JAMES Murdoch was accused by an MP yesterday of being the first "Mafia boss in history" who didn't know he was running a criminal enterprise.

The News International executive chairman denied Labour MP Tom Watson’s allegation regarding the News of the World as he was questioned about an email intended for the tabloid’s chief reporter Neville Thurlbeck, containing a transcript of voicemail messages hacked from Professional Footballers Association chief executive Gordon Taylor.

Mr Murdoch, appearing for a second time before the Commons Culture, Media and Sport Committee investigating the scandal, was asked by Mr Watson if the newspaper’s owner, News International, operated on the basis of the Mafia’s code of silence known as “omerta”.

The MP said the term described a set of people bound together by secrecy, who jointly pursue their group’s business objectives without regard for the law, and using “intimidation, corruption and general criminality”.

The accusation came as Mr Watson said Mr Thurlbeck had claimed that News of the World legal manager Tom Crone had told him Mr Murdoch was shown the so-called “For Neville” email, which suggested phone hacking went beyond a single rogue reporter.

On the mafia claims, Mr Murdoch replied: “Absolutely not, I frankly think that’s offensive and it’s not true.”

Mr Watson countered: “You must be the first Mafia boss in history who didn’t know he was running a criminal enterprise.”

Mr Murdoch later “vigorously denied” knowledge of the email as he appeared for the second time in five months before MPs.

He was recalled following claims by the newspaper’s former editor Colin Myler and legal chief Mr Crone that he had been aware of the document.

He rejected the pair’s suggestion that they had made him aware of the contents of the email. Mr Crone last night reiterated his earlier claim that Mr Murdoch did know, and MPs are now to decide whether the News International chief misled them.

He denied misleading the committee previously when he appeared with his father Rupert, the company’s chief executive, in July.

Mr Murdoch said the meeting with Mr Myler and Mr Crone had been to discuss increasing an offer to settle a legal claim brought by Mr Taylor. He described it as a short discussion, at which he was given information to authorise an increase of the settlement, but he was given no more than that. Mr Taylor eventually received £700,000.

“It was not described as the ‘For Neville’ email, and I want to be very clear. No documents were shown to me at that meeting or were given to me at that meeting,” added Mr Murdoch.

He also refused to rule out closing The Sun, following the News of the World’s demise in July, if an investigation into phone hacking showed up widespread abuses at the daily newspaper. Sun journalist Jamie Pyatt was arrested last week over alleged corrupt payments to police.

Mr Murdoch said it was important not to prejudge the wider investigation adding: “Don’t think we can rule – and I shouldn’t rule – any corporate reaction to wrong-doing out. That will be a decision taken at the time, given whatever is out there.”

He also denied that he was shown legal advice that indicated the extent of phone hacking was greater than the sole reporter, royal editor Clive Goodman, who was jailed in 2007.

Mr Murdoch described News International’s use of a private detective to spy on Mark Lewis and the teenage daughter of the lawyer representing phone hacking victims as “appalling” and “unacceptable” and blamed Mr Crone and another unnamed former News of the World executive for the decision.

Mr Murdoch also apologised to Mr Watson after he was put under surveillance.

Mr Thurlbeck later said he had compiled a dossier that would back up Mr Murdoch’s claim he had been “seriously misled” by senior executives.