The Palace of Justice in Siracusa on the east coast of Sicily feels about as far as it gets from London or New York, yet is now the scene of the latest hacking drama involving a subsidiary of Rupert Murdoch's News Corporation.

This time the alleged hacking does not involve phones, but the conditional access cards handed out by satellite TV broadcasters to paying customers which allow them to view encrypted broadcasts.

In a trial that got underway in May and heard expert witnesses on Monday, an Italian once on the payroll of NDS, a leading encryption technology company owned by News Corp and private equity firm Permira, is accused of hacking the cards of a rival firm, Nagra France, leading to the sale of pirated cards. The Italian case, which deals with events in 2003 and 2004, also turns the spotlight on News Corp's then fledgling Sky Italia operation.

As the trial proceeds, the court will hear a sometimes surreal tale involving 26 accused, including some with nicknames such as Micro, Blackjack and Seven, who refer to News Corp founder Murdoch in intercepted phone calls as "the Kangaroo".

The case revolves around Pasquale Caiazza, an NDS consultant paid €1,250 (£1,088) a month during 2004, who allegedly hacked Nagra France's Seca 2 card.

Nagra France was supplying cards to two Italian satellite TV firms, Stream and Tele+, which were bought by Sky Italia in 2003. But Sky then cited the number of pirated Nagra France cards in circulation as a reason to fire Nagra and promptly hired its Murdoch stablemate, NDS.

NDS, which has its headquarters in London and more than 5,000 staff, is no stranger to accusations that it hacked rivals' encryption cards, as highlighted by a group of US banks and investment funds with stakes in News Corp when they issued a legal complaint earlier this month accusing the company of widespread corporate misconduct.

The magistrate who sent the case to trial alleges that while he has no proof that Davide Rossi, an NDS consultant who recommended Caiazza to the company, or the News Corp firm instructed him to hack Seca 2, they were aware he was already hacking it when they took him on as a consultant and kept quiet about it.

The investigation started after a raid by Sicilian police on the house of an associate of Caiazza's, Australian-born Concetto La Rosa. After overhearing talk of consignments on wiretaps, the police expected to find drugs at La Rosa's house near Siracusa, only to find 67 pirated encryption cards ready for sale.

La Rosa joined Caiazza and Rossi in the dock, but after finding no hard evidence against NDS, magistrates did not include the firm on the list of the accused. And since the alleged hackers set about breaking NDS's codes as well as Nagra's, the Murdoch-controlled firm is an injured party in the case.

Rossi, a respected member of an Italian government committee on intellectual property until 2004, denies aiding the pirating operation and notes that he partly wrote the law which he is now being accused of breaking. NDS, he told the Guardian, hired Caiazza to feed it information on the Italian piracy scene and on threats to NDS's codes.

An NDS spokeswoman declined to comment on the case.

Rossi added that it was common knowledge at the time that Nagra was talking to Silvio Berlusconi's Mediaset, a Sky Italia rival, about supplying encrypted cards. "At that point it was impossible for Sky to retain Nagra, there was no law binding it to its contract with Nagra, and it did not need to damage Nagra to create an excuse to leave it."

In any case, after taking three years to reach trial following the conclusion of the investigation, and with 50 witnesses to be questioned and just one hearing a month, Rossi said the trial would be timed out by the statute of limitations before it reached the appeal stage.

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