James Murdoch underwent a grilling at the Leveson Inquiry this morning, and denied accusations that he approved “over the odds” phone hacking settlements to prevent further damage to the reputation of News International.

The former chairman of News International denied the claims that the settlements were used to prevent details of more widespread hacking allegations coming into the public domain.

Referring to a settlement in the case of football Chief Gordon Taylor, in which both Taylor and News International sought confidentiality, Robert Jay QC described the payout, believed to be in the region of £700,000 in 2008, as “hush money.” Murdoch denied these claims, explaining that he had received advice from lawyers not to pursue the case further, to prevent events of the past being “dragged up”.

Jay also suggested that Taylor sought a higher payout because he was aware of the reputational damage that News International could have been subjected to as a result of his claim, though Murdoch denied ever hearing any discussion of the case as one of blackmail.

When asked if Murdoch considered the payout to be an extraordinary amount, he said: “I was told sufficient information to authorise them to go and negotiate at a higher level. I was not told sufficient information to turn over a load of stones that I was told had already been turned over.”

Murdoch added that he left it to Colin Myler, editor of the News of the World, and legal manager Tom Crone to negotiate the fee. A memo from Crone suggested that Myler was becoming increasingly frustrated with Taylor, because he felt he was attempting to blackmail the organisation.

The inquiry also heard details of a meeting on 10 June 2008, when the full extent of phone hacking was believed to be revealed in the “For Neville” email, and Taylor’s case was discussed. Murdoch denied that he had seen the email which suggested that phone hacking at News of the World was more widespread than one rogue reporter. Murdoch also claimed that the purpose of the meeting was not to bring him up to speed on the whole story.

In the same meeting, Jay suggested that Crone and Myler were “very keen” for the Taylor issue to be resolved, “to transmit the message to you that if you didn’t there were serious reputational risks to the company”.

Murdoch denied the suggestion that there was a failure of governance within the company, and that there was a cover-up of evidence linking others at News of the World to Mulcaire. He explained that he had been given “repeated assurances that the newsroom had been investigated,” and that ethics training had been undergone, and was continually ongoing.

When referred to the settlement of Max Clifford, Murdoch said he was not aware of the size of the claim. He added: “My understanding was that there was a litigation pending with Mr. Clifford but it was decided, that because there was a commercial relationship he and Rebekah Brooks wanted to re-establish, they settled it at that.”

Murdoch also recognised that the corporation had been too quick to dismiss Guardian claims in 2009, telling the court he was advised it was a smear campaign. He added: “”No matter where something comes from, whether it’s a commercial or political rival, being more dispassionate, forensic and understanding is very important.” Murdoch also acknowledged that they needed to assess allegations of wrongdoing in a way which was “dispassionate and forensic”, and regretted the “cavalier” attitude of News of the World.

James Murdoch’s testimony will continue throughout the afternoon.

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