While the scandal that shuttered Britain’s best-selling tabloid, News of the World, has gone quiet ahead of next year’s phone-hacking trials, Britain’s parallel investigation into what has been described as a “culture of illegal payments” to public officials at sister daily The Sun has shifted into high gear. And this week Scotland Yard handed over several new files from its investigations into the alleged bribery to public prosecutors in the U.K., for a decision over whether to press formal charges against some of the 54 individuals arrested so far in the controversy.


The May 20th, 2005 cover of The New York Post shows Saddam Hussein in his underwear. (Daniel Acker / Bloomberg / Getty Images)

The allegations that News Corp., which owns The Sun, made illegal payments to British defense personnel, police officers, and health workers in exchange for confidential information sparked widespread public outcry, which triggered investigations by the U.S. Department of Justice, Federal Bureau of Investigation, and Securities and Exchange Commission in the summer of 2011. Under the U.S. Foreign Corrupt Practices Act, American-owned companies who suborn foreign officials can incur large fines and possible prison sentences for senior executives. These investigations typically take two years to complete.

But The Daily Beast has learned that The Sun may have made another potentially corrupt payment, to a U.S. official on American soil.

On Friday, May 20, 2005, two Murdoch-owned tabloids, The Sun and the New York Post, ran front-page pictures of Saddam Hussein in his underwear, and inside the papers, more photos of the former Iraqi leader in U.S. captivity. According to Fox News, the Multinational Forces spokeswoman in Baghdad said the images could have been taken between January and April 2004, “based on the background of the photos and appearance of him.” Given the context of the Abu Ghraib revelations and ongoing, violent insurgency in Iraq at the time, multiple sources reported that President George W. Bush was upset about the leak. “There will be a thorough investigation into this instance,” deputy White House spokesman Trent Duffy told The New York Times, “[The president] wants to get to the bottom of it immediately.”

No investigation has ever found the source of the leaked pictures, but buried in the contemporary reports is a glaring admission. The Sun’s then-managing editor, Graham Dudman, told the Associated Press that his newspaper paid “a small sum” for the photos. Dudman would not elaborate “except to say it was more than 500 British pounds, which is about $900.”

Sources close to the story have told The Daily Beast that the payment was significantly greater, and was made to a U.S. official on American soil. Meanwhile, Scotland Yard detectives arrested Dudman in January of this year on suspicion of making corrupt payments involving British officials. He has yet to be charged with any criminal offense in the U.K.

(Incidentally, in 2005, Dudman said in a statement, “The Sun obtained [the Hussein] pictures by professional journalistic methods, and by any standards this is an extraordinary scoop as shown by the way it has been followed in the world’s media.”)

In 2004 former News of the World editor and current CNN host Piers Morgan was sacked from the U.K.’s Daily Mirror publishing fake photos of British soldiers abusing Iraqis. Given this history of hoaxes, The Sun would have been very cautious about accepting the Hussein photos in 2005. Expertise in both photographic manipulation and the physical details of Iraqi life would have been required to authenticate the pictures before they were procured. If the procurement and verification of the photos happened on American soil by a News International contact from the U.K., their movements may have been recorded by U.S. immigration. Any financial transaction would also most likely have left an audit trail.

The problem for News Corp. may be that the Hussein pictures were published on both sides of the Atlantic on the same day, perhaps suggesting some kind of advance cooperation.

The Sun’s editor in 2005, Rebekah Brooks, appeared to be oblivious to the illegality of paying public officials for stories when she appeared before a House of Commons Select committee a couple of years before. However, in his verbal evidence to the Leveson Inquiry into press ethics, Rupert Murdoch, chair, CEO and head of corporate governance for News Corp., told Lord Justice Leveson under oath in May (PDF), “I believe that paying police officers for information is wrong.”

The problem for Murdoch and the board of News Corp. may be that these pictures were published on both sides of the Atlantic on the same day, perhaps suggesting some kind of advance co-operation between the American parent company and the British News International subsidiary. If there is any evidence that there was prior knowledge by senior executives of payment for the pictures, this could bring the possibility of a U.S. investigation and charges with stiff penalties for illegal payments to public officials.

Last year, New Corp. set up a Management and Standards Committee, tasked with assisting British police with uncovering evidence of corrupt payments. The MSC holds a vast database of internal News International emails and communications, and answers to former U.S. assistant attorney general and News Corp. board member Viet Dinh. It is not known whether any requests for information have been made to the MSC regarding The Sun’s activities in May 2005, when the Hussein pictures were published.

Neither representatives from the FBI nor News Corp. responded to The Daily Beast’s requests for comment on the fresh revelations at the time of publication.