By Michael Holden and Mark Hosenball
LONDON/WASHINGTON, Aug 16 (Reuters) - London police are actively investigating Rupert Murdoch's British newspaper business for possible criminal violations over allegations of phone-hacking and illegal payments to public officials by its journalists, a source familiar with the matter told Reuters.
Murdoch's News Corp said it was aware of the police inquiry but gave no further details.
Until now, the investigation appeared to be focused on News Corp employees rather than the corporation.
British police launched an investigation in January 2011 into claims journalists at Murdoch's now defunct News of the World tabloid had been illegally accessing mobile phone voice-mail messages to find stories.
The investigation led to Murdoch closing the paper and spawned further inquiries into claims reporters had also made illegal payments to police officers and other public officials for information.
The Independent newspaper of London reported on its website on Friday that the Metropolitan Police Service, also known as Scotland Yard, was investigating News International, as Murdoch's London publishing operation was previously known, as a "corporate suspect" over possible "hacking and bribery offences."
Any corporate action against News Corp could lead to more expense for the company, which has already spent millions of dollars on legal cases, and further damage its already-tarnished reputation.
Police inquiries into the hacking and bribery allegations had been based mainly on information provided to detectives under a "memorandum of understanding" between authorities and News Corp's Management and Standards Committee (MSC), set up to conduct an internal investigation and liaise with officials.
More than 125 people have been arrested and more than 40 charged with offences under English law, including senior figures and journalists from Murdoch's British papers.
However, the source familiar with the matter told Reuters detectives and prosecutors also were actively considering taking action against News Corp as a corporation.
More than a year ago, Sue Akers, the officer who was then leading the police inquiry, sent a letter to MSC Chairman Lord Grabiner to advise him of this, the source said.
John Turnbull, a senior News Corp lawyer who worked on the MSC, has since been interviewed formally by police, the source added.
The revelation led News Corp to withdraw cooperation with detectives. Later, Murdoch belittled the police and said during a meeting with staff from his Sun tabloid which was secretly recorded and broadcast in July that he had been wrong to help them.
"The relationship has always been a challenging one and since May of this year voluntary cooperation has been significantly reduced and all requests for new material are now supervised by the courts," London Police Assistant Commissioner Cressida Dick told lawmakers shortly afterwards.
News Corp said the police investigation into possible corporate wrongdoing had been well known since comments made in July 2012 by Akers to a public inquiry into Britain's press industry.
"We've sought legal advice and in respect of both individual and corporate offences, and also in relation to our police powers and our options for investigating," Akers said.
Asked on Friday, a spokesman for London police said they were not prepared to discuss the issue.
"We have cooperated with all relevant authorities throughout the process and our history of assistance is a matter of record," a News Corp spokesman said.