Murdoch firm accused of sabotaging rival

A News Corporation company recruited a pay-TV "pirate" to post hacked details of a rival's secret codes online, BBC Panorama has found. Lee Gibling set up a website in the late 1990s known as The House of Ill-Compute or Thoic. He said NDS, a pay-TV smartcard maker, then funded expansion of the Thoic site and later had him distribute the set-top pay-TV codes of rival ITV Digital. NDS denied this and said Thoic was only used to gather intelligence on hackers. It says Lee Gibling worked as a consultant who was used legitimately to inform on hackers. ITV Digital was first launched as "On Digital" and was set up as a rival to News Corporation's Sky TV in 1998. But the widespread availability of the secret codes meant ITV Digital's services could be accessed for free by pirates. The company went bust in 2002. 'Killer blow' ITV Digital's former chief technical officer, Simon Dore, told the programme that piracy was "the killer blow for the business, there is no question". "The business had its issues aside from the piracy... but those issues I believe would have been solvable by careful and good management. The real killer, the hole beneath the water line, was the piracy. We couldn't recover from that." Lee Gibling told Panorama the codes on the Thoic site originated from NDS. "They delivered the actual software to be able to do this, with prior instructions that it should go to the widest possible community," he said. NDS manufactures smartcards for all News Corporations' pay-TV companies across the world. Its UK security unit was 50% funded by Sky. But the satellite broadcaster, chaired by James Murdoch, told the programme it had no involvement in how the unit was run and was not aware of Thoic. Two former senior policemen ran the NDS UK security unit. Ray Adams had been head of criminal intelligence at the Metropolitan Police and Len Withall, who had been a chief inspector in the Surrey force. Both men were secretly filmed by Panorama. Ray Adams claimed he "would have arrested" Lee Gibling if he had known ITV Digital's code had been published on Thoic and denied having the codes himself. But internal NDS documents, obtained by Panorama, show a hacked code was passed to Len Withall and Ray Adams from a technology expert inside the company. 'Their baby' Lee Gibling said NDS paid for Thoic's servers and was across all of its hacking and TV piracy. "Everything that was in the closed area of Thoic was totally accessed by any of the NDS representatives," he said. He added that although Thoic was in his name, in reality the website belonged to NDS. "It was NDS. It was their baby and it started to become more their baby as they fashioned it to their own design." Once ITV Digital's codes were published on Thoic, Mr Gibling said his site was then used to defeat the electronic countermeasures that the company used to try to stop the piracy. Mr Gibling said new codes created by ITV Digital were sent out to other piracy websites. "We wanted people to be able to update these cards themselves, we didn't want them buying a single card and then finding they couldn't get channels. We wanted them to stay and keep with On Digital, flogging it until it broke." James Murdoch was a non-executive director of NDS when ITV Digital was hacked, although there is no evidence that he knew about the events reported by Panorama. 'Fit and proper' Ofcom, the television regulator, is currently examining whether James Murdoch and News Corporation are "fit and proper" persons to be in control of BSkyB, the company that runs Sky TV. News Corporation currently owns 39% of BSkyB. Tom Watson MP, a member of the Culture, Media and Sport Select Committee that has been examining the phone-hacking scandal, has called for Ofcom to examine these new allegations in their assessment. "Clearly allegations of TV hacking are far more serious than phone hacking," he said. "It seems inconceivable that they (Ofcom) would not want to look at these new allegations. Ofcom are now applying the fit and proper person test to Rupert and James Murdoch. It also seems inconceivable to me that if these allegations are true that Rupert Murdoch and James Murdoch will pass that test." NDS declined to be interviewed but said in a statement that it never authorised or condoned the posting of any code belonging to any competitor on any website.