THE Sun newspaper could be closed down if it is dragged into the phone-hacking scandal, James Murdoch admitted yesterday in evidence to MPs.

The threat to the red-top emerged more than two decades after newsagents and readers in Liverpool launched a boycott of the newspaper, because of its coverage of the Hillsborough tragedy.

The News International chief said he could not rule out the newspaper suffering the same fate as The News of the World, if evidence emerged of criminal behaviour by its journalists.

Asked about The Sun’s future by Steve Rotheram, the Walton MP, as part of a Parliamentary inquiry, Mr Murdoch replied: “I don’t think we can rule out any corporate reaction to behaviour or wrongdoing.”

The comment came just days after Jamie Pyatt became the first Sun journalist to be arrested, in connection with an investigation into payments made to police officers.

Days after the Hillsborough disaster, the tabloid carried the infamous front page headline “The Truth”, alleging falsely that Liverpool fans picked the pockets of victims and urinated on police officers.

In yesterday’s hearing – during which Mr Murdoch was branded a “Mafia boss running a criminal enterprise” by Labour MP Tom Watson – Mr Rotheram suggested there was a direct link between the notorious Hillsborough story and hacking.

The Labour MP asked: “Did the fact that The Sun got away with telling outrageous lies in 1989 lead News International into believing they could do whatever they wanted without reproach?”

In reply, Mr Murdoch said: “I don’t think there has been, certainly not in my experience of the company, a sense that anyone is untouchable.”

The executive chairman of News International also added his name to the list of senior Sun staff who have apologised for its coverage of Hillsborough, agreeing it was “wrong” to have printed the allegations.

He told the Culture Select Committee: “I would like to add my full apology for the wrong coverage of that affair.

“It was 22 years ago. I was far away and a much younger person and had no involvement or proximity to it, but I have since looked at it and I am aware of the concerns and the hurt it caused and it is something we are very sorry for – and I am as well.”