Former News of the World editor Colin Myler said today that he feared further revelations after Clive Goodman and Glenn Mulcaire were jailed, telling the Leveson inquiry he thought there might be "bombs under the newsroom floor" and he "didn't know where they were or when they might go off".
Private investigator Mulcaire and royal correspondent Goodman were jailed in 2007 for phone hacking, and Myler said today the police's decision not to interview any other member of staff apart from Goodman "weighed heavily" on his mind.
It has since emerged hacking at the tabloid went beyond Goodman, and emails sent by Myler to News International chairman James Murdoch in June 2008 said the situation was "as bad as we feared".
Murdoch has acknowledged he was sent the email as part of a chain, but insists that he did not read it.
Crone told the inquiry yesterday that he took a copy of the key emails – the so-called "for Neville" email – to a meeting with Murdoch and Myler, and held the email up, explaining the nature of it to the News International chairman.
Myler said today he could not remember whether Murdoch was made fully aware of the implications of the email during the meeting, but said Crone tended to take all the relevant documents to meetings and he had no reason to doubt the former legal manager's testimony.
Myler added he left the meeting under the impression that Murdoch wanted to settle the Taylor case out of court, and agreed with inquiry counsel Robert Jay QC that it was possible he was "extremely angry" about the plan to settle out of court and feared it was likely the evidence of widespread hacking would emerge anyway.
"And that is what happened," he said.
But Myler denied the actions of News International during and after the Taylor case amounted to a "cover up".
"I don't believe it was a cover up. You are dealing with very difficult negotiations and newspapers deal with very complex negotiations throughout the course of their business.
"I don't think it's wrong or unreasonable for any business to try and protect the reputation of itself, especially given what had happened [at the News of the World] during 2006 and 2007."
Myler went on to admit that following the June 2008 Taylor negotiation he was aware that the "rogue reporter" defence – that hacking at the tabloid was confined to Goodman, which James Murdoch claims to have believed up until late 2010 – was false.
"It couldn't be correct," he told the inquiry, "in as much as the 'for Neville' email had indicated that at least another reporter had transcribed it and it names another reporter".
Myler's admission is significant in relation to his testimony to the PCC in August 2009, when he said that an internal investigation "found no evidence of involvement by News of the World staff other than Clive Goodman in phone message interception beyond the e-mail transcript which emerged in April 2008 during the Gordon Taylor litigation".
Myler acknowledged the "junior reporter" responsible for the email and transcription "accepted that he had created the relevant e-mail document but had no recollection of it beyond that", and said that no other staff, including Neville Thurlbeck, were involved.
It was pointed out to Myler by Jay that a written opinion drafted by Michael Silverleaf QC - leading counsel for the News of the World's direct parent company News Group Newspapers - in June 2008 had by the conclusion of the Taylor settlement identified three people at the News of the World who were "intimately involved with Mulcaire's illegal researching into Taylor's affairs".
Myler reiterated that he could not recall seeing Silverleaf's written opinion, and was not shown specific names.
The former editor did recall being told by Crone and News International lawyer Julian Pike that Taylor "would not budge" in his demand for a large sum and that News Group Newspapers should settle out of court to avoid "reputational damage".
He said he thought the eventual settlement of almost £1m was "extremely high", but defended the fact that he had not asked Crone or Pike for an assessment of the real value of Taylor settlement, claiming he trusted them both to take the right course.
Myler's evidence continues at the inquiry. He will be followed today by testimony from former News of the World reporter Daniel Sanderson and private investigator Derek Webb.
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