guardian.co.uk,
David Leigh, Monday 26 March 2012
 |
| Rupert Murdoch's News Corporation is facing questions over pay-TV rival ONdigital's collapse. Photograph: Graham Turner for the Guardian |
Part of
Rupert Murdoch's News Corporation empire employed computer hacking to undermine
the business of its chief TV rival in Britain, according to evidence due to be
broadcast by BBC1's Panorama programme on Monday .
The
allegations stem from apparently incriminating emails the programme-makers have
obtained, and on-screen descriptions for the first time from two of the people
said to be involved, a German hacker and the operator of a pirate website
secretly controlled by a Murdoch company.
The
witnesses allege a software company NDS, owned by News Corp, cracked the smart
card codes of rival company ONdigital. ONdigital, owned by the ITV companies
Granada and Carlton, eventually went under amid a welter of counterfeiting by
pirates, leaving the immensely lucrative pay-TV field clear for Sky.
The
allegations, if proved, cast further doubt on whether News Corp meets the
"fit and proper" test required to run a broadcaster in Britain. It
emerged earlier this month that broadcasting regulator Ofcom has set up a unit
called Project Apple to establish whether BSkyB, 39.1% owned by News Corp,
meets the test.
Panorama's
emails appear to state that ONdigital's secret codes were first cracked by NDS,
and then subsequently publicised by the pirate website, called The House of Ill
Compute – THOIC for short. According to the programme, the codes were passed to
NDS's head of UK security, Ray Adams, a former police officer. NDS made smart
cards for Sky. NDS was jointly funded by Sky, which says it never ran NDS.
Lee Gibling,
operator of THOIC, says that behind the scenes, he was being paid up to £60,000
a year by Adams, and NDS handed over thousands more to supply him with computer
equipment.
He says
Adams sent him the ONdigital codes so that other pirates could use them to
manufacture thousands of counterfeit smart cards, giving viewers illicit free
access to ONdigital, then Sky's chief business rival.
Gibling
says he and another NDS employee later destroyed much of the computer evidence
with a sledgehammer. After that NDS continued to send him money, he says, until
the end of 2008, when he was given a severance payment of £15,000 with a
confidentiality clause attached. An expert hacker, Oliver Koermmerling, who
cracked the codes in the first place, says on the programme that he, like
Gibling, had been recruited on NDS's behalf by Adams.
The
potentially seismic nature of these pay-TV allegations was underlined over the
weekend, when News Corp's lawyers, Allen & Overy, sought to derail the
programme in advance by sending round denials and legal threats to other media
organisations. They said any forthcoming BBC allegations that NDS "has
been involved in illegal activities designed to cause the collapse of a
business rival" would be false and libellous, and demanded they not be
repeated.
On the
programme, former Labour minister Tom Watson, who has been prominent in pursuit
of Murdoch over the separate News of the World phone-hacking scandals, predicts
that Ofcom could not conceivably regard the Murdochs as "fit and
proper" to take full control of Sky, if the allegations were correct.
James Murdoch,
who is deputy chief operating officer of News Corp and chairman of BSkyB, was a
non-executive director of NDS when ONdigital was hacked. There is no evidence,
the BBC says, that he knew about the events alleged by Panorama.
Gibling
told the programme: "There was a meeting that took place in a hotel and Mr
Adams, myself and other NDS representatives were there … and it became very
clear there was a hack going on."
He claimed:
"They delivered the actual software to be able to do this, with prior instructions
that it should go to the widest possible community … software [intended] to be
able to activate ONdigital cards. So giving a full channel line-up without
payment."
Gibling
says that when fellow pirates found out in 2002 that he was being secretly
funded by NDS, THOIC was hastily closed down and he was told by Adams's
security unit to make himself scarce.
"We
sledgehammered all the hard drives." He says he was told to go into hiding
abroad.
Kommerling
says he was recruited by Adams in 1996. "He looked at me and said 'Could
you imagine working for us?'"
Kommerling
was told the NDS marketing department were "looking into the competitors'
products" and he cracked the codes for the system used by ONdigital, which
came from the French broadcaster Canal Plus.
Later he
recognised the codes cracked by his own NDS team, when they got out on to the
internet. They appeared on a Canadian pirate site with an identical timestamp:
"The timestamp was like a fingerprint," he says.
NDS
published its own response to the programme's allegations before transmission,
saying: "It is simply not true that NDS used the THOIC website to sabotage
the commercial interests of ONdigital/ITV digital or indeed any rival."
NDS admits
Gibling was in its pay, but says it was using THOIC as a legitimate undercover
device. "NDS paid Lee Gibling for his expertise so information from THOIC
could be used to trap and catch hackers and pirates," NDS said.
The company
does not dispute the allegations that it got its own hands on ONdigital's
secret codes, which was not itself illegal, and that the material was passed on
to Adams, its security chief. But NDS says there is an innocent explanation
"as part of the fight against pay-TV piracy".
According
to NDS: "All companies in the conditional access industry … come to
possess codes that could enable hackers to access services for free." This
is for the purpose of "research and analysis". They claim that it was
part of Adams' job to "liaise with other pay-TV providers" and
therefore "it was right and proper for Mr Adams to have knowledge of …
codes that could be used by hackers".
The company
added: "NDS has never authorised or condoned the posting of any code
belonging to any competitor on any website." Adams has denied he ever had
the codes.
In 2002
Canal Plus, which supplied ONdigital with its smart card system, sued NDS in a
US Court, alleging that NDS had hacked its codes. But no evidence about a link
to ONdigital emerged: the case was dropped following a business deal under
which Murdoch agreed to purchase some of Canal Plus's assets.
ONdigital
briefly became ITV Digital before it went under.
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