to the News International Chief Executive Rebekah Brooks, but had been rejected on all counts.

The contents of the taped call had exonerated me and identified the executive responsible. I offered this to Tom Crone but he refused to take the tape.

Mr Murdoch has been kept in the dark by those who he trusted most, Thurlbeck said. Based upon my first hand experience of the chronic lack of full disclosure over the past two and a half years, (Murdoch's) account to the CMS (Culture Media and Sport) committee seems entirely credible to me.

Murdoch, the 38-year-old son of media mogul Rupert and widely viewed as his heir apparent, told a parliamentary hearing last week that he was innocent of covering up phone-hacking at the tabloid. He blamed Crone and Myler.

Thurlbeck has also protested his innocence over the Gordon Taylor case and said he had little involvement in the story. He is currently engaged in an unfair dismissal case with the paper and has been arrested by the police.

He released his statement after the most recent appearance by James Murdoch before the powerful parliamentary committee.

During the hearing, Labor MP Tom Watson, the most aggressive member of the committee, told Murdoch he had met Thurlbeck. He quoted him as saying that Crone, a lawyer, had indicated he had explained the e-mail's relevance to Murdoch.

Thurlbeck said he had released the statement to Reuters because Watson had only given a partial version of their conversations, and had not included Thurlbeck's assertion that James Murdoch had not been given all the details.

Watson told Reuters that Thurlbeck had told him that he raised his concerns with senior managers in July 2009 but said he could not comment any further so as not to prejudice the conduct of a police inquiry.

I am sorry that I cannot say more at this time, Watson said. I have made the information he shared with me available to the police.

($1 = 0.622 British Pounds)

(Reporting by Adrian Croft; Editing by Richard Balmforth)

Hacking