The New York Times has a big scoop tonight on the Murdoch hacking scandal, reporting that News International and its law firm knew back in 2007 that News of the World had bribed the police—and proceeded to cover it up.

Both Harbottle & Lewis and News International took notice of the e-mails to and from Mr. Goodman containing those initial indications of payoffs in 2007, according to the two people knowledgeable about the events. News International’s chief lawyer set them aside for a second look and they were among the e-mails retained in the files of the law firm. Yet they were not turned over to the police until last month, and no hint of their existence made its way into the firm’s single-paragraph letter four years ago.

More on that:

The correspondence between the company and the firm over framing the letter does not make reference to the e-mails on police payments, a source familiar with the exchanges said, but it does reflect “huge anxiety” about the wording.

The final version of the letter, dated May 29, 2007, sent by the firm’s managing partner to Jon Chapman, who was head of the legal department for News International, read: “I can confirm that we did not find anything in those e-mails which appeared to us to be reasonable evidence that Clive Goodman’s illegal actions were known about and supported by both or either of Andy Coulson, the editor, and Neil Wallis, the deputy editor, and/or that Ian Edmondson, the news editor, and others were carrying out similar procedures.”

The company rejected earlier drafts by Harbottle & Lewis that were not as broad, according to the two people with access to the correspondence. One of them said that lawyers on both sides seemed to struggle to find language that said the review had found no evidence of wrongdoing.

In a hilarious side note, the Times says John Chapman, News International’s former top lawyer—and the guy who last week said James Murdoch misled Parliament—plans to testify “that while he noticed the e-mails in question, he did not realize that paying the police was a criminal offense.”

Good luck with that one!

— In other News Corporation news, Glenn Mulcaire, one of the private investigators NotW paid hundreds of thousands of pounds to hack phones, and the one who may have hacked the phone the paper gave a murder victim’s mother, released a statement today saying that “As an employee he acted on the instructions of others.”

It should be noted that it was just a week ago that News International “decided to terminate the arrangement to pay the legal fees of Glenn Mulcaire with immediate effect.”

That News Corp. would pay for a convicted criminal’s expensive legal defense, was one of the foulest smelling facts of the whole affair before the Milly Dowler story broke it wide open. Mulcaire had been awfully quiet up to this point and was appealing “a High Court order that would force him to give more information about hacking to his alleged victims.”

In other words, News Corp. was paying to help Mulcaire keep his mouth shut.

It’s worth recalling James Murdoch’s testimony on that:

The move follows evidence given by James Murdoch to the Commons culture, media and sport select committee, when he told MPs he was “as surprised as you are” when he discovered “certain legal fees were paid to Mr Mulcaire” by News of the World publisher.

— The Financial Times is on a tear with its paywall, reporting that online subscriptions jumped 34 percent over the last year to 230,000. And those suckers are not cheap.

The pinkish paper has all but doubled its paying online subscribers in just two years, jumping from 117,000 in July 2009.

That’s changing the company’s revenue makeup:

Pearson says “digital subscriptions (are) now the engine of the FT Group’s growth”.

Digital and services now make up 46 percent of FT Group revenue, content-related revenue (ie. not advertising) makes up 57 percent. Advertising grew “modestly” but is something the FT is happy not to rely on.

The FT is a specialty paper with a high-end readership, but it’s still good news, particularly for business journalism.