msnbc.com news services
updated 7/14/2011 5:20:40 PM ET 2011-07-14T21:20:40

The FBI has opened an investigation into allegations that media mogul Rupert Murdoch's News Corp. sought to hack into the phones of Sept. 11 victims, a law enforcement official said Thursday.

The official spoke Thursday to The Associated Press on condition of anonymity because he was not authorized to speak publicly.

New York City-based News Corp. has been in crisis mode.

A rival newspaper reported last week that the company's News of the World had hacked into the phone of U.K. teenage murder victim Milly Dowler in 2002 and may have impeded a police investigation into the 13-year-old's disappearance.

More possible victims soon emerged: other child murder victims, 2005 London bombing victims, the families of dead soldiers and former Prime Minister Gordon Brown.

The FBI's New York office didn't immediately comment Thursday. There was no immediate response to messages left for News Corp. and the U.S. attorney's office in Manhattan.

Story: Has Murdoch's bad apple spoiled the barrel?

On Thursday, Murdoch caved in to pressure from Britain's Parliament as he and his son James first refused, then agreed, to appear next week before lawmakers investigating phone hacking and bribery by employees of their newspaper empire.

Murdoch began his media career in Australia in 1952 after inheriting The News newspaper after the death of his father, and he has built News Corp. into one of the world's biggest media groups. Assets include Fox News, the 20th Century Fox movie studio, The Wall Street Journal, the New York Post and three newspapers in Britain — down from four with the death of the News of the World.

Hostile reception

Earlier, the company announced the father and son would attend after British Prime Minister David Cameron criticized their original decision.

Rebekah Brooks, chief executive of News International and editor of the News of the World tabloid at the time phone hacking is alleged to have happened, will also attend.

The reception is certain to be hostile. During a heated debate on the hacking scandal on Wednesday, Dennis Skinner, a veteran left-wing Labour member of parliament described Murdoch as "this cancer on the body politic." Murdoch and other senior executives have denied any knowledge of the alleged practices.

British police also arrested a ninth suspect, named by media as Neil Wallis, a former senior editor of Murdoch's News of the World, adding weight to a government call for the media regulator to decide whether his business is fit to run British television stations.

Video: Murdochs to appear before British parliament

Global fallout
The allegations of phone hacking, which reached a peak as Murdoch's British bid came up for approval this month, are now reverberating around the world.

Story: Victim's family appears amid rage at tabloids

Murdoch, who owns 39 percent of British pay TV operator BSkyB, withdrew his $12 billion bid to take over the rest of it on Wednesday after British politicians united in a call for him to pull out of the deal.

Video: Congress calls for US inquiry into phone hacking (on this page)

Deputy Prime Minister Nick Clegg noted media regulator OFCOM was already looking into whether News Corp, whose British newspaper arm News International is at the heart of the scandal, should be allowed to maintain its existing stake in BSkyB.

Some U.S. lawmakers called for an investigation to see if the billionaire's News Corp. had broken American laws while in Australia, where Murdoch was born, the prime minister said her government may review media laws.

Sen. Frank Lautenberg. D-N.J., told NBC News Thursday he and his colleagues were seriously considering summoning Murdoch to Capitol Hill to testify about the allegations.

"We want to get to the end of game, and if bringing Rupert Murdoch here helps, he'd be welcome at the witness chair," he told NBC News. Lautenberg went on to say, "I don't want to bring him here unless there are other people with knowledge here, but I think it would be good for the world to see Mr. Murdoch in the witness chair."

The senator said that if the allegations against News Corp are true, he like to see News Corp. pay.

When asked how he wanted to see Murdoch punished, Lautenberg said "Well, torture is out... but the fact of the matter is I'd like to see him pay a really deep price, because the message has to go out to others who do this same type of thing."

Video: Bond Report Update

The catalyst for public disgust over the hacking allegations were reports a News Corp. newspaper had hacked into the voicemails of murder victims.

"To see some of the things that have been done to intrude on people's privacy, particularly in moments of grief and stress in the family lives, I've truly been disgusted to see it," Australian Prime Minister Julia Gillard told Australia's National Press Club.

"I anticipate that we will have a discussion amongst parliamentarians about this, about the best review and way of dealing with all of this," she said.

'Something much more systemic'
U.S.-based News Corp has been rocked by a series of scandals alleging journalists and hired investigators working for its flagship News of the World tabloid hacked into the voicemails of thousands of people, from victims of notorious crimes to families of soldiers killed in the war in Afghanistan.

The allegations, which include bribing police officers for information, galvanized British lawmakers across parties to oppose a man long used to being courted by the political elite.

The crisis has also tarnished Cameron, who faces questions about why he appointed a former News of the World editor as his communications chief.

Clegg distanced himself from the decision on Thursday.

"We did discuss it. Of course we discussed it. But at the end of the day I make my appointments to my own office and David Cameron makes his own appointments," he said.

Murdoch shut down the News of the World in a move to contain the fallout from the crisis, which included a 15 percent slide in News Corp shares.

Story: Murdoch's News Corp. withdraws bid for BSkyB

The media baron is currently focused on sorting out the immediate political and legal issues faced by his company, family and staff, a source close to the situation told Reuters.

Clegg said he believed the phone hacking scandal was symptomatic of wrongdoing that went wider than News International, the U.K. arm of News Corp.

"It clearly goes beyond News International, it's clearly something much more systemic," Clegg said.

Reuters and The Associated Press contributed to this report.

Video: FBI opens News Corp. probe

Timeline: Tabloid stir: Phone-hacking scandal intensifies

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