Code-cracker claims hit Murdoch firm

The broadcasting watchdog Ofcom is to investigate claims that a subsidiary of Rupert Murdoch's News Corp helped to hasten the demise of one of its British pay-TV rivals through the activities of a piracy website.

The television regulator said yesterday that it would consider "all relevant evidence" after a senior Labour MP called for it to look into allegations by the BBC's Panorama that NDS, a London-based News Corp company specialising in satellite television technology, leaked codes that could have been used to create counterfeit smartcards for the now-defunct ITV Digital.

It emerged earlier this month that Ofcom has already stepped up Project Apple, its investigation into whether Murdoch's son, James, is a "fit and proper" person to sit on the board of BSkyB, and whether News Corp should be allowed a controlling stake in the satellite broadcaster.

NDS, which is being sold to computing giant Cisco for US$5 billion, has denied the Panorama claims as "simply not true". It said: "It is wrong to claim NDS has ever been in possession of any codes for the purpose of promoting hacking or piracy."

Further claims published by the Australian Financial Review allege NDS is also facing questions about tactics deployed against News Corp's pay-TV rivals in Australia.

At the heart of the latest claims, which focus on the strenuous and expensive efforts of pay-TV companies to maintain the integrity of their encryption systems in a ruthless world of pirates, lies an elite stratum of "super-hackers" who can penetrate security codes which their manufacturers claim to be unbreakable.

It is not illegal to break the encryption of a TV smart card. But it is claimed NDS and its security unit went beyond looking after the company's own products and used its code-cracking experts to undermine rivals' efforts to gain market share.

A document obtained by the Independent which has been put before an Italian court shows how investigators became concerned at the activities of Davide Rossi, a consultant to NDS who is accused of involvement in a piracy ring which targeted, among others, Nagra France, a smartcard supplier in competition with NDS.

In 2003 and 2004, Rossi was in regular contact with Pasquale Caiazza, a suspected computer hacker who was consulting to NDS.

Italian investigators, who eavesdropped on conversations between the men, said they had gathered evidence "leading to the reasonable hypothesis that NDS, presumably, gave Caiazza, via its Italian consultant Rossi, access codes which ... were used by hackers" to create a programme to decode a Nagra France smartcard "with very serious financial and reputation losses".

Caiazza and Rossi deny involvement in piracy.

- Independent