Michael Wolff
guardian.co.uk, Wednesday 29 February 2012 17.39 GMT

"What's done is done – even if they don't yet acknowledge that it is 100% done.

James Murdoch, hopelessly tarred by the phone-hacking scandal, exits his position as chairman of News International, the tainted News Corp subsidiary in the UK, and takes up, in his father's words, "a variety of essential corporate leadership mandates, with particular focus on important pay-TV businesses and broader international operations."

Let us first dispense with that fig leaf: James Murdoch does not have a role at News Corp. He is the shadow man. Nobody talks to him – not even, at least not meaningfully, his father. (They once spoke two or three times a day, managing the affairs of their world.) His siblings shun or pity him. He has not existed as a force, and hardly as presence, since the meltdown of the News of the World last summer.

And, to say the least, there is no possibility that he will inherit the top job.

The reality is stark: everybody in the company blames James for the terrible things that have happened in London. They blame his father for falling under James's sway – but blame James more for swaying him.

In a way, it's even starker than that: since he left the top job at BSkyB at his father's behest and took over News Corp's operations in Europe and Asia, James has become the most disliked man in the company. This is partly because, for all the obvious reasons, Murdoch's entitled children would breed a predictable resentment. But additionally, it is because James is an extraordinarily cold, abrasive know-it-all.

"Who would have thought anybody could make Lachlan look good," said one of Murdoch's close executives, referring to the contrast between James and his brother Lachlan, who once was the heir apparent – and, in his moment, another headquarters albatross. But starker still, within News Corp, there is a structural analysis of why everything in London went so wrong – with James as the faulty linchpin.

In his father's determination to elevate James, James Murdoch found himself with vastly more power than he should have had. He used it, as power-mad people are wont to do, to grab more power. He did this by pressuring his father to push out all the key executives – chief operating officer Peter Chernin, general counsel Lon Jacobs, communications chief and Rupert-right hand Gary Ginsberg – who, for so long, had so adroitly steered Rupert and the company. And they had had a tight hold on his ear – for Murdoch often tends to listen most to the last person he has spoken to.

Thus, in the end, with everybody else gone, James was calling most of the shots. His was the strategic mind dealing with the meltdown in London. Or worse: his was the strategic mind that allowed Rebekah Brooks, the former Sun editor who became the CEO of News International, to be the strategic mind.

And then, the Taylor payment: one News Corp view is that he authorised the vast settlement payment to Gordon Taylor, chief executive of the Professional Footballers Association, whose voicemail the News of the World had hacked – not so much because he was afraid of what Taylor might say, but because he thought any potential scandal might provide an excuse for American executives to take a greater oversight role of what was now his domain.

James Murdoch was not trying to cover up the company's crimes – and it never quite made sense why he would. Rather, he was playing internal politics.

Hence the smoking gun: his legal approach during his testimony before the British parliament this summer was the tried-and-true theory of "plausible deniability". If he carefully couched his testimony, then, ultimately, there would just no way of truly knowing what he knew.

Except there was. In essence, the bureaucracy, in the form of Tom Crone, the company lawyer, and Colin Myler, the News of the World editor, whom James had implicitly blamed, rebelled – saying they had told him all. And they had an email to prove it. James's only defence was that he had not read it all. Plausible deniability gone.

He should, of course, step down and out. Not be a distraction, until name is cleared, etc. He continues as an executive now because his father has great difficulties saying the obvious. And because James himself has determined that his personal interests are best served by staying on the inside and being able to pick up what scuttlebutt he can.

The story, however, is not completely over. He will not be the chief executive of News Corp, or much of anything else, but even from jail, if that is where he finds himself, he will be one of four siblings who each control 25% of their birthright company.