By Michael Holden and Kate Holton
LONDON, June 24 (Reuters) - On July 7, 2011, at the height of Britain's phone-hacking scandal, Rebekah Brooks announced the closure of Britain's biggest-selling newspaper, The News of the World. That evening, she sat with senior colleagues in a restaurant in London's Chelsea Harbour, fighting back tears.
The group - which included James Murdoch, chairman of News Corp's British newspaper arm - vowed to fight on. "It was them against the world," said a former senior News Corp figure with knowledge of the dinner. "They just believed ... it was once more unto the breach. Just one more charge."
Days later, Brooks would be in a London police cell. She was subsequently charged with being part of an illegal conspiracy to hack into phones to find exclusive stories, authorising illegal payments to public officials and trying to hinder the police investigation.
On Tuesday, the defiance of that dinner paid off. After a near eight-month trial at London's Old Bailey courthouse, 46-year-old Brooks walked hand-in-hand with her husband Charlie from the court building, cleared on all counts. He was also cleared, along with her former personal assistant and the firm's head of security.
Her former lover Andy Coulson, Prime Minister David Cameron's ex-media chief, was found guilty of conspiring to hack phones while he was editor of News of the World. The jury is still deliberating on further charges against Coulson and former News of the World royal editor Clive Goodman.
Brooks' lawyer Jonathan Laidlaw had argued the prosecution failed to produce a "smoking gun." He had called her the most vilified woman in Britain and said the trial had been a "witch hunt."
On hearing the jury's verdict, Brooks took a sharp intake of breath and, visibly shaken, was escorted out of court by a nurse. The former executive, who had lost weight during the 138-day trial, smiled silently as she and her husband left court and caught a taxi. It was the latest twist in a career that saw a gardener's daughter rise to become one of the youngest editors of a British national newspaper, charm a string of British prime ministers and attend a pyjama party with the wife of one of them.
In her 14 days in the witness box, she remained calm and controlled through hours of intense questioning, even as the evidence against her pointed to a mixture of naked ambition and vulnerability. She called her private life a "car crash."
News Corp is headed by Rupert Murdoch, 83. Its holdings include Dow Jones Newswires and the Wall Street Journal, which compete with Reuters News.
"OUT OF LEFT-FIELD"
Inside News Corp, Brooks' rise was unprecedented. She climbed in just 14 years from the most junior position in the newsroom to become the first female editor of the Sun, the country's best-selling daily. An only child, her father ran a gardening company while her mother worked as a personal assistant at an engineering firm before leaving it to join her husband.
Jo Whichelow, who went to the same state-run primary school in Daresbury, a rural village in northwest England remembers fondly that Brooks would "write really, really good stories and we would all be on the edge of our seats."
Brooks got her first taste of journalism at 14, when she swept floors and made tea at the local Warrington Guardian in 1982. She joined the News of the World, a Sunday tabloid known for its brash style, in 1989.
Even in those early days Brooks was marked out as a rising star, recall some ex-colleagues, including Piers Morgan, editor of the News of the World in the 1990s and most recently a prime-time talk show host for CNN.
In his book "The Insider", Morgan recounts how Brooks dressed as a cleaner and then hid in the toilets by the printing presses for two hours so the pair could steal an exclusive story about heir-to-the-throne Prince Charles from another Murdoch paper printed in the same building.
That aggressiveness caught the eye of senior executives including Les Hinton, Murdoch's right-hand man in Britain, insiders said. By 2000 Brooks was editing the News of the World and three years later, aged just 34, became the first female editor of its sister daily paper the Sun, Murdoch's main British mouthpiece. Hinton declined to comment for this article.
"She came out of left-field," said another News Corp source. "A lot of people underestimated her."
Murdoch took Brooks under his wing and gave her advice about how to conduct business. "She owed everything to him," said the first News Corp source; Brooks would clear her diary and be pictured by Murdoch's side when he was in town.
"She was part daughter, part muse, part nursemaid," the source said.
Brooks also won support from James Murdoch, and was promoted in 2009 to chief executive of News International, making her one of the most influential women in Britain. That role brought access to the political elite. She socialised with several prime ministers: first Tony Blair and his wife, then Blair's successor Gordon Brown, and finally David Cameron, the current premier.
John Prescott, deputy prime minister under Blair, said Brooks was at times more influential than he was in government. One former senior journalist at the News of the World recalled how, while meeting with Brown when he was finance minister, Brooks was called by Blair's staff to ask why she was there and if she had time to meet with the prime minister as well.
