* Internal probe to cover all of Murdoch's London papers
* Lawyers also examining emails and financial records
* Cash payouts will be closely scrutinized
WASHINGTON, Aug 29 (Reuters) - Lawyers for Rupert Murdoch's News International are conducting a broad inquiry into reporting practices at all of the company's U.K. newspapers, according to sources who have been briefed on the probe.
As part of the inquiry, attorneys for Linklaters, the large London law firm leading the investigation, will be looking for anything that U.S. government investigators might be able to construe as evidence the company violated American law, particularly the Foreign Corrupt Practices Act, which prohibits corrupt payments to foreign officials, a source familiar with the investigation told Reuters.
In addition to conducting personal interviews with selected journalists, lawyers will also be looking at email and financial records, said this source.
A second source close to the company stressed that just because the internal inquiry is examining reporting standards across Murdoch's U.K. papers, this does not mean there is evidence inappropriate activity occurred at News International's currently-operating British properties.
News Corp acknowledges an extensive review is under way, although the details it released have been sparse.
"As is widely known, a review of journalistic standards is underway at News International with Linklaters assisting in the process," a company spokesperson told Reuters.
The spokesperson added the review was "part of a process that started a number of weeks ago." That process is under the "ultimate control" of Joel Klein, a Murdoch executive in New York who formerly worked at the White House and U.S. Justice Department; Viet Dinh, an outside News Corp director who also worked at the Justice Department; and the Management and Standards Committee. The latter is a unit Murdoch created to handle corporate response and cleanup related to the uproar over allegations of phone hacking and questionable payments to police by News International journalists.
Journalists from the company's surviving British tabloid, The Sun, have already been interviewed for the internal investigation. Interviews with journalists from The Sunday Times, one of Murdoch's two London "quality" papers, are scheduled to begin in September.
The inquiry is also expected to review reporting practices at Murdoch's other upscale British title, the Times of London, although people familiar with the investigation say the scope of the review at the daily paper is likely to be less extensive than at its sister papers.
Two people briefed on Linklater's activities said information about the extent of the inquiry had been widely communicated throughout the company over the last month. One of these sources said only a selection of journalists -- including reporters involved in sensitive reporting projects -- were expected to be interviewed about their reporting methods.
Lawyers are also examining emails and financial records that might relate to matters under investigation by police, including phone hacking and questionable payments to police officers or other government officials. One of the sources briefed on the inquiry said close scrutiny would be given to records of cash payouts requested or authorized by journalists at News International properties.
In early July, Murdoch unexpectedly announced he was shutting down the 168-year-old, Sunday-only, News of the World, Britain's biggest-selling newspaper. James Murdoch, Rupert's son and News International chairman, said the paper had lost the trust of readers due to allegations about controversial reporting practices by its staff, some of which he characterized as "inhuman."
Both Murdochs were summoned before a parliamentary committee in late July to face questioning about the scandal. London's police force, Scotland Yard, also established teams of detectives to investigate allegedly abusive or illegal journalistic activities, including phone and computer hacking and questionable payments to police officers.
So far, most if not all of the News International journalists known to have been arrested and questioned by police in connection with alleged reporting irregularities were associated with the News of the World. But one of the most prominent figures to have faced arrest, Andy Coulson, who most recently served as British Prime Minister David Cameron's chief spokesman, edited a gossip column at The Sun before becoming editor of the News of the World in 2003.
Former News International CEO Rebekah Brooks, who was also arrested and questioned by police, edited both the Sun and the News of the World. Brooks was in charge of the Sunday tabloid at the time of the infamous incident in which the voice mail of missing schoolgirl Milly Dowler allegedly was hacked. Brooks was on vacation when the incident occurred.
Although more than a dozen individuals have been arrested and questioned by Scotland Yard in recent months regarding alleged reporting abuses, so far none have faced criminal charges.
Most of the specific phone hacking and questionable payment allegations that have become public relate to the News of the World. However, actor Jude Law has sued both the News of the World and The Sun for alleged phone hacking. The company strongly denied his claim, saying it was a "deeply cynical" ploy to implicate The Sun in the hacking controversy.
Some of the Sunday Times reporting practices have also faced public criticism. Britain's former Labor prime minister, Gordon Brown, accused the paper of using questionable tactics to acquire some of his banking, tax and legal records. The paper has defended its reporting.
Reporting by Mark Hosenball in Washington and Georgina Prodhan in London; editing by Peter Lauria and Andre Grenon