THE damage to the reputation of News International from the phone-hacking scandal was underlined further yesterday as organisers of the London Olympics withdrew a deal giving them exclusive access to athletes.
Team 2012, a Visa-backed project supporting potential British Olympians, had signed up News International as its official partner, in a deal which would have allowed the firm's titles to bill themselves as "the official newspaper of Team 2012".

But the project declared in a statement yesterday that "as a result of the closure of News of the World the contract can no longer be fulfilled as originally envisaged".

The development is a further blow to News International which had invested heavily in a project with social media website Facebook and plans for content generated ahead of next week's one-year-to-go celebrations. Team 2012 said they were now "exploring media partnerships across a range of channels".

The blow came as Deputy Prime Minister Nick Clegg announced he had asked Ofcom to explore whether News International should be forced to give up its holding in BSkyB.

Mr Clegg said Ofcom should move "quickly" to consider whether Rupert Murdoch's News International was "fit and proper" to help control a British broadcaster in the light of the phone-hacking scandal. It represents a huge turn around in fortunes for a company which only three weeks ago had seemed certain to win its battle to win complete control of BSkyB, but which now has major question marks hanging over its future.

It comes as Mr Murdoch returned to New York yesterday, facing pressure from shareholders, and the likelihood of legal action in the US as well.

An investigation into whether News Corp employees hacked phones of 9/11 victims in the US is already under way by the FBI, while bribes the company allegedly paid to British police could also violate the corrupt practices act in the US.

One legal expert, Washington lawyer James Tillen, said: "Any payments to police that were inaccurately recorded or payments to phone hackers paid from some kind of slush fund, would make it easier for the US authorities to go after News Corp."

Yesterday, there were fresh allegations that a News Corp subsidiary hacked into the computers of a New Jersey rival to steal business secrets in 2004. News America Marketing came to a $29 million settlement with marketing firm Floorgraphics. Democrat senator Frank Lautenberg yesterday wrote to FBI chief Robert Mueller and US attorney-general Eric Holder urging them to examine the case as part of their investigations into the conglomerate.