Rupert Murdoch's News International promised to pay all of News of the World editor Andy Coulson's legal fees only a month after he resigned from the paper in disgrace, according to a court document obtained by The Associated Press on Tuesday.
The former editor, who later served as communications director for Prime Minister David Cameron, is a central figure in the phone hacking scandal that has convulsed the British media. He's been arrested on suspicion of abetting a culture of illegal spying while at the top of the News of the World, an allegation he's fighting with the help of the high-powered international law firm DLA Piper.
Such an open-ended promise to foot Coulson's legal bill would have been highly unusual, according to Jo Keddie, an employment partner with the London law firm Winckworth Sherwood. She called it the equivalent of "writing a blank check for a former employee."
The generous deals struck by News International with its victims and former staff members have emerged as a key issue for lawmakers investigating the scandal, with some suggesting that the company had tried to buy the silence of those involved to help bury the scandal, which first erupted more than five years ago.
The exact nature of the promises made to Coulson are under dispute.
According a nine-page lawsuit filed by Coulson in the court's Queen's Bench Division, News International subsidiary News Group Newspapers has recently refused to pay expenses incurred by Coulson's criminal defense team, telling him that allegations of phone hacking fell "outside the scope of your contract of employment."
Coulson's lawyers reject the assertion, saying that News Group had made a blanket deal to pay any legal fees stemming from his time at the News of the World.
The complaint says News International struck the deal with Coulson in February 2007, a month after his royal editor, Clive Goodman, was jailed for hacking into the phones of members of the royal household. While Coulson denied knowing anything about the practice, he said he was resigning out of a sense of responsibility for what happened.
Goodman's sentence was meant to draw a line under the scandal, but Coulson's deal appeared to suggest that both parties saw trouble on the horizon.
The lawsuit says that News International promised to repay Coulson for "any professional (including without limitation, legal and accounting) costs and expenses ... which arise from his having to defend, or appear in, any administrative, regulatory, judicial or quasi-judicial proceeding as a result of his having been the editor of the News of the World."
The suit goes says that "it was anticipated" that Coulson would be drawn into the criminal investigation into phone hacking which was relaunched early this year.
News International declined to comment on the suit. DLA Piper, Coulson's law firm, did not immediately return an email seeking further comment on Coulson's complaint.
Coulson was arrested over the phone hacking allegation on July 8 _ making him one of more than a dozen former News of the World employees who've been arrested since the beginning of the year. The scandal has led to the closure of the 168-year-old paper and the resignation of several top Murdoch executives.
Raphael G. Satter can be reached at: http://twitter.com/razhael
(This version CORRECTS Corrects spelling of lawyer's last name in the third paragraph. Links photo. Adds online tag. This story is part of AP's general news and financial services.)