Colleagues said Brooks had an unmatched talent for entering a room full of people and charming them. In 2010, Brooks spent time with Cameron over Christmas. Her second husband Charlie was a racehorse trainer and socialite who went to the country's most elite school Eton with Cameron. The two went riding together. The couples would meet for dinners at their country houses near the pretty town of Chipping Norton.
Besides her charm, though, Brooks had a "catastrophic" temper, said one person who worked with her. She could terrify one day, and mollify with gifts and charisma the next. Her assistants kept gifts under their desks, including candles, for use as needed, former colleagues recalled.
"If you became a friend ... she would be there at breakfast, lunch and dinner, she would send you presents, you would become her mate," the second News Corp source said. "But if you were an enemy you would know about it."
"DO HIS PHONE"
As editor, Brooks revitalised the News of the World. The prosecution case was that she "did not much care how" the paper got the stories. In 2003, she left and was promoted to editor of the Sun. Coulson took over.
In 2006, Clive Goodman, the royal editor at her previous title, and Glenn Mulcaire, a private investigator who worked for the News of the World, admitted hacking voicemails in the hunt for salacious news. They were jailed. Senior executives said such wrongdoing was the exception.
The trial revealed that to be untrue.
Thousands of phones were hacked under Coulson. On one occasion he wrote an email to another reporter about a story the paper was planning on the private life of a famous footballer's son.
"Do his phone," Coulson instructed the reporter in an email shown to the jury. Coulson's defence said this was not an instruction to hack the phone, but referred to checking the billing on another phone.
Coulson later joined David Cameron's Conservative Party as its media chief before moving with him into Downing Street.
Over the next few years, increasing numbers of hacking victims took legal action. Those who knew and worked with Brooks say her instinct was to confront her accusers.
"She was incredibly loyal to the company," the first former News Corp source said. "If someone pulled out a pistol, she pulled out a bazooka. And then she would pull out a surface to air missile."
Finally, on July 4, 2011, the Guardian ran a story alleging Mulcaire had hacked the phone of Milly Dowler, a schoolgirl who was abducted in 2002 and later found murdered. It was the final straw.
Brooks, who was editor at the time of the Milly Dowler story, said she had not known anything about the hacking of Dowler's phone, and was horrified by the revelation. She had been on holiday when the girl's phone was hacked. Her lawyer said only 12 confirmed hackings had occurred during Brooks' time as editor.
The Dowler story was central to the prosecution. Coulson, her deputy and - the prosecution was keen to point out - her on-off lover at the time, said he had no idea what the paper's journalists had done.
The prosecuting lawyer was incredulous. How could they not know, he asked, unless they were incompetent? "There was a rotten state of affairs at the top of that organisation."
The prosecutors had argued the pair's affair, which lasted from 1998 until 2007, meant Brooks would have known everything Coulson did. In their defence, they said they had kept strict dividing lines between their personal and professional lives.
The two, who made careers out of exposing the love lives of famous people, sat impassively in the dock as the prosecutor read out their private thoughts, having lost a legal battle to stop the press from reporting the existence of their relationship. They had argued they had a right to privacy.
"The fact is you are my very best friend," Brooks wrote in a 2004 letter to Coulson, which police discovered on one of her computers but which she never sent. "I tell you everything, I confide in you, I seek your advice, I love you, care about you, worry about you."
The then-News International boss married Charlie Brooks in 2009. He was cleared of trying to pervert the course of justice by hiding evidence as police questioned his wife. He denied the charges throughout, arguing he was simply trying to hide his large collection of pornography.
In his defence, his own lawyer called him "foolish," "stupid" and "not academically gifted." One character witness, Sara Bradstock, recalled how he drank a pint of washing up liquid to get rid of a hangover. He was found passed out, foaming from the mouth.
At the height of the scandal, billions of dollars were wiped from Murdoch's company's market value and politicians who once courted his support lined up to denounce his behaviour.
He was called before parliament to answer questions and forced to drop a planned $12 billion buyout of pay-TV group BSkyB. He later split his company in half to appease investors who wanted the newspapers held in a separate entity from the rest of the business.
News Corp said in a statement it had changed the way it did business since the revelations.
The fact Brooks has been cleared means that she could possibly go and work in the United States, where News Corp's headquarters are based.
Murdoch's former protegee received a $17 million payoff when she quit, and he continued to support her during the trial, paying for her and her husband to stay in a five-bedroom house, with staff, close to the central London court where the trial took place, the first News Corp source told Reuters. News UK, as Murdoch's British company is now known, declined to comment on the cost of representing those accused. (Edited by Sara Ledwith and Richard Woods)