By Michael Holden
LONDON, March 20 (Reuters) - Rupert Murdoch's British newspaper arm approved phone-hacking "on an industrial scale" at its top-selling Sunday tabloid, the paper's former royal editor told a London court on Thursday.
Clive Goodman, who was jailed in 2007 for hacking phones of senior aides to Britain's royal family, made the allegation when asked why he had not raised the issue of bullying at the News of the World when he appealed against his dismissal following his conviction.
"That wasn't the grounds on which I was complaining about unfair dismissal," Goodman told the court. "The company had sanctioned phone-hacking on an industrial scale and they had dealt with me unfairly compared to other people."
After his imprisonment, News Corp.'s British newspaper arm News International stated publicly and in parliament that phone-hacking was limited to Goodman, who they described as a rogue reporter, and a private detective, Glenn Mulcaire, who worked for the paper and was also jailed.
However four journalists, including three senior editorial executives, have now admitted phone-hacking offences since a new police inquiry was launched in 2011. This ultimately led to the closure of the 168-year-old tabloid, rocked Murdoch's empire and sent ructions through Britain's establishment.
Goodman and the paper's former editor Andy Coulson are on trial accused of making corrupt payments to police officers to obtain telephone directories of the royal household, charges they deny.
Coulson, who edited the paper from 2003 to 2007 before later becoming Prime Minister David Cameron's media chief, is also accused of conspiracy to illegally intercept voicemails on mobile phones.
He denies any knowledge of phone-hacking but under cross-examination from Coulson's lawyer, Goodman told the court that the editor knowingly approved payments to Mulcaire for his royal hacking project and knew of his own criminal behaviour.
"Mr Coulson knew I was hacking them myself," he said.
He had previously told the court Coulson was a bullying and aggressive editor and Coulson's lawyer Timothy Langdale queried why this had not formed part of his unfair dismissal claim.
"It was unfair because my ultimate boss Mr Coulson had sanctioned the project which had got me sent to prison," Goodman said.
Mulcaire was one of the sources Goodman had sought cash payments for and the court was told that in total he had requested more than 215,000 pounds ($357,500) in cash for his contacts between 2001 and his arrest in mid-2006.
Coulson's lawyer Timothy Langdale suggested Goodman had been pocketing the money himself, pointing out that between early 2004 and June 2006 he had not withdrawn any money from ATMs.
Langdale also said some stories for which some of his sources had been paid had actually appeared in other publications a few days earlier.
Goodman denied keeping any of the cash. The trial of Goodman, Coulson and five others continues. ($1 = 0.6014 British Pounds) (Editing by Andrew Roche